Political Hay

Shadows on the Summit

A weakened Obama will face European woes at the G-8.

By 5.17.12

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HAGERSTOWN, Maryland -- They don't teach economics at Harvard Law School. That's the only explanation I've been able to offer for President Obama's consistently wrongheaded policies for the past three years. Of course, we've never seen any of Obama's transcripts, so we can only speculate what courses he took at Occidental College, Columbia University or Harvard Law. Being therefore compelled to judge his familiarity with economics based entirely on his record and public rhetoric, we are reminded of Ronald Reagan's famous quip: "The trouble with our liberal friends is not that they are ignorant, but that they know so much that isn't so."

Whether the result of ignorance or misinformation, Obama's economic incompetence has made him a laughingstock. Yesterday, the Senate rejected his budget by a 99-0 vote. The joke might be funnier, were it not for the 23 million Americans who can't find a job. The pathetic blunder that is Obamanomics -- record deficits, an inflationary monetary policy and an alleged "recovery" that has scarcely dented persistently high unemployment -- undermines our international prestige. If the United States can't get its fiscal house in order, what claim can the president make to world economic leadership?

America's weakness in the Obama era will be on display Friday as leaders from seven nations arrive at Camp David for the G-8 Summit: German Chancellor Angela Merkel, British Prime Minster David Cameron, Canadian Prime Minister Stephen Harper, Japanese Prime Minister Yoshihido Noda, Italian Prime Minister Mario Monti and France's newly-elected president, Francois Hollande. Russian President Vladimir Putin won't attend the summit, sending Prime Minister Dmitri Medvedev in his stead. Putin's absence is widely viewed as a deliberate snub, evidence of worsening U.S.-Russian relations.

The economic crisis that threatens to engulf Europe will be the prime topic of discussion at the G-8, but there isn't much the United States can do to help. Instead, Obama is expected to urge Merkel to support a policy of "growth," which is liberal-speak for the sort of Keynesian deficit-spending measures that the U.S. has pursued under Obama's administration. Merkel's Germany is the most solvent economic power in the European Union. If the euro is to be saved, German bankers will be crucial to the deal. As opposed to Obama's Keynesian "growth," Germany has steadily demanded a policy of "austerity," which is to say fiscal responsibility through the reduction of government spending.

Europe's crisis has been caused by out-of-control government debt in the so-called PIIGS -- Portugal, Italy, Ireland, Greece and Spain -- whose feeble economies threaten to take down the entire European financial system. Patient Zero in the fiscal epidemic is Greece, which has been bleeding currency at the rate of $5 billion a month since 2009. Terms of a bailout loan backed by the European Union, the European Central Bank and the International Monetary Fund imposed stiff austerity requirements on the Greek government, provoking angry and occasionally violent demonstrations by Greeks accustomed to living at government expense. Last week's elections in Greece saw gains by a radical-left coalition whose demagogic leader, Alexis Tsipras, has called austerity a "disease" for which he blames Merkel. Another round of Greek elections is scheduled for next month, and the possibility that it will bring Tsipras to power has frightened those already worried about Greece. Depositors reportedly withdrew $890 million from Greek banks Monday, raising concerns of a possible all-out panic.

Even if Greece's woes don't trigger a complete collapse, the ongoing European crisis continues to undermine prospects for a genuine recovery in the United States. With the presidential election less than six months away, the troubling economic picture is bad news for Obama's re-election prospects, as James Pethokoukis of the American Enterprise Institute explained Wednesday.

This year's G-8 had originally been scheduled for Chicago, but was moved to the more secluded Camp David -- a move for which leaders of the "Occupy" protest movement claimed credit. Yet if U.S. officials thought they could escape the rowdy Occupiers altogether, they reckoned wrong. While the Camp David compound itself is carefully guarded, Occupy protesters have announced plans to descend on the nearby town of Thurmont, population 6,098. The police chief in this tiny burg in Maryland's rustic Catoctin Mountains has expressed confidence that local, state and federal law enforcement will be able to cope with the Occupy demonstrations at the G-8. "We've got our plans together and we're ready to deal with it," Chief Greg Eyler told Baltimore's WBAL-TV. Occupy movement leaders insist that their protest plans are entirely peaceful. "We're not looking to come in and cause trouble," one Occupier told the Baltimore Sun.

Having witnessed an Occupy mob in raging frenzy last year ("The Mob Who Came to Dinner," Nov. 7), I have no more confidence in such pacific promises from the protesters than I do in Obama's economic competence. Much like the president, the Occupiers don't want to let a crisis go to waste.

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About the Author

Robert Stacy McCain is co-author (with Lynn Vincent) of Donkey Cons: Sex, Crime, and Corruption in the Democratic Party (Nelson Current). He blogs at The Other McCain.