The year 2008 was an important year, not just for the United States of America but for the rest of the world as well.
The world was witnessing a financial crisis, which eventually went on to be called the Great Recession. The 2008 US elections were being closely watched by one and all and that year great changes occurred in the country and globally, including the election of Barack Obama. The year turned out to be a historic one as on this day in 2008, Obama went on to become the first African-American President of the US.
While the George Bush presidency was marred by a financial crisis and security instability for the world, including India, there was plenty of hope that was pinned on Obama. He eventually went on to state that he was taking over the presidency at a very difficult time.
When Obama took office, he faced the biggest combination of crisis as well as opportunity that any President of the United States since Franklin Delano Roosevelt did. The economy was in free fall and the entire financial system in US and many parts of the world was gripped by panic. When the US voted Obama to power there was a lot of hope resting on him. He had the mandate to enact far reaching reforms. However unfortunately, he did not use this opportunity.
The experts felt that Obama and his key advisers largely sought to restore the restore the pre crisis status quo, inaugurating a decade of economic stagnation which eventually culminated in the election of Donald Trump.
When Obama took office in the first quarter of 2009, the US economy was shrinking. By the end of his term, the economy was growing at about 2 per cent in inflation-adjusted terms. In fact during his second term, economic growth per person was higher than the growth of several previous presidents.
However there are several arguments on how Obama handled the financial crisis, which according to many was the worst that the US had witnessed in more than 50 years at the time of him taking office. The two big policies that he used to turn around the economic situation were the Troubled Assets Relief Programme (TARP) and the stimulus package.
The TARP was initiated by then Treasury secretary Henry Paulson. While there were false steps taken in the early use of TARP, injecting capital into the banking system was said to be the right thing to do.
On Obama’s economic policies, the reactions by the public have been mixed. 27 per cent of the Americans had rated the economy as excellent or good, while 48 per cent had said it was only fair. 24 per cent called it poor. Since he took office, nearly four in ten said that he had made the economic condition better, while 28 per cent said that it had become worse. On the job front, 57 per cent said that jobs were hard to find, while the rest said that there were plenty of them to find.
While many would say that the economy did improve under Obama, several people in the US said that they were falling behind on cost of living. The key grouse however was that the government under Obama had gone too far in regulating financial institutions and markets. This had made it hard for the economy to grow.
By the end of his term in 2014, there was a broad public agreement that economic inequality had grown. At least two-thirds of the Americans felt that under Obama, the gap between the rich and poor had increased. According to an analysis of data from the Federal Reserve’s Survey of Consumer Finances, under Obama, the wealth of the white households was 13 times the median wealth of the black households in 2013, compared with eight times the wealth in 2010. The survey said that the gap between blacks and whites had reached its highest point since 1989, when the whites had 17 times the wealth of the black households.
At the end of his 8 year tenure, the economic legacy of Obama did show some success, but they were largely overshadowed by failures. If one looks at his success it could be said that there was increased employment, stricter financial regulation following the Wall Street scandals that had fuelled the 2008 crisis and cleaner energy.
However the less illustrious have been his policies to boost growth, international trade deals and healthcare reforms. Attempts to tackle tax reform, public debt and income inequality stand out as his administration’s main economic failures.
In his first year in office, the economy shrunk by 2.8 per cent, its worst annual performance since World War II. This had led to Donald Trump’s highly critical campaign claim that the US had experienced its slowest growth since 1929 under Obama. He later said that Obama had been the first president in modern history not have a single year of 3 per cent growth.
While Obama did manage to steer the economy away from recession, the country’s economic gains were not distributed evenly as Obama had promised. Further between 2007 and 2014 the average household income fell steadily and this has been blamed on the failure of Obama’s middle-class focused policies.
In a nut shell if one were to put it, Obama did manage to save the economy from recession, but his policies failed to create higher growth rates. Tax reforms and middle-class policies which were supposed to revolutionise the American health insurance sector, left a massive public debt. Most of his commitments were unrealised or incomplete and this was largely thanks to weak policy actions.
Obama and India
For India, the relations with the US under Obama have been blow hot blow cold. India was beleaguered by controversies and corruption under the premiership of Dr Manmohan Singh. This resulted in the Indian growth sliding to just over 4 per cent in late 2013.
The Obama administration at this time mounted pressure on India and urged it to open up more of the economy and reform, its Intellectual Property Rights regime, mostly in response to intense lobbying by the the US companies.
In the year 2011, Obama had visited India. Just a few months after his visit, India announced that US airplane makers Lockheed Martin and Boeing had not made it to the short list of companies in the fray for the multi billion Dollar Medium Range Multi Role Combat Aircraft fighter jets. America had hoped to bag this deal in big measure as a thank you gesture for ending India’s nuclear isolation with the Civil Nuclear Deal which had been formalised in 2008. The Americans were angry and used words such as ‘betray’ and ‘ungrateful.’
In 2014, India under the leadership of Narendra Modi invited Obama to be the 1st US president to grace the Republic Day celebrations as chief guest. While he became the first US president to be chief guest, he was the also the first to visit India twice during a US presidency. As he sat beside PM Modi, Obama needed a break from a possible urge to smoke. He chewed on gum to distract himself and many felt insulted by the same.
He also was an irritant for India, when it came to his preachings on religious freedom. On January 27 2015, at a private event, he appealed for religious freedom. “India will succeed as long as it’s not splintered along religious lines…nowhere is it more important to uphold religious freedom than in India,” he had said from the Siri Fort auditorium. The fall out was immediate, which eventually led the White House to clarify that the remarks were a reiteration of a personal belief system.
Obama, a few days later doubled down on his remarks and said, “ Michelle and I returned from India — an incredible, beautiful country, full of magnificent diversity — but a place where, in past years, religious faiths of all types have, on occasion, been targeted by other peoples of faith, simply due to their heritage and their beliefs — acts of intolerance that would have shocked Gandhiji, the person who helped to liberate that nation.”
Comments