News Release: Faculty Experts, Finance and Economics, Politics

Feb. 16,  2009

Experts: Can President Obama Execute His Ambitious Agenda?

From Knowledge@Emory

Barack Obama won the U.S. presidential election with a mantra of change. But whether he’s able to execute his mandate in the face of a crushed economy and dispirited electorate is another question, say faculty at Emory University and its Goizueta Business School.

Already three of the administration's high profile candidates had to bow out of the running; and economists and others are questioning some aspects of the American Recovery and Reinvestment Act of 2009, a nearly $800 billion broad-based stimulus package designed to kick-start the economy. During the campaign, Obama promised to get the measure passed during the early days in office. His frustration with the bill's detractors spurred a nationally televised news conference on Monday, February 9,  and has him travelling the country to sell the plan to the American people.

But Obama's success in getting the bill through Congress doesn't surprise Peter Topping, a professor of organization and management at Emory University’s Goizueta Business School. President Obama is “more of a pragmatic centrist than many supporters and detractors suspect,” says Topping, adding that this aspect may aid him in retaining his pre-election support system, which he could then use to help implement his agenda.

But politicians require more than  goodwill to accomplish their goals, notes Topping. “Meeting his goals will require a great deal of persistence on Obama’s part,” says Topping. “A variety of special-interest and other groups will compete for his attention, but he must be relentless in his quest to create a common vision. He must keep his eye on the nation’s broad goals, and must not allow himself to be deterred by criticism or setbacks.”

Staying focused and retaining a sense of humility, is also essential, Topping adds.

“Obama will have to balance a great many competing interests, and taming them will require the efforts of many people,” says Topping. “It would be a mistake to attribute any successes to a single person. Instead, the goal should be to build a consensus where possible and give credit to a group instead of an individual.”

In addition, he adds, Obama must be prepared to stand behind his bold initiatives.

“There may be a time when he will have to be prepared to take heat for a program,” observes Topping. “If he truly believes in it, then Obama will gain stature in the long run by standing up for his long-term objectives instead of getting sidelined by short-term goals, like re-election considerations.”

But Topping says overconfidence could cripple Obama’s momentum.

“If Obama manages to score a partial success early on, he must be careful not to get overconfident and rush forward with other proposals,” Topping notes. “In these uncertain times, measured progress may often be the answer, even though some supporters may be impatient and others may denounce Obama for not being bold enough. In order to achieve his long-term goals, however, he may have to stifle the urge to satisfy the loudest voices.”

If Obama follows through on his campaign promises—including pledges to reduce healthcare costs, to make health care accessible to all Americans, and to implement a “fairer” system of taxation—he will benefit by having an informed group of economic advisers like former U.S. Treasury Secretary Lawrence Summers, adds Zheng Liu, an associate professor of economics at Emory. 

Liu notes that "Summers [who was tapped to head the incoming administration’s National Economic Council] and other advisers understand the issues and are committed to Obama’s policies. That will help to establish Obama’s credibility.”

That’s important because a nation’s citizens are more likely to back a leader that possesses a high level of credibility, he adds.

“If Obama is seen as being credible and committed then there’s a good chance people will respond to his programs,” says Liu. “Problems may arise if a leader changes policy constantly or announces a plan and then goes back on it.”

When that happens, people find it difficult to plan ahead and start to think ‘You say one thing but then change your mind—what should I do?’ notes Liu, who is currently conducting research at the Federal Reserve Bank of San Francisco, California while on leave from Emory. Liu also notes that his comments reflect his personal views, which do not necessarily reflect the views of the Federal Reserve Bank of San Francisco or the Federal Reserve System.

“Unusual times call for unusual steps,” adds Liu. “To rally legislators and others, Obama will need to conduct transparent discussions and demonstrate his commitment to implementing the solutions.”

As the Obama administration is already noting, building consensus in Washington, even with a Democratic majority in congress, may not be so easy, says Emory economics chair  Hashem Dezhbakhsh.

“The current economic situation is not sustainable,” he notes. “But the cost of some of Obama’s proposals to quickly stimulate the economy and create millions of jobs could lead to inflation.”

The new U.S. president will face the challenge of reigning in America’s spending appetite without crippling national and international commerce.

“Obama may have been elected on a vision of hope, but he faces a future that is not very positive,” explains Dezhbakhsh. “Painful steps must be taken to tighten, and Obama must communicate this to his constituents.”

Dezhbakhsh reels off a litany of challenges: aging baby boomers that are transitioning out of their position as economic providers and moving into a position of net consumption; the increased healthcare demands expected to accompany the aging of the baby-boom generation; and the anticipated depletion of the social security trust fund.

“If he is to implement real change, Obama needs to communicate the challenges that lie ahead,” says Dezhbakhsh. “He needs to tone down people’s expectations and relay the message that the U.S. cannot continue to mortgage its future. The debt is now coming due.”

The success of any stimulus program will depend, to a large degree, on the psychology of the marketplace, Dezhbakhsh adds.

“Obama will have to strike a balance between managing expectations to a realistic level, while building confidence for the long term,” says Dezhbakhsh. “In the short run, any kind of stimulus program is unlikely to result in a net gain—instead it will focus on redistributing economic resources. If it’s done properly, the effort may lead to long-term gains, at the expense of adding to the nation’s debt, but it will not be an easy task.”


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