The Investor 90

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Those following this year’s
US presidential race –
and, in what has been
an unusually colourful
campaign, many will have
been drawn to it – may have wondered
how many of the promises made during
the process will ever see their way
into policy.
When, in November 2008, Obama
gave his‘Change has come’ victory speech
in Chicago as the first African-American
US president, hopes were high. Obama
pledged to‘reclaim theAmerican dream’
and to end a situation in which, while
Wall Street had prospered, Main Street
had struggled.With the president now in
his lame duck period, how did he do?
His lasting legacy is likely to be
‘Obamacare’, the Patient Protection
and Affordable Care Act he introduced
in 2010; and which, despite Republican
opposition, became fully operational
in 2013. Obama’s aim was to give
millions of uninsured Americans access
to healthcare. In that respect, he
succeeded. Some 20 million Americans
were drawn into health insurance by the
reforms and the uninsured rate dropped
from 15.1% of the population in 2011
to 9.1% last year1.
ANALYSIS
14 | THE INVESTOR
Time will tell if the
president’s policies benefit
future generations
Beneath the surface, however,
there are problems with Obamacare,
despite claims that the president was
introducing a system of European-style
socialised medicine. Obamacare is a
multi-tiered health insurance system,
and many participants are finding
that their insurance does not entitle
them to the treatments they want or
need at many hospitals. Obama would
have liked a more comprehensive and
complete system, but had to operate
within the constraints of office.
Those constraints can be seen in
other ways. He took office at the height
of the global financial crisis and one of
his earliest responses was the American
Recovery and Reinvestment Act of
2009, the centrepiece of which was a
$787 billion fiscal stimulus covering
the period 2009-19, later revised up
to $840 billion 2.The stimulus, while
large in total, was not huge when
spread over 10 years in relation to an
economy which has an annual GDP of
$18 trillion3. Not only that, but while
the ObamaWhite House was pushing in
one direction on fiscal policy, Congress
frequently pushed in the other.
This came to a head in August 2011
during the so-called debt-ceiling
crisis, when Republicans in Congress
insisted on $2.4 trillion of future cuts
in government spending in return for
allowing the federal debt ceiling to rise
above $14.3 trillion4.Though the deal
was done, the wrangling resulted in
the loss of America’s AAA sovereign
debt rating5. Even without that crisis,
the Obama stimulus was never quite
what it seemed.The US has had its
slowest economic recovery in the
post-war period.
Whether the recovery would have
been any faster had Obama had a freer
hand is open to debate, but the result
is that the economic wounds he pledged
to tackle in 2008 haven’t completely