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Obama's First Test

Will he stand up to Congress and demand a credible stimulus?

11:00 PM, Jan 18, 2009 • By FRED BARNES
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BARACK OBAMA'S FIRST test as president isn't his inaugural address. As talented a writer and orator as Obama is, the speech should be a snap. His big test is the economic stimulus package that Congress is expected to pass within a few weeks. The starting point for Congress is an old-fashioned, pork-filled, partisan measure drafted by House Democrats and likely to stimulate the national debt more than the economy.


For Obama, it's a test of his leadership, his promise of bipartisanship, and his economic common sense. Should Congress pass a package similar to the House bill and Obama goes along, he will have failed on all three counts.


With his sky-high popularity and unused political capital, Obama has the power to shape the stimulus bill to his liking. But he'll have to exert that power. If he doesn't, Democrats in Congress will not only have rolled him, they're likely to conclude they can dominate him again and again, at least on domestic policy.


This is exactly what happened in 1993 to President Clinton after he bowed to the Democratic leadership in Congress. He wound up with a reputation for knuckling under, and his signature initiative on health care failed. And in 1994, Republicans captured both houses of Congress.


The problem with the House stimulus package is less its size ($850 billion) than its contents. Two of its biggest expenditures -- jobs in building infrastructure and in environmentally-friendly industries and sending checks to tens of millions of Americans -- have been tried before and failed to revive a sagging economy.
The measure also allocates $166 billion for states and $6 billion for colleges, arguably worthwhile expenditures but ones with no stimulative value. That's also true of the tax cuts in the package. They would provide cash for corporations but practically no incentives for investment, the key to an economic recovery. And of course there's the blatant pork: $44 million to repair the Agriculture Department headquarters, $650 million to help digitize TVs, $50 million for the National Endowment for the Arts, and so on.


There's still another problem. The bulk of the spending wouldn't hit the economy until the second half of this year, much of it late in the year or in early 2010. So whatever stimulus effect it has would be late in arriving.


When does Obama, who has vowed the stimulus package would be pork-free, enter the picture? The answer is soon, since Democrats are in a hurry to pass a bill. If he informs congressional Democrats that the package is unsatisfactory, they're likely to accede to his wishes. They don't want to embarrass a new Democratic president.


By stepping in forcefully, Obama will pass the test of leadership. He said on Sunday that he sees "no obstacle" in his way. But there is one: congressional Democrats. They are seemingly more partisan and liberal than Obama and impatient to pass liberal initiatives that were non-starters in the 16-year era of Republican control of Congress, the White House, or both.


Obama is also committed to gaining the support of a critical mass of Republicans. But he can't achieve that with the stimulus package put together by House Democrats. The easiest way to attract Republicans is by including tax incentives for private investment. Such tax cuts, if retroactive to January 1, would have the added value of an immediate impact on the economy.


Democrats, however, can pass practically anything they want in Congress without Republican support. Still, in the case of the stimulus package, they could open themselves to stinging (and effective) criticism by Republicans for studding the bill with pork and leaving it without serious tax cuts.


Surely Obama wants to avoid that. The longer he can keep a significant number of Republicans on board, the longer his honeymoon with the public and the media will last, the longer his popularity will remain at a lofty level, and the longer his ability to enact his agenda will remain intact. But if he doesn't insist on a credible stimulus, all that will be jeopardized.

Fred Barnes is executive editor of THE WEEKLY STANDARD.