INTERNATIONAL ECONOMICS: OBAMA
SPECIFIC POLICY POSITIONS
President Obama has followed the same pro-free-trade approach as every Democrat since Bill Clinton but with a slight left-of-center slant. He delayed a trade agreement with Colombia after U.S. unions protested vigorously over violence against workers and union leaders, and he has doubled the rate of U.S. cases brought before the World Trade Organization since the Bush administration. He has also done little to negotiate new bilateral trade pacts, and he has consistently attacked his Republican rival, Mitt Romney, for driving jobs overseas while at Bain Capital. But as U.S. growth has lagged, Obama has increasingly made free trade a centerpiece of his economic plans, pledging to double U.S. exports over five years and pushing for a Trans-Pacific Partnership that would mark the biggest trade pact since NAFTA.
INTERNATIONAL ECONOMIC COORDINATION
Since the G-20 meeting in Pittsburgh in 2009, when the president managed to orchestrate a commitment to coordinate stimulus plans in the aftermath of the financial crisis, the Obama administration has had limited success in forging global consensus. Beginning with the Toronto G-20 summit in June 2010, the administration has encountered greater resistance to its agenda. Obama’s letter urging more fiscal stimulus was ignored; instead, the summiteers focused on deficit-cutting. The following year in Seoul, participants rejected Treasury Secretary Timothy Geithner’s proposal to place 4 percent curbs around current-account deficits and surpluses. Talks on financial coordination have also lagged, although at Geithner’s urging, Basel III bank-capital standards were negotiated in a lightning-fast two years.
THE EURO CRISIS
It is hardly Obama’s fault that he has been all but helpless to deal with the single biggest crisis in the international economy over the past two years: the fate of the eurozone. Lael Brainard, the undersecretary of Treasury for international affairs, has been practically “living in Europe” as part of the negotiations, according to one U.S. official, but mainly as an observer. European leaders have considered this entirely their project. Obama’s efforts to urge a resolution to the crisis at the G-20 summit in Cannes last fall earned him only enmity from the Germans. “Who did he think he was?” one German official asked.
The Obama administration has not been shy about criticizing China on exchange rates, interference in cyberspace, and intellectual-property-rights theft, to the point where it is risking Beijing’s wrath by negotiating the Trans-Pacific Partnership without China. Obama has also orchestrated a broad “pivot” of geostrategy aimed at delivering a show of strength in the Pacific, if not quite “containing” China. Nonetheless, following the lead of the Bush administration, Obama has stopped short of labeling Beijing a “currency manipulator.” Even some Democrats, such as Sen. Sherrod Brown of Ohio, have criticized Geithner’s Treasury for “giving China a pass.”
In Obama’s State of the Union address in 2010, he laid out a plan to help U.S. businesses double exports over five years and to add 2 million American jobs. The administration says it’s well on the way: Exports are up by 35 percent and adding 1.2 million jobs.
Obama doesn’t deserve all the blame, but at a time when most economists say that the U.S. and Europe should be forging new agreements to stimulate the international economy, both economies are doing the opposite, for domestic political reasons.
The Trans-Pacific pact would cover a market of about 40 percent of the world’s goods, but unions and consumer groups worry that corporations would be allowed to have extraterritorial rights.
Obama’s biggest triumph is probably the return of General Motors to global competitiveness.
Timothy Geithner: The Treasury secretary has had a dominant hand in shaping the Dodd-Frank law, and he has heavily influenced some international efforts like Basel III bank-capital standards. But he has trouble getting his way at international meetings.
Lael Brainard: Geithner’s deputy is an economic-policy whiz who served with him under Robert Rubin in the Clinton administration, and she occasionally goes to international meetings in his place. You may be looking at the (future) first female Treasury secretary.