Bad news continues to pile up for Obama

pub_date:Congress expected to oppose the president on economy, Syria and new Fed chiefCONGRESS returns to Washington this week after a summer recess.文件倉 President Barack Obama is back from the G-20 Summit in Russia. The US president looks tired and the lawmakers sound irritated. And the mood in Washington ranges between "not good" to "really bad". And it could get worse.The reasons for this state of affairs are not hard to discern. The economic recovery is failing to gain momentum. The unemployment numbers remain stuck on the road to nowhere. The Obama administration faces major obstacles in trying to get Congressional (and international) support for a military strike against Syria. There is a growing feeling that with the lack of leadership on all sides, Washington just cannot get its act together.Even before the lawmakers began returning to Washington, a stream of bad economic news was already seeping through town. The new unemployment figures released by the Labor Department on Friday told a gloomy story.The American economy added just 169,000 jobs in August, falling short of the expectations of economists and investors and raising the possibility that the US central bank would put on hold plans to start tapering off its aggressive monetary stimulus programme.While the unemployment rate did fall a bit to 7.3 per cent, from 7.4 per cent in July, the reason for the drop was that more Americans were no longer looking for jobs and 312,000 people had dropped out of the labour force. This marks an historic low in the American workforce participation rate.The Labor Department also revised down its estimates for June and July and downgraded the job creation numbers in those months by 74,000, concluding that the unemployment situation was bleaker than its earlier figures had suggested.The stagnant job market points to a frail economic recovery. Not only has Congress, under Republican leadership, rejected every proposed fiscal stimulus programme, the tighter fiscal measures since the start of the year through the so-called "sequestration" have made it even less likely that the US economy will grow fast enough to provide sufficient job opportunities for the unemployed and under-employed people.That in turn puts more pressure on the leadership of the Federal Reserve to reassess the earlier proposal to start slowing down the pace of its so-called quantitative easing (QE) operations that includes purchases of US$85 billion-a-month of bonds.With no improvement in the job market, the Fed's policymakers who are meeting on Sept 17 will be less inclined to announce a winding down of its QE operations since they recognise that with the continuing political deadlock over fiscal policy, the Fed's monetary strategy remains the only engine of economic growth in town.In fact, the Fed and Wall Street continue to be nervous about the mess into which the politicians in Washington could drag the American economy in the coming months.First, Congress has to agree on some form of short-te存倉m spending plan by October or risk shutting down the federal government because of a lack of funding by Congress.Then there is the danger that Washington will not be able to pay all its bills unless Congress agrees to raise the debt ceiling before an October deadline, threatening a rerun of the recent "game of chicken" over the debt limit that led eventually to credit agencies downgrading the US government's credit rating.Some Republicans have already threatened to go to the brink over both the funding of the government and the debt limit issues. So from that perspective, the fact that Congress would be pre-occupied in the coming weeks with a debate on whether to approve President Obama's request to launch a missile attack against Syria may be seen as good news, since it's doubtful that the Republicans would allow the government to shut down or default at a time when it is engaged in major military operations in the Middle East.But then, the debate over the Syria policy itself could have enormous political and legal ramifications for the White House and Congress, not to mention the impact on the US's status in the world.In what has astounded political pundits in Washington, a large number of lawmakers from both parties have indicated that they will vote against authorising the president to attack Syria.At least 217 members of the House of Representatives are likely to vote against the president's request, raising doubts that the White House can get the House to approve authorisation for a new American military intervention in the Middle East.Indeed, Democratic and Republican lawmakers report that huge majorities in their constituencies oppose President Obama's military plans, and these lawmakers face re-election next year. The president is scheduled to address the nation on the issue today and his aides hope that his lobbying effort will succeed in swaying enough lawmakers over to his side.Perhaps, Mr Obama could eventually get the vote he needs to attack Syria. But a military confrontation with Syria would only have negative impact on economic growth, at least in the short term, as a new war in the Middle East is likely to trigger a rise in global oil prices. That would affect US consumers and businesses directly. And a lengthy war would lead to an increase in defence spending, putting more upward pressure on the federal deficit.Meanwhile, the White House is also worried that if, as expected, Mr Obama chooses Lawrence Summers to replace Ben Bernanke as the next Fed chairman, he would not be able to win enough support on Capitol Hill for the nomination.Indeed, several Democratic senators from the liberal wing of the party have announced that they will vote against Mr Summers. And a prolonged Congressional debate over the nomination of the most powerful monetary policymaker in the world can only create ever more anxiety in financial markets about the Fed's policies and the condition of the American economy.No wonder President Obama looks exhausted these days.迷你倉