Is the President bailing out on the bailout?

After months of pumping billions of dollars into the US economy in an attempt to stem the tide of recession and massive unemployment – currently hovering around 10% but closer to 20% according to some economists.

The White House released a statement this week that it will now shift its focus to reducing the deficits. What a novel idea!

President Obama will announce early next year that he wants to focus extensively on cutting the federal deficit in 2010 – and will downplay or eliminate altogether other domestic spending programs that are not directly tied to job creation.

But it was Obama that spent more money on new programs in nine months than Bill Clinton did in eight years, pushing the annual deficit to $1.4 trillion.
This leaves little room for big spending initiatives, and progressive social programs which we’re of course the bulwark of his campaign promises, many of which now seem in jeopardy.

But despite the appearance of a policy shift from debt creation to deficit reduction, often thought to be more the conservative approach to economics - the shift in strategy seems to indicate the President is concerned about the midterm elections and is trying to help moderate Democrats avoid some tough campaigns and, perhaps more importantly, calm the nerves of independent voters who are voicing concerns with the big spending programs.

The big question for Obama – and the country – is whether the sudden concern about deficits will be more rhetoric than reality.

All presidents promise deficit reduction – and almost always fall short. There is good reason to be skeptical of this White House, too, on its commitment.

The Wall Street Journal reported this past Thursday the White House is considering applying some money from the $700 billion financial bailout to deficit reduction, which ironically is partially responsible for creating the deficit in the first place.

But if Obama’s real political goal is to minimize tough elections, gutting domestic spending bills could mean fewer projects lawmakers can brag about back home. And history shows that that’s often an impossible sale on the Hill.

So Obama will likely find himself squeezed between economic and political pressures for much of the year, and while he attempts to strike a fine line between shoring up our economy and salvaging his first term, the rest of the country watches with startled amazement.