Rupert Cornwell: Three weeks in, Obama's presidency is on the line

Out of America: The President's $800bn economic stimulus bill doesn't just have his and his country's future riding on it - it marks the last rites for a Republican era
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The Independent Online

It's not often that an American presidency is on the line just three weeks after it has started. But that's what the struggle to pass Barack Obama's stimulus bill amounts to. The measure, probably slimmed down to a nonetheless mindnumbing $800bn (£550bn or so) will ultimately pass, because the alternative is simply unthinkable, even if economists are divided on whether that is too much or too little – and not a single one of them has the faintest idea whether it will work.

The deed should finally be done by the end of this week, in time for the Presidents' Day holiday, perhaps as early as 12 February, the 200th anniversary of the birth of Abraham Lincoln, Obama's political hero. And make no mistake: even though the outcome is pre-ordained, it has been a showdown, not just over how to tackle an economic crisis like no other, but over everything for which Obama campaigned.

In its early stages, any president's performance is judged virtually on an hourly basis, with the reviews gyrating as violently as the Dow Jones index. The historic nature of Obama's victory, and the vast hopes pinned to it, have only exaggerated the process. One moment he can do no wrong. One breathless news flash later, the pundit juggernaut has shuddered into reverse. Ice-cool Superman has turned into a hot-headed and blundering naïf.

In normal times, little of this would matter. Individual mistakes can be quickly rectified. A couple of months on, who remembers the nominee for a cabinet post who withdrew? But these are not normal times. During the campaign, historians declared that 2008 would be a watershed election. Three weeks into the age of Obama, it looks not so much a watershed as a continental divide. Everything has come together: a change of party, a change of governing philosophy, and a change in the national mood, fired in the crucible of economic crisis.

Rarely, if ever, has America been as angry. Even if the recession had been mild, you sensed the country's implicit social contract had already ruptured. The US has always had an exceptionally high tolerance for the excesses of capitalism. Markets could be brutal, but their injustices were bearable when opportunity was equal for all. But since the late 1970s this compact has eroded. The earnings of top executives soared, while the income of average families – the vast "middle class" to which every politician pays homage – stagnated. The slice of national wealth going to the richest 1 per cent of the population has more than doubled since 1980; everyone else has faced a grinding struggle merely to keep up with the soaring cost of health care and college education. The crisis, to all appearances created by the greed of that richest 1 per cent and by the mismanagement of the politicians they had suborned, but whose impact is felt by everyone, was simply the last straw.

Thus the outrage over the lavish bonuses paid by banks and financial institutions kept afloat by taxpayers' money. Though Gordon Brown still seems oblivious to the row, the $500,000 cap on compensation for senior employees of these firms was the minimum Obama could do. And that's why the transgressions of Tom Daschle, the former senator chosen by Obama to lead health reform, were unpardonable.

Daschle, as I can testify from personal experience, is a delightful man. On another occasion he might have got away with failing to report $250,000 of perks that he should have declared as income. Indeed, his former Senate colleagues, who were to have confirmed him last week as Health and Human Services Secretary, initially seemed unperturbed. Alas, it then emerged that Daschle had earned over $5m in two years after he left the Senate, becoming "special public policy adviser" to a law firm – what the rest of us call influence peddling. He hadn't done anything wrong, but as the liberal columnist Michael Kinsley noted: "In Washington, the scandal isn't what's illegal; it's what's legal." Obama had promised his administration would be a break with grubby "business as usual". If Daschle had stayed, the talk of change would have been a sham.

But Republicans, even more than Democrats, ignore the popular fury at their peril. This crisis may have been in the works for decades. For the public, however, it's Republican-made, mainly brought about by winner-take-all Reaganomics, and Republican laissez-faire policies. So, you will ask, what on earth are Congressional Republicans now doing? Are they not playing with fire, obstructing the huge package which Obama says is the only way out of the mess? You might have thought, three months after their election thrashing, the party would have got the message that American voters wanted change.

But here they are, still complaining about government spending (even though they presided over a vast expansion in such spending), and still arguing that tax cuts are the way to go – even when the Reagan and Bush tax cuts did so much to expand the inequality that causes such resentment now.

This debate isn't only about a stimulus plan, however. Obviously, Republicans are putting down a marker: if the measure fails, the chorus of I-told-you-sos will be deafening. But the debate is above all a radical change of direction for the country, in style as well as substance.. And Republicans are bent on applying the brakes.

As for style, just when did a president last publicly admit – as Obama did after Daschle withdrew his name – that "I screwed up"? Not George W Bush. And when did a newly minted president last go out of his way to woo the opposing party to back a bill that would sail through anyway? Obama came to office promising bipartisanship, and to listen to "the best ideas, no matter where they come from". That's what the American public yearns to hear. The Republican objective is to drag Obama back down into the mud.

But Obama knows a colossal crisis also represents a colossal opportunity. Candidates usually prattle about change. But once in office, after a few mostly symbolic measures, it's business as usual. Not this time.

Obama's stimulus package amounts to the last rites for a Republican era. That's why not one House Republican voted for it. Activist government is back. The provisions on tax, health care, public works and energy policy are building blocks for Democratic policy initiatives that will shape a generation. And that's why, just three weeks in, an entire presidency is on the line.