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Leading article: The world is relying on Mr Obama's rescue plan

Our fates are bound up with the success of the US President's efforts

Thursday 26 February 2009 01:00 GMT
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These are testing times for Barack Obama and his mission to rescue the world's dominant economy from economic collapse. The American President's $787bn stimulus package was passed by Congress, but only after several of its provisions were watered down. Many economists doubt whether the measures are substantial enough to take up the considerable and dangerous slack that has developed in the United States economy.

The measures to sort out the crippled US banking sector unveiled by Mr Obama's Treasury Secretary, Timothy Geithner, earlier this month, disappointed many too. There is confusion over the nature of the "stress test" that the banks will be ordered to undergo. No details have been released of the public-private partnership that is supposed to buy up their "troubled" assets either. Meanwhile, the financial markets are driving Citigroup and others ever closer to emergency nationalisation.

Then there is the massive public debt burden, which will grow still larger as the federal government is forced to borrow to pay for all these extraordinary economic rescue measures. Mr Obama has spoken this week of his intention to halve the budget deficit by the end of his first term in office. But for the US President to have any chance of achieving this, the American economy would have to bounce back quickly and forcefully within the coming year. On present trends, this seems a rather unrealistic hope.

So there are plenty of grounds for despondency. And not just for Americans. The world badly needs a revival of the world's largest economy. We live in an economically interconnected world. Like it or not, our fates are bound up with the success of Mr Obama's efforts. If he appears to be struggling, then we all have reason to be fearful.

And yet the President demonstrated in his speech to a joint session of Congress on Tuesday evening why, whatever setbacks he has endured in his first month in office, he still has the capability to deliver, both for the US and the wider world.

The tone of the address was honest and pragmatic. As in last month's inauguration speech, Mr Obama stressed that Americans cannot go on living beyond their means indefinitely. The challenges facing his country were spelt out with a brutal clarity: "A trillion dollar deficit, a financial crisis and a costly recession."

The US President was also refreshingly non-partisan and non-ideological in his arguments on how best to deal with those challenges. Despite the attempts of the Republicans to paint Mr Obama as a doctrinaire believer in the virtues of "big government", what matters for this particular president is plainly what works. As he put it: "My job is to solve the problem."

In this sense Mr Obama's approach echoes that of one of his predecessor, Franklin Delano Roosevelt. FDR did not come into office in 1933 with a detailed and coherent plan to haul America out of depression. But he did enter the White House with a determination to do whatever was necessary to restore confidence and achieve the economic turnaround. There were mistakes and reversals along the way, but, under his leadership, the US, eventually, recovered.

The American people and the wider world need the present White House incumbent to be a leader of similar open-mindedness and tenacity. On the basis of this week's Congress speech, there are still grounds for audacious hope.

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