Too little, too late

President Obama said recently that he would rather be a great one-term president than a mediocre two-year term president. Hogwash! With his State of the Union address, the president made a desperate attempt to preserve his chances for reelection at all cost. The humiliating defeats of his candidates in New Jersey, Virginia, and Massachusetts have made it clear that the honeymoon is over. The independent voter is waking up with a bad hangover and starting to question the wisdom of his 2008 decision. And Obama is demonstrating willingness to compromise previously professed principles in order to hold on to an estranged and rather inconvenient but very useful partner.

In mid January I attended a seminar at the New York Federal Reserve Bank. The speakers were honest to admit that they were trying to steer the economy in uncharted waters. Had they updated their economic models and kept their eyes on long-term inflation targets, they could have tightened the credit markets and ended the speculative bubble before it had affected the global economy. Now, fears of inflation clash with depression warnings from economists like Paul Krugman. The specter of a "Double Dip" a la 1937 hangs over our central bankers and they cannot make up their minds on the right moment and rate of withdrawal from the stimulus. The president, however, may be running out of time.

Since the beginning of the financial crisis I have maintained that a return to the Keynesian philosophy of "spending our way out of it," while bringing temporary relief, does nothing to solve our structural problems. Now Obama is trying on for size the mantle of a fiscal conservative. Has he learned his lesson in just one year? Should I open the champagne bottle and put my dancing shoes on? I'd like to give the president the benefit of the doubt, but I understand the logic of politics too well to be that naïve. The simple truth is that at the current stage of his presidency, it is politically expedient for Obama to appeal to the center-right even it means alienating his former "progressive" comrades.

P.S. But if Obama had been sincere in his first statement, he has nothing to fear from the 2012 election; regardless of achievements, guys with an excess of charisma don't get labeled "mediocre."