Obama and Team in Commanding Denial of Reality

I along with millions of Americans, and no doubt many more millions of people from all over the world, watched a poised and polished President Obama give a press conference last night that had a bit of a different tone than his previous press conferences.

There was a much harder tone to the questions as the reporters decided to play a little hardball. The Obama team’s plan to reverse the economic decline is beginning to bring about questions about the competence of the President’s team at an early date in the Obama Presidency. It looks like the administration’s honeymoon will not last even the traditional 100 days.

Most of the press conference time was spent on domestic issues, as one might expect with the economy still in a tailspin. Many of the reporters, as well as many congressmen and Joe Sixpacks, are beginning to be troubled by the trillions of dollars in deficits that the Obama budget will surely bring. Unfortunately Obama’s assurance that the federal budget deficit will be cut in half within five years does not ring as at all possible, only the hollow assurance of yet another Washington politician. This lack of belief was evident in the questioning. President Obama must be careful. His credibility is on the line.

President Obama does have a tremendous communication challenge. Either he and his team are in a commanding denial of reality or they feel, perhaps rightly so, that Americas are not yet prepared to accept the truth. Has President Obama fathomed the awful truth yet or is he unable for various reasons unable or unwilling to speak the truth to the America people? I have no way of knowing.

I can only surmise that Obama, being a savvy, thoughtful fellow, has some idea that America can not return to the go go growth oriented full speed ahead, widen more roads, build another subdivision, go shopping at the malls until you drop, buy another SUV, adult Disneyland that somehow became the American dream. In a world of dwindling resources, confronted by climate change, and peak oil, those days are over for good.

But how can an American President stand before the nation and say that the old way of living, the American dream way, is over, never to return? To do so would be political suicide. He would immediately be held responsible for the collapse of the stock market and the dollar.

Yet, no matter how much money the government throws at the banks, the automotive industry, financial institutions like AIG, and public works projects, the economy will sink further into depression, probably stay there for years, and the unpleasant truth will come out. The old way of life in America is over. While the economy eventually will in a way recover, it will not at all be the happy shopping, easy credit, economy that is now in such a funk. It will be an economy where people will have to work much harder at meaningful tasks, like growing food, just to survive.

Obama at the moment is more like an economic cheerleader than a realist. Yes we can, that is until we can’t, isn’t yet the message. At this stage he probably has no choice. I doubt if Americans can handle the truth. What is worrying, however, is that his recovery programs are all geared to reinstating the type of economy that was and is no more. He and his team are trying very hard to sustain the unsustainable.

This will be a further drain on scarce resources. The government’s need to borrow huge amounts of money as financing for the expanded spending programs, to service debt on the tremendous trillions of dollars already borrowed, along with the Fed’s new venture into monetizing the debt risks a rapid trashing of the dollar. A sharply lower dollar and the loss of the dollar as a reserve currency will take the “yes we can” economy pretty quickly into third world misery status.

So far it appears that Obama and his team remain in a commanding denial of reality. The toughest speech of Obama’s career will come when he has to admit the truth and communicate that truth to the American public. The truth is that retrenchment, downsizing, and sacrifices, will be required, not uncontrolled growth. This is a truth that any President, including President Obama, may have a hard time accepting, much less being forthright in going about the business of shaping appropriate policies for a downsized America. Probably the disaster will have to be far advanced and beyond control before reality even begins to set in. Then, of course, it will be too late to prevent the worse.

Rapid change is certainly coming. Unfortunately it will not be what most Americans or their leaders expect. A commanding denial of reality will likely persist even as we are all firmly in its grasp.