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Friday, October 19, 2018

Obama Shows His Gambling Streak in Debt-Ceiling Deal

Among the many misconceptions about Barack Obama is that he is cautious. In fact, it is hard to think of a modern president in recent times who has been more willing to take big risks, not because he is reckless, but because he is willing to suffer potential short-term setbacks to achieve a desired long-term result. It is in that context that the much-maligned debt-ceiling compromise must be understood.

This sort of risk-taking goes beyond making policy choices, whose success or failure will always be debated, and can’t be known for years. What I am talking about are presidential decisions that can be demonstrably shown to be right or wrong in a relatively short window, with serious repercussions. That sort of risk-taking by presidents is fairly rare, and yet Obama hasn’t hesitated to take such gambles.

One example early in his administration was his choice to “bail out” the automobile industry. There were many ways in which that could have gone wrong: Chrysler Group LLC and General Motors Co. (GM) could have failed; management changes and bankruptcy filings that the administration insisted upon could have exacerbated problems; good money could have been thrown after bad.

The safe course was the one that President George W. Bush followed: pumping in just enough money to be able to say he had made an effort, and letting the chips fall where they may. But Obama took action by investing substantial funds, demanding important management and strategic changes, requiring bankruptcy filings, and painfully shrinking auto-dealer networks. All were risky steps that could have quickly unraveled.

Two years later, that choice is paying off: Car sales have risen, auto-industry employment is up, taxpayers are getting their money back, and U.S. cars are getting higher consumer ratings than ever.