The state of the nation according to the Brookings Institution

The Brookings Institution

Sunday, Aug. 2, 2009 | 2 a.m.

An index of three factors

As the Obama administration completes its first six months in office, a team of Brookings scholars is tracking data for various dimensions of national and international well-being. This first “How We’re Doing” Index serves two purposes: It compares the state of the nation and the world with conditions that prevailed at about the same time in the terms of the past five presidents, and it establishes a baseline for future indexes. Our starting point is the American Constitution’s mandate that the government “provide for the common defense, promote the general welfare, and secure the blessings of liberty.” This index premiered July 26 in the Washington Post’s Sunday Opinion section, with further analysis and updates on the Brookings Institution Web site at brookings.edu/index.

The analysis

In dealing with a complex world, Obama inherited — and now owns — wars in Iraq and Afghanistan. During his first six months, the U.S. has suffered more combat casualties than in the outset of the terms of his five predecessors. The armed services also have grown considerably in cost, eating into the post-Cold War “peace dividend.” Still, there is no rival superpower; none of the major nations is at war or on the brink of war with each other; and the world as a whole is afflicted by fewer armed conflicts than in the recent past, with fewer civilian casualties.

However, the nuclear nonproliferation regime — anchored by the 1968 Non-Proliferation Treaty — is weakening. India, Pakistan and North Korea have tested the bomb; Israel is presumed to have it as well; Iran’s ambitions are one of the world’s worst kept — and most dangerous — secrets; and other countries, including U.S. allies, are reconsidering their nonnuclear status. On top of all that, “loose nukes” could end up in the hands of nonstate actors such as al-Qaida.

Peace and security depend not just on common defense but on the political and economic stability of individual countries. Conversely, abject poverty is a security challenge as well as a humanitarian one. There has been progress on that front. Despite steady growth in the world’s population, the number and percentage of desperately poor people have declined dramatically, especially in China and India. Yet the economic crisis jeopardizes that favorable trend.

Then there is the ultimate mega-threat of climate change: The concentration of greenhouse gases is creeping upward toward a level that scientists believe will cause the increase in mean temperature of the planet to trigger a perfect storm of irreversible and catastrophic consequences unless somehow checked or countered.

America’s ability to lead in addressing this daunting global agenda depends on a strong U.S. economy. Like Obama, earlier presidents were handicapped in that regard at the outset of their terms: Jimmy Carter, Ronald Reagan and Bill Clinton faced high unemployment; Carter, Reagan and Bush 41 were confronted with high inflation and interest rates; Clinton had to cope with anemic growth and a staggering debt burden; Bush 43 took office amidst a recession brought on by the bursting of the dot-com bubble.

Barack Obama can take comfort from low inflation and low interest rates. Still, his task is unprecedented. The fall-off in productive output, spending and employment is the worst — by far — since the Depression. Most experts believe the unemployment rate will continue to rise for the rest 2009. Unlike in previous recent downturns, virtually no region of the U.S. has avoided job losses. Nearly all American homeowners have experienced significant declines in the value of their homes. Public debt as a percentage of GDP has now exceeded even Reagan-era levels, because of recent years of high debt and the massive spending of the stimulus package. The prospect of future deficits looms large, as does the cost of the Federal Reserve’s “pump-priming,” which has put nearly three times as much cash into the economy as at any point in the past four decades. Paradoxically, excessive borrowing and spending caused the crisis, but that crisis has led Americans to start saving. Policymakers now believe that the best way out of the crisis is for citizens to borrow and spend again.

Confronted with such ironies, dilemmas and stresses, how does the public think its government is doing? Remarkably, so far, so good. Obama’s first six-month job approval numbers are impressive. But he should note that several predecessors also got the benefit of the doubt — for a while. Moreover, the country remains deeply polarized, and public confidence in Congress — Obama’s same-party partner in governing — is at an all-time low. Republican opponents and Democratic skeptics can be counted on to jump on evidence, real or perceived, of government waste, fraud, abuse and stupidity — from banker bonuses to pork-barrel stimulus projects to error-filled tax returns by administration nominees.

The president’s initial accomplishment has been to reestablish public trust and optimism in the U.S. For the first time in six years, there is positive turnaround in the percentage of Americans who think the country is headed in the right direction. That line-item in the index — the most subjective but among the most important — marks a turnaround that is nearly as great as what Ronald Reagan was able to effect in his first half-year. Obama’s ability to sustain that optimism and trust will depend on his ability to nudge the more objective indicators in the right direction.