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Command and control

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After two months in which an oil gusher seemed to underscore the limits of his powers, President Barack Obama spent the past week trying to reassert control over a triumvirate of forces that almost always test a new president’s authority: the military, the markets and the lobbyists.

Obama’s remarkable victories in little more than a week, nearly a year and a half into a presidency that was saddled from the start by two wars and a terrifying financial plunge, may not prove to be lasting.

His firing of Gen. Stanley A. McChrystal for what appeared to be an attitude of disrespect and disdain for the civilian chain of command does not make success in Afghanistan any more likely. The financial regulatory bill that was agreed upon in Congress on Friday reverses two decades of increasingly blind faith in the ability of financial markets to regulate themselves, but few think it will stop Wall Street’s constant effort to route around Washington in pursuit of profits.

Still, add those together with the use of raw presidential power to force BP to set up a $20 billion fund for victims of the disaster in the Gulf of Mexico, and the conclusion is unmistakable. George Bush and Dick Cheney may have left the White House, but the need for an extraordinarily strong executive lives on.

"This is a clear respite from the theme that Obama had lost control," said David Rothkopf, a former Clinton administration official who wrote the definitive history of the National Security Council, the organization that American presidents have used for 60 years to assert authority around the country and the world. "He sent a loud and clear message to the generals about who is in charge. And he has engineered a pivot-point in U.S. economic history, an end, or at least a big change, to the ‘leave it to the markets’ era."

The White House certainly has an enormous interest in portraying Obama as a president who has grown comfortable with his powers and is unafraid to exercise them. They conceded that Obama had no legal basis to force BP to create the $20 billion fund; they said he was making a moral argument, and used the jawboning power of the presidential pulpit to push the company.

One top national security aide noted to a reporter on Wednesday that the decision to oust McChrystal and replace him with Gen. David A. Petraeus was "considered, decided and executed in less than 36 hours" and sent a message that the president would not tolerate what he called "division" in the ranks of his team after he had set strategy.

And the financial regulatory bill, they argued, got stronger in the past few weeks, leading Obama to boast at the White House that it was "the toughest financial reform since the one we created in the aftermath of the Great Depression."

He can rightly claim that the bill actually got stronger as it worked its way through Congress rather than having the legislation eroded as one lobbyist after another found a way to carve exceptions. (The exception to that rule was the handling of derivatives, a business the banks get to keep, even if they have to operate under new restrictions.)

"I think we used this week or so not only for a reassertion of executive authority, but as an demonstration that, when presidential power is judiciously applied, you can get a lot done," said Rahm Emanuel, the president’s chief of staff, who argued for a more confrontational approach to BP and for McChrystal’s ouster. He described financial reform legislation as one of five pillars of "a new foundation" for the economy, after the stimulus package, the health care overhaul and the re-engineering of college aid. (The fifth, an energy bill, may prove the hardest.)

Yet Rothkopf and even some of the president’s aides caution against confusing short-term reassertion of authority with a long-term ability to shape events. Wars and markets have a curious way of taking on a momentum of their own. With his victories this week, Obama owns, even more than before, America’s future in Afghanistan and the government’s running war to rein in big market players without squashing innovation or growth.

The messy encounter with McChrystal forced Obama to reassert his faith in a strategy in Afghanistan (a troop surge, a counterinsurgency strategy that exposes American forces to significant danger, and the eventual transfer of recaptured territory to Afghan government hands) that so far has shown little signs of working. The left remains deeply apprehensive about his growing commitment to the war; the right argues that his 18-month deadline to begin withdrawing troops is a sign of absence of commitment.

When Obama declared, "I welcome debate, but I won’t tolerate division," it amounted to an unspoken acknowledgment that his national security team remained split, and never really ended the argument over whether the current approach to the war was the right one. Even without McChrystal, the argument seems bound to flare again in December, when it is up for a major review.

The financial reform bill was a different expression of presidential influence and power and a bill Obama clearly wanted in his pocket before he left Friday for Canada and his third meeting of the Group of 20 nations, the organization that has risen in power largely because of the financial crisis.

At the first G-20 in his presidency in London last year, Obama got an earful about how lax American regulation was responsible for the huge lapses in judgment and the greed that prompted the crisis. He promised changes that would directly address the causes of the 2008 collapse, but when the health care debate diverted Congress, many foreign officials said during visits to Washington that they feared the reforms would wither, just as they had in past crises.

Obama insisted on a series of consumer protections that would assure government regulation of, say, subprime mortgages even if the loans were not issued by a bank. (Countrywide Financial, one of the biggest offenders in the subprime market, was not a bank and thus not subject to the usual rules.)

He got that, but the regulatory powers do not rest with the president himself. The bill relies more on the powers of the Fed and independent boards, insulating Obama a bit from the argument that he has centered more regulatory power in the White House.

Obama must now make the argument that he is serious about enforcement and that if regulations are to work in a global economy, banks around the globe will have to adhere to the same regulations. Otherwise, evading the new American rules will pose little challenge to financial institutions that have learned long ago the art of crossing borders to take new risks.


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