Plan A was to have the economy humming by now and see Obama cruise to re-election on the success of Keynesian counter-cyclical stimulus. Hope and change would have proven itself superior to the failed policies of the Republican past and the country would eagerly follow Obama into yet more “transformational” policies in his second term.

Well, that didn’t work. Politico reported last August that the Obama campaign looked at the economic projections coming out of the Federal agencies, saw his approval ratings (particularly in the area of his economic stewardship), and decided it was time for a Plan B:

The dramatic and unabashedly negative turn is the product of political reality. Obama remains personally popular, but pluralities in recent polling disapprove of his handling of his job, and Americans fear the country is on the wrong track. His aides are increasingly resigned to running for reelection in a glum nation. And so the candidate who ran on “hope” in 2008 has little choice four years later but to run a slashing, personal campaign aimed at disqualifying his likeliest opponent.

“In a move that will make some Democrats shudder, Obama’s high command has even studied former President George W. Bush’s 2004 takedown of Sen. John Kerry, a senior campaign adviser told POLITICO, for clues on how a president with middling approval ratings can defeat a challenger.

“’Unless things change and Obama can run on accomplishments, he will have to kill Romney,’ said a prominent Democratic strategist aligned with the White House.”

In the world of Washington politics, this is known as the sin of committing truth. The campaign immediately disavowed the comment, but, of course, everyone on both sides of the political divide knew Obama had been on Plan B since the Democratic Senate refused to take up any of the multiple fiscal reform bills passed by the newly elected Republican House during 2011 after postponing any budget action until 2011 when the Dems had held both houses of Congress. Indeed, as the volatile Republican primary season has continued to move one new front-runner after another ahead of Romney, Plan B has broadened from “kill Romney” to whack-a-mole.

I don’t know whether Plan B will work for its intended purpose of insuring Obama’s re-election if the economy keeps limping along without going back to above-average growth before next summer (see Plan A, failure of). It might, but whatever mole survives the whacking and actually gets the Republican nomination will have thereby been proven to have a much harder head than it now appears. The Obama-Hillary contest in 2008 made Obama a much stronger candidate for the general election.

But Plan B is not really the subject of this post. We will have many months ahead to debate that issue. My subject is, instead, what happens if the economy gets worse? In fact, what happens if the economy gets bad beyond the point where even demonizing the opposition can get Obama re-elected? In other words, what will be Plan C?

And there are real downside risks coming from overseas. Stock, bond, and currency markets have been gyrating for months over the economies of the European nations. I’m not aware of any credible economist forecasting a Eurozone boom anytime soon; the dispute is whether the Europeans can “muddle through” with a mere new (if lengthy) recession in the core countries — which could slow growth in the United States — or whether the differences between the northern and southern nations would only be resolved much more messily — with much more severe impacts on world-wide growth prospects.

The ability for Europe to muddle through economically is closely tied to the level of stability in North Africa and the Middle East. NATO intervention in Libya earlier this year was “led from the front” by Britain and France because Europe gets about 3/4th of the Libyan oil exports, and Europe could not afford the impacts of spending more money for the same amount of oil.

The economic coupling goes both ways. The Egyptian revolution is unlikely to stabilize unless a new government can provide bread as well as “freedom”, because it was the inequality and perception of privilege that sparked revolt.

As the Washington Post reported, the prospect of shortages of subsidized wheat for the populace looms in the spring of 2012 because government money reserves are dwindling. The platform of the more extreme Islamists being elected discourages interest-earning loans as usury, and opposes alcohol even at tourist-catering sites. That doesn’t exactly encourage Westerners to invest or visit until the rules are better defined.

However, the center of the vortex of instability in the Middle East remains in Syria, as I noted in an earlier post a mere seventy days ago. In that seventy days, the number of dead in demonstrations against the Assad government has increased to over 5000 and a rebel army has appeared from defectors of the Syrian military, with support from outside becoming less covert all the time (certainly in the eyes of the Syrian, Russian, and Iranian governments). We’ve seen Syrian deployments of anti-air and anti-ship missiles (top picture) to face US naval forces in the Eastern Med, movement of armored forces to reinforce both sides of the Syrian borders with Jordan, Israel, and Turkey, and a show-of-support visit to Syria from Russia’s only aircraft carrier group, heavy with command and control technology that could aid Syrian air defenses against any NATO and/or Turkish “humanitarian” intervention.

At the same time, there have been increasing diplomatic efforts to defuse the crisis, notably through an Arab League proposal to send international observers. The simultaneous increase in the pace and scope of military and diplomatic activity usually means that a crisis is nearing a tipping point in the race between stability and instability. Like a bulge in the side of a volcano, it signals that an eruption is close at hand unless a safe release can be found for the forces causing the strain.

If all parties wanted a diplomatic outcome, one would be possible. However, previous events in Egypt and Libya are acting to reinforce the notion that diplomatic outcomes short of victory can be mere stepping stones to a no-prisoners-taken, life-or-death defeat. Trust can become a less preferential course of action than escalation, and that is still the situation that seems to be prevailing in Syria.

Syria, in turn, is a fuse burning toward military confrontation between Iran, the Israelis, the Sunni Arabs of the Gulf States, and NATO. An explosion in Syria could quickly ignite a regional war. But even a diplomatic solution there would be coupled to a change in the regional balance of power that is already leading to strategic realignments, preliminary mobilizations, and covert military actions, as I also noted in my earlier post. The tipping point for the latter crisis, absent a Syrian explosion, is still perhaps several months away, but both sides are clearly publicizing their “red lines”.

Israel has consistently said that it will “use it before it loses it” when it comes to striking Iran’s nuclear programs before they become invulnerable. Invulnerability can be conferred by taking the programs underground or installing advanced air defense systems (such as the SS-300, which triggered a similar flurry of diplomatic maneuvers early in the Obama administration to keep Russia from delivering the already sold system to Iran). Iran is trying to do both, and is quickening its pace because of Syria.

Iran sees its need for a nuclear weapon growing as its key ally in Syria is destabilized and Sunni power grows from Egypt to Turkey. Whether out of extreme confidence or extreme fear, an overt military move against either Syria or its own nuclear program is asserted to be its red line, and closure of the Straits of Hormuz to destabilize Western economies (as well as missile war on Israeli cities and NATO bases) its threatened response.

The US increasingly seems to recognize that its own red lines are farther from being crossed than those of regional actors, and so its policy is increasingly hostage to the actions of the latter. In early December, US Defense Secretary Panetta, backed by other high Administration officials, warned Israel about the dangers of unforeseen consequences, doubtful long-term success, and dangers to the world economy of a strike on Iran. However, this past week, following Administration meetings with the Israelis and the Turks, the tone of the remarks had changed.

Panetta told CBS News in a December 20 interview:  “Despite the efforts to disrupt the Iranian nuclear program, they have reached a point where they can assemble a bomb in a year or potentially less… That’s a red line for us and that’s a red line, obviously for the Israelis. If we have to do it we will deal with it.”

US Joint Chief of Staff Chairman General Martin Dempsey followed that up with an additional interview the following Wednesday:

Speaking to CNN, Dempsey said he was concerned that the US will get drawn into conflict with Iran, and said the United States is collaborating with Israel on the Iran issue.

“My biggest worry is they will miscalculate our resolve,” Dempsey said, referring to Iran. “Any miscalculation could mean that we are drawn into conflict, and that would be a tragedy for the region and the world.”

“We are trying to establish some confidence on the part of the Israelis that we recognize their concerns and are collaborating with them on addressing them,” he continued.

I want to be very clear on the following point: Neither Barak Obama nor any high level member of his Administration or in the military want another war in the Middle East. They very much want to avoid one precisely for the reasons Leon Panetta warned about at the beginning of December. The foreseeable consequences of such a war will be mightily unpleasant for the Western nations at this point in our history even if we are on the side that “wins”.

But if Obama understands that, you understand that, and I understand that, then chances are that all of the major regional actors understand that, too, and they are taking that into account as they make their moves on the strategic chessboard. Our statements of resolve have less credibility to all parties in the region than they might have had early in Obama’s term. The Israelis have less reason to trust us, and the Iranians can, in turn, calculate that we are less able to restrain Israel. (And, remember, the Iranians still believe, with some justification, that we are fully complicit in a covert war against Syria and Iran.) So, knowing their likely moves, what is the likely US move to avoid the undesired war?

Walter Mead summarizes Obama’s dilemma:

“Our best remaining hope for peace is that the Iranians think the Americans have been bluffing and that as they realize the administration is serious they will rethink the nuclear program.  This, one presumes, is why we are hearing such strong rhetoric now.  The Obama administration is hoping that advertising its increasing readiness to use force, and putting itself in a position where it will have no choice but to follow through with its threats, will give the Iranians pause.

But the cost is clear: the tougher the rhetoric, the more the administration commits itself to follow through.  After Panetta’s interview the administration seems to be painted into a corner.  Iran will either stop its nuclear program (offering convincing proof of its actions) or the bombs are going to fall.  What happens after that, nobody knows.”

So, ironically, because the fate of the US economy is now in the hands of actors whom the US does not control, the economy can worsen beyond the point of either Plan A or Plan B to get Obama re-elected. I am reasonably certain Obama considers his own re-election vital for the future of the country, however much I may disagree with that assessment. Thus, if regional actors continue to put their own preservation first, I expect Obama to end up throwing his anti-war liberal base under the bus rather than being held responsible for an economic catastrophe by the rest of the country (Libertarians excepted). Plan C would have to be to run as the President who saved the Middle East. I would expect him to fight a Middle East war with all of the ruthlessness it takes to rise in Chicago machine politics in the first place. Given that his foreign policy poll ratings are much higher than his economic poll ratings, Plan C just might work.

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I know that war is an unpleasant topic to contemplate at a season when we want to focus on the hope of “peace on earth, good will to men” — and perhaps after thinking about what’s happening in the world today, the proper immediate response is to go read the lyrics to “I Heard the Bells on Christmas Day”.  But our Christmas tradition also includes the recognition that Herod sought the Child to destroy Him lest Herod lose his kingdom, and Herod was willing to slay thousands of innocents to hold power. Today there are still Herods (perhaps a bit in every one of us) who are willing to slay innocents to hold power. And even one Herod in the Middle East can compel necessary actions of many other kings and peoples.

Most of us don’t have political power as our primary objective. So what is our goal as we face the coming 2012? What is your plan A in light of the plans being made by political leaders here and abroad?