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Obama must rethink health care

  • Obama gives State of the Union address Wednesday under pressure to change direction
  • Fareed Zakaria says Obama doesn't need to reinvent his administration
  • He says he needs to rethink health care and focus much more on the economy and jobs
  • He says health reform should largely focus on restraining out-of-control costs

Editor's note: Fareed Zakaria is an author and foreign affairs analyst who hosts "Fareed Zakaria GPS" on CNN U.S. on Sundays at 1 and 5 p.m. ET and CNN International at 2 p.m. and 10 p.m. CET / 5 p.m. Abu Dhabi / 9 p.m. HK.

President Obama can get his administration back on track by rethinking health care reform and putting his focus squarely on boosting the economy, says analyst Fareed Zakaria.

As the president prepares to deliver his first State of the Union address Wednesday night, many pundits are urging him to relaunch his presidency with a sharp change in direction. But Zakaria says the changes don't need to be dramatic.

Zakaria told CNN, "The big problem is that there is a sense that he lost focus on the economy and focused too much on health care. He focused too much on the spending side of the economy, that's to say, the pork in the stimulus bill, the expanded coverage in health care, and not enough on being a careful steward of the public's money.

"I think if he gets back to the original image he had in January [2009], February, March, I think he'll do fine. I don't think he needs some grand reinvention, it's just a question of having strayed from the original set of positions that the public admired him for."

Zakaria, author and host of CNN's "Fareed Zakaria: GPS," spoke to CNN Tuesday.

CNN: A year ago, Barack Obama was sworn in as president and most experts saw it as a watershed moment that would change the political atmosphere in Washington and the direction of policy. What happened?

Fareed Zakaria: I think to be honest, we would have to say we all perhaps overinterpreted Obama's victory in the sense that we saw it as a sign of an ideological shift.

It wasn't just because of Obama and how well he did in the election. It was also because of the dramatic economic crisis that befell the entire world. And it made people feel that there was now a sense that there was a greater tolerance for a larger role for government.

What has become clear is that the crisis was real and it allowed for a very dramatic expansion of the government in its emergency role. ... Obama's election was a sign of frustration with Bush and the policies of the Bush years, but it may not have been a sign of an ideological realignment. ...

CNN iReport: Your thoughts on the State of the Union

CNN: Today Obama is still personally admired by most Americans but polls show they have doubts about his policies. In the latest CNN/Opinion Research poll, 60 percent say Obama has paid more attention to the problems of financial institutions than he has to the problems of the middle class. Is that a key concern for Obama? And what can he do about it?

Zakaria: The unfortunate part here is that Obama's policies have been, broadly speaking, correct, and the public's perception is, broadly speaking, wrong. ... What the Obama administration did in confronting a very deep financial crisis is that they stabilized the financial system and rescued it.

That allowed the financial system to bounce back with remarkable speed ... which has had positive economic effects. There is credit flowing through the economy.

CNN: He's going to be proposing a freeze on the discretionary spending of most federal agencies, but the overall impact of the freeze on the budget deficit isn't expected to be large. Is this a good move?

Zakaria: It's symbolic more than substantive, because most of the big-ticket items are exempt, which Washington always does when it has spending freezes. It's an attempt to rebuild his image and his credibility, given what has happened with both the stimulus and health care. ...

And it will probably have some impact, but it's worth noting that the only way to have any serious effect on the long-term budget problem is to tackle spending on entitlements, particularly health care.

CNN: On health care, in the CNN poll, 48 percent of Americans say Congress should work on a new bill, while only 30 percent say the current legislation should be passed. What should Obama do?

Zakaria: I don't always advocate that politicians should listen to polls, but I think this is one that he should listen to. After 29 speeches on health care and after a long drawn-out public debate, only 30 percent of the country is in favor of the plan that is currently in Congress.

I think this is the single most important reason Obama's popularity has faded, why the Scott Brown victory took place, why there is such public dissatisfaction -- because I think Obama focused too quickly on health care, rather than spending more time on the economy and on jobs; and second, he subcontracted the problem to Congress, in a way which allowed the process to get entirely out of his control.

And what you ended up with was a plan that had very little in the way of real reform and cost controls and focused instead on expansion.

What it says to most Americans is we have a dysfunctional health care system with out-of-control costs, and by the way, we're going to add 45 million Americans to the rolls -- and that proved to be a message that was not very popular.

I think Obama needs to rethink the entire approach to health care, and start with a fundamentally different approach which tries genuine reform, and tries genuine bipartisanship that would embrace certain Republican ideas relating to cost controls. ... There's a chance that he would get a few Republican votes.

There's also a greater chance that he would convince a lot of independents in the country that this was a genuine reform effort that was genuinely bipartisan.

CNN: Given that the U.S. has double-digit unemployment, is this the time to be a careful steward of the public's money, or is this a time to spend freely to stimulate the economy?

Zakaria: I think you can make the case for a modest second stimulus. I think it's worth pointing out that $400 billion of the original stimulus has not been spent. ... Some more focused and less pork-laden job creation programs, perhaps tax credits, would be a good idea. ...

In the short term, you need to get the economy moving again, to create demand. In the long run, I do think there is a genuine concern around the world about America's finances. We are going to be running a larger deficit than we have since World War II.

Growth is the magic elixir that makes budget deficits go away. I do think a focus on growth is appropriate But it has to be done in a larger budgetary context.

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