In Western Europe, political commentators have been surprised by the apparent inability of President Barack Obama to implement comprehensive social policy reform, with the exception of health care legislation. Hopes that President Obama could become a new Roosevelt have been disappointed, precisely at a time when the ‘Great Recession’ (2007–09) has laid bare the challenge of economic insecurity and poverty in contemporary America. Paradoxically, it is the Presidency's incapacity to address this challenge that partially explains the Democrats' crushing electoral defeat in the mid-term congressional elections in November 2010.
This article explains this apparent political paradox in four stages. First, it defines the American social contract – the dream of social mobility through hard work. Second, it shows how this dream has been severely tested by the rise of economic insecurity since the late 1970s and finally the Great Recession. Third, it analyses the social policy responses to the recession, namely the American Recovery Act. To conclude, the comparative timidity of the Obama administration's response is explained by a series of circumstantial and institutional constraints that limit the capacity of the Presidency to implement comprehensive social reform.