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Down Under

How Australia's Obama-like prime minister has managed to save his country.

SYDNEY, Australia--The hardest slogan to sell in politics is: "Things could have been a whole lot worse." No wonder President Obama is having trouble defending his stimulus plan.

If governments around the world, including our own, had not acted aggressively--and had not spent piles of money--a very bad economic situation would have become a cataclysm.

But because the cataclysm was avoided, this is an invisible achievement. Many whose bacon was saved, particularly in the banking and corporate sectors, do not want to admit how important the actions of government were. Anti-government ideologues try to pretend that no serious intervention was required.

So everyone goes back to complaining about high deficits and the shortcomings of government as if nothing had happened. This is now creating problems for Obama on health care.

One person who empathizes with our president is Australian Prime Minister Kevin Rudd. He argues that if the governments of the world's biggest economies had not injected "$5 trillion plus into the real economy" in stimulus and had not taken other coordinated actions, we would have relived "the tawdry tale of the 1930s."

"In March of this year, the world was staring down the barrel of a Great Depression," Rudd said in an interview here last week. "This is a case study in bringing the world back from the brink, and it was American leadership from President Obama that was the key to that."

Rudd is Obama's political kinsman not only because they are philosophically in tune with each other, but also because the 51-year-old Australian's election victory in November 2007 foreshadowed Obama's own. The leader of the center-left Labor Party, Rudd ousted one of George W. Bush's best friends, conservative Prime Minister John Howard, by riding the same theme of change and the same generational tide that carried in his American friend.

Yet if Rudd praises Obama, he also praises Bush for acting swiftly when the global economy began coming apart in the fall of 2008. As Rudd put it in a speech to the Australian-American Leadership Dialogue, Bush acted in dire circumstances, at a moment when "global financial flows ground to a virtual halt."

In fact, for all the flaws in the execution of the bank bailout program, Bush's willingness last fall to put the urgent need for massive action over his own ideological proclivities is likely to go down as the most enduringly constructive act of his presidency.

Rudd argues that in the last months of Bush's administration and the first months of Obama's, every economic indicator pointed to "catastrophe." He speaks of banks running out of money, developers whose credit was frozen and signs of panic among individual savers.

What prevented a repeat of the 1930s, he says, is that the world's governments actually learned from that era, particularly from "the deliberations on the Great Depression by John Maynard Keynes." The British economist stressed the imperative of government action at moments when the private economy falters.

If anything, Rudd has it easier than Obama. Australia's unemployment rate in July was 5.8 percent, compared with 9.4 percent in the United States. Technically, at least, Australia has so far avoided recession.

And Rudd's conservative predecessor, unlike Obama's, was fiscally responsible. Thus, Australian Treasurer Wayne Swan points out that even after his government's large stimulus spending, the country's budget deficit will peak at 4.9 percent of GDP in 2009-10. In 2009, Swan noted, the U.S. budget deficit will hit 13.6 percent of GDP.

Then there is the biggest difference in the national political situations: Australia already has a national health system. This means that Rudd has been able to concentrate on the economy and cap-and-trade legislation while Obama has found himself battling in the health care trenches.

But Swan has some words of encouragement for Obama. The fight for government-led universal health coverage in Australia during the 1970s and '80s, Swan said in an interview, was "every bit as tough as the debate in the United States." He added: "Thirty years on, we've got this system which, whatever its flaws, is one of the most effective in the world."

In other words, once it's in place, government-guaranteed universal health coverage becomes an unassailable social gain. Obama's chances of securing such a victory will improve if he can overcome reflexive anti-government propaganda that ignores how governments kept the world economy from falling off the cliff. In Rudd, he has a willing witness.

E.J. Dionne, Jr. is the author of the recently published Souled Out: Reclaiming Faith and Politics After the Religious Right. He is a Washington Post columnist, a senior fellow at the Brookings Institution, and a professor at Georgetown University.

© 2009, Washington Post Writers Group