US President Barack Obama is shepherding the embattled US economy out of the woods in his first year in office, some experts say.

Others, however, paint the president's handling of the economy as setting the stage for future economic woes.

Obama inherited a recession that began long before he took office, the result of reckless lending practices and mortgage-backed securities that fed a massive bubble that popped and sent the economy reeling.

In response, the government implemented a number of controversial spending programs in a bid to jolt the economy back to life, the biggest being a US$787 billion stimulus program.

And therein lies the conundrum -- much of the government's spending, while credited with preventing the economic crisis from spiraling out of control, is contributing to a massive deficit that could lead to inflation and tax hikes years down the road, critics say.

Andy Busch, a policy strategist at BMO Capital Markets, said that while government spending initiatives helped stabilize the economy, they also contributed to a budget deficit that by 2019 will cost US$800 billion a year in interest alone.

"Congress, along with the president, is spending like drunken sailors," he said.

"In the short term, Obama helped stabilize things," he said. "But in the long term he created a fiscal tsunami that will present a financial crisis in the next several years if it is not dealt with."

Years down the road, US debt could spark a double whammy of higher taxes and inflation that could deal a serious blow to Americans' earnings, he said, although other experts say the debt is manageable in a stable economy such as the United States.

Many of Obama's decisions thus far stem from a particular worldview that holds the government as sacrosanct, Busch added.

"We have a group of politicians that believe that government is the answer, as opposed to what (former US President) Reagan said, that government is the problem," he said.

But that sharply contrasts with the views of those who believe that Obama has pulled through in a time of crisis.

"He inherited a disaster and the basic policy response was very reasonable," said Barry Bosworth, a former presidential advisor and senior fellow at the Brookings Institution.

"The only criticism is that it took too long to get going," he said, noting that it took Congress six months to enact the measure.

And while part of that was due to the transition to a new administration, most was because of congressional delay, he said.

"But now the delays seem to be over and so far (Obama) has done pretty a good job and it's hard to say how it could have been done better," he said.

Obama also deserves credit for supporting the Federal Reserve's monetary policy. But on a sour note, the Troubled Asset Relief Program (TARP) -- an initiative to strengthen the U.S. financial sector by purchasing assets and equity -- has not gone well, he said. And while the initiative began under the Bush administration, Obama deserves part of the blame, he said.

The Treasury Department, which administers TARP, has been criticized as being understaffed and lacking transparency on certain issues, such as how officials decide on which banks qualify for aid.

Douglas Elliott, a fellow at Brookings and a 20-year Wall Street veteran, praised the positive market response to what he billed as Obama's successful handing of the financial crisis.

Once investors realized the government would be there to ensure stability, it made a significant difference in their view of the financial system, he said.

"Financial markets have done very well since then, which has been good for restoring the economy as a whole," he said.

Philip Levy, resident scholar at the American Enterprise Institute and a former member of the secretary of state's policy planning staff, credits Obama for handling the issue of Chinese currency with caution. Obama also deserves praise for being cooperative at the G20 conference and restoring a degree of confidence in the worst economy since World War II.

"That is not to be scoffed at," Levy said of the president's achievements.

Still, agenda items such as health care reform and cap and trade -- a plan in the works to reduce harmful greenhouse gases by requiring companies to buy permits to pollute the atmosphere -- introduced much uncertainty at a time when the economy was already on unsure footing, he said.

In addition, the administration was also misguided in its bailouts of firms such as General Motors and Chrysler, which smacked of too much government interference in the private sector, he said.

On trade, the president's actions have not matched his words, as he has taken what some see as a protectionist stance on issues such as Chinese tire imports, slapping on a three-year tariff in September, Levy said.

On health care, the administration has engaged in "creative accounting" in its push for what could amount to hugely expensive reforms, Levy said. Proponents, however, said the current system is financially unsustainable and that it would be more expensive not to overhaul it.

For 2010, Obama's Christmas stocking will remain stuffed with challenges. While the economy continues to claw itself out of the recession, job openings are expected to grow at a snail's pace. The recession may technically be coming to a halt, but it may not feel that way to droves of jobless Americans.

Some analysts believe the economy is headed for a double dip recession -- a second plunge after a short rebound in 2010, although the fall may not be as severe as last year's economic nose dive. That could cause more headaches for the Obama administration.

And with the looming 2010 Congressional elections and much unfinished business this year -- such as pending trade agreements, health care and financial regulation -- Obama's plate will be full next year.

(Xinhua News Agency December 18, 2009)