Tuesday, August 3, 2010

Barack "Half Measure" Obama

Robert Reich has post in his blog that nails the problem with Obama: his initiatives have been half measures. They aren't enough to fix a problem, but they are just big enough to cause the Republicans to go crazy with cries about "socialist" Obama and make accusations that he has bankrupted the nation and that he only wants to raise taxes. Nutty stuff, but it is the big lie technique: repeat it enough, and a lot of people come to believe it.

Here's the key bit of the Reich post:
Whatever the outcome of the upcoming midterm elections, the activist phase of the Obama administration has likely come to a close. The President may have a fight on his hands even to hold on to what he’s already achieved because his legislative successes have been large enough to fuel strong opposition but not big enough to strengthen his support. The result could be disastrous for him and congressional Democrats.

Consider the stimulus package. Although it’s difficult to separate the consequences of fiscal and monetary policy, most knowledgeable observers conclude that the stimulus has had a positive effect.

Yet the official rate of unemployment remains above 9%, not including millions either too discouraged to look for work or working part-time when they’d rather have full-time jobs. Almost half of the jobless have been without work for more than six months, a level not seen since the Great Depression.

The central problem continues to be inadequate aggregate demand. The administration’s original sin was not spending enough and focusing the stimulus more directly on job creation.

In fairness, no one knew how sick the economy was in February 2009 when Congress approved the initial stimulus. Yet by late spring 2009 the White House knew the extent of the damage and should have pushed much harder for significantly more spending. Almost a third of the initial stimulus, moreover, came in the form of temporary tax cuts, which already had been proven relatively ineffective at spurring demand after President Bush tried them in 2008. And many states were engaging in reverse stimulus policies, slashing spending and increasing taxes. The administration knew its stimulus was not nearly up to the job.

Even so, the initial spending inflamed conservative critics who claimed that it unnecessarily enlarged the federal deficit. And its subsequent apparent failure to reduce unemployment has only added more fuel to the fire. This pattern—big enough to energize adversaries but not enough to tangibly benefit most people or to gain the enthusiastic support of independent voters and the Democratic base—has come to haunt almost every major initiative.

The Troubled Asset Relief Program (TARP) was a clear financial success: It brought Wall Street back from the brink of collapse and in the end will likely cost taxpayers well under $100 billion. Yet in a larger sense, TARP also failed.

The bailout of Wall Street had been sold to the American people, by the Bush and then by the Obama administrations, as a way to revive Main Street and protect homeowners and jobs. But it didn’t accomplish these broader goals. Small businesses have had difficulty getting loans. Few homeowners—according to a recent report by the special inspector general for TARP, only 340,000 of the estimated three to four million borrowers who were supposed to receive assistance—have had their mortgage terms permanently modified.

As Wall Street profits rebounded, TARP increasingly looked to many Americans like a giant political payoff. In a poll taken by Hart Associates in September 2009, more than 60% of respondents felt that “large banks” had been helped “a lot” or “a fair amount” by government economic policies, but only 13% felt that the “average working person” had been. TARP has fueled tea party anger on the right, disillusionment on the left, and cynicism on Main Street.

The recently enacted financial regulatory legislation offers another example. Although the legislation has riled Wall Street and fueled Republican opposition, it lacks many of the large-scale changes reformers were seeking. For example, it neither limits the size of big banks nor explicitly ties banker compensation to long-term performance. And despite Paul Volcker’s entreaties, many risky trades will continue to be subsidized by protections the government accords to commercial banking. In short, the financial reforms do not rule out more bank bailouts down the road—a specter critics are already exploiting.

The health-care law, too, is big enough to have unleashed fierce attacks about a “takeover” of the health-care sector. But it’s not nearly large or bold enough to assure most people truly affordable care in the future. By leaving the system in the hands of private for-profit health insurers rather than building on Social Security and Medicare, the law continues to subject most Americans to escalating costs. Yes, people with pre-existing conditions will gain coverage, and those who become seriously diseased can’t be dropped. But most Americans will have to contract with insurers that already have or will be able to gain significant market power.
Back in early 2008 I didn't believe Paul Krugman when he warned that Obama wasn't as progressive as his campaign with its "Change you can believe in" slogan appeared to promise. Well... Brad DeLong warns that Paul Krugman is one smart cookie and inevitably he is right. So I admit, Paul Krugman was right. Obama is a centrist who sits on the right of the Democratic party. His deepest impulse is to find "consensus" with the Republicans. But the Republicans are rabid and will not compromise of "join in" on anything. But they have learned that they can denature and ruin every one of Obama's initiatives by making noises about compromise and having their "voice heard" at the start of each legislative initiative. But then as the process continues they keep raising objections and end up declaring it all unsatisfactory and their "only choice" is to oppose it. In short, they have sabotaged everything. And Obama hasn't learned this lesson. He continues to think he can "reach out" to Republicans and govern. Crazy!


thomas said...


I think there comes a time when compromise makes us less than what we are. There are definitely times to relent and compromise, but a person must be true to themselves and a politician should be true to those who elected him.. As you say, he has not succeeded on either front and he has lost his people and has not won over his enemies. I think he truly desires that it would not be a war and that those people would not be referred to as enemies, but they are the ones with their weapons drawn.

RYviewpoint said...

Thomas: Yes a war, but hopefully a war of ballots and not bullets. Wars of bullets usually end with both sides much worse off than before. A war of ballots can be just as unpredictable as a real war, but the land doesn't lie devastated after a "war of ballots".

Obama needs to realize that our sports are stylized "wars" where everybody gets up afterwards, dusts themselves off, and live to fight another day. But in sports, we use blood curdling yells and revile our enemies and plot their downfall. Leaders in sports call for heroic action and strenuous effort. Somehow Obama has not realized that politics, like sports, calls for struggle and glory. Sure compromise is wonderful as a capstone where you offer a generous hand to your enemy, but compromise comes at the end, not the start of a struggle.

thomas said...

I agree with you and admit that I did not see it quite that way this morning. I keep thinking that he should have gone in more like Roosevelt with determination to fight the battle and win for the sake of the nation and the suffering citizens. He should have been willing to pull out all the stops and he went in willing to do anything to make compromise with an enemy, who is not only willing, but pulled all stops from the start.

RYviewpoint said...

Thomas: My guess is that the key difference between FDR and Obama is that FDR didn't mind being disliked. FDR came from the upper classes and had an insider's view on their corrupt ways and the extent to which they would destroy those who opposed them, so he was steeled for tough opposition. Obama came from a single mom family just barely hanging on and used lots of crumbs off the tables of the rich -- scholarships -- to get a superior education, so he is more beholden to the rich and sees them as fundamentally "good people" who are sometimes misguided.

I agree that a fair proportion of the rich have a good heart and will respond if you reach out to them, but the radical right fanatical billionaires are as hard-hearted, mean-spirited SOBs as you will ever know. They are the ones who still dance on FDR's grave and wish to rewrite history. They are the ones who rub their hands in glee as they fund Tea Party activists to carry "Obama = Socialist" signs. These are not the kind of people you "reach out to". They will bite your hand off!

thomas said...


I knew to certain extent that he wants to reach out very badly and make nice. I figured he was beholden for campaign contributions and favors. I just did not really put his path from the poor side of things into the equation, so once again I have learned something. And, it kind of hurts to take away some of my cynicism like that, but it is better to think about it this way and I can understand these reasons and not blame him so much. It doesn't take away the fact that he is fighting the battle all wrong and that he should grow a set, but it makes his approach more understandable or less evil if I don't suspect favors for favors.

RYviewpoint said...

Thomas: I've read both books that Obama has written. His first, Dreams from My Father is quite good. The second, The Audacity of Hope didn't tell me much. It was more like campaign literature. If you want to get a feel for Barack Obama, read the first book. It covers his childhood up to his early adulthood. You will get a better sense of his struggle with himself and his family roots. I found it surprising that it was so strongly focused on his missing father and so little on his mother and her family who did the heavy lifting to make his life possible. Similarly, I'm surprised by how much Obama wants to "reach out" to the Republicans while ignoring the progressives in the Democratic party who made his election possible. There's a parallel there.

thomas said...


First; thank you for the recommended reading and then I must say more about the idea of selling out those who have put their hopes and dreams into the idea of a leader who has promised change and other things.. it is like the scene in Brave Heart when Wallace sees that he and his cause has been betrayed and cannot stand any longer after the realization. That is a classic moment of acting in a movie and it is a moment that can illustrate how all of the hopeful hardworking people who got Obama elected must feel.. I am a little cynical and don't really believe that anything but money got him elected, but many worked hard and many have had high hopes in his election victory. But, whether a body voted for him or supported his campaign; he is betraying the American people by not fighting for "change we can believe in" and justice for the poor and widows and orphans and really the common man who works and struggles daily to survive in a nation that wants him and his kind to quietly disappear.

RYviewpoint said...

Thomas: I agree except for the bit "wants him and his kind to quietly disappear". I want him to recognize his errors and change his actions. It was hard enough to get him elected and he has 2 more years in office. It is never too late to stop frittering away time and do more. Also, he has done some good things. It is just that there is so much more that is needed. But he is a wonderful compared to Bush and if the US had elected McCain the economy would have probably collapsed. So Obama deserves some credit.

Enjoy the Matt Ridley book. It will pick your spirits up because it lays out a story of progress over hundreds of thousands of years for humans. Ridley knows his stuff, so it is full of solid science. The only thing I would warn you about is that Ridley is a libertarian and the son of a bank director who became a bank director at Northern Rock and made millions and millions sitting on the board. In short, he lives in a world that you and I don't live in and he takes no responsibility for being on the board when that bank went bankrupt and he doesn't accept the story of excessive risk taking and corrupt practices as the explanation of the financial crisis. So... if you ignore his politics and his social station and just read the science and history, you will be well rewarded.