Obama Progress Report / Year 2, Q3

The Republicans are going to control the House even if Nancy Pelosi remains as Speaker. How is that, you ask? Even if the House is saved, it will be by a margin large enough for the Blue Dogs to form a House equivalent of the Senate “gangs” and advance the Republican agenda. They’ll say, hey, look, we lost this last election! America is a center-right nation! Don’t you read Newsweek? Plus, we’re Democrats! We have to cower in fear.

Not so the Senate. In fact, we may see the Senate get revenge in the next Congress as the seat of some really good legislation because they know it probably won’t go anywhere in the House, the reverse of the current Congress. That’s assuming there really are 50 Democrats. And by 50, I do not include Joe Lieberman and Ben Nelson, whom I believe will flip if the opportunity presents itself. That’s looking like a strong possibility at this point.

What does this have to do with Obama? We’ll see what kind of progressive he really is, if he is one. Since he was elected, he has had the excuse of needing to get things past 60 senators. Now that he has legislated so well, it’s time for him to make statements.

Of course the GOP House won’t pass a carbon tax or a cut to military spending. What’s great is, they’ll pay the price for it not being enacted without the President being susceptible to all of the process stories that go with laws actually going into effect. That’s of course, if Obama tries. If he doesn’t, then, well, we’ll know what’s going to happen.

I still think the odds are better than not that Obama will get reelected, especially after folks get a dose of the current nutty GOP and especially since it seems like it will be very hard to stop Sarah Palin from being the nominee. But the question will be, will we be excited to return him, or will we be doing so just because we’re scared to death of the alternative?

Education: B- (B-)

Asking teachers to accept the changes that come with Race to the Top and other programs like it is one thing. But leaving them to flag in the wind is another. Obama needs to come to the defense of this core constituency soon. It’s a lot easier to complain about teacher quality when teachers aren’t underpaid. I have trouble finding a good gardener, too, but it doesn’t shock me. That’s not to say there are so many bad teachers. I just don’t understand why they aren’t expected to be bad though.

Environment: C- (D)

I heard another rumor that the EPA is going to do something about carbon. But pretending that the oil spill (remember that) is all better now and continuing to ignore this issue is stupid.

Foreign Policy: C- (C)

I hope you know what you’re doing with Israel. It seems to me that neither party really wants to make a deal, though Israel always gets closer, but until there’s a different governing coalition there, it doesn’t look good. Every new president is always “inexperienced” but they’re still going to throw rocks at you over this if it doesn’t work. And why are we in Afghanistan still? I think I know why, but does anyone else?

Social Issues: B- (A)

Bungling the DADT and DOMA appeals right before the election are hurting you with a key constituency, one that didn’t trust you much to begin with.

Economy: C

I can’t believe the fight on the “Bush” tax cuts was given up. I can’t believe that they’re going to continue even though I know they are. This is one of those things I hope will change after things become more adversarial with Congress. If they are going to extend the cuts, make them pay the price.

Overall: C (B)

I know there’s an election, but do better.

Moral Hazard

Economists love to talk about the concept of moral hazard. It’s why you have a co-payment on your doctor’s visit, even if you have really good insurance. It’s so that people don’t use something just because it’s free when they don’t need it. It’s the crux of all of the angry arguments against the welfare state.

But in terms of sheer scale, no one has abused moral hazard more than the same banksters who use it as a bludgeon against the middle class. Literally trillions of dollars have been vacuumed out of middle class retirements, property values, and investments to make profits for the elite. Meanwhile, the utter lack of inflation lets those hordes of cash retain their value.

But there’s more to it than that. It’s not enough that the richest are the largest consumer of welfare by several orders of magnitude. They are then able to turn around and use the general bad luck of the middle class to justify all sorts of further self-enrichment.

For example, we hardly even question mass layoffs in this country anymore. Mostly, it’s seen as a shrewd move by investors to keep the corporation’s stock price high. It’s never even dreamed of that the investors’ welfare is less important than the workers’.

Or, tax cuts. Very low tax rates for extreme amounts of wealth are passed off as a form of stimulus. Yet the fact that (first) most of these folks pay way less than their bracket suggests, and, there will be zero impact on their quality of life if their taxes were 10 or even 25% higher is ignored.

This same class that has vacuumed trillions of dollars out of the middle class through financial scandal after financial scandal going back 30 years then matter-of-factly announces that the government will have to “tighten its belt” because there’s not enough money. Suddenly, budgets must be balanced. Cuts must be made. But, since the economy is in the shitter, we can’t raise taxes!

In short, the same people who ripped us off and have all the money are telling us there isn’t any left to fund things like police, schools, and firefighters.

The same people who ripped us off and have all the money are telling us they need an extra 5′ of length on their next yacht more than your neighbors need a job.

I don’t have any particular problem in general with balanced budgets. When interest rates are low, it makes sense to borrow to expand, just like any business would do (because the price of money is so cheap). When there is a recession, it makes sense to borrow to prevent misery. Otherwise, I suppose, there’s no need to needlessly run a deficit. But both of those conditions obtain right now. So, even under a more classical economic theory, there’s no excuse right now.

The truth is, we have bailed out the rich so many times, they see it as an entitlement now. The moral hazard concept has been proved. By them.

TARP II: The Empire Strikes Back

Lots of talk today about the bankster’s failure to comply with basic contract and property law when they skimmed a few trillion dollars of wealth out of the middle class may require another bailout.

Politically, this is something that Democrats of the early 20th century would have benefitted from, but this kind of bank-friendly pseudo-working class Democrat that we have today will not only suffer from, but could face disaster over.

Sure, a lot of this is Bush’s fault. But Obama refused to nationalize the banks because we aren’t Sweden. You see, Democrats can’t nationalize things. Thank God he did that! Otherwise he might have gotten called a socialist!

And leaving the men who saved the world in Geithner and Bernanke in the reins, the promised pragmatic solutions. And so many people have told us that TARP was a success. Sure. It saved the banks from collapse. That time. And it didn’t end up costing that much. People who oppose it almost all would have been even more upset at the opposite consequences, which almost surely would have result in more “big government” not less.

But the luke-warm financial sector reform that just passed and TARP apparently aren’t good enough to fix the Bush era feeding frenzy. So, all of that talk is now compromised depending on what develops.

The odds are there will be another bailout that Obama has to “ram through” that Republicans will oppose—in power or not—that lets the banksters keep their bonuses and suffer no pain, just like TARP.  Then they’ll all get mad that Obama wants something minimal in return and whine about regulations and support the Republicans anyway. Oh, and Larry Summers will make sure that any Democrat that speaks up for normal people gets labeled a crackpot or has to go Independent like Bernie Sanders.

But the solution is clearly to nationalize the banks until they are no longer a systematic threat to the system. And, as I suggested almost 2 years ago, a new form of bankruptcy that helps people stay in their houses without destroying their credit. Is that fair? No, it’s not fair. But neither is the continued fat-hog-cutting the banksters are doing. It’s time for “not fair” to benefit someone else and do so in a way that helps shore up basic economic security and demand.

Also, this could have consequences that would affect 2012. The Republicans will make sure of that. Good thing President Snowe made sure that the Very Serious People got their way and kept the stimulus so small!

These people are insane, stupid, and powerful.