Sunday, April 29, 2012

The Obama Counter Factual

As the 2012 campaign gets started, some ink will be spilled about the President's record and progressives and liberals alike will squawk about the opportunities missed by the Obama Administration, particularly in the first two years of his term in office.  This is not a new phenomenon; indeed, way back in August 2010, Obama's then-Press Secretary Robert Gibbs bemoaned the "professional left" for being unsatisfied with the President's record. The general retort to any carping about the first two years of Obama's presidency focuses on some combination of Republican intransigence and the difficult situation the President inherited in seeking to give him a free pass for taking half, and more often, quarter, loaves when the times demanded more aggressive action.  

While there is some merit to this argument, it gives the President and his team more of a free pass than they deserve.  As reporting has leaked out and the discussions around the three major issues of the early part of the Obama presidency come into sharper relief, it is clear that when it came to economic recovery, health care and financial reform, the Administration staked out weak positions from which they quickly came off of in the interest of finding political compromise instead of moving aggressively with popular positions for fear of being on the receiving end of Republican fear mongering.  Unfortunately for the President, and more so "average" Americans who have suffered because of these bad decisions, the President was going to be on the receiving end of scathing attacks  by Republicans regardless of what he did; however, instead of doing what was right and needed, he opted for watered down bills that are already being attacked in court, in administrative agencies and are at risk of being defunded by Republicans in Congress.

Health Care.  Considering that the President's signature accomplishment is 5 conservative votes in the Supreme Court away from being struck down, you would think he passed a law that creates a single payer program or at least offered people a so-called "public option,"  what with all the carrying on about "socialized medicine" and what not. Of course, you would be wrong.  Instead, a Democratic President and his Democratic allies in Congress (not one Republican in the House or Senate voted for the Affordable Care Act) enacted a law to give health insurance companies 30 million new customers - and not voluntary customers, mandatory customers.  For that, companies like United Health and Aetna should be sending bouquets of thanks to the President.  

The President made a strategic decision to not replicate what President Clinton did - hand a bill to Congress fully baked and refuse to negotiate.  Instead, Obama reasoned that allowing Congress to direct the legislative process would result in greater ownership of the final bill.  Obama failed to appreciate two things: (1) the failure of Clinton's initiative was as much in the packaging as it was in the actual plan.  Had Clinton handed Congress a simpler plan less open to nit picking, the outcome may have been much different; and (2) while extending an olive branch to Congress in allowing it to take the lead in shaping the bill, at critical points along the way, the President failed to articulate a clear vision of what the bill should look like - which resulted in exactly the kind of "sausage making" that ordinary Americans deride.  

In the meantime, he conceded two of his biggest bargaining points before serious discussion of the bill started.  Although language was adopted that would have allowed the bill to be passed in the Senate through a process called "reconciliation," which skirts the filibuster, Obama stated early on that he would not use it (even though he eventually did) and second, the framing of the bill in the Senate never seriously maintained the "public option" even though studies show that the health plans "run" by the government - Medicare, Medicaid and VA - have far lower overhead costs than the private sector.  Moreover, ideas like allowing people nearing retirement age to "buy into" Medicare could have gone a long way to (ironically) mollifying health insurers who don't like having older people on their plans anyway because they are (generally) at greater risk of filing insurance claims and would have allowed for some of the cost containment reforms Obama initially pitched (but quickly jettisoned) to be attempted. 

Instead, the Affordable Care Act got bogged down in a serious legislative morass, was overly complicated and subject to ridicule for things like the so-called "Cornhusker Kickback" - a "pay off" to Nebraska Senator Ben Nelson that would have ensured his state received greater (and longer) Medicaid reimbursement from the federal government.  Although that provision was ultimately excised, the overall impression of the bill was highly negative, aided and abetted by the lockstep opposition of Republicans, hyperactive town hall events and the right wing smear machine, that churned out bogus claims about "death panels" and other foolishness. 

While Vice President Biden rightly called passage of the ACA, a "big fucking deal," the final bill was far less than it could have been had the President exercised affirmative leadership, leveraged the bully pulpit and taken a more active role in crafting the bill.  Instead of chasing elusive Republicans, who, like Lucy and the football with Charlie Brown, would flirt with offering some tepid support of health care reform only to walk away when the rubber met the road, an early and aggressive push for a public option as a driver of coverage and lower costs would have been useful.  Had Republicans pushed back, the simple response would have been  that we already have "government run" health care for nearly 100 million Americans in the form of Medicare, Medicaid and TriCare (Veterans).  These programs have lower overhead and administrative costs and deliver basic services more cheaply than the private sector (and without much of the confusion and paperwork).  Republicans were going to call anything Obama proposed "government run" health care anyway, so why not defend the value of it and take a stand?  

Ultimately, the President was left with defending an idea initially floated by the Heritage Foundation (which, unsurprisingly, didn't impress the Supreme Court), that still fails to cover roughly 20 million Americans and is now subject to a low level guerrilla war in Congress, which is constantly looking to trim appropriations for the myriad programs created under the ACA.  Maybe not such a big fucking deal after all.

The Economy.  You remember the economy, right?  That thing that almost disappeared about 2 months before the 2008 election.  Yeah, that.  
Within a month of Obama's inauguration, the American Recovery and Reinvestment Act, a $787 billion piece of legislation was passed as an emergency effort to right the economic ship.  ARRA was actually several bills in one. It provided a tax cut for people making less than $250,000, direct assistance to state and local government, infrastructure investment, unemployment aid and funding for things like education and renewable energy. Unfortunately, because the bill attempted to do so much, but was artificially capped at a number that Obama's own economists did not think was sufficient to meet the needs of the time, it was not as effective as it could have, or should have, been.  Further, in an effort to gain Republican support and appear bi-partisan, Obama allowed people like Susan Collins to trim parts of the bill in the Senate.  Ultimately, no House Republicans, and only 3 Senate Republicans (Collins, her Maine colleague Olympia Snowe, and Arlen Specter, who would switch parties later that year), voted for it.  When it turned out that the economic meltdown was more severe than initially thought, and unemployment went up, not down, Republicans eagerly pounced on the "stimulus bill" as a waste of taxpayer money even though many eagerly lobbied for funds appropriated under the law. 

By the time the full effect of the Recovery Act was felt and unemployment fell, it was too late, between a shaky recovery and the health care debacle, Democrats were swept out of office in November 2010.  A hastily negotiated extension of the Bush tax cuts for two years in exchange for a 13 month extension of unemployment insurance and some other sweeteners (including a reduction in the payroll tax workers pay for Social Security) pumped an additional $860 billion in stimulus into the economy but the public's perception of the ARRA was fixed - it failed (even though it did not.)  

Could things have been different?  Without question. Reporting in Ron Suskind's essential Confidence Men and elsewhere confirms that Obama was provided with alternatives for greater stimulus than he ultimately settled on and that the larger proposals were ruled out entirely for political purposes.  At the apex of Obama's popularity, the President was already shrinking from a fight (that might not have happened) and bowing to what his advisors determined was not politically expedient. Ironically, when you calculate the additional "stimulus" that Obama ended up negotiating with Republicans during the lame duck session at the end of 2010, you get to around $1.6 trillion, which was where some on his economic team (including incoming Council of Economic Advisers Chair Christina Romer) recommended in the first place.  The problem is that instead of going "big" in the first place, which could have put more money into things like infrastructure (as he finally did in the American Jobs Act, which has been DOA in Congress but for a small provision for veterans), direct aid to states and localities (who ended up laying off close to 1 million public sector employees after the ARRA ran out), and unemployment insurance, the overwhelming majority of the second "stimulus" passed by Congress went to tax cuts, and much of those to the wealthiest Americans who did not need them in the first place.  

Wall Street.  As reported in Confidence Men, just two months into his term, the President called a meeting of Wall Street executives to discuss the economy, their companies and, among other things, the public mood toward the financial industry.  Obama noted that his Administration was "the only thing between you and the pitchforks."  For having given his stamp of approval for TARP, not nationalizing CitiBank and giving a pass on financial regulation until well into his second year in office, Obama has gotten very little from Wall Street in return except their enmity.  Further, not only were Wall Street banks provided hundreds of billions of dollars in support through TARP, Bloomberg has reported that the Federal Reserve floated more than $7 trillion in loans to a wide assortment of banks and other financial institutions, some of which weren't even American. 

While smarter minds than me have debated the efficacy of bailing out the banks, the bottom line is it happened, but the enormous opportunity the President missed was in demanding certain things from the banks in return for this government largesse - specifically, the Obama Administration has done little to help struggling homeowners, even three plus years into his term.  No obligations were placed on banks to, for example, lower principal amounts or mandate lower interest rates for homeowners as a condition of their government bailouts.  By the time Obama got around to settling an ancillary mortgage meltdown issue (so-called "robo signing") that purportedly includes some relief for homeowners, banks were more than happy to take a modest financial hit in exchange for blanket immunity from prosecution.  

And this is where I think the greatest frustration with Obama lies.  For whatever else one can say about our nation, at its core, there is a belief in fairness and what happened on Wall Street offended most people's basic sense of fairness.  How could the people who created the problem be let off with few repercussions while the tens of millions who were affected by those decisions left to twist in the wind?  And as to Obama, as a Democrat, whose party has, for the last 75 years, stood as the defender of the middle class, how could he be so blind to the visceral suffering of those stuck with underwater mortgages, evaporated equity and the worst employment picture since the Great Depression and more importantly, why wasn't more done?   

Gibbs had it wrong when he complained about the "professional left."  What progressives and liberals find disappointing about Obama is the sense of opportunity missed, of accepting trade offs that favored the politically expedient over what was both good public policy and publicly popular.  Unfortunately, all of this is down the rabbit hole because even if Obama wins a second term, his moment has passed.  The stars aligned in 2008 to give him an enormous mandate that, had he taken advantage of to make critical investments in infrastructure, create truly universal health coverage and provide needed relief for homeowners struggling to make ends meet, may have resulted in Obama being the transformational President many hoped he would be (not to mention stymying the nascent Tea Party and the retaking of the House by Republicans in 2010.)  While I have no doubt many disaffected Democrats will still pull the lever for the President in November, a victory will feel less like the beginning of a new era so much as the beginning of the end of one that never truly was.  

1 comment:

  1. Amen to that. I was almost tempted not to vote in November. I certainly have no intentions of voting for Mitt Romney. I could say that Obama had disappointed me. But to be honest, he didn't. He turned out to be exactly what I had expected from a moderate Democratic politician. But I will vote for him, because like Bill Clinton, he is the lesser of two evils for me.