What We Got With Obama/Part Two, The Bankers and Healthcare

First published in August 2013


While THE major issue when Barack Obama took office was halting the economic plunge, the President faced other issues and the country undoubtedly had unrealistic super high expectations, more so from the center, to the left of center, to the far left, on the political spectrum. Campaigning on certain issues and promising certain things in an initial campaign is one thing, but if you win, people are actually going to expect that you try to do the things you campaigned on. Both major American political parties are coalitions with various factions forming a part of the whole. For Obama and Democrats, they faced a number of choices as to how to proceed after the "stimulus" measure was passed. There has been a particularly tight lipped inner circle around this president, and we'll have to wait for someone to break the code of silence, either accidentally or in some "tell all," otherwise we'll have to wait until Obama leaves office, when "presumably" some will talk, to find out many things, so this is just a guess, but I'd say his economic team correctly told him that there was only so much he could do about the economy, and that with the stimulus in place and the Federal Reserve working more behind the scenes, that it would take time for the crisis to ease and then for recovery to begin, and that it would be a long road back. So what to do next?

Not only was the country in a depressed mood over the economic situation, Americans were angry at the many moneygrubbing shenanigans (I'm being kind here, because it was outright criminal, or should have been, except they got laws changed) that had helped to bring about the crisis, the soaring number of foreclosures, the plunging economy and the fast escalating number of unemployed. These actions had been orchestrated by the nation's financial sector and there were calls for reforms to curb the many abuses and schemes concocted by elements of that sector. These schemes, coupled with huge salaries and bonuses paid to executives in finance, made action on financial sector matters a high priority to many Americans, in my opinion, and even some Republicans were outraged, although they seemed more outraged with efforts by President Obama to halt the economic slide and with his birth certificate, than with financial sector abuses. Democrats controlled a majority of the U.S. House of Representatives 255 to 179 (one vacant)* and a majority of the U.S. Senate 57 Democrats + 2 independents (who caucused  with the Democrats) to 41 Republicans.** Symbolism in politics is important, I'd say especially so in the ultra modern era, when information is on cable television and on the Internet within seconds, or even carried in real time. In my opinion, a couple of the President's choices for his economic team sent the wrong message, unless of course he meant to send a comforting word to the bankers, Wall Street and others in the financial sector. The choices of Larry Summers and Tim Geithner put two men with strong ties to Wall Street, banking deregulation and deregulation of financial services, part of which included the non regulation of "derivatives," in notable positions in the new administration.*** Summers has often been touted as "a brilliant economist;" whatever the hell that means, but I'm not sure the President needed a "brilliant economist" to tell him to pump money into an economy that had lost trillions. This was not new economic policy, and even some Republicans over time came to accept the need to use such measures to counter downturns. Ronald Reagan spent money like a broken water main, all the while telling gullible Americans how he was against deficit spending,**** a sort of "don't pay attention to my actions, just listen to what I say." Through the decades though, many Republicans and business people have opposed deficit spending (unless they're in trouble) dating back to the Great Depression, often because they fear some "addiction," but then again, if you are possibly dying and in terrible pain, should the doctor say, "Sorry, I can't give you narcotics, you might get addicted, but don't worry, once you die it will 'kill' the pain. Ah ... sorry about that, but the pun IS intended ."

President Obama made a crucial decision to first pursue the reform of American's huge and complicated  health care sector (complete, for better or for worse, with many entrenched "interests"), before pursuing financial system reform. The decision was flawed to say the least. Yes, the decision was bold, but the ensuing negotiation over the measure was not as bold, and the early compromises over the stimulus and in health care reform earned the President the reputation of being quick to compromise, often seemingly with himself. Certainly the President's advisers had to know how divisive a fight would develop over this decision, although the White House seemed stunned and unprepared by the ferocity of the attacks. Further, the political advisers had to know that health care reform was not a high priority for most Americans at that time; after all, both parties use pollsters to gauge public opinion. Republicans, hammered with losses at the polls in the 2006 and 2008 elections, connected to unpopular former President George W. Bush and his policies, which were linked to the economic meltdown, and tainted by Republican politicians' sex scandals***** saw a path to new life, and they took it with vigor and vengeance. An expanding conservative movement called the Tea Party had already been active from early in Obama's term by organizing protests, where people waved tea bags (in representation of the Boston Tea Party) and where some openly carried firearms (presumably loaded) and some others dressed in apparel from the 1700s; a pretty clear indication the century to which these folks, at least, want to return. The President's health care decision provided a boost to his opponents like no other, as the previously dispirited conservatives rallied to defeat the President at all costs, although the blueprint for the reform came from former Republican governor of Massachusetts, Mitt Romney, and elements of the proposal had been previously touted by none other than Newt Gingrich and the conservative organization the Heritage Foundation.******

The rancorous health care debate carried a heavy political cost to the President and Democrats, as well as to reform of the financial sector, as the delay gave special interests time to regroup from the financial meltdown and to marshal their lobbying forces to take on proposed changes. The political disarray and public confusion over the health care law also allowed opponents of financial reform to use public anger at the President and Democrats to their favor. The massive amount of attack ads by conservative groups reinforced public fears and disapproval of the health care law, as the White House and Democrats could never concisely explain the  law; largely because, there IS no concise way to explain the law covering such a vast part of the American economy. Change always creates anxiety, and conservatives exploited that anxiety. It was far easier for conservatives to hammer away at parts of the law in ads to create doubt and fear, and to pick it apart, as every segment of American society would be affected by the law in some way. Day after day the spectacle played out on television screens and on radio as the attack ads mounted. Progressive groups, including unions, were, in my opinion, never totally sold on the health care law that emerged, but they rallied to the cause to keep Barack Obama's presidency from going down in flames early on. Further disappointment would come to progressives when the President scrapped the "public option" from the reform legislation. This was a provision that would have permitted non insured individuals to choose a government sponsored insurance plan in competition with private insurance companies' plans, something that likely would have lowered costs substantially. I'm sure the White House would argue that in order to keep insurance companies from actively opposing the reform, they had to drop the provision, which just further shows how complex the overall reform was. Even with progressive support, opponents far outspent supporters of the law, which was clearly reflected in polls showing the law decisively unpopular, giving opponents another angle of attack: "They're trying to ram this law through against the wishes of the American people." There were certainly many distortions and outright lies, but when have American political campaigns (and that's what this was) ever been truthful and fair? Certainly the White House should have expected such, and while the President seemed to be the only trooper in the game for the pro-reform side, and he performed superbly in some instances, even when taking face-to face questions from congressional Republicans, the law remained highly unpopular with the public.

Meanwhile, the banks that had been dubbed "too big to fail" during the initial part of the economic meltdown, became even larger, and financial sector CEOs never spent one day in jail, let alone prison, bringing about the saying that they were "too big to jail." The general defense by the CEOs was that they hadn't known about the risky and complicated financial ventures made by THEIR companies. Of course none made any attempt to therefore return their salaries or bonuses. While to me the amounts paid these individuals was, and is, obscene, the fact that they essentially admitted to incompetence ("they didn't know," not that I buy that explanation for one second) should have been cause for immediate dismissal, but with corporate boards stacked with like-minded members, and with super wealthy stockholders owning most of the stock in these entities, that just hasn't happened. So they got to have it both ways: they got huge salaries and bonuses while being incompetent, and they didn't go to prison for all of the manipulation and deceit in the industry. Further, their ravaged companies were bailed out, stabilized, and made even larger by America's taxpayers. America ... the land where crime DOES pay! And let's not forget, while all of the worst came during the administration of George W. Bush (although as I noted elsewhere in this article, much of the deregulation came under Democratic President Bill Clinton), the aftermath took place under Democrat Barack Obama and with both houses of Congress under Democratic control (at least until after the 2010 election, when Republicans took control of the House of Representatives and the Democratic majority in the Senate was considerably lessened).

Grades:
Obama on agenda setting after the stimulus: "F"
Obama on health care reform "I" =incomplete, as the law is not yet fully implemented
Obama on curtailing the economic power of elements of the financial sector: "F"    

More on financial reform in "Part Three" .... 

* The breakdown by party affiliation at any given time for the House can be complicated because of deaths, resignations, or appointments to other positions. The thing to remember is, the House operates on a simple majority vote. 

** Pennsylvania Senator Arlen Spector had been elected as a Republican in prior elections, but switched to the Democratic Party in the spring of 2009 giving Democrats 58 plus the two independents to 40 Republicans, but Massachusetts Democratic Senator Edward "Ted" Kennedy was frequently away from the Senate with serious illness and Minnesota Democratic Senator Al Franken was involved in a contested election outcome that was not settled until the summer of 2009, after which he took office, so the Democratic majority was not quite what it seemed on paper. The Senate has its own rules and most, but not all, legislation requires at least 60 votes to pass, so it is important to note that Democrats did not always have the necessary 60 votes from among their own party caucus members, again, which included the two independents.

*** Summers served in the Clinton administration and actually became Secretary of the Treasury late in Clinton's second term. He had previously been Deputy Secretary under Treasury Secretary Robert Rubin, another proponent of deregulation. He later became President of Harvard University, where the university got involved in risky and speculative derivative markets, which led to hundreds of millions of dollars in losses to the university. It's all far too complicated to explain here, but the main thing is, Summers approved the university getting involved in derivatives, the non regulation of which he had supported while in the Clinton administration (the overall legislation which included non regulation passed Congress and was signed by Clinton late in 2000). Summers also supported the law to essentially repeal the Glass-Steagall Act, a law passed and implemented during the Great Depression to separate traditional commercial banking, like checking and savings accounts, auto loans, home loans, etc, and the far riskier investment banking, which involved investment in various stocks, bonds and commodities. This law too passed Congress and was signed by Bill Clinton in 1999. For more information on this law see:  http://pontificating-randy.blogspot.com/2009/03/understanding-crisis-part-three.html 

**** For more on government deficits, see my article:  http://pontificating-randy.blogspot.com/2011/02/gop-keynesians-in-disguise.html

***** Republican Senator John Ensign of Nevada was involved in an affair with the wife of one of his administrative aides, who was a campaign staff worker herself. The whole matter was complicated by attempts to keep the affair quiet by providing work and money to the couple. Ensign eventually resigned, but not until 2011. Then Mark Sanford, the Republican governor of South Carolina, was "missing" for a number of days, supposedly on a hiking trip in the Appalachian Mountains. He obviously failed geography in school, as it turned out he was in Argentina with a woman with whom he was in a relationship (Sanford was married). The South Carolina legislature later censured Sanford. (Censure= strong disapproval.) Let's see, Appalachian starts with "A" and Argentina starts with "A," maybe that's where he got confused. Also a little while before this, Idaho Republican Senator Larry Craig had been arrested for soliciting sex in an airport mens' room. He thought of resigning, but then changed his mind and remained in office until his term expired, which only kept the matter lingering in the news and in jokes in comedy acts. During his career, Craig had supported anti-gay measures, but I guess he took a page from Reagan's deficit playbook, "don't pay attention to what I do, just listen to what I say."

****** For more detailed information on previous Republican support of provisions of what now is called  "Obamacare," see: http://healthcarereform.procon.org/view.resource.php?resourceID=004182

WORD HISTORY:
Cleave-English has two words "cleave;" this is the word meaning "to split, to cut." It goes back to Indo European "gleubh," which had the meaning "to cut." This gave its Old Germanic offspring "kleubanan," with the same meaning. This gave Old English (Anglo-Saxon) "cleofan," with the meaning "to split." which then became "cleven," before the modern version. The derived noun "cleaver" retains the meaning as "a sharp ax-like implement for splitting large slabs of meat." The past tense form of "cleave" gave modern English "clove;" as in "clove of garlic;" that is, "separated, split pieces of garlic," and the participle form, "cloven," is often used for an animal's hoof, or of feet in general. The other Germanic languages have: German has "klieben" (now used much more in Bavaria and Austria for "to split/to cleave logs or wood"), and German also has the now archaic noun "Kliebeisen" (literally "cleaving iron;" that is, "cleaver"), Low German Saxon has "klöven," Dutch has "klieven," Danish and Norwegian (dialect?) has "kløve," Icelandic "kljúfa," and Swedish has "klyva." All these forms retain the same general meaning as their English relative, "to split, to cleave."