Judging Obama

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Mon Aug-16-10 11:40 AM
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Judging Obama

by Jerome a Paris

The debate on whether it is more appropriate to say that Obama has done a lot or that he has done too little regularly divides DailyKos, and I'd like to tackle it from a slightly different perspective, to say that this is not really about Obama, but about the perspective of the different groups about our civilisation.

I would like to propose that those who think that Obama has not done enough consider that the current system is profoundly failing, and that it is time for systemic changes, instead of the tinkering they see Obama doing, whereas those that tend to focus on what Obama has done think that the system is flawed, but mendable, and that Obama is doing just that, moving things back in the right direction.

And the fact is - we don't know yet what group is right, and we may not know for a few more years.

First, I think there is a number of things that most here agree with:

Obama inherited a mess, and he has no responsibility in creating it. The financial meltdown, the economic recession, the budget crisis, the wars in Iraq and Afghanistan were all created by the policies of the Bush years (or the policies run since the Reagan revolution, if you want to look at the bigger picture);
he is facing a nastily partisan Republican party backed by a well-run and highly effective media / noise machine. They were bullies while in power, and they have adapted similarly shamelessly ugly behavior now that they are in opposition;
Obama ran on "change" - including a change in the way politics were run in Washington - that included going back to listening to actual experts rather than hacks, and it also included trying to move away from partisanship and trying to reconcile opposing view points. He's done both of these

Now here's a list of the points where fundamental disagreement pop up:

the bank bailout, however distasteful, was necessary to save the economy, and Obama was right to support it (alternatively: the bailout of the banks is the original sin of this administration: it has not solved anything and wasted massive amounts of money; the economy is still in the doldrums while bankers make even more money than before);
the stimulus plan was unprecedented in its scope and content, and it worked to support the economy at the worst time, and things are now improving (the stimulus was far too small and the economy is now on the verge of collapsing again, the administration does not seem to care about the incredibly widespread and persistent unemployment) ;
the troops are leaving Iraq; the fight in Afghanistan, while incredibly difficult, was and is the right thing to do because leaving would create new dangers (Iraq is still occupied, Afghanistan is a lost cause, draining massive resources which can ill be afforded, Guantanamo is still open );
the healthcare bill is a massive improvement for many American families and sets in tone the principle that everybody has a right to healthcare coverage (it's a massive giveaway to insurance companies which will find their way around the new rules, meanwhile healthcare costs continue to increase);
Obama did that, and a lot more (2 competent women in the Supreme Court and many more) despite the systematic and outright evil opposition of the Republicans at every step (Obama has failed to use the bully pulpit to push for his preferred options, choosing backroom negotiations with lobbies and giving up too much too early, and watering down policies for the sake of illusory bipartisanship);

Fundamentally, such contrasting opinions on the meaning of basic facts (which are themselves not really in dispute) can only be explained by profound differences on deeply held beliefs about where we are going.

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And the fact is, we don't know yet if the economy will move back to growth soon; we don't know for sure if the financial system is back on its feet or just zombie-like; we don't know how climate change will affect each of us and our civilisation even if we accept that change is on the way; we don't really see how we would do without oil ; and we don't really know how to move away from the financial optimisation logic which drive everything today - or let alone agree whether it is a good thing to do so.

But all of this suggests that we should discuss our future rather than trying to judge Obama - as that judgement depends a lot more on our vision for the future than on our assessment of what he has done.

On the bailout, Elixabeth Warren made the same point as above. In June, Warren isssued a report stating that the government should have acted much earlier, long before September 2008, to effect a private rescue, which she said could have been difficult or impossible, but definitely worth trying. When it was too late, the decision to rescue was made in a panic, but it was successful, albeit an enormous cost.

Video of the COP's June report

From the report (PDF):

The rescue of AIG distorted the marketplace by transforming highly risky derivative bets into fully guaranteed payment obligations. In the ordinary course of business, the costs of AIG‟s inability to meet its derivative obligations would have been borne entirely by AIG‟s shareholders and creditors under the well-established rules of bankruptcy. But rather than sharing the pain among AIG‟s creditors – an outcome that would have maintained the market discipline associated with credit risks – the government instead shifted those costs in full onto taxpayers out of a belief that demanding sacrifice from creditors would have destabilized the markets. The result was that the government backed up the entire derivatives market, as if these trades deserved the same taxpayer backstop as savings deposits and checking accounts.

One consequence of this approach was that every counterparty received exactly the same deal: a complete rescue at taxpayer expense. Among the beneficiaries of this rescue were parties whom taxpayers might have been willing to support, such as pension funds for retired workers and individual insurance policy holders. But the across-the-board rescue also benefitted far less sympathetic players, such as sophisticated investors who had profited handsomely from playing a risky game and who had no reason to expect that they would be paid in full in the event of AIG‟s failure. Other beneficiaries included foreign banks that were dependent on contracts with AIG to maintain required regulatory capital reserves. Some of those same banks were also counterparties to other AIG CDSs.

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Through a series of actions, including the rescue of AIG, the government succeeded in averting a financial collapse, and nothing in this report takes away from that accomplishment. But this victory came at an enormous cost. Billions of taxpayer dollars were put at risk, a marketplace was forever changed, and the confidence of the American people was badly shaken. How the government will manage those costs, both in the specific case of AIG and in the more general case of TARP, remains a central challenge – one the Panel will continue to review.

Krugman on the stimulus: Too Little of a Good Thing

The Iraq war is ending and withdrawal from Afghanistan is on track to begin in 2011.