Saturday, January 23, 2010

Whither FDR and LBJ?

So this is the part of Obama's presidency where he becomes FDR and LBJ.

Everyone has advice on how he can save his presidency, so I'll add mine. If only he would do it my way. If only he would fix healthcare my way, if only he would regulate the banks my way, if only he would cut taxes for small businesses and stimulate consumer spending... my way.

The one bright shiny spot from the last year has been a stock market rally. For Pres. Obama or Barney Frank or Chris Dodd to have squelched that rally could have been disastrous. Sure employment still lags and we still have massive consumer and government debt, two wars, ongoing terrorist threats, and assorted other maladies, but everything must be done in its place.

Dear President Obama:

Critics on Wall Street will never like the timing or the nature of your call for regulation of the financial industry. Get over it, they aren't going to vote for you anyway, Barack. This goes for the health-insurance industry as well. It's time to find out who your friends are, and they are the people of the United States.

Financial Industry

Without significant reform, banks and investment houses will ruin this world. A year ago the bank bailout brought us back from the abyss, but it cost us nearly a trillion dollars. Now solid legislation is necessary to prevent any recurrence. Our reserves are spent and no more such mistakes can be made.

We all know the banks need to be fixed either with more regulation, more loan reserves, less securitization or more regulation of trading, but something has to be done. The eight largest banks now control more revenue than before the crash, so if they were too big to fail then, they are certainly too big to fail now. Some advocate splitting the largest banks into smaller ones, but opponents say would be unable to compete in the worldwide economy. We may need to sacrifice some competitive advantage to reduce the risks of large banks destroying us. That's what FDR would do.

Silly, nit-picking taxes are not the answer.

I cannot believe the whining that has taken place the last 72 hours because the stock market has dropped three days in a row. The horror. After a 70% rise in the stock market indices, we've pulled back a mere 4%... so we're back to December 31 levels. Whoopdy doo. In no way should stock market performance be a deterrent to promoting regulation and legislation to prevent another financial meltdown. If Bank of America stockholders are that concerned, then they should vote for a break up of the dysfunctional behemoth... same goes for Citigroup. Their shareholder value would soar. And why Goldman Sachs is still publicly traded is beyond me.

Health Care Reform

Your signature legislation of an all-in-one healthcare bill is dead. Now is the time to go about this in a piecemeal fashion, and it may even turn out better: first, disallow health insurance companies from denying benefits due to pre-existing illness, and second, restrict health-insurance companies from canceling insurance due to illness or loss of jobs. Not even the most recalcitrant Republican can vote against these popular measures, and even if they do, since they are not omnibus bills only 51 votes would be needed for each of these to pass.

At this point insurance companies will come crying to Congress that without an insurance mandate these measures will kill them. They can't be required to accept just anyone onto their roles without ensuring that even the healthy and wealthy are also required to sign up. Then the bargaining begins and offer the needed insurance mandate only if there is a public option and (not or) expansion of Medicare to 55 year-olds. That's how LBJ would rebuild the Great Society.

It's time to grow a pair, Mr. Obama. While it would have been nice to pass the all-one health care reform, that didn't happen, and besides it wasn't enough reform anyway. Now, the proper overhaul can get done and the American people will be better off for it. It would have been nice if the banks and investment houses would have reformed on their own, but, come on, I know you aren't that naive. Jettison Larry Summers and Tim Geithner, and bring in some acolytes of Paul Volcker.

What this country needs is some good ol fashioned populist outrage. This Scott Brown guy isn't as bad as the progressives and left wing make him out to be. He's a bit too authoritarian for my liking, but he voted for the Massachusetts universal health care bill and he realizes that the financial industry needs to be reigned in. Let's face it, Republicans in Massachusetts are more like Democrats from Nebraska than anything else.

It's crunch time.

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