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Sunday, June 21, 2009

Obama's Agenda On the Ropes...Or From Messiah to Hack By January

To be fair, I predicted Obama would be viewed as a hack within a 100 days once. So, maybe, I am not the best person to predict this. That said, in front of our eyes, President Obama's entire agenda is nearing disintegration. A couple days back, negotiations between top Democrats broke down over cap and trade. The situation was characterized as going back to the drawing board.

Cap and trade always had a dubious chance of passing. It's not something that just about any Republican would ever support. It would also not enjoy support of any legislator in any state or district that relied on any form of energy that would be adversely affected by its imposition. As such coal states, agriculture states, and any state that relies on oil, would be furtive ground for opposition to the legislation. So far, it passed through the Energy and Commerce Committee in the House.

The legislation has stalled because Collin Peterson, head of the Agriculture Committee, has demanded input and threatened to withhold votes without it. So far, those negotiations have stalled. Those negotiations are a microcosm of a much bigger problem for the legislation. Because energy affects everyone, everyone wants input. By the time every one gets their input in, you either have a bill no one will support or one that does nothing. That's what is happening now to cap and trade. To pass serious energy reform, you need a good piece of legislation. That way no matter the push back from special interests, the public pressure will override. That simply isn't cap and trade. This is a hokey idea that replaces market forces with government imposition. As such, public support will never be enough to overcome special interest push back.

As for health care, what the media once characterized as a near done deal is now being characterized as in big trouble. Health care reform faces an even bigger problem. It's a total lemon. The problem isn't that they can't figure out how to pay for it. The problem is that the bill is being sold as reducing costs and yet it costs at least a trillion dollars and more over the next ten years. Just the other day the White House was touting an agreement by the drug companies to reduce costs by $80 billion over the next ten years. Therein lies the problem. If you are going to pay for health care reform $80 billion at a time, you aren't going to get there. There's only two ways to pay for this, major cuts in services or major increases in taxes. That those are the two big problems is the inherent proof that this is a lemon.

Then, there's Obama's regulatory reform. It only took a day for this to get attacked by both sides. Robert Menendez joined several Republicans in questioning the wisdom of putting more power into the hands of the Federal Reserve. This legislation would give the Federal Reserve the role of being a super regulator on any company judged too big to fail. Given that the Fed already controls the world's money supply, this is a perfectly reasonable concern (that the fed would have too much power that is). His Consumer Financial Protection Agency has been met with resistence from the banking industry.

Taking a populist tone in his Saturday address, President Barack Obama framed the debate over his proposed Consumer Financial Protection Agency as a showdown between special interests and average Americans.

“And while I’m not spoiling for a fight, I’m ready for one,” Obama said in the radio and Internet speech.

His proposal this week to create an agency that protects consumers from risky financial products has become the chief target of the banking industry, which stands to lose profits and fears it would create conflicting regulations.

President Obama is shrewd in turning this into special interests versus the public, though it's unlikely to work. He tried a similar tactic when he orchestrated the bankruptcy of Chrysler and the public still turned against it.

The problem here is different though. Here, most of the average voters simply don't understand the nuance in any of this legislation. No one really understands, or unfortunately, cares about what the Fed does. As such, they don't really think about whether the fed has too much power. The same is true of regulatory reform. President Obama can claim that this will protect the public but the public doesn't really know or care.

Yet, those affected by the legislation really do care. The banking industry has very powerful lobbying interests. They have a very big horse in the race. The rest of the public doesn't. So, you can expect them to put serious pressure on whereas the other side won't be represented with the same vigor.

The president faces a much simpler problem. He's trying to jam all of this through by the end of the year. On one level, it all makes sense. He's very powerful. He feels he has a mandate for radical change. He needs to strike while the iron, his immense popularity, is hot. Then, he and the Democrats can spend all of 2010 touting all the reform they passed. On the other hand, this is the naive beliefs of an inexperienced president. There's no way that anyone of these three pieces would pass in one year. Now, he wants all three to pass all at once. The Congress simply doesn't work that way, and frankly, nor should it. The mere White Paper for financial reform is nearly 80 pages. The bill will likely be over a thousand pages. Does this sound like something that should be rammed through Congress?

So, in fact, we are on the brink of witnessing the disintegration of the whole entire domestic agenda of the president. He's dropped the mother load of reform on Congress and most likely, he's going to walk away with nothing. By next year, instead of touting health care, energy, and financial reform, he'll tout a massive budget deficit, continued recession, and whatever it is he'll have done with GITMO. At that point, it will be safe to call him a hack.

1 comment:

Anonymous said...

Its not a surprise. For all the rhetoric, Obama's spent most of the past few months attacking his base. If I were him, I would bring all the resources at my disposal into pushing Conyer's nationalized health care bill. It already has 83 co-sponsors.

In short, the only way he's going to get reform is if he works through the people who actually *want* reform. Instead, he's letting moderate/conservative democrats and democrats aligned with wall street dictate his agenda. Obama's not going to side with his base in taking them on because he *is* one of them. Its like Bill Maher said on his show the other night: "I know Obama isn't a liberal because I've seen him on television."