The Stephanopoulos Interview with Obama – The Economy

I never had the idea that Obama was a progressive. His support of the FISA Amendments Act and Paulson’s $700 billion bailout just reinforced a view I already had. Still I was surprised by how right wing the selection for the top slots in his Administration has been. The only progressive in the Cabinet looks to be Hilda Solis at Labor and that is very much a second, possibly even third tier position. So when I stumbled upon the George Stephanopoulos interview with Obama today, I was not expecting much, but found even less.

I have said before that we would all like to see Obama succeed because if he succeeds we all do. Progressivism is certainly about values but it is just as much about solutions that really work and as Obama keeps the maximum distance he can from us he also stays equally far from the solutions the country needs. This is not partisanship. The Washington Establishment under Clinton set the stage for this landscape of unending Bush disasters we now live among. They had their shot and they failed as badly as failure can get. They failed because deficits didn’t matter to them, because they created their own reality, because they felt that the normal laws of the universe did not apply to them, that 2 + 2 equaled whatever they said it did. If I had to define a progressive nowadays, I would say that it is someone for whom 2 + 2 remains 4 and for whom the ideals expressed in the Constitution are the bedrock on which our nation stands, and not obstacles to be worked around or discarded when convenience dictates.

So turning to the Obama interview I will confine my remarks in this part to his discussion of the economy, when asked about the tax cuts in his stimulus package Obama had this to say:

Well, let’s look at the package as a whole, the bulk of the package is direct government spending.

But as currently structured 40% of Obama’s stimulus is tied up in tax cuts. So while technically correct that more than half, the bulk, of the stimulus is directed toward spending, it isn’t much more than half. Or to look at those pesky numbers. Obama’s $775 billion stimulus is the cost over two years. If we divide by two to get its per year cost, that would be $377.5 billion. His tax cuts come in at $310 billion for two years or $155 billion per year. So the truly effective part of the stimulus which involves spending is actually $222.5 billion a year. This is less than half of the $500 billion in spending that many of us think is needed to keep us out of depression and maybe even point us in the direction of recovery. Does anyone seriously think this is sufficient?

A stimulus is not a magic wand. Even at the proper size and spent the right way, its effects last only as long as it does. So what is the plan for what comes after it? The simple truth is Obama doesn’t have one. He talks a little about greening the country, education, healthcare but he is talking baby steps and not the major restructuring that will be necessary to give our country a sustainable and stable economy.

Nor does it appear that Obama has considered, in the respite a stimulus might give, how to tackle the fundamental problems underlying the housing crisis and financial meltdown. When asked what he would do for distressed homeowners in the context of a $50 billion program suggested by Barney Frank, he evaded:

Well, so here’s what we have done. What I’ve done is asked my team to come together, come up with a set of principles around how we are going to maintain transparency, what are we going to do in terms of housing, how are we going to target small businesses that are under an enormous business crunch?

This is as close to a “I’ll get back to you on that” as we will ever see. If the fundamentals are not addressed, the stimulus will be so much wasted money. This isn’t rocket science. Obama doesn’t need a team to support help for homeowners along the lines of the recent cramdown program that has been suggested or to support a reimposition of Glass-Steagall or strict limitations on derivatives or a demand for banks to make an open accounting of their toxic assets or a requirement for banks receiving federal funds to lend or else. Instead we get Obama hedging and punting to his “team”, a team comprised of many of the failures who brought us this mess. For the good of the country and even the world, I would like Obama to be successful but as a progressive 2 + 2 still is 4 for me and when I look at Obama’s plans the math doesn’t add up. It just doesn’t.

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