Archive for May, 2010

Blaming Obama

Monday, May 31st, 2010

Two weeks ago, the  mainstream media meme was that the oil spill in the gulf was Obama’s Katrina. But that never made any sense. As Kevin Drum wrote:

Katrina was a case of a disaster that the federal government is specifically tasked with handling. And for most of the 90s, it was very good at handling them. But when George Bush became president and Joe Allbaugh became director of FEMA, everything changed. Allbaugh neither knew nor cared about disaster preparedness. FEMA was downsized and much of its work outsourced. When Allbaugh left after less than two years on the job, he was replaced by the hapless Michael Brown and the agency was downgraded and broken up yet again. By the time Katrina hit, the upper levels of FEMA were populated largely with political appointees with no disaster preparedness experience and the agency was simply not up to the job of dealing with a huge storm anymore.

The Deepwater Horizon explosion is almost the exact opposite. There is no federal expertise in capping oil blowouts. There is no federal agency tasked with repairing oil spills. There is no expectation that the federal government should be able to respond instantly to a disaster like this. There never has been. For better or worse, it’s simply not something that’s ever been considered the responsibility of the federal government.

In the case of Katrina, you have the kind of disaster that, contra Levin, can be addressed by the federal government. In the case of the BP spill, we’re faced with a technological challenge that can’t be. They could hardly be more different.

But there is one way in which they’re similar. Katrina was far worse than it had to be because a conservative administration, one that fundamentally disdained the mechanics of government for ideological reasons, decided that FEMA wasn’t very important. Likewise, the BP blowout was made more likely because that same administration decided that government regulation of private industry wasn’t very important and turned the relevant agency into a joke. If you believe that government is the problem, not the solution, and if you actually run the country that way for eight years, it becomes a self-fulfilling prophecy. But let’s not pretend it’s inevitable.

Last week, the mainstream media meme was that the oil spill in the gulf shows the incompetence of government. George Will opined that President Obama “is being unfairly blamed” for its oil spill response but “ it sort of serves him right”. Obama  promised that the government could solve problems but we now know that isn’t true since the government can’t plug an oil leak a mile beneath the surface of the ocean. I guess we should just leave our problems to private enterprises like British Petroleum to solve.

This week, apparently, the meme will be that there isn’t much anyone can do to plug the oil leak but Obama must do a better job of feeling our pain. Over the weekend, the intellectual giant Maureen Dowd took time away from her Sex in the City reruns to give Obama some advice:

For five weeks, it looked as though Obama considered the gushing that became the worst oil spill in U.S. history a distraction, like a fire alarm going off in the middle of a law seminar he was teaching. He’ll deal with it, but he’s annoyed because it’s not on his syllabus.

Even if Obama doesn’t watch “Treme” on HBO, it’s strange that he would not have a more spontaneous emotional response to another horrendous hit for Louisiana, with residents and lawmakers crying on the news and dead pelicans washing up on shore.

Steve Benen is not impressed with the discourse thus far:

At this point, the discourse seems to boil down to a) those who want to see the president don a wetsuit and head to the Gulf floor; b) those who want to see the president don a cape and fly around the planet really quickly in order to reverse time; and c) those who want to see the president pound on podiums and lose his cool, as if that would make a difference. (Thanks, Maureen Dowd, for comparing Obama to Spock again. That never gets old.)

Here’s an idea for assignment editors: publish a piece with specific steps federal officials should take but haven’t. Because at this point, unless we can fix the leak with useless media palaver, there’s not much point to the breathless speculation, nebulous criticism, and finger-pointing.

Indeed. It is becoming increasingly apparent that the one mistake Obama has made is to trust any American institution. Wall St., the health insurance lobby, the Pentagon, and big oil have all stuck him with monumental headaches because he wants to meet them halfway. But of course part of the President’s job is to work with American institutions. Trying to govern by making enemies of them would be unlikely to yield much success either.

But one think the President could do is take this opportunity to condemn the way industry has succeeded in taking over our regulatory agencies  and attack the morons in the Republican Party who want to “drill, baby, drill”.

The Terminator’s Budget

Thursday, May 27th, 2010

Arnold Schwartzenegger has long argued that California’s budget deficit requires that we decimate public education and immiserate the millions of people who depend on government services. Making up the revenue shortfall by modestly increasing taxes has always been off the table because higher taxes would make it difficult for businesses to hire more workers, thus prolonging our historically high unemployment rate.

This argument never made much sense. How does laying off thousands of teachers and state employees improve our unemployment rate? We now have some empirical evidence that the argument is nonsense.

This study by the UC Berkeley Labor Center shows what is wrong with the argument:

We estimate that the Governor’s proposed budget would result in a loss of 331,000 full-time equivalent jobs, increasing the unemployment rate by 1.8 percentage points. More than half of the jobs lost would be in the private sector. Because many of the jobs lost are part time, the actual number of Californians affected would be much greater. The number of jobs estimated to be lost is much greater than the entire employment growth for the state projected by the Legislative Analyst’s Office for 2011.

An alternative approach that mixed spending cuts with $5.4 billion in targeted revenue increases would save an estimated 244,000 jobs compared with the Governor’s proposal.

The greatest part of the job loss due to the Governor’s budget would result from cuts to major health and human service programs that bring in significant federal matching funds.

The argument that budget cuts and the lowest tax rates possible are the only way out of a recession has a degree of apriori plausibility.

But when the budget cuts entail significant job loss and restrain economic growth, the argument collapses. The proposed budget solutions from Democrats in the Assembly and Senate, including an end to corporate tax breaks, are a much better solution.

As Robert Cruickshank at Calitics argues:

The governor’s budget may have been designed to wedge the middle-class and the poor, but as this study indicates, the middle-class has every incentive to oppose these cuts as well. Any increase in unemployment will reverberate around the rest of the economy, leading to middle-class job losses and further cuts to schools and other things the middle class cares about.

The Same Old Game

Wednesday, May 26th, 2010

It has been said before but it is worth a reminder—if you want to know what is going on in politics follow the money.

The press has focused on the tea party crowd and portrays opposition to Obama as a grass roots phenomenon. But Obama haters are not limited to “ordinary folks”.

As Paul Krugman reports:   

Look, for example, at the campaign contributions of commercial banks – traditionally Republican-leaning, but only mildly so. So far this year, according to the Washington Post, 63 percent of spending by banks’ corporate PACs has gone to Republicans, up from 53 percent last year. Securities and investment firms, traditionally Democratic-leaning, are now giving more money to Republicans. And oil and gas companies, always Republican-leaning, have gone all out, bestowing 76 percent of their largess on the GOP.

These are extraordinary numbers given the normal tendency of corporate money to flow to the party in power. Corporate America, however, really, truly hates the current administration. Wall Street, for example, is in “a state of bitter, seething, hysterical fury” toward the president, writes John Heilemann of New York magazine. What’s going on? One answer is taxes – not so much on corporations themselves as on the people who run them. The Obama administration plans to raise tax rates on upper brackets back to Clinton-era levels.

Furthermore, health reform will in part be paid for with surtaxes on high-income individuals. All this will amount to a significant financial hit to CEOs, investment bankers and other masters of the universe.

Now, don’t cry for these people: They’ll still be doing extremely well, and by and large they’ll be paying little more as a percentage of their income than they did in the 1990s. Yet the fact that the tax increases they’re facing are reasonable doesn’t stop them from being very, very angry.

Nor are taxes the whole story.

Although many liberals are disappointed in Obama’s timid attempts to regulate Wall St. and the oil industry, corporate America is livid that the free ride they received from the Bush Administration is over.

From the outside, this rage against regulation seems bizarre. I mean, what did they expect? The financial industry, in particular, ran wild under deregulation, eventually bringing on a crisis that has left 15 million Americans unemployed, and required large-scale taxpayer-financed bailouts to avoid an even worse outcome. Did Wall Street expect to emerge from all that without facing some new restrictions? Apparently it did.

So what President Barack Obama and his party now face isn’t just, or even mainly, an opposition grounded in right-wing populism. For grass-roots anger is being channeled and exploited by corporate interests, which will be the big winners if the GOP does well in November.

If this sounds familiar, it should: It’s the same formula the right has been using for a generation. Use identity politics to whip up the base; then, when the election is over, give priority to the concerns of your corporate donors. Run as the candidate of “real Americans,” not those soft-on-terror East Coast liberals; then, once you’ve won, declare that you have a mandate to privatize Social Security. It comes as no surprise to learn that American Crossroads, a new organization whose goal is to deploy large amounts of corporate cash on behalf of Republican candidates, is the brainchild of none other than Karl Rove.

The tea party movement is nothing but the visible manifestation of this resurgence of corporate influence. And the corporations are quite of aware of how this game is played. FreedomWorks, the brainchild of former House Republican leader Dick Army, is funded primarily by corporations and is the main financial backer of the tea partiers. Instead of acting in their self-interest and working towards a federal government that has the resources to constrain corporations, the tea partiers are actively working against their own interests trying to insure that corporate America can operate with impunity.

The plutocrats with the money know that there are enough people for whom tribalism trumps self-interest, confident that they can kick up enough racism, fear, and resentment to sustain sufficient anti-government fervor to return us to the good old days when Wall St. whiz kids  and Saudi sheiks set the political agenda for the rest of the world.