OK so what's the POTUS up to? There's been so much speculation and criticism about so many of his decisions during the last 70+ days that it's been really hard for me to try to make sense of it. But, since in this blog we discuss public policy along with everything else, I'm going to try to give it a shot. Writing helps me work out my thoughts. Today, we discuss domestic policy.
On domestic policy, obviously the POTUS is concerned primarily with our economic crisis (duh!). Here's what I think he's doing: First, he's attempting to clean out the bad assets from the big banks while propping them up in the process. Why prop them up? Because if they fail, there is a strong likelihood of a worldwide depression and panic, the likes of which only those who are really around 80+ have ever witnessed. Of course, in 1929, you'll recall, there were no nuclear weapons or global terrorist organizations, etc. Why is this important? Because it's not entirely clear that several countries that possess nuclear weapons are stable enough to withstand an worldwide panic (e.g., Pakistan) and it would be a bad thing for nukes to get into the hands of fundamentalist terrorist organizations who would like to take advantage of the situation. Maybe that is farfetched, but there's certainly another, more practical, reason: We would all prefer not to lose any more of our life savings. That would happen if a big money-center bank failed and panic and depression ensued. No thanks. So, the POTUS has taken the good advice of his financial team and tried to leverage taxpayer money with private money from hedge funds and other big investors to clean out the bad assets. Is it a risk? Of course. Welcome to investing. Would it be a bigger risk if it was all taxpayer money. For taxpayers it certainly would be.
Second, as for the larger economy, the POTUS understands that the old model of industrial organization is dead and has been for many years. In many respectst the corporations did this to themselves, with plenty of help from unions. Over the past several decades, our country has been deindustrialized and deunionized. The major heavy industries have been offshored to countries with very low labor costs (like China, etc.), unions have shrunk to less than 10% of the workforce, and the remaining big unionized industries in this country simply cannot compete with deunionized industries both domestic and foreign. That is why GM -- the weakest of the Big Two U.S. car companies -- is going to, basically, fold. The POTUS knows this is the case and that is why he fired Waggoner and hired a labor expert to help distressed auto industry communities to transform. The GM of the future, if it survives at all, will be a much smaller company that is structured much differently. So, there will be one large U.S. auto company -- Ford -- and two fairly small ones that may, eventually, fold (GM and Chrysler). Personally, I don't think the country can support two or three large auto companies. At least one of them, and probably two, will have to go. Obviously, this is major, major, major not only for the economy but for individuals, communities, and the national psyche. As the POTUS said in his address to a joint session of Congress earlier this year, "the day of reckoning has arrived." He is merely preparing us for the inevitable.
Has the POTUS made mistakes on handling the economy? Certainly, but they've been darn small compared to the mistakes that Bush was making. He inherited a bunch of bad decisions and a few good ones and has to make lemonade out of a lemon. He needed to be more proactive on the stimulus with Chris Dodd, the chair of the Senate Banking Committee, who is in the pocket of AIG. The POTUS's congressional liaison (Senate side) failed him on that. That's really, quite honestly, the only major mistake I think he's made. Otherwise, I think his work on the stimulus was stellar. I know many disagree, but they're wrong. There's this thing we have in our country called the legislative process. It's ugly and hasn't been used very much over the past several years so folks forget what it looks like. It's republican government at work and we should be OK with that.
Perhaps some of his economic team appointments are arguable. I'm not sure I would have appointed Geithner as Treasury Secretary. I would have called upon Warren Buffet or Bill Gates to be a figurehead TS for a couple of years and have Geithner serve as deputy, or something like that. Elevate him later on if he does a good job. Fire him if he doesn't. Oh well, we got Tim and he'll be alright. Obviously, the Daschle nomination turned out to be a mistake, which is too bad but, unfortunately, Daschle is the ultimate Washington insider and that's what you get when you get too cozy with folks like that. They are, in many ways, very out of touch. In retrospect, this will turn out to be a good mistake because Governor Sibelius is fantastic and brings a sensibility to the health care issue that Daschle doesn't have. Plus, I'm sure he'll work his magic behind the scenes and be helpful. Anyway, I'm straying from policy into politics, which is another issue, albeit related certainly.
On a myriad of other domestic issues, the POTUS get's a B+/A- so far. Here's my summary:
Stem cell research: Great.
Closing Guantanamo: Great.
No torture: Great.
Criminal justice policy: Very good.
Drug policy: good/fair.
Health Care: Great.
Governing philosophy: Great.
Use of First Lady's Office for Outreach: Great.
What am I missing?
Next time: Foreign Policy.