Obama’s Learning Curve

The president received a rude awakening on the bipartisan, sometimes called postpartisan front. In a similar fashion to the loading up of his government with Republicans and, in general, rightist oriented thinkers and ignoring progressives, he thought all he had to do was make nice with the opposition and Republicans and Democrats could then be all one happy family. So he stuffed the stimulus bill with idiotic tax breaks to please the Repugs and they responded by farting in his face with an almost unanimous no vote.

The Dems, true to form, still think they are helpless without approval from the Repugs, who, all they have to do is think filibuster, and the Dems instantly go flat on their back in submission mode. Why not let them make fools of themselves going all out in opposition to bills desired by the vast majority of Americans? It doesn’t take a master strategist to know that that is just good politics. Why can’t the Dems for once be known for standing up for something and not abject capitulation? Their job isn’t to boost the opposition, it’s to crush them, trample them, shame them and then toss the wreckage in the waste bin. Simple politics.

I’m not saying it has to be anything like the purely obstructionist, underhanded and mean spirited neo-con way of doing things: It can be totally honest, straightforward and fair minded. All they have to do is speak to the heart of Americans’ concerns and follow through. For instance, the vast majority of Americans favor universal health care and a clear majority do so even if it means increased taxes. Everybody knows that the insurance companies are a large part of the problem and yet they are part of all current thinking on the matter.

Former Senator and Majority Leader Tom Daschle, Obama’s first cabinet pick to deal with the problem has been deeply tied to the health care industry for a long time and was thus a terrible choice for the office. I especially despise the fellow for his embrace of Bush in his 2004 campaign ads. I was thrilled that he lost. How about picking someone with some new ideas, someone who actually believes in change?

And how about hiring people for his economic team who weren’t the ones who helped to cause the problem in the first place? An ungodly amount of money has been spent trying to beat dead banks back to life. It’s been common knowledge amongst all but those who created the mess that the big banks are insolvent and have been for a quite a while. Their liabilities are far greater than their assets. Their stock prices reflect hoped for bailout money, otherwise zero is their effective worth.

I imagine Obama thought he could placate the fat cats, soothe their nerves, by putting their own in charge, while he would maintain the final word. It may well work in theory but, by listening to the stupid ones and ignoring progressives, precious time, not to mention trillions of dollars, has been lost trying to avoid the inevitable need to nationalize the banks. Government, we’re told is not good at managing banks, but could the government possibly do worse than the bankers have?

It makes a difference who he takes advice from: there are any number of progressive voices that could‘ve provided alternative and far less costly visions.

The numbers involved in these bailouts are so great that the people, evidently including the president, are no longer able to grasp their significance. Forty billion dollars of aid to the states, who are in dire financial straits, was stripped from the stimulus bill to placate the Repugs while Citibank has already received $45 billion in a direct cash handout and hundreds of billions more has been committed in the form of guarantees to keep it afloat and it’s still insolvent. Meanwhile Citi’s capital value is $10 billion… does any of that make sense?

The president’s plan to halve the deficit is based largely on fantasy as it presumes a growth rate of more than 2% in 2010. Ain’t gonna happen folks: the trajectory is down, down, down; at best treading water. There is so much garbage in the financial system and economic insecurity on the part of the citizenry, it will take years to work it out. And that’s beside the point that we don’t want to get the country moving again, we want it to slow down, take stock and look for a genuinely new kind of economy; one that’s sustainable and easy on the earth.

Meanwhile, trillions of dollars will be added to the debt since he has no plans to raise taxes on the wealthy until Bush’s tax cut expires in 2011. That money is needed now. It does the economy very little good in rich people’s hands: far more important in reducing the deficit.

Besides, the economy will not be what we want it to be until income disparity is reduced to more ethical and moral levels. Also, to call $250,000 per year middle class and think everybody under that needs a tax break is ludicrous. People living on that amount are using way too much of the earth: it is absolutely impossible to build a sustainable economy when large numbers of people are living that high. At a minimum, everybody over $100,000 per year ought to see a stiff tax increase; to reduce the deficit now and later pay for a more intelligently designed and community oriented nation.

Personally, regarding the deficit, though I’m no professional economist, I wonder where all the money will come from to finance it. Considering countries all over the world are engaging in deficit spending, they will be competing for limited resources.

With stock markets halved, property prices plummeting and banks insolvent it will have to come from outside. But countries all over the world are in their own downward spirals. Japan, for instance, which traditionally has enjoyed huge trade surpluses and bought lots of US treasury notes, is now running deficits so will be pulling back its dollars. The US will have to borrow $1.3 trillion dollars next year, which hat will it be pulled out of?

But Obama is a fast learner and I believe his head and heart are in the right place, so he may well change the government’s tack before the burden of losses is too great. At best, the people will be saddled with huge debts for decades.

The Middle East will be an equal challenge. In many ways the election of Netanyahu as Israel’s next prime minister will serve to clarify the situation. Based solely on a short clip of a TV interview I saw him give about twenty years ago, I consider him a slimy creature. His words were so full of lies, he couldn’t bring himself to look at the camera.

Notwithstanding the fact that Tzipi Livni of the Kadima party and Ehud Barak of Labor speak in favor of a two-state solution, their actions belie their words. Since the beginning of the occupation, every government of Israel has continued the theft and colonization of Palestinian land. Settlement building was even accelerated under Labor, supposedly the party most committed to peace. Livni, who campaigned for a deal with the Palestinians, famously said during the recent Gaza carnage that Israel goes wild when put upon.

Therefore, much better to have someone in power who pays no lip service to policies he has no intention of implementing in a way that would satisfy the Palestinians. Makes things so much clearer. But also much harder for Obama who, in spite of obligatory obeisance to right-wing Jewish lobbies, has used words like fair and evenhanded in relationship to what needs to happen there.

Israel’s war machine and colonization program are a gift from the American people. Though it is by any standard a wealthy developed country, Israel gets more US development aid than any other recipient. While it’s possible they could carry on their dastardly policies towards the Palestinians without US largesse, it would require a real sacrifice on their part. now, with America’s help they can easily subsidize settlement housing to encourage people to move there.

So what will Obama’s response be when Netanyahu, who thought the Gaza attack didn’t go far enough, takes Israel on another rampage? Will he continue US policy of blaming the oppressed for resisting their subjugation? Or will he take the high road and explain to Netanyahu that America is no longer interested in subsidizing the theft and colonization of Arab land? Now that Israel has a leader who is not interested in a two-state solution - the conventional wisdom solution to the problem - there can be no pretense that lack of an agreement is solely the fault of the Palestinians.

Besides, with half million Jews now living on Palestinian land, the two-state solution is unthinkable. A unitary secular state where all are equal is equally unimaginable, so, Mr. President, welcome to the Middle East.

As for Afghanistan, it’s going to change its name to Afquagmirestan.

Within political correct, conventional wisdom, Obama is making all the right moves and has a large majority of the country behind him; but conventional answers are not going to work this time. The only question is how long it takes him to learn that hard lesson.

Jump Start, Stimulus or ?

Is it merely a frantic and futile, all-out and spare-no-expense attempt at resuscitating an economy that should have enjoyed an undignified death decades ago?

Frantic? Even common sense, cool head Obama indulged in hyperbole saying if the stimulus package wasn’t passed quickly a whole generation might be lost. Is this like the $700 billion Bush bank bailout that had to be passed within a weekend or the world would come to an end? In fact, there’s nothing of a stimulating sort that will have much effect at all in 2009.

The part that will have an immediate impact is the money allocated to food stamps, unemployment and other welfare programs designed to alleviate widespread destitution but that’s not stimulation, only treading water. Grants to cities and states is also important but in essence will not stimulate, but rather merely reduce the number of civil servants they will have to lay off and the severity of cuts in education and social programs they will have to make.

Futile because nothing short of time - a good long time, maybe five to ten years - is going to see a thriving economy again. Moreover, the more effort, and money, that is expended to revive the old economy, the longer it will take to create a new economy.

Futile because a good part of the “stimulus” is in the form of tax cuts which will have almost no positive effect but merely add to the nation’s debt load, which is approaching staggering dimensions. This is not only mortgaging the future but also will inevitably have a devastating effect on the value of the dollar. Taking on massive new debt in order to solve the problem of massive old debt is only something bankers, economists, politicians and pundits can get their heads around. For normal people it’s like the guy stuck in a pit who doesn’t know without coaxing to stop digging.

Debt isn’t all bad. Going into debt for infrastructure makes perfect sense, since it’ll be around for a long time. However, spending a lot of money on roads is almost counterproductive considering the need to get away from autos as a primary form of travel. Railroads, on the other hand, seem to have low priority in the package though they are the most efficient form of transportation. Three rail oriented improvements could be made that would quickly get the stimulus money in the system.

First is double tracking. Most lines in the West, for instance, have a single track. That means when two train’s path’s cross, one has to stop in a siding and wait for the other to pass. The train will sometimes have to wait for 15 or 20 minutes. One time on Amtrak in southern California our train got stuck behind a freight that couldn’t make it up a steep grade on one try. We had to stand idle in frustration for an hour till the freight’s engines cooled down and it could make another stab at it. Double tracking would thus allow for a significant reduction in travel time, and thus efficiency, as well as frustration level. Since most of the right-of-way is already in the hands of the railroads, work could begin within a couple months.

The second is electrification. Electric trains are superior to diesel in every way. They are faster, cheaper, cleaner and quieter and the engines last longer and require less maintenance. This work could also get started on a very short timetable. Their only drawback is the need for additional infrastructure, but since it would pay off for a long time, an ideal use for borrowed money.

Manufacturing modern, efficient, lightweight new rolling stock would also be a good investment that would put people to work very quickly. Amtrak’s trains are heavy lumbering beasts. They are very smooth and comfortable, but they were built at a time when fossil fuels were cheap and ‘inexhaustible’, and they pay no heed to conservation. Amtrak has been mercilessly emasculated over the past decades, so merely reestablishing previous routes would put people to work almost immediately.

Every penny of the stimulus devoted to conservation and green energy will be well spent, but that’s only a small part of the total.

Well spent or ill spent, it’s not going to jump-start the economy. Obama talks of creating 2 million jobs in two years, but the country lost 1.9 million in just the last quarter of 2008, and those losses are just the beginning. The most it will do, therefore, is provide necessary safety nets and keep the situation from getting worse. Problem is, in the longer view the increased debt will definitely make things worse.

What needs to happen is a total rethink, a movement towards a different kind of economy, one based on quality of life rather than quantity of possessions. One designed with sufficient leisure time so people can pursue the arts and humanities. What America, as well as much of the developed world, needs is shorter work weeks and a lower cost of living which can only come with deflation, a word that puts fear in the hearts of all those in power.

Obama is a quick study. In a very short time he will find his stimulus has been very unstimulating and be forced to seek alternatives. So far he’s gotten most of his advice from the very people who created the problem in the first place.

One policy change he must recognize pretty quickly is the need to raise tax revenue. The only place those taxes can be found is in the wealthy and corporations and taxing them is a good in itself. They’ve had too much power and privilege and must be reined in if any kind of new economy can be brought into play.

Meanwhile hold on to your hats, this is likely to be a wild ride.