Reader Question Time!

Reader Andrew J. of Chicago Illinois asks: "How much of the "Obama's done nothing" that gets filtered down to me is fact and how much is fiction? And of the fact---why?

Is it true? did he just waste everyone's time and get us excited for nothing? Is it all poppycock and he really has been doing amazing things that if it were any other president (with lower expectations) we would be very happy about? Did he put all his eggs in one basket and didn't leave time for anything else? What the heck really happened!?"


Hey, Andrew, thanks for your question(s). Might as well start answering them, I suppose. To start with, of course it's not true to say that Obama's done nothing. Heck, by the standards of the last guy's first year in office Obama's been a veritable cyclone of activity; whereas the last guy spent most of his time in that first year flicking off the international community by opting out of treaties and agreements. Oh, and he spent a lot of time at his ranch. And reading children's books to first graders. Of course, he would later make up for this inactivity by starting twice as many wars as any previous president. Unfortunately for Mr. Obama, you don't get judged by what the last guy did, you are judged based on the actual mess the country is in on your watch and what you do about it.

And the country is in a very, very big mess. Multiple big messes, in fact. The fact that they're all left over from the previous administration (you could argue that the economic mess has been brewing for the last 4 administrations) is not going to buy the president any good will for much longer if he doesn't show people that he's trying to clean them up. And Obama simply hasn't been that vigorous in taking on these problems.

Let's look at what he has done. The bank bailout he inherited from Bush was probably (however distastefully) the absolute minimum required to keep the economy from eating itself. The stimulus package he and his Democrats came up with, however, was too small and was misdirected. Yes, $750 billion, or $800 billion or whatever it was sounds like a lot. But the Defense Department's public budget is $650 billion EVERY YEAR. Not counting all the Top Secret money they're spending to build microscopic robots to eat Al-Queda's brains from the inside. And, hilariously, that doesn't even count the money we're spending on the two wars we're fighting. Bush had the money for them authorized separately because he didn't want those huge numbers to show up in the budget when he was already running trillion dollar deficits. So, in the grand scheme of things, a one-time package of $800 billion really isn't that much. We could admit that we really don't care what happens in Iraq and Afghanistan, bring all our troops and equipment home, and save enough money for a couple of stimulus packages that big every year.

The real killer though, was that all this money was sent after the wrong target. Granted, it still did a lot of good, Lord knows we need to spend money on our infrastructure. Most of the money that went to the states was spent filling in the holes they suddenly had in their budgets, which is all to the good. But what it basically amounted to is treading water without addressing the real problem. Which was/is that suddenly a lot of people's homes are worth much less than they thought, while at the same time their mortgage payment has "ballooned" to use the technical term, to several times what it used to be. A lot of people out there suddenly owe more on their mortgage than their house is actually worth. Even more find that they suddenly can't pay their new, "ballooned" monthly mortgage payment.

When I worked in title insurance, the mortgage company would have to send us the loan instrument, the mortgage or deed of trust, or whatever their state used. So, I'd see a lot of these 5-Year Balloon ARM's. Which basically say that your mortgage payment is X for the first 5 years. X is typically already just about as much as the borrower can pay. Since the bank making the loan planned to sell it to someone else, their job became to qualify as many people as possible. These "low for 5 years" mortgage payments helped do that. But you also had to make it look good on the other end, to the people buying the mortgages. That's why after 5 years the borrower's payment goes up (balloons) and they're paying the full principal and interest, plus the interest they missed from the first 5 years. This makes it look like an attractive investment. If you don't have the full picture anyway.

Once I'd read the first one or two, I went to my boss and asked, "How on earth is this a good deal?" The answer of course is that it wasn't a good deal at all. But it isn't a suicidally stupid deal either. In an environment where home prices are rising at a double-digit rate every year and everyone is looking to buy, you live in a house two or three years, let it appreciate, then sell at a healthy profit and go on to the next 5-Year Balloon ARM. In an environment in which home prices are sinking and everyone's trying to sell... yes, then it is a suicidally stupid deal.

My idea for a stimulus package would have been to pass a law requiring all the retarded financial institutions holding mortgage backed securities, or at least sub-prime mortgage backed securities, to sell them to the federal government for 50 cents on the dollar. Yes, they would lose money, but they're also already getting bailed out, screw them. It was their greed, blindness, and stupidity (plus the stupidity of 30 years of federal deregulation with special shout-outs to Ronald Reagan and Phil Gramm) that led to this situation in the first place. Let them lose money. The point is, the federal government now owns all the bad mortgages. Announce a mortgage holiday. Mortgage payments are suspended until you and the government can negotiate a new, non-predatory, deal that lets you keep your house. Adjusting your payment down to what your house is now actually worth. Combine that with some good old-fashioned re-regulation to keep this from happening again. Now THAT'S a stimulus package. Suddenly people feel rich again. They don't have a mortgage payment! They go out and buy shit again. Companies start making shit for them to buy, they hire more people to help them make the shit. More people have money, so they can buy shit, etc., etc.

So, the bailout and stimulus package were kind of weak sauce. What else has Obama done? The Cash for Clunkers program was a great idea, and seemed to be working. Inasmuch as, people were actually buying cars again. But they only ran the thing for a couple months. That's the kind of thing that should have been continued and expanded. Why not do the same thing for major appliances? Get people buying washers and dryers, refrigerators, etc.? People buying stuff is what keeps the economy moving. If something you're doing gets people to buy stuff, keep doing it.

On the international front, he's promised to shut down Guantanamo Bay and he's made several trips abroad to try to start rebuilding our credibility and goodwill with other nations. He's also reshuffling our troops, presumably from Iraq to Afghanistan, but I don't have any hard numbers as to who's going where. And both of those countries are places you're not going to "conquer" unless you're willing to play by Mongol rules. Which I'm going to say is an impossibility in our video over the internet age. I guess the alternative is we could keep a million troops there forever. That might work.

Anyway, the big thing Obama has tried to do is get some kind of health care reform done. He's spent pretty much the whole year on it, and it doesn't look like it's going to happen. This is what most people are talking about when they say Obama hasn't done anything. And that's fair and unfair. It's true that he hasn't put much of his own personal ass on the line with anything specific. He hasn't put together his own plan and sent it to Congress. There hasn't been any full-court press from the White House on this, to my knowledge. He's basically been content to issue fairly vague directives about what he expects from any health care bill before he'll sign it, and left the actual nuts and bolts of it to Congress. Which is always a bad idea.

In his defense however, he thought he was learning from Bill Clinton's mistakes. Back in '93, Bill had Hills put together a health care reform plan. She put together a round-table of industry interests, and they came up with something pretty horrific. Then these same industry interests spent a lot of money ripping the bill to pieces in the media. Congress decided it wasn't worth the trouble, and health care reform was over for another decade. So, Obama's idea seems to have been not to give everyone a specific target to focus on, to get some kind of consensus bill through, on the theory that something is better than nothing.

The problem, of course, is that perpetual fly in the ointment, the Republican Party. They don't get all the credit this time, sadly, there are several Democrats (including, mystifyingly, Obama himself) that are insistent on getting Republican support for health care reform. To this day, I don't know why. Political cover for Democrats in conservative districts? I don't know. I keep hoping that this is all just Phase 1 in his ingenious plan. Let the Republicans wear themselves out on this, frankly crappy, health plan, and then roll out his tremendous Cadillac health care reform bill and just watch their jaws hit the floor.

Because the truth is that what Congress has come up with is not very awesome. Mostly because of concessions made to try and attract Republican and conservative Democratic votes. Doubly ironic because it will be a cold day in hell before Republicans vote for health care reform. It will be a cold day in hell before they vote for anything that will help Obama look like he's doing a good job. The Democrats and Obama are going to have to wise up and start doing it themselves. The Republicans are not going to help. Ever. And learning this, if he has learned, has cost Obama the first year of his term, more or less.

So, has Obama done nothing? Well, no, clearly he's done something. Is doing things. But, has he done enough? Like I said in the beginning, you get judged by the standard of what you have to accomplish. The size of the tasks before you. By that standard, Obama's not doing what he could, or should have. He hasn't done nearly enough.

The thing to do, as I think I mentioned in my last post, was to blitz Congress with bills. And scream at them. Vote now, vote now, vote now! The economy's falling apart, vote now!! I'm doing my part, here are these bills I want you to pass, here's my plan. Now vote!! Or it will be your fault when we're all out selling apples and hunting for tins of dog food in dumpsters!! After September 11, the do-nothing Bush Administration managed to invade Afghanistan and slam the Patriot Act through Congress IN OCTOBER. Not the next October. Not October, 2002. The very same October! The month after September 11. We were facing a much realer crisis in January 2009. Guys with box cutters simply aren't going to be able to pull off a September 11, probably ever again. But if our whole economy collapses, it most likely takes the world economy with it. And at that point it takes government spending on a scale that may actually be impossible for us now to get thing going in the right direction again.

What Obama needed to do was use that. Bush used a fake threat to push the country the last few feet over the edge, why not use a real threat to help pull it back? Get people's mortgages fixed, help them buy cars and appliances and so on, fix health care, throw in a few more goodies while you're at it. You're in a position to hold Wall Street hostage. Use it. No, you don't want everyone to panic, but the economy is in very real trouble, if the only way to save it is to scare the people that think they matter a little, then do it. What we've ended up with is a surface band-aid that saves the bacon of the people at the top, the people that created the mess in the first place, while doing very little for the people down in the trenches that were always going to suffer the most anyway. They basically stopped the bleeding, breathed a sigh of relief, and now everyone seems to think it's back to business as usual.

And, Mr. Obama, you simply can't get something like health care passed under business as usual rules. In another 10 or 20 years when health insurance premiums really start to bite, maybe. But not right now. Not unless you really get behind something and push it. Forget the Republicans, they're not going to help. You basically need one Republican vote right now, in the Senate. Find someone halfway reasonable and squeeze them. Get your caucus together and threaten them, bribe them, do what you have to do. Get them all moving in the same direction. Then roll the damn Republicans and let everyone see them for exactly what they are. Obstructions. What they are is in the way. You're going to have make them get out of the way. Or else, like I said, roll all over them. You still have the numbers for that, until November. But if you can't do one or the other now, right now! Then imagine trying to do it with a Republican Speaker of the House, or staring at a Republican Senate.

The answer to your questions, Andrew, is that Obama hasn't exactly been a do-nothing. But he certainly hasn't done enough to justify people's hopes for him. And he may be running out of time.