Tag Archives: Obama

Don’t Screw Up Healthcare to Make Political Points

The health care reform effort in Congress is hitting some snags, and reports are discussing how the republicans see this as a make or break moment for the Obama administration. The republicans want to stop reform to make Obama look bad and weaken his chances to implement other parts of his agenda. Jim DeMint (R-SC) called it a “Waterloo moment” for the president.

This is why people hate politicians. Because instead of focusing on policy and helping their country and their constituents, they play douche bag political games like this is some sort of high school mock senate instead of the real thing.

If politicians don’t like the health care reform bills being presented, that’s fine. They are challenging bills, and concerns about their cost or about growing government bureaucracy or any number of other issues are legitimate. Hell, if you think that the free market should rule and people should be on their own for health care, that’s a legitimate, although heartless, view.

Virtually everyone – including republicans – agrees that health care reform is needed. The disastrous state of the American health care system is well known. So to fight health care reform bill – not fight to improve it, but fight against it passing at all – just to score political points, well that sucks. As happens so often here at Thoughtbasket, I must ask our representatives to stop dicking around and do the right thing.

Supreme Court Agrees With Thoughtbasket

OK, the justices didn’t exactly mention me in their decision, but they did unanimously (according to Scotusblog) rule against the Indiana pension funds who were whining that they hadn’t gotten enough money for their secured debt. The highest court in the country has thus decided that the Obama administration did not violate the rule of law in pushing through the Chrysler bankruptcy. Read here my post saying just that. Of course, some argue that this issue is too political for the Court to be focused just on the law, but if that were the driving issue here, wouldn’t this conservative court be likely to rule against Obama, not for him?

Please Focus on Policy, Not on Fear

Opponents of President Obama’s plan to close the prison at Guantanamo Bay have recently seized on the tactic of asking “do you want these terrorists in your neighborhood?” and thus playing on people’s fears. This is purely a rhetorical feint, and it’s offensive. The president isn’t planning on installing the Gitmo inmates in your local condo complex, and his opponents know that. The inmates will go into military brigs or maximum security prisons: the same places that currently house murderers, rapists and drug dealers. Are Obama’s opponents saying that these prisons aren’t secure? If so, shouldn’t they focus on fixing the prisons, so that rapists aren’t wandering your neighborhoods?

The fact is that the opponents of closing Gitmo know perfectly well that moving the inmates to a US supermax facility is perfectly safe. They just disagree with closing the island prison on policy grounds. And that’s fine. There are reasons – cost, isolation from US courts, desire to maintain military control – for wanting to keep Gitmo open. But let’s discuss those actual reasons, instead of using fear mongering and mistruths to get people scared and worked up.

Speaking of mistruths, on the same day that Admiral Mike Mullen, the chairman of the Joint Chiefs, said that he has long wanted to close Gitmo because it “has been a recruiting symbol for those extremists and jihadists who would fight us,” Republican Senator John Kyl, who is a major league douchebag, claimed that “it’s palpably false to suggest that the existence of Gitmo created terrorists.” Who is a more reputable source – the career soldier or the sleazy politician?

Glenn Greenwald has an excellent piece in Salon describing how this is an ongoing pattern: Republicans use specious arguments to make voters afraid, and Democrats feel a need to act tough instead of pointing out the ridiculousness of the Republican arguments. The NY Times recently ran a piece showing how the Republicans were planning even before Obama’s inauguration to use this strategy. To me, this demonstrates that the strategy is purely political, with no basis in fact or policy.

Wall Street Has Gone Too Far

In the wake of the financial meltdown there has been continued tension between Main Street and Wall Street; between the working class (and the politicians who represent them) and the financiers (and the lobbyists who represent them). Despite the commentary from populists such as me who have been railing against Wall Streeters continuing to pay themselves huge bonuses, some of this tension has been between legitimate positions of free markets versus genuine concern about greed and income inequality.

But now the financiers have gone too far. First was an article last week saying that some big banks are looking at participating in the government’s PPIP (Public Private Investment Program) in order to buy their own toxic assets. Wait…so they are going to borrow cheap money from US taxpayers, and then use it to buy their own assets, with US Treasury backstopping on their losses? That is appalling without even considering the obvious conflict of interest regarding what price the assets are sold for. You have got to be kidding me.

Then today’s NY Times reports about the extensive lobbying effort that the big NY banks have launched to limit regulation of derivatives. You remember derivatives – the financial “weapons of mass destruction” that were a huge cause of the meltdown? The big banks make a ton of money on derivatives, and they don’t want that gravy train derailed. And since when they lose money, the taxpayers bail them out, they are clearly in support of the status quo. So they formed a lobbying organization and hired a big-name lawyer to lead the charge, paying him over $400,000 for four months of work. Now they are lobbying Congress to water down any sort of regulation of derivatives.

For banks that received taxpayer bailouts to now be spending money lobbying to avoid regulation on the very products that caused them to require bailouts? No way. It is time for Congress, and for the Obama administration to say “Fuck you, Wall Street.” The big banks make billions in profit on unregulated derivatives? Too damn bad. So maybe some traders will only make $2 million per year instead of $10 million. Tough shit. The Treasury Department-Wall Street axis of greed has to stop, and it has to stop now. President Obama, it’s time you step up to the plate on this.

Added bonus links: 1) Paul Krugman on how Reagan-era decisions on deregulation set the stage for financial catastrophe; and 2) a hilarious piece on Harvard Business School students taking a pledge to serve “the greater good” instead of their “narrow ambitions.” The money paragraph is the last one, with a quote about principles from a woman who is taking a job at Goldman Sachs, one of the leaders of the lobbying effort excoriated above. Oh, HBSers, it’s such a shame that you don’t understand irony.

Chrysler Bailout and Contract Law

Conservative commentators have been criticizing how President Obama handled the Chrysler bankruptcy, saying that because the Administration pushed the secured creditors to take less than the UAW, which was unsecured, the basic tenets of contract law were violated. If the Administration had actually forced the secured creditors into this position, by passing some new law or threatening to arrest them, I would completely agree with these commentators. Rule of law is an essential underpinning of the American system.

But Obama did not “force” the creditors to do anything; he simply applied leverage. This is what parties do in contentious business negotiations. Whether it’s a bankruptcy or unwinding a marketing partnership, when it gets ugly the businesspeople start deploying whatever leverage they have. In Obama’s case, he had two levers: 1) the bully pulpit of the presidency; and 2) the fact that without the UAW on board, Chrysler was worthless and the creditors would get nothing.

With his bully pulpit lever, Obama did indeed “browbeat” the creditors. But hey, this is hardball here, and there were billions of dollars at stake. Plus these are vulture funds…they are used to being insulted. With his second lever, Obama simply was playing the game of chicken that is usually played in a bankruptcy, and he won. The creditors were saying “give us what we want or we’ll take over the company” and Obama replied “take what we’re offering or we’ll give you the company.” The creditors blinked first; they knew that if they took over the company it would essentially disintegrate overnight, and they would be left with a bunch of factories nobody would buy.

I’m as big a supporter of the rule of law as anyone – I have long said that exporting law is more important than exporting democracy – but this is not a case of the government ignoring the law. Instead it’s a case of government playing by the same rules as business, but playing better, which is something the right wing ideologues just can’t handle. And lest you think I’m alone in this, here are a law professor and a private equity professional saying similar things.

Which isn’t to say that I am a blanket supporter of the auto bailouts, because I’m not. I would have been perfectly happy to see Chrysler shut down. But any criticism should be on the merits, not based on a spurious claim being advanced for political reasons.

Obama: Greed is “Shameful”

This is the second in a series of posts about the need for Americans to step up and be more responsible. We all knew this need was coming – it has been a theme running through many of my posts – but when President Obama called it out during his inaugural address, I decided to address it more directly. My first entry in this series was about NIMBY attitudes preventing environmental projects from moving forward. Today’s entry is about greed, particularly among corporate executives and Wall Street bankers.

When Obama said during his inauguration that “what is required of us now is a new era of responsibility — a recognition on the part of every American that we have duties to ourselves, our nation and the world,” my guess is that he meant businesspeople too. And yet just three days after the inauguration, the Wall Street Journal ran an article about companies using dicey calculations to boost the value of pension payments they are making to senior executives. I won’t get into the mathematical details, but the basic story is that instead of using IRS rates to discount the value of future pension payments, companies are using their own rates, to generate a higher payment.

For example, one of the executives profiled, John Hammergren of McKesson, is due to receive $84.6 million, rather than the $66.4 million he would be paid using the IRS rate. This man made $38 million in 2008, $25 million in 2007 and over $10 million per year for the last several years. And on top of all this money he gets paid, he is due a pension payment of $66 million. But that isn’t enough…he seems to need even more money, so he monkeys with the numbers to boost that pension by another $20 million.

Merrill Lynch is a steady source of greed. First you have John Thain (am I the only one who thinks he’s a dead ringer for Mitt Romney?)


spending $1 million to redecorate his office. His excuse: the redecoration was done during better times. Dude, if you’re spending $1 million of shareholder money on office decorations, you are being greedy, no matter how well your company is doing. Then there is Thomas Montag, who Thain recruited to Merrill from Goldman Sachs with a guaranteed pay package of $39 million for 2008. Mr. Montag’s debt unit lost $16 billion in Q4 of 2008. Because of those losses, taxpayers have had to invest over $20 billion in Bank of America to support its acquisition of Merrill, and agree to share losses on $118 billion in assets. But has Montag (who, let’s not forget, after 20 years at Goldman is already rich) offered to take less of his bonus? No way. Why? Because he is greedy.

Of course, the ultimate symbol of greed was the recent news that Wall Street bankers paid themselves $18 billion in bonuses while taxpayers bailed out all their companies. It was this act of greed that President Obama called “shameful.” And he was right. For bankers to insist on getting their multi-million dollar performance bonuses, when their companies clearly had not performed, and were taking taxpayer money to survive, is the apex of greed. Companies claimed that they had to pay bonuses to retain employees. Where were those employees going to go? Bear Stearns? Lehman? I don’t think so.

Look, I understand people wanting to make money. I understand the desire to be rich. But rich people grubbing for the last dollar…I have to ask: have you no sense of decency? Responsibility and duty – to the nation, to our neighbors – means sometimes leaving a little money on the table. If we are to “begin again the work of remaking America,” as President Obama encourages us to do, reducing greed is a good place to start. How can we expect to solve problems like Social Security, health care, or global warming if everyone is grabbing as much money as they can? Whether the sacrifice is flying commercial instead of private, or buying a 30″ flat screen instead of 50″, if we are going to build America back up we must all change our attitude from “I want it all now” to “I’d like most of it, but I’m willing to share.” Let’s show a little restraint and try to come together to solve some really difficult challenges.

Saving the Environment – We All Need to Give

President Obama’s inaugural address has gotten me thinking about responsibility and sacrifice. The President said what we have all known for a long time: that Americans are too profligate – spending money we don’t have, burning energy we can’t afford – and that a day of reckoning would come. In fact, the President made clear that the day of reckoning is here: “our time of standing pat, of protecting narrow interests and putting off unpleasant decisions — that time has surely passed.” As a result, I am planning a series of entries on this topic, on the theme of sacrifice. Today’s item: the environment.

A recent article in the Wall Street Journal (regular readers know I love my WSJ) discussed Cape Wind, which aims to put 130 windmills off the coast of Cape Cod, reducing greenhouse gas emissions an amount equivalent to taking 175,000 cars off the road. A no brainer project, right? Wrong, because the wealthy folks who have their weekend houses on that part of the Cape don’t want their views marred by windmills out on the horizon. They have been protesting the project and putting up legal barriers, enlisting the help of their most powerful neighbor, Teddy Kennedy, whose family has a fabled compound in Hyannisport.

Massachusetts is famously liberal, and based on my two years in Boston, the people who weekend on the Cape would consider themselves environmentalists. They recycle, they install solar power, they drive their Prius to Whole Foods to buy local produce. But when it comes to windmills in their expensive view, suddenly they aren’t so green. This is where they need to listen to our new president and stop protecting their narrow interests. They need to sacrifice a little for the good of the environment.

Broadening the scope of this discussion, if we are going to defeat global warming, everyone is going to have to chip in. The NIMBY (not in my back yard) protests that stall projects like new power lines, or wind farms, are going to have to stop. Of course, nobody wants a giant tower in their back yard, or a windmill right off their front porch. But nobody wants temperatures to go up several degrees either, or ocean levels to rise to a point where Cape Cod weekend houses are under water. Global warming is a major problem that affects everybody, and we are all going to have to sacrifice a little – give up our SUV, or allow windmills near our weekend house – if we are going to solve it. As theologian Sallie McFague put in her new book regarding climate change, “either we will all make it together or none of us will.”