Recently in Obamanomics Category

Also making the rounds on Facebook, this ancient Calvin & Hobbes strip anticipates the socialized-losses-for-me-but-not-for-thee mindset of contemporary "job creators." Thank goodness they only have one-and-a-half major political parties behind them to back their play.

"In its report, the budget office found that from 1979 to 2007, average inflation-adjusted after-tax income grew by 275 percent for the 1 percent of the population with the highest income...By contrast, the budget office said, for the poorest fifth of the population, average real after-tax household income rose 18 percent. And for the three-fifths of people in the middle of the income scale, the growth in such household income was just under 40 percent."

A brand-spankin' new CBO report concludes what we all already know: Income inequality has surged since 1981, and government, post-Reagan, has consistently failed to address the problem. "'The equalizing effect of federal taxes was smaller' in 2007 than in 1979, as 'the composition of federal revenues shifted away from progressive income taxes to less-progressive payroll taxes,' the budget office said." But, hey, let's sweat that deficit.

"What fiscal crisis? The great unasked question in this summer of sound-and-fury is 'why?' The United States has many problems at the moment: a high-and-stubborn unemployment rate, a foreclosure catastrophe, a slowing economy that has not recovered and will not recover...and the ongoing challenges of infrastructure, energy and climate change. Fiscal crisis? The entire thing is a figment, made up of wise-men's warnings repeated endlessly."

James K. Galbraith, who warned of the deficit witchhunt a year ago, weighs in on the debt ceiling endgame currently playing out in Washington, as well as Obama's role in it:

"[W]hat do we have, from a President who claims to be a member of the Democratic Party? First, there is the claim that we face a fiscal crisis, which is a big untruth. Second, a concession in principle that we should deal with that crisis by enacting massive cuts in public services on one hand and in vital social insurance programs on the other. This is an arbitrary cruelty. Third, a refusal to stand on the strong ground of the Constitution, against those whose open and declared purpose is tear that document and the public credit to shreds."

Yep, that's about it. When it became clear that Obama had fully inhaled voodoo economics and was once again going to give away the store in these needless negotiations, I said on Twitter: ""I'll take [Boehner/Cantor/Lannisters/Littlefinger] at his word!" I just realized: Obama negotiates like Ned Stark. Now, winter is coming."

But, really, that gives this president too much credit. He's not a nobly deluded sap. He's getting exactly what he wants: a Third Way-approved Grand Bargain that takes money out of a sputtering economy and needlessly slashes our social insurance system, all in response to a problem that is basically imaginary.

But, of course, the chatterers and the Serious People™ will applaud this bargain as being wise, centrist, and independent no matter what damage it causes -- hey, only Nixon can go to China! And all the while the economy and labor market will continue to tank. What a fucking fiasco. [Rorschcat via here.]

"The contrast in fortunes between those on top of the economic heap and those buried in the rubble couldn't be starker. The 10 biggest banks now control more than three-quarters of the country's banking assets. Profits have bounced back, while compensation at publicly traded Wall Street firms hit a record $135 billion in 2010. Meanwhile, more than 24 million Americans are out of work or can't find full-time work, and nearly $9 trillion in household wealth has vanished. There seems to be no correlation between who drove the crisis and who is paying the price."

As Bank of America pays a pittance to other banks for its malfeasance, former chair of the Financial Crisis Inquiry Commission Phil Angelides looks into how the winners are now rewriting the history of the 2008 financial collapse. "So, how do you revise the historical narrative when the evidence of what led to economic catastrophe is so overwhelming and the events at issue so recent? You and your political allies just do it. And you bet on the old axiom that a lie is halfway around the world before the truth can tie its shoes." Attorney General Schneiderman, our nation turns its lowly eyes to you.

"Just counting work that's on the books (never mind those 11 p.m. emails), Americans now put in an average of 122 more hours per year than Brits, and 378 hours (nearly 10 weeks!) more than Germans. The differential isn't solely accounted for by longer hours, of course--worldwide, almost everyone except us has...a right to weekends off, paid vacation time, and paid maternity leave. (The only other countries that don't mandate paid time off for new moms are Papua New Guinea, Sierra Leone, Liberia, Samoa, and Swaziland. U-S...A?)"

It used to be a central tenet of progressivism was working to shorten the work week. Now, even unemployment-soothing innovations like workshare go nowhere, and, as Mother Jones's Monika Bauerlein and Claira Jeffrey explain (with handy graphs), we are all victims of the Great Speedup...but not the beneficiaries. "For 90 percent of American workers, incomes have stagnated or fallen for the past three decades, while they've ballooned at the top, and exploded at the very tippy-top...In other words, all that extra work you've taken on -- the late nights, the skipped lunch hours, the missed soccer games -- paid off. For them."

"There is a dignity in the Hoover Dam, a massiveness that speaks to a grand national purpose. A country -- our country -- decided to build it...Great works of infrastructure provided jobs and returned an incredible social investment. It is inconceivable to imagine the modern economy without the vast investments in infrastructure made by preceding generations -- everything from rural electrification to developing the Internet."

Ex-Grayson staffer (and friend) Matt Stoller dissects the lack of political will for infrastructure reinvestment in today's political climate. "Ultimately, of course, we will have no choice but to rebuild our infrastructure or risk social collapse...Meanwhile, the ideological fight is not over whether to spend more on infrastructure. It's whether we should privatize what's left."

Proving Matt's point is this thoroughly sad column by ex-Biden Chief of Staff Ron Klain, a man who until very recently was a senior advisor to the president. (Now, he works for a "private investment firm," natch.). Says Klain: "Hoover Dam nostalgia is misguided...[I]t's time to let go of the idea that a handful of marquee construction projects, even majestic and lasting ones, can solve our employment problem. Such endeavors alone didn't bring us out of the Depression in the 1930s, and they won't end our current predicament."

Uh, is anyone actually saying that we should only do "a handful of marquee construction projects"? No, no, they're not. They're saying we should build big things, build small things, rebuild and repair things big and small, and otherwise put people back to work in any way possible. Where's the vision? It's going to take something a mite bigger and more audacious to get the economy moving again than an employer-side payroll tax cut.

"The audits conclude that the banks effectively cheated taxpayers by presenting the Federal Housing Administration with false claims: They filed for federal reimbursement on foreclosed homes that sold for less than the outstanding loan balance using defective and faulty documents. Two of the firms, including Bank of America, refused to cooperate with the investigations, according to the sources."

As the alleged perps try to get off by paying the (to-them) meager sum of $5 billion, a confidential audit conducted by HUD finds (surprise, surprise) compelling evidence of rampant foreclosure fraud at the big banks. "The audits accuse the five major lenders of violating the False Claims Act, a Civil War-era law crafted as a weapon against firms that swindle the government...The audit on Bank of America finds that the company -- the nation's largest handler of home loans -- failed to correct faulty foreclosure practices even after imposing a moratorium that lifted last October."

And, in very related news, someone has finally stepped up to the plate with regards to the roots of the financial crisis: New York Attorney General Eric Schneiderman has announced he's officially going to look into the Street's role in precipitating the meltdown. "The inquiry appears to be quite broad, with the attorney general's requests for information covering many aspects of the banks' loan pooling operations." Godspeed, Mr. Schneiderman.

"Told that the data came directly from the Social Security Administration, Simpson continued to insist it was inaccurate, while misstating the nature of a statistical average: "If you're telling me that a guy who got to be 65 in 1940 -- that all of them lived to be 77 -- that is just not correct. Just because a guy gets to be 65, he's gonna live to be 77? Hell, that's my genre. That's not true,' said Simpson, who will turn 80 in September. Understanding life expectancy rates at age 65 in 1940 is central to understanding Social Security itself."

In keeping with his informative interview with Alex Lawson last fall, former Wyoming Senator and co-head of the president's deficit commission Alan Simpson -- while railing against AARP -- proves once again knows as little about Social Security as he does about hip-hop. So, yeah, by all means let's put him in charge of entitlement "reform."

"Simpson's forceful gesture came after an extended diatribe against Social Security, which he said is a 'Ponzi' scheme, 'not a retirement program.' Simpson argued that Social Security was originally intended more as a welfare program." Um, no. But, in Simpson's defense, the president who appointed him also harbors some misunderstandings about Social Security. And at least the Senator is right on public financing of elections. So, there's that.

"Lloyd Blankfein went to Washington and testified under oath that Goldman Sachs didn't make a massive short bet and didn't bet against its clients. The Levin report proves that Goldman spent the whole summer of 2007 riding a 'big short' and took a multibillion-dollar bet against its clients, a bet that incidentally made them enormous profits. Are we all missing something? Is there some different and higher standard of triple- and quadruple-lying that applies to bank CEOs but not to baseball players?"

In Rolling Stone, a simile-happy Matt Taibbi reiterates the open-and-shut fraud and perjury case against Goldman Sachs that was laid out last month in the Levin report -- a case that, thus far, nobody in a prosecutorial position seems to be taking up. Too busy going after Wikileaks, I guess.

"To recap: Goldman, to get $1.2 billion in crap off its books, dumps a huge lot of deadly mortgages on its clients, lies about where that crap came from and claims it believes in the product even as it's betting $2 billion against it. When its victims try to run out of the burning house, Goldman stands in the doorway, blasts them all with gasoline before they can escape, and then has the balls to send a bill overcharging its victims for the pleasure of getting fried."

"The outlook isn't sunshine and roses: Rick Raymond, of the College Parents of America, notes, 'Graduates are not the first to be hired when the job markets begins to improve. We're seeing shocking numbers of people with undergraduates degrees who can't get work.'"

According to a new poll conducted by Twentysomething, a whopping 85% of college grads are moving back in with their parents after graduation. They're also facing the worst job market on record and holding a record amount of college debt.

In other words, it's crisis time. Should we ramp up government spending and fashion 21st-century versions of jobs programs like the CCC, WPA, and NYA? Or should we cut public sector jobs and just concentrate on lowering corporate taxes? hey, Win the Future™ and all that.

"'Trump's presidential run is no longer being treated as serious by the easily distracted and resolutely frivolous political press that covered it so thoroughly just a few short weeks ago. While it was always an unamusing joke...we had what felt like a lifetime of New Hampshire trip coverage and Piers Morgan interviews and 'President Trump? It might be more likely than you think!'"

With last month's embarrassing Trump boomlet seemingly run its course in the Village, Salon's Alex Pareene comes to bury, not praise, the Donald. "[T]ransparent idiocy didn't cause the press to take Trump less seriously, but it did lead people to gradually grow to hate Trump, which made his ratings suffer, and the exposure of the artifice of the Trump persona was decidedly damaging to his 'brand.' Once your 'brand' has been damaged, say goodbye to credulous political press coverage!"

To be honest, I couldn't care less about Trump, and mostly avoided all of his Birther shenanigans as they were unfolding two weeks ago for the same reason I try to avoid any political coverage -- from right or left -- of the "You won't believe what Sarah Palin just posted on Facebook!" variety. It's lazy, it's boring, and it's actively pernicious given all the real problems we face right now. (But at the very least, both Trump and Palin are noteworthy indicators of how far the GOP done fell.)

I'm only posting on this now to point out that the Trump boomlet was by no means a one-time-thing. When the President of the United States actually had to come on TV two weeks ago to prove he was an American citizen, there was much pearl-clutching by the Village press about what a travesty this had all become. "What a sad day in American political history," lamented MSNBC's Chuck Todd. Meanwhile, the Washington Post opined that the release "says something embarrassing -- actually, make that disturbing -- about the state of American politics" -- soon after that newspaper of record invited Trump to the White House Correspondent's Dinner. (An evening, by the way, that's as good as reflection as any of how desiccated and domesticated today's establishment press has become.)

For his part, ABC's Jake Tapper -- a fellow who, let's remember, got his big break as a hard-hitting journalist by kissing-and-telling on Monica Lewinsky back in the day -- tried to defend the press by pointing to a Pew study which found that the deficit debate was actually the most-covered news story of the week. The problem with this line of argument is that conducting lousy journalism in one arena does not absolve you of conducting lousy journalism in another. And in fact, Village criers have been just as incompetent and/or duplicitous on the deficit.

For months, as you all know, the Serious People in the media have been banging the drum of the deficit witchhunt even though, from an economic perspective, austerity at this hour makes about as much sense as Birtherism. And, in the past few weeks, they have doubled down on this idiocy by trying to elevate the most recent flavor of the month, Wisconsin Congressman Paul Ryan, as a Serious Man, come to tell us hard truths about the need for sacrifice.

In fact, Congressman Ryan is scarcely any less of a huckster than the Donald. This is a guy who laments the intrusions of the welfare state at every turn, but only made it to college thanks to Social Security benefits received upon the passing of his father. (To be fair: Ryan is only emulating his hero with this sort of hypocrisy.) This is also a guy who, when confronted with the Clinton budget surpluses of a decade ago, then lamented that the debt was too small.

And this is a guy whose budget proposal -- which he was quick to deem not a budget, but a cause -- is basically the same vile, stale concoction of malice and magical thinking that the right has been peddling for decades. It uses made-up numbers to argue that privatizing Medicare (and leaving seniors with the bills), slashing the social safety net, and lowering taxes on the rich will somehow end deficits and save America. (Short answer: It won't.)

By any reasonable standard, the Ryan budget should have been laughed out of the room as soon as it dropped. But, no, the press needed A Serious Man™ on the right for its lazy he-said, she-said approach to any political story. And, so Ryan got the Trump treatment and the rest is history. Ostensibly liberal pundits fell over themselves praising Ryan's budget. In response, the president eventually drew progressive kudos for pitching his own deficit reduction plan. (More on that in a sec.) With both sides established, the press can now continue to happily indulge in the usual medley of content-free, he-said, she-said inanities that, to them, constitutes political journalism. And everyone in Washington can continue to ignore the fact that, actually, more spending, not cutting the deficit, is what is needed to fix the economy right now. Win-win!

Regarding President Obama's deficit proposals, he delivered an eloquent speech on the subject last month, to be sure -- one of his best as president. But, even if we hadn't already been burned far too many times by his rhetoric not matching up to his policies, it's hard for me to take his remarks as some great moment of the left just because he finally articulated what should be pretty basic principles of American government. Particularly when you consider that the Obama plan is, of course, center-right-leaning, and yet it has nevertheless become the left pole in an exceedingly narrow economic debate.

(By the way, if you're really worried about the long-term deficit, the answer isn't rocket science. Try raising taxes on the rich. Or passing real health care cost controls. Or going where the money's at. Or growing the economy and putting people back to work. Or, y'know, doing nothing -- that would work too.)

In sum, the Trump boomlet of last month was not the exception. It was a clear and distilled expression of the rule, a sideshow to a sideshow. And because the Village press is so terrible, our entire politics is distorted -- We are living out the consequences of this disaster yet again in the deficit debate. Only the sheer amount of money flooding the system right now is a bigger political problem than the broken state of the newsmedia.

"After the Civil War, political leaders in the defeated South announced their intention of resuming their seats in Congress and of using their power...to compel the federal government either to pay off all debts of the Confederacy or to default on the national debt which had been borrowed to finance the Union war effort...For this reason, [Reconstruction Republicans] wrote into our fundamental law an absolute prohibition against defaulting on the national debt. Its language establishes a complete firewall against the misuse of governmental power by one political faction to get its way by wrecking the public credit."

As congressional Republicans try to bluff their way through another round of hostage-taking with the American economy, this time vis a vis the debt limit, Garrett Epps reminds us that the debt limit idea is actually unconstitutional, by way of the 14th Amendment (already not the GOP's favorite accomplishment.) "This requirement is absolute. It is contained in Section Four of the Fourteenth Amendment, which directs, in no uncertain terms, that "the validity of the public debt of the United States, authorized by law...shall not be questioned."

"Treasury's mismanagement of TARP and its disregard for TARP's Main Street goals -- whether born of incompetence, timidity in the face of a crisis or a mindset too closely aligned with the banks it was supposed to rein in -- may have so damaged the credibility of the government as a whole that future policy makers may be politically unable to take the necessary steps to save the system the next time a crisis arises. This avoidable political reality might just be TARP's most lasting, and unfortunate, legacy." On his last day on the job, outgoing special inspector general for TARP Neil Barofsky laments the failures of the program he oversaw.

In very related news, see also NYT columnist William Cohan on the same subject yesterday: "Not only did the government's theory fail in practice -- unemployment remains relentlessly and historically high and American businesses seem intent on hoarding, rather than spending, the $2 trillion in cash on their collective balance sheets -- but it also lost a once-in-a-century opportunity to change the mores of a momentarily chastened Wall Street, which remains badly in need of substantive reform. This is more than a shame; it is prima facie evidence of how deep Wall Street's hooks have been -- and continue to be -- into the powers that be in Washington (and vice versa)."

"This chart puts the class war in simple, visual terms. On the left you have the 'shared sacrifices' and 'painful cuts' that the Republicans claim we must make to get our fiscal house in order. On the right, you can plainly see WHY these cuts are 'necessary.'" Via JackDean and several other sites, This is What Class War Looks Like.

But, hey, Win the Future and all that.

"You can practically break a search engine if you start looking around the Internet for those words. They're used repeatedly with reference to our local, state and federal governments, almost always to make a case for slashing programs -- and, lately, to go after public-employee unions. The phrase is designed to create a sense of crisis that justifies rapid and radical actions before citizens have a chance to debate the consequences. Just one problem: We're not broke."

Swimming upstream against a tide of misleading soundbites and outright idiocy -- from Republicans and Democrats both -- E.J. Dionne tries to explain the obvious: America has plenty of money right now. "A phony metaphor is being used to hijack the nation's political conversation and skew public policies to benefit better-off Americans and hurt most others."

"Even worse than that is the common assertion by these millionaire pundits that 'we all' must sacrifice for the greater good and allow Social Security to be slashed. This is usually spoken with such a tone of lugubrious forbearance that one imagines they would like us to believe that while they might be forced to become Wal-Mart greeters in their elder years, patriotic duty demands we all pitch in. They seem to have no idea that the median wage in this country in 2009 was $26,261 -- sadly, lower than it was in the year 2000."

In very related news: In The Hill, Heather D. Parton of Digby fame rails against establishment media's complicity in the deficit witchhunt. "It's very easy to prescribe 'shared sacrifice' when you will not personally sacrifice anything at all."

"What is at stake in the long run? Two things, mainly, in my view. First, it seems to me that we as progressives need to make an honorable defense of the great legacies of the New Deal and Great Society -- programs and institutions that brought America out of the Great Depression and bought us through the Second World War, brought us to our period of greatest prosperity, and the greatest advances in social justice. Social Security, Medicare, housing finance -- the front-line right now is the foreclosure crisis, the crisis, I should say, of foreclosure fraud -- the progressive tax code, anti-poverty policy, public investment, public safety, and human and civil rights. We are going to lose these battles- get used to it. But we need to make an honorable fight, to state clearly what our principles are and to lay down a record which is trustworthy for the future."

In a hard-hitting address to the Americans for Democratic Action from last November, economist Jamie Galbraith puts the current situation of progressivism in perspective. His steely resignation may sound fatalistic, but it's hard not to feel thus these days. "Recovery begins with realism and there is nothing to be gained by kidding ourselves...We need to lose our fear, our hesitation, and our unwillingness to face the facts. If we thereby lose some of our hopes, let's remember the dictum of William of Orange that 'it is not necessary to hope in order to persevere.'"

"We know what it takes to compete for the jobs and industries of our time. We need to out-innovate, out-educate, and out-build the rest of the world. We have to make America the best place on Earth to do business. We need to take responsibility for our deficit and reform our government. That's how our people will prosper. That's how we'll win the future."

The best place to do business? Um...how about the best place to live, create, raise a family, be a community? Ah well, Win the Future!™ At this point, my thoughts on the the president's State of the Union address probably don't matter much, since I pretty clearly wasn't the intended audience, and the intended audience apparently dug it quite a bit. But, as for myself: Suffice to say, the "fetal position fallacy" that characterized the 2010 SotU seems to now be in full bloom. This speech, highly reminiscent of Dubya's 2006 address, basically made Barack Obama seem like the best Republican president we've had in years.

It wasn't just the bland corporate seminar tagline -- Win the Future!™ -- that rankled. Here we have a Democratic president -- the great hope of the left only two short years ago, imploring us all to clap harder for a five-year budget freeze (only in non-defense, discretionary spending, of course, and still not enough for the GOP), a promise to review regulations that put an "unnecessary burden on businesses," and a lower corporate tax rate. WTF, indeed.

Now, there's nothing inherently wrong with national goals like increasing competitiveness and doubling exports (provided you aren't suppressing wages to do it), and I've speculated here on getting rid of corporate taxes in the past. (10/12/00 -- Arguably, they're redundant.) But, really, what a thin gruel to offer the American people at this hour. Is there no other way to answer the challenges of the future than a Tony Robbins slogan and generous heapings of business seminar pablum? Have things gotten so bad for the Left that we're supposed to applaud a president simply for not explicitly threatening Social Security?

Alas, it looks like that may be the case. In his address, the president made sure to make obeisance once again to the deficit witchhunt: "Every day, families sacrifice to live within their means. They deserve a government that does the same." What you didn't hear was any attempt to explain that family and government budgets are not the same, or that cutting spending in the midst of a fragile economic recovery is actually a terrible idea. It's like Keynesianism never existed.

This administration -- and all of Washington, really -- is now so prisoner to Republican message-framing that "bring[ing] discretionary spending to the lowest share of our economy since Dwight Eisenhower was President" is somehow considered a great thing. Woohoo! Austerity we can believe in! It's not the most inspiring peg to hang your hat on, to be sure.

Speaking of Ike, Obama also tried to inject some historical cachet into the speech by talking of one of the Eisenhower Era's signature events: "This is our generation's Sputnik moment," he said, and it probably is.

But, as Fred Kaplan (and others) has well pointed out: "The lesson from the 1950s is that it takes more than private enterprise to revive American innovation. It takes lots of government spending." And I'm not seeing how the president is going to be able to pull that off anymore, now that he's willingly enclosed himself -- and all of us -- in the Republicans' deficit-scare paddock. To really Win the Future!™, it's going to take a lot more from this administration than a zippy corporate rebranding and a string of hoary, Third Way cliches.

"The Fed accepted a total of $1.31 trillion in junk-rated collateral between Sept. 15, 2008 and May 12, 2009 through the Primary Dealer Credit Facility. TARP was nothing compared to this." (Also, $500 billion of that junk was rated CCC or below, which -- given the rampant grade inflation going on at all the rating agencies -- means it was really garbage.)

So, yeah, Wikileaks isn't the only document dump in town this week. As mandated by the Dodd-Frank Act (after much pushing from below), the Federal Reserve today released information about some of its dealings from December 2007 to July 2010. And, while folks are just now delving into the intel, it already seems that some of the bodies buried during the financial crisis are now floating to the surface: "A quick analysis...indicates that Citigroup was the greatest beneficiary, drawing on a total of $1.8 trillion in loans, followed by Merrill Lynch, which used $1.5 trillion; Morgan Stanley, which drew $1.4 trillion; and Bear Stearns, which used $960 billion."

In very related news, former Alan Grayson staffer (and a Hill friend of mine) Matthew Stoller lays out a compelling case for a harder stance against the Fed from the Left from now on. Some brief excerpts:

"It is good that this debate is happening. It means that we will be able to examine the real power structure of the American order, rather than the minor food fights allowable in our current political system. This will bring deep disagreements, profound ones, but also remarkable possibility. Modern American industrial policy is to push capital into housing, move manufacturing abroad, build a massive defense establishment, and maintain an oligarchic financial sector. This system isn't a structural inevitability. People built it, and people are unbuilding it...

Like most American institutions, the Fed has shrouded itself in myth, with self-serving officials discussing the immaculate design of the central bank as untouchable, secretive, an autocratic and technocratic adult in the world of democratic children. But the Fed, and specifically the people who run it, are responsible for declining wages, for de-industrialization, for bubbles, and for the systemic corruption of American capital markets."

Also on this topic, it comes out today that Bank of America was given a break by the SEC on a securities fraud settlement "'because of the nation's perilous economic situation at the time' and the fact that it had received billions of dollars in taxpayer aid, according to the report by the SEC's inspector general...Specifically, during settlement negotiations, Bank of America won relief from sanctions that could have hurt its investment banking business."

To tie this back to the top, according to Bloomberg's Lizzie O'Leary, who's also been parsing the new Fed data, "52% of the collateral Bank of America pledged to the #Fed's PDCF was rated Ba/BB or lower, or didn't have available ratings." (And, let's keep in mind, PDCF was only one of several emergency programs.)

So, in other words, the government kept banks like BoA alive by buying up trillions in toxic assets and looking askance at their illegal activity. They repaid us with record bonuses for themselves and an epidemic of foreclosure fraud -- the "getaway car for the financial crisis," as a friend well put it -- that's screwing over millions of American families. And in terms of fixing bad behavior on the Street, nothing changed whatsoever. Boy, that's some deal.

"These are also times where all of us are called on to make some sacrifices. And I'm asking civil servants to do what they always do and play their part." Ah, now we shall touch the bottom of this swamp!

So it seems the deficit witchhunt has found some folks who float like a duck in the form of civilian federal (i.e., non-military and non-congressional) workers. (Burn, witches!) And so, in the name of austerity and the New Bipartisanship, the President has announced a federal pay freeze for the next two years, and implored the tattered remnants of OFA to play along. (Sadly, this isn't even the most ridiculous message OFA has sent out this month.)

Now, according to the normal, Keynesian (i.e., reality-based) understanding of economics, cutting pay for workers -- yes, Virginia, even those lazy, self-entitled public-sector workers -- is a regressive move during a bad economy: It further hurts purchasing power. This is one of the reasons why Dems opposed the idea a few months ago.

But, of course, sacrifices must be made to appease the Deficit Gods, and this move will save about $60 billion over ten years. So if the economy takes a minor hit, and if it pushes some of the more talented help out of the government and into, say, government-contracting (where Uncle Sam will then pay out considerably more for the same work), well, that's just the cost of finally getting Serious about the deficit.

Besides, one might argue, this pay freeze is just basic fairness. As the president himself said, "Lower-skilled workers are slightly overpaid relative to the private sector. And that's not surprising, because it's a unionized workforce." Those dastardly unions!

Oh, wait, did I mention -- also as part of the New Bipartisanship -- the president laid the groundwork for capitulating on the Dubya tax breaks for the wealthiest 2%? This executive folding -- and, really, who could've seen this coming? -- will cost us $700 billion over the next ten years -- That's over 11 times more than the money ostensibly saved.

So, if you're doing the math at home, folks, that means, taken together: We've cut millions of workers' pay in the midst of a fragile economy. We've once again reified dumb GOP talking points about Big Guvmint jobs. And we've added $640 billion to the deficit, theoretically the reason for doing all of this in the first place. But, hey, the president looks bipartisan, and at least we drowned us a few witches. So, there's that.

Update: See also Krugman: "Yep, that's exactly what we needed: a transparently cynical policy gesture, trivial in scale but misguided in direction, and in effect conceding that your bitter political opponents have the right idea."

Update 2: And what are the fruits of the New Bipartisanship? Well, really, what did you expect? The fetal position fallacy strikes again.

A tale of two financial crimes: After the Savings and Loan Crisis of the late 80's and early 90's -- a clear consequence of Reagan-era deregulation, by the way -- had run its course, 1852 S&L officials were prosecuted, and 1072 of them ended up behind bars, as did over 2500 bankers for S&L-related crimes. But, when a similarly-deregulated Wall Street plunged the US economy into a much steeper recession two decades later...nobody (with the notable exception of Bernie Madoff) went to jail -- In fact, it was barely even admitted by the powers-that-be that serious crimes had even occurred at all. So what happened?

That is the stark question driving Charles Ferguson's well-laid-out prosecutorial brief Inside Job, which works to explain exactly how we ended up in the most calamitous economic straits since the 1930s. If you've been keeping up on current events at all, even if by comic books, stick figures, or Oliver Stone flicks, then you won't be surprised by the frustrating tale Inside Job has to tell. But unlke the more inchoate and disorganized Casino Jack and the United States of Money earlier this year, which ultimately let its subject wriggle off the hook, Inside Job tells its sad, sordid story clearly, concisely, and well.

The central through-line of the financial crisis by now is well-known. Basically, Wall Steet banksters -- relying heavily on "market innovations" (i.e. unregulated toys) like securitization, collaterized debt obligations (CDOs) and credit default swaps -- spent the first decade of the 21st century engaged in a trillion-dollar orgy of avarice, criminality, and fraud. And, a few prominent casualties like Lehman Brothers and Bear Stearns aside, the perpetrators of these financial misdeeds mostly walked away unscathed from the economic devastation they wrought. In fact, they're doing better than ever.

Said banksters got away with this from start to finish mainly becauset they could, thanks to thirty years of deregulation and an absolute bipartisan chokehold on the political process. So, when the bill came due in 2008, these masters of the free market just got the Fed to socialize their losses, thus handing the damage over to the American taxpayer by way of Secretary of the Treasury Hank Paulson (former Chairman and CEO of Goldman Sachs) and his successor, Tim Geithner (no stranger to Wall Street himself.)

As I said recently, my thoughts on the relative necessity of TARP have shifted a good deal since 2008, but, surprisingly, Ferguson doesn't really get into that debate here. Inside Job is more broad in its focus: It aims instead to show how Wall Street has systematically corrupted both our political process and our economics departments over the course of decades, and nobody is safe from its wrath. Sure, it was probably a tremendously bad idea to let an Ayn Rand acolyte like Alan Greenspan call the shots for the American economy for so long, but he's just the tip of the iceberg. There are other fish to fry.

After all, it is President Clinton and his financial lieutenants, Robert Rubin and Larry Summers, who preside over the death of Glass-Steagall, the original sin that precipitates all the later shenanigans. It is also they who work to keep prescient regulators like Brooksley Born from sounding the alarm. And, after the house of cards has collapsed in 2008, and President Obama steps up to the plate promising "change we can believe in," who does he pull out of the bullpen to lead us but...the irrepressibly porcine Larry Summers and Tim Geithner, the Chair of the New York Fed? Meet the new boss, same as the old boss. (But remember, folks, Obama is really an anti-business socialist.)

What goes for the US government goes for the academy as well. As Ferguson shows, Milton Friedman aficionadoes and Reagan/Bush policy guys like Marty Feldstein of Harvard and Glenn Hubbard of Columbia, who now find themselves atop prestigious Ivy League economics departments, are all too happy to give an academic imprimatur to bad bankster behavior, as long as they see a piece of the cut. (Nobody gets it worse than Columbia prof and former Fed governor Frederic Mishkin, who appears here to have walked into a battle of wits completely unarmed.)

In the meantime, Ferguson fleshes out the documentary with related vignettes on the financial crisis and those who brought us low -- some work, some don't. The movie begins with the cautionary tale of Iceland, about as pure a real-time case study into the abysmal failures of deregulation as you can ask for. (If that doesn't do ya, try Ireland.) But the film ends as badly as it starts well, with an overheated monologue about the way forward, cut to swelling music and images of the Statue of Liberty -- a cliche that serves to dissipate much of the pent-up anger of the last 90 minutes. (Perhaps Inside Job should've used the lightning strike.)

What's more, at times Ferguson seems to try too hard to frame guilty men, and never more so than when he has a former psychiatrist-to-the-bankster-stars opine about cocaine abuse and prostitution all over the Street. Sure, it's unsavory, and I see the ultimate point here -- that these petty crimes could've been used to flip the lower-level traders if anyone had had tried to bring a RICO case against these jokers. But this sort of bad behavior, however frat-tastically douchey, is extraneous to the real crime at hand, and it seems really out of place when you're using fallen crusader Elliot Spitzer as a witness for the prosecution.)

Still, overall, Inside Job is a very solid documentary that manages to capture its elusive quarry, and in a better world it would result in more serious consequences for the banksters who put us in this mess. Make no mistake -- this is a crime story. As Massachusetts rep Michael Capuano observes in the trailer, and as Woody Guthrie put it many moons ago, "some rob you with a six-gun, and some with a fountain pen." Thing is, when Pretty Boy Floyd or John Dillinger robbed banks back in the day, they got shot. When the banks rob you...well, that's apparently another thing entirely.

Imagine for a moment you are president of the United States.

You were just elected in the midst of a worsening economic crisis, one that demands bold action and decisive leadership to confront. Fortunately, you enter office with an historic wind at your back: You enjoy unprecedented enthusiasm and goodwill from millions of new voters, a clear mandate for change, and, most importantly, sizable majorities in both the House and Senate.

You also know that the political opposition -- who hold a long and storied record of being ruthless, craven and despicable to get what they want -- will try to prevent your agenda by any means necessary.

And, being a student of history, you know that, particularly in the face of a poor economy, this political opposition is very likely to pick up congressional seats in the next election (with a few notable exceptions, one of which I'll get to in a moment.) In other words, a pendulum swing against you is highly probable, and so the majorities you have are probably as big as they are ever going to get.

Basically, you have two years, and likely two years only, to do pretty much anything you want in order to grapple with this economic crisis. Do you [a] take a page from FDR's 100 Days, go big, and push hard for the progressive agenda you laid down in your election campaign, which has the added benefit of enthusing the "rising American electorate" that got you elected? Or do you [b] try to ingratiate yourself with people who will always hate you, water down your signature legislative initiatives from the outset, and seemingly go out of your way to depress the lefty base that got you elected?

I think you see where I'm going with this.

First things first, let's be clear about why the Republicans took back the House so decisively two days ago.

1) It's the Economy, Stupid. Though it may be mostly Dubya's fault, the economy is obviously still in terrible shape. The official unemployment rate hovers just under the double-digits, and real unemployment and underemployment levels are much higher. Household incomes are down, consumer debt is up, millions of homeowners are stuck with underwater mortgages, and millions more feel in danger of slipping under. As everyone knows, when economic times are bad, the party in power suffers.

Compounding the situation, families are feeling under the gun at exactly the same time that those same wealthy few who precipitated the Great Recession are now rolling in dough. Having evaded pretty much any and all serious consequences for the meltdown they created, the Big Brains on Wall Street are instead giving themselves record bonuses, and trying to profit from even more rampant corruption on the foreclosure front. To no one does this ugly sight look like change we can believe in.

2) Republicans voted, Democrats didn't. Again, not rocket science: Democrats lost because Republicans came out and Democrats stayed home. Look at the breakdown of exit polls: As per the norm in midterms, the 2010 electorate was older than the population at large. (23% of the vote versus 13% of the population.) And 57% of those seniors, worried that the threat of Creeping Socialism might somehow interfere with their federal retirement security and universal health care, pulled the lever for Republicans.

Conversely, 29 million Obama voters did not show up to vote. "Hispanics, African Americans, union members and young people were among the many core Democratic groups that turned out in large numbers in the 2008 elections...In 2010, turnout among these groups dropped off substantially, even below their previous midterm levels." Take voters under 30, for example, who vote Democratic at about the same rate seniors vote Republican. They went from 18% of the electorate in 2008 to 11% this year. Obviously, that's a problem.

So, working back from these factors -- economic performance and voter turnout -- it follows that the two best things the administration could have done to improve Democrats' standing this year would have been to get the economy moving again and to get the Democratic base fired up and ready to go. So what happened? Let's look at the tape.

The Economy: As Paul Krugman has already pointed out, much of the story of this election was written way back in February 2009, when the Obama administration chose to settle on a stimulus package that was watered-down to appease Republicans who would never, ever vote for it. In fact, thanks to Larry Summers, the stimulus was low-balled from the start -- Summers made sure Christina Romer's higher-end projections for the amount needed never even made it to the president's desk.

So the crystal was in the steel at the point of fracture, and mainly because Obama, doing the President Goldilocks routine that would become a trademark, watered down the Recovery Act early-on to appease an opposition that was unappeasable.

By late 2009, the warning signs that ARRA was probably too small were all over the place -- not the least in the growing state budget crises seen all across the country. But even as Republicans throttled congressional attempts to remedy the situation, the Obama administration remained mostly passive...or, in the case of food stamps, worse. Many in the White House took up the standard of the deficit witchhunt. (Yes, there was some rhetorical urging of the tsk-tsk variety eventually, but that, as on so many other fights, was after the chips were already down.)

Going along with this frustrating passivity was the increasing sense over time that this administration, elected to be change we could believe in, was more than a little cozy with the Wall Street yokels who caused the economic disaster in the first place. Yes, TARP was originally Dubya's baby -- not that very many voters seemed to remember that fact. (And it's hard to blame them when folks like Geithner keep touting its merits.) Still, acceding to the $700 billion bailout for Wall Street -- with little to no strings attached -- was an extraordinarily inopportune way to kick off an administration theoretically premised on fundamental change.

I have to confess that, at the time, I thought TARP was unfortunate but probably necessary. Two years later, I'm thinking I probably just just got railroaded, and didn't know what I was talking about. (Hey, it wasn't the only thing I was wrong about in 2008.) But, even back then, I argued that TARP had to come with game-changing restrictions on Wall Street's behavior. Those, clearly, were not forthcoming.

Yes, Congress did pass financial reform -- But let's remember, Team Obama worked openly to weaken the bill, and even now certain admin folks are clearly trying to derail Elizabeth Warren, the best chance the financial reforms, however tepid, have at working as intended for consumers. (Or, to quickly take another example, there's the matter of the HAMP foreclosure program, which, as David Dayen has documented, seems more concerned with recouping money for lenders than helping families in trouble.)

As on the finreg bill, so too on other fronts -- and this is where we get to the suppressing turnout issue.

On health reform, which thank god eventually passed, we now know that the administration cut deals early on to kill drug reimportation on behalf of the pharmaceutical industry (even after Sen. Dorgan reintroduced the idea) and, more egregiously, to kill the public option on behalf of AHIP and the hospitals. Looking back, the president signaled the public option's expendability in his September 2009 health care address, another classic example of the wait-too-long-then-try-to-swoop-in-and-save-the-day legislative strategy usually preferred by the White House. And by the eve of the midterms, he was openly mocking public option supporters at fundraisers.

But, even those fundamental breaks with real reform aside, the entire health care process got badly screwed up when the administration, in a misguided attempt to curry bipartisan favor for reform, let Max Baucus dink around for weeks on the Senate Finance Committee. While Republican Senators Snowe and Grassley played Lucy to Baucus' Charlie Brown and kept moving the football, the Tea Party August of 2009 took shape, and almost a year in legislative time was lost. And, by the time Baucus finally released the durned thing, the bill had once again been watered down to gain imaginary Republican votes that were never, ever going to be forthcoming.

The litany of Obama's other sins by now are well known. As noted before, this administration has been absolutely egregious on civil liberties, all the while telling us to "look forward, not backward" on Dubya's torture regime. (But different rules for everyone else, it seems.) Meanwhile, Gitmo is still open, and DADT is still enforced. Immigration reform did not happen. Nor did energy reform, despite House Democrats going out on a limb to pass a bill way back in June of 2009. (Yesterday, Obama the "shellacked" buried this bill for good.) And so on.

If all these compromises and capitulation -- which were never political necessities so much as unforced errors -- weren't enough to depress the base, the administration's press arm continued a steady diet of hippie-punching. "Left of the left", pajama-wearing bloggers, the "professional left" -- time and again, "senior advisors" and press flaks went out of their way to scorn the people who sweat blood and tears to get them elected. I already mentioned Obama ridiculing public option supporters -- Well, where did folks ever get the notion that a wonky, badly-named fix like the public option was the ground to fight on anyway? Because the president told us it was important.

To be clear: I am not arguing that Obama hasn't accomplished anything (although, in almost all cases -- including health care reform, much more credit should really go to the very unfairly maligned Speaker Pelosi -- she's the one who made it all happen.) But, at every point down the line, for every piece of legislation that did pass, you have to factor in the opportunity costs that were lost. And consistently, this administration has pursued the politics of the lowest common denominator. To quote the prescient Drew Westen once again:

"I don't honestly know what this president believes. But I believe if he doesn't figure it out soon, start enunciating it, and start fighting for it, he's not only going to give American families hungry for security a series of half-loaves where they could have had full ones, but he's going to set back the Democratic Party and the progressive movement by decades, because the average American is coming to believe that what they're seeing right now is 'liberalism,' and they don't like what they see. I don't, either. What's they're seeing is weakness, waffling, and wandering through the wilderness without an ideological compass. That's a recipe for going nowhere fast -- but getting there by November."

And, hey, look what happened.

Remember how I mentioned a midterm outlier way up at the beginning of this post? That was 1934 -- when, in an economy even worse than the one America faces now, Roosevelt managed to pick up seats in both the House and Senate. FDR gave us the 100 Days, a flurry of political activity we haven't seen before or since. Now, granted, the Roosevelt team did not have to contend with either unfettered money corrupting the system or a pathetic Fourth Estate in a death spiral -- both severe problems with our current political culture that must be addressed. Still, when elected in the midst of a similar economic crisis, with similar expectations, this administration did not bring about a 100 Days. It gave us Three Months of Max Baucus dicking around to appease intractable Republicans.

So why did the 2010 shellacking happen? Because of the economy, yes. And because of low turnout, yes. And also because of troubling trends like corrupting money everywhere and a national press in severe decline -- The fact that the media followed Christine O'Donnell more than any other 2010 candidate tells you all you need to know about that broken-down disaster we call the Village these days.

But, nonetheless, all of these determining factors were exacerbated in the wrong direction by the administration's fatal addiction to the Fetal Position fallacy. As I said of this year's State of the Union address, "people were not looking to President Obama for this sort of deficit tsk-tsking and small-bore, fiddling around the margins. You'd think we Dems would have learned this by now. But curling up into a fetal position and mouthing moderate GOP-lite bromides will not stop the Republicans from kicking us, ever."

Some argue politics is the art of the possible. That's true, but I believe much, much more was possible if this administration had actually deigned to fight for it.

Some say the president can only do as much as Congress lets him -- he needs 60 votes, yadda yadda yadda. I'd say that he had 60 votes, and even then did not push to make things happen as much as he could. I would also argue that the presidency of the United States is actually a remarkably powerful position these days, that Obama has showed no inclination to act progressive on crucial matters like civil liberties that are totally in his bailiwick, and that, even now with a Republican House, the administration could move forward with a progressive agenda, if it so desired.

Some -- such as pathetic, DLC-brand fortunate sons like Evan Bayh and Harold Ford -- say progressivism was tried and found wanting. I would argue progressivism was not even tried.

Some say it is time to go for the Dems to embrace a more "centrist", GOP-lite Third Way from now on. I think we've been experimenting with that sad sack of failure for decades now -- it's our First Way -- and it's been proven over and over again not to work. (Just ask the Blue Dogs, who got eviscerated on Tuesday. Why vote for Republican-lite when you can have the real thing?)

Basically, it comes to this. Without vision, the people perish...and vote GOP. And because this administration did not go big, because it did not produce the change people so desperately desired, and because it forsook the possibility of real progressivism early and often to indulge their fantastical belief in the magical unicorns of High Broderism, the Democrats have now lost the House -- ironically the one branch of government that, under Speaker Pelosi, actually tried to get done what had been promised.

Now, matters are worse.

"A shame the Lemur Brothers had to be sacrificed." "Yes, the Invisible Hand works in mysterious ways." By way of Mother Jones, Erich Origen and Gan Golan explain the financial crisis in comic book form. (The full Adventures of Unemployed Man are available here.)

"'The potential for exit in terms of emigration is huge and it's a major part of the Irish story'...'Ireland is on the verge of losing a whole generation. People are simply not able to get a job in Ireland, not happy with the quality of life here and they are upping and leaving."

Faced, like so many other nations, with a bank-fueled financial meltdown and a grueling austerity program to make up the slack (sound familiar?), the Irish are -- well, according to Reuters at least -- either leaving or taking it in stride...for now. "'It's a cultural characteristic of the Irish people,' said portrait photographer Kevin Abosch as he strode down O'Connell Street. 'Generations of pacifism have been bred into them.'"

Particularly as I was just writing up The Town, it reminds me of that line from The Departed: "If we're not gonna make it, it's gotta be you that gets out, cause I'm not capable. I'm f**king Irish, I'll deal with something being wrong for the rest of my life."

"The president told Democrats that making change happen is hard and 'if people now want to take their ball and go home, that tells me folks weren't serious in the first place.'" As part of a continuing pattern of late, President Obama tells Rolling Stone that progressives need to stop whining about the way things are going and get happy, because, in what's become a new talking point, "If you look at the checklist, we've already covered about 70 percent [of the 2008 campaign promises.]" (70%?! Uh, can I see this checklist?)

Anyway, this latest weird effusion against the base has already been well-critiqued and well-answered many times. See, for example, Glenn Greenwald and David Dayen: "I've never seen a politician run an election with the message 'Don't be stupid, quit your bitching and vote for me.'" I would only add two things:

1) As it turns out, the unhappy Dems among us are more likely to vote, so perhaps berating them for not clapping enough is not altogether productive. (Unless, of course, the WH is doing it as a Sistah Souljah bank shot to get independents, on the classic establishment premise that indies love hippie-punching.)

2) I'd love to live in a world where progressive bloggers have the power to move ginormous voting blocs, I really would. But it takes a certain type of top-down, Beltway-obsessive mentality to think that's what's going on here. The biggest reason voters are depressed is because the economy is, quite obviously, not doing so well at the moment, and people are feeling the pinch. And, that aside, most Obama voters don't need blogs to tell them that this administration, on all too many fronts, hasn't lived up to its promises.

If this White House wants to engage the base (and I really, really hope they do, for reasons personal, professional, and patriotic), then, for Pete's sake, don't browbeat and lecture the Left for being disappointed -- Try to make them less disappointed! Give them some red meat, respond to their concerns, and, you know, do the things you were elected to do. Why this even has to be said is beyond me.

"I don't know what my biggest contribution has been. I think it has been simply showing up for work every day, trying to fight the good fight for average people...But I leave more discontented when I came here because of the terrible things that have been done to this economy by political leaders who allowed Wall Street to turn Wall Street banks into gambling casinos which damned near destroyed the economy."

On the eve of his retirement, Chair of the House Appropriations Committee David Obey has some choice words for the administration, and himself. "I think the more important thing was what was my biggest failure...our failure to stop the ripoff of the middle class by the economic elite of this country, and this is not just something that happened because of the forces of the market."

"[T]o the extent that the 'liberal left' is upset at the President, it's because they are seeing a great opportunity slip away in real time. The only one that told the base that they could change America from the bottom up and bring forth a transformative new era of leadership is Barack Obama. If he didn't want one, he shouldn't have said anything."

In response to the most recent disparaging of liberal and progressive blogs by "senior administrative official" to his or her media lap dog of choice, FDL's Dave Dayen gets to the heart of progressive consternation with Team Obama: "Nobody had a bigger challenge coming into office than Barack Obama but nobody had a bigger opportunity. And liberals like myself are generally peeved that the opportunity has been squandered. Yes, squandered." Yep, sounds about right.

In very related news, with the passage of financial reform in the Senate today, The Prospect's Kevin Drum gets off a zinger about Obama's legislative accomplishments thus far. I think, overall, this president could have accomplished much more than Drum's biting joke suggests -- most obviously on executive power issues like torture and indefinite detention. (Or, put another way, I just get irritated with people who throw up their hands and say the problem with our politics is entirely structural when you have an ostensibly-lefty president saying patently dumb things like this. Choices matter, and this administration makes terrible ones.) All that being said, Drum's comment was still worth a (rueful) laugh regardless.

"We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost -- to the world economy and, above all, to the millions of lives blighted by the absence of jobs -- will nonetheless be immense. And this third depression will be primarily a failure of policy."

They used to tell me I was building a dream...In the NYT, Paul Krugman calls out the deficit peacocks one more time before the wheels come off around the world. "[This is] the victory of an orthodoxy that has little to do with rational analysis, whose main tenet is that imposing suffering on other people is how you show leadership in tough times. And who will pay the price for this triumph of orthodoxy? The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again."

In very related news, from the bowels of the Fed comes a taxpayer-paid response to Krugman, DeLong, and others sounding the alarm about the deficit witchhunt: Quiet, you nasty bloggers! You have not sufficiently mastered our economickal arts! "[W]riters who have not taken a year of PhD coursework in a decent economics department (and passed their PhD qualifying exams), cannot meaningfully advance the discussion on economic policy...[T]here is extremely low likelihood that the speculations of the untrained, on a topic almost pathologically riddled by dynamic considerations and feedback effects, will offer anything new."

Having spent much of the past decade in academe, I'd like to point out that this is a pretty classic overreach by the writer here. I mean, you spend all those years chasing down a degree that's not particularly useful anymore...there must be some upside to it, right? Am I not now part of the intellectual -- in this case, macroeconomic -- Elect? No, Mr. Athreya, I'm afraid not. Sometimes people spend so much time examining, say, the myriad variances in an oak leaf (or worse) they miss the forest for the trees.

Update: In an attempt to move past the entitlement-cutting hysteria out and about in DC at the moment, the Center for Economic Policy and Research offers up handy tool: The People's Deficit Calculator. "The budget options in the calculator include ending the wars in Iraq and Afghanistan, adopting a carbon tax, reduction in the size of the health care subsidies created by the health care reform bill, progressive price indexing of Social Security, adopting a financial speculation tax and others."

Update 2: James K. Galbraith reads the riot act to the deficit witchhunt tribunal. "You are plainly not equipped, either by disposition or resources, to take on the true cause of deficits now or in the future: the financial crisis."

"The terms on which the U.S. government can borrow now are exceptionally advantageous. And because of high unemployment the benefits of boosting government purchases and cutting taxes right now are exceptionally large...[R]ight now, as best we can tell, an increase in federal spending or a cut in taxes will produce (in the short run) no increase in interest rates and hence no crowding-out of productivity -- increasing private investment. Indeed, government spending that adds to firms' current cash flow may well boost private investment and so leave us, dollar for dollar, richer after the effect of the stimulus ebbs."

As the recent wave of deficit hysteria hits the G20, prompting a frightening and idiotic retreat back into Hooverism (As Krugman put it: "Utter folly posing as wisdom"), economist Brad DeLong explains once more the the case for deficit spending during a recession. THIS IS NOT ROCKET SCIENCE, people (which is why 3/4ths of voters already get it.)

"[E]very investment expert knows two truths about investing: 1) Past performance is no indication of future performance. 2) You need to consider a company's track record. Right, yes, those are opposites. And it's pretty much all that anyone knows about investing."

In the WSJ, Dilbert's Scott Adams makes the case for investing in thoroughly evil companies. "People ask me how it feels to take the side of moral bankruptcy. Answer: Pretty good! Thanks for asking. How's it feel to be a disgruntled victim?"

"What's the greatest threat to our still-fragile economic recovery? Dangers abound, of course. But what I currently find most ominous is the spread of a destructive idea: the view that now, less than a year into a weak recovery from the worst slump since World War II, is the time for policy makers to stop helping the jobless and start inflicting pain." The NYT's Paul Krugman weighs in on the deficit hysteria afflicting Washington right now. Honestly, this is Keynes 101, people -- you don't dial back government spending at a moment of incipient recovery, or else you end up with things like the 1937 Roosevelt Recession.

FWIW, the deficit witchhunt may be rolling in DC, but the bond markets aren't listening. "On Friday, they were willing to hand over their cash to the Treasury for 10 years for 3.3 percent interest, a level so low it implies they consider the United States among the safest investments in the world."

"They're not accustomed to being engaged in politics this way," says a private-equity investor. 'Their skin isn't toughened. They actually take [the attacks by Obama] personally. This is a profession with a lot of smart people, but who aren't necessarily terribly introspective. They think they actually deserve to make all this money. So any attack on their livelihood is, ahem, unpleasant.'"

In the wake of the Senate's 59-39 passage of financial reform last week (not to mention increasing evidence of rampant and pervasive fraud at Goldman, Morgan, and elsewhere), New York's John Heilemann surveys the bruised egos of Wall Street's would-be robber barons. (In very related news, Paul Krugman and the WP note that Wall Street is now betting heavily on the GOP again.)

Keep in mind: Wall Street is angry with the administration despite the fact that "Geithner's team spent much of its time during the debate over the Senate bill helping...kill off or modify amendments being offered by more-progressive Democrats." [Change we can believe in!] Heilemann writes: "Whatever the effects of the bill, among them will be neither an end to the too-big-too-fail doctrine nor any curb on what the sharpest Wall Streeters see as the central threat to the system's stability: excessive financial leverage. Geithner, Summers, and Obama had little interest in tackling those matters, not because they are indentured servants to Wall Street but because at heart they are all technocrats who believe the system doesn't need to be rebooted or downsized, merely better supervised."

Still, on the bright side and despite the ambivalence (or open opposition) from folks in high places, this bill did get significantly stronger on the Senate floor, and in some ways is now stronger than the House version passed last year. Let's hope this welcome progressive trend continues in conference.

"The initial reaction of traders to the Flash Crash was that some human must have made a mistake submitting a trade. But the SEC...hasn't found evidence of a 'Fat Fingered Louie' punching a billion rather than a million on an order. In fact, the SEC still doesn't know what caused this crash. Curiously, no one is focusing on what caused the crash to stop...JP Morgan and Merrill Lynch were big buyers precisely as the market hit minus one thousand points on the Dow. It seems rather odd that both these firms at the same time would see the same trading opportunity.

In fact, what they did was violate one of the prime rules of trading: never try to catch a falling knife. The market was falling fast and furious at the point they entered the pit to buy equity futures, so why did they take such an enormous risk? We learned yesterday that both of these firms, plus Goldman Sachs, were such superb traders in the market that none of them had a single losing trading day all last quarter. This type of risky trade is not how you get to be a superb trader."

Over at the Agonist, Numerian digs deep into last week's "Flash Crash" -- and comes to some very troubling conclusions. To wit, the big players know the thresholds where the trading algorithms kick in, and thus, basically, the fix is in. "The stock market seems to be nothing but a playground for the big banks and other connected firms who get a preview peek at everything that goes through the market, and who can program their computers to skim profits off daily with no risk whatever. The stock market is also, quite possibly, prone to more serious manipulation that resulted in last Thursday's crash."

Oof. I'm out of my comfort zone when it comes to understanding market behavior, so I hope someone has a better explanation for the Flash Crash than the disconcertingly plausible one offered here. (Just saying Greece doesn't quite cut it, I don't think.)

"Is our huge deficit a problem today? Not if you think people should have jobs. Private sector demand has plunged because of the collapse of the bubble. If the public sector does not fill the demand gap with deficit spending, then we have less demand and fewer jobs. That's worth saying a few hundred thousand times since the deficit hawks have filled the airwaves and cyberspace with so much nonsense."

The CEPR's invaluable Dean Baker rails anew at the deficit hysteria currently in Beltway vogue. I've said this several times already now, but I just cannot take anyone seriously who froths and frets about looming deficits, but then says nary a word about out-of-control defense spending. And right now, when it comes to such deficit peacocks, DC is a full-fledged menagerie.

Update: "The danger posed by the deficit 'is zero. It's not overstated. It's completely misstated.'" Ezra Klein talks with James Galbraith, son of the venerable J.K. Galbraith and originator of the great witchcraft metaphor, about the deficit hysteria seizing Washington:

"[W]e should be focusing on real problems and not fake ones. We have serious problems. Unemployment is at 10 percent. if we got busy and worked out things for the unemployed to do, we'd be much better off. And we can certainly afford it. We have an impending energy crisis and a climate crisis. We could spend a generation fixing those problems in a way that would rebuild our country, too. On the tax side, what you want to do is reverse the burden on working people. Since the beginning of the crisis, I've supported a payroll tax holiday so everyone gets an increase in their after-tax earnings so they can pay down their mortgages, which would be a good thing."

"Last week, Congress decided it would not confront Too Big To Fail, the single gravest threat to our collective financial security. But there are still several key Wall Street reforms worth fighting for--reforms that must be enacted before the next crisis hits, with or without a big bank break-up. And fortunately, key Senators have authored amendments dealing with each one." In HuffPo, Zach Carter delineates the most worthwhile progressive amendments to financial reform still up for debate in the Senate. A good encapsulation of the state of play.

"'The frame of the debate is between those who think the witches have taken over the entire community and the whole lot of them should be burned and those who think there are only a few witches and burning just a few of them would be enough to appease the demons,' said James Galbraith, the Lloyd M. Bentsen Jr. Chair in Government at the University of Texas. 'There are a few of us operating safely removed from the bonfires who maintain there is no such thing as witchcraft.'"

As more troubling details emerge about its funding and backers, and as commission member Andy Stern, late of SEIU, settles into a troubling Lanny Davis-ish "those fringe liberals are ruining everything" mode, The Huffington Post's Sam Stein reports in on the early doings of Obama's deficit commission.I went over my thoughts on deficits and this commission in my SotU post a few months ago, but to repeat myself:..

On deficits: "We know exactly what happens when you cut spending too quickly after a virulent recession -- It was called the 1937 Roosevelt recession, and it would be flagrantly idiotic to repeat it. Just because the GOP doesn't seem to understand basic Keynesian economics doesn't mean we should follow them down the rabbit hole of flat-earth thinking, just so we can look bipartisan...[Besides, p]eople were not looking to President Obama for this sort of deficit tsk-tsking and small-bore, fiddling around the margins."

On this commission: "It's clear to everyone involved that the entire point of this commission is CYA: i.e, to create political cover for raids on entitlement spending, while once again ignoring the grotesquely swollen defense budget...In other words, this commission will basically just be a chance for deficit peacocks to pretend they're Serious People and 'make tough decisions,' while in fact the one really tough idea that actually needs to be tackled -- reining in defense spending -- will be completely avoided."

What I said then still stands. At best, this commission always sounded to me like centrist kabuki theater for deficit peacocks, and, given what we're learning about some of its backers, it could end up being much, much worse.

"The big U.S. banks were the source of the global financial crisis, in part because their bigness and their practices were copied by major banks around the world. What happens in this reform effort is being watched avidly in many countries, because it will say much about how global finance is to be conducted. What is often missing in these discussions are the assumptions people make about banking and its role in a modern economy. We should begin therefore with some first principles."

As the manifestly fradulent behavior by Goldman Sachs of late comes to full light -- one among many, it seems -- Numerian of The Agonist goes back to basics to make a case for strong banking reform. "The very first lesson we should learn from this crisis, which we thought this nation learned in the 1930s, is never again...The second lesson we should learn from this crisis is that we should not as a nation have to learn these lessons over and over again every 80 years. Something has to be done to make the legislative changes this time stick."

"'How can anyone -- regulators, investors or anyone -- understand what's in these financial statements if they have to dig 15 layers deep to find these kinds of interlocking relationships and these kinds of transactions?' said Francine McKenna, an accounting consultant who has examined the financial crisis on her blog, re: The Auditors. "'Everybody's talking about preventing the next crisis, but they can't prevent the next crisis if they don't understand all these incestuous relationships.'"

The NYT delves into the sordid story of Hudson Castle, a.k.a. Lehman Brothers' alter-ego, which they used to squirrel away shady investments. (This shell game didn't even make the recent Lehman report, which apparently found enough "materially misleading" behavior to warrant criminal charges against Lehman's leadership.)

Via Speaker Pelosi's official website, some much-needed perspective on the jobs situation under Dubya and Obama respectively (so far). Next time anyone of the (Keynesian-challenged) Republican persuasion starts to rant and rave about the stimulus, this might be a good graph to keep in your back pocket.

Of course, this is not to say we're anywhere near the clear on the jobs front. Not only is there some frightening new data around about the length of unemployment in this downturn, The Atlantic's Don Peck makes a compelling case about how this new jobless era will transform America: "The unemployment rate hit 10 percent in October, and there are good reasons to believe that by 2011, 2012, even 2014, it will have declined only a little...The worst effects of pervasive joblessness--on family, politics, society--take time to incubate, and they show themselves only slowly. But ultimately, they leave deep marks that endure long after boom times have returned."

"I know that we haven't agreed on every issue thus far, and there are surely times in the future when we will part ways. But I also know that every American who is sitting here tonight loves this country and wants it to succeed. That must be the starting point for every debate we have in the coming months, and where we return after those debates are done. That is the foundation on which the American people expect us to build common ground."

They do? I thought they expected change we can believe in. But worn-out nods to an elusive, ephemeral, and, given the current GOP, often undesirable bipartisanship does not constitute such. In any event, so concluded the President's State of the Union address last Thursday. This is old news at this point, so I'll keep it brief. Suffice to say, while it got better as it went along, I thought the speech was merely ok, and often troubling. Throughout the evening, the president's remarks had that excessively-poll-tested, small-bore feel that conjured up grim odors of 1995 and 1996. Throw on a flannel and fire up the Pulp Fiction soundtrack, y'all: One year into the Obama era, are we already back to V-chips and school uniforms?

Part of the president's problem is that the Senate is looking like the elephant's graveyard of progressive-minded legislation right now. The president called for an energy reform bill. The House went out on a limb to pass one last June. The president called for a financial reform bill. The House passed one in December. The president called for a new jobs bill. The House also passed one in December. All of these bills, and many, many others, are languishing in the Senate right now, as Sen. Reid and others try to figure out how to somehow get something -- anything! -- passed with a larger majority than Dubya ever enjoyed.

The Senate issue aside, there were other problems in the President's speech, including far too many nods and feints in the direction of ridiculous deficit peacocks like Judd Gregg and Evan Bayh. First off, at the risk of sounding like Dick Cheney, I tend to think that deficits are troubling, but, even in the best of times, they shouldn't really be the foremost driving concern of our government policy. If we run a deficit to invest in education now, we'll save money down the road and improve Americans' quality-of-life to boot. (Put in somewhat ugly fashion, it's invest in schools now or prisons later.)

And that being said, right now is emphatically not the best of times. We know exactly what happens when you cut spending too quickly after a virulent recession -- It was called the 1937 Roosevelt recession, and it would be flagrantly idiotic to repeat it. Just because the GOP doesn't seem to understand basic Keynesian economics doesn't mean we should follow them down the rabbit hole of flat-earth thinking, just so we can look bipartisan.

No, the problem with deficits isn't necessarily the running of a deficit. It's the running-up of massive deficits for patently stupid reasons -- like, say, prosecuting a war of choice in Iraq, or doling out excessive tax breaks to multi-millionaires. And that's why some of the President's nods in that direction were so irritating last Thursday. Calling for a spending freeze on discretionary spending, without touching the exorbitant "security-related" budget (cute euphemism, that), is kabuki theater at best. And at worst, you're balancing the books at the expense of our most vulnerable citizens. (I tend to agree with Candidate Obama on this issue anyway.)

Similarly, this deficit commission which the president plans to foist on Congress by executive order after the Senate killed it, is, again, at best kabuki theater and at worst trouble. It's clear to everyone involved that the entire point of this commission is CYA: i.e, to create political cover for raids on entitlement spending, while once again ignoring the grotesquely swollen defense budget. (Altho', to be fair, Secretary Gates has at least tried to rein in growth in this sector.) In other words, this commission will basically just be a chance for deficit peacocks to pretend they're Serious People and "make tough decisions," while in fact the one really tough idea that actually needs to be tackled -- reining in defense spending -- will be completely avoided.

In any event, all this discussion of the deficit ignores the larger problem. Obviously, one of the president's biggest charges coming into office was to restore economic sanity after eight years of Dubyaite excess. That being said, people were not looking to President Obama for this sort of deficit tsk-tsking and small-bore, fiddling around the margins. You'd think we Dems would have learned this by now. But curling up into a fetal position and mouthing moderate GOP-lite bromides will not stop the Republicans from kicking us, ever.

We have a Democratic president, an 18-seat majority in the Senate, and a 79-seat majority in the House. In short, we Dems need to keep thinking big or we will pay dearly at the polls this November. Perhaps the dysfunction of the Senate is the central problem Obama faces right now, but his speech nonetheless suggests that we're getting dangerously close to Eisenhower Republican territory now, and not even in the good "the military-industrial complex is completely frakked" kinda way. Without vision, the people perish. So too will our party, if we keep up with this thin gruel, triangulation schtick. At the advice of the careerist DLC-types over the years, we have tried this path several times over -- Put simply, it does not work.

"The whole thing basically went like that: Republican asks obnoxious question rooted in Glenn Beck-ian talking points; Obama swats it away, makes the questioner look silly, and then smiles at the end. It got so bad, in fact, that Fox News cut away from the event before it was over."

My issues with the SotU notwithstanding, the president's sallying back-and-forth with House Republicans on Friday clearly indicate that, whatever our problems are within the party, the GOP are just not ready for prime-time right now. (I also get the sense that this will mark the definitive end of the Republican's goofy "teleprompter" meme.) [Full transcript.]

To his credit, the president made his political opponents seem like the blatantly hypocritical ideologues they in fact are. Which begs the "common ground" question once again: Why should we try to meet the "Party of No" halfway, particularly when we know that they move the goalposts every single time you try to take them seriously?

"I don't honestly know what this president believes. But I believe if he doesn't figure it out soon, start enunciating it, and start fighting for it, he's not only going to give American families hungry for security a series of half-loaves where they could have had full ones, but he's going to set back the Democratic Party and the progressive movement by decades, because the average American is coming to believe that what they're seeing right now is 'liberalism,' and they don't like what they see. I don't, either. What's they're seeing is weakness, waffling, and wandering through the wilderness without an ideological compass. That's a recipe for going nowhere fast -- but getting there by November."

I already said my piece about this last week, and was going to let it drop for now. But this long essay by Drew Westen on the problems with Obama's leadership so far is right on the nose and well worth-reading. "[W]hat Democrats just can't seem to understand is that the politics of the lowest common denominator is always a losing politics. It sends a meta-message that you're weak -- nothing more, nothing less -- and that's the cross the Democrats have had to bear since they 'lost China' 60 years ago. And in fact, it is weak."

"Obama supporters are eager to depict the White House as nothing more than a helpless victim in all of this -- the President so deeply wanted a more progressive bill but was sadly thwarted in his noble efforts by those inhumane, corrupt Congressional 'centrists.' Right. The evidence was overwhelming from the start that the White House was not only indifferent, but opposed, to the provisions most important to progressives. The administration is getting the bill which they, more or less, wanted from the start -- the one that is a huge boon to the health insurance and pharmaceutical industry."

A day after Senate Democrats kill Byron Dorgan's non-importation amendment in order to preserve the administration's back-door deal with Big Pharma, the indispensable Glenn Greenwald takes the Obama administration to task for the final Senate product on health care, which, suffice to say, is looking pretty far afield from the House bill. (And all the while, the bought and paid for Joe Lieberman grins like the Cheshire Cat.)

I was going to wait until year-in-review post week to put this up, but now's as good a time as any: From civil liberties to this Senate health care fiasco, it's hard to think of any arena where this administration's first year hasn't been a tremendous disappointment. (Regarding the former: I didn't mention this here earlier, but the brazen audacity of this passage from the president's war-is-peace Nobel Prize speech made me blanch: "We lose ourselves when we compromise the very ideals that we fight to defend. And we honor -- we honor those ideals by upholding them not when it's easy, but when it is hard." Uh, your Justice Department is not upholding them, remember? Is the president even aware of his own civil liberties record?)

Anyway, I keep being reminded of this line from my Obama endorsement of January 2008: "There's a possibility -- maybe even a strong possibility -- that he'll end up a Tommy Carcetti-like president: a well-meaning reformer outmatched and buffeted to and fro by the entrenched forces arrayed against him." Well, welcome to the Carcetti presidency, y'all. The only surprise so far for many of us is in how little he's actually even tried to enact meaningful reforms. But I guess once the president surrounded himself with the exact same GOP-lite people we'd spent months trying to defeat in the Democratic primary, the writing should have been on the wall. This will not be change we can believe in. A New Day is not dawning. And the president is not really with us -- We're going to have to do the heavy lifting for reform next year without him.

"Unfortunately, there are some in the financial industry who are misreading this moment. Instead of learning the lessons of Lehman and the crisis from which we are still recovering, they are choosing to ignore them. They do so not just at their own peril, but at our nation's. So I want them to hear my words: We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses. Those on Wall Street cannot resume taking risks without regard for consequences, and expect that next time, American taxpayers will be there to break their fall."

In the bowels of Wall Street and one year after the collapse of Lehman Brothers, President Obama outlines his vision for financial regulatory reform, including a new Consumer Financial Protection Agency and stronger accountability and oversight in the existing regulatory regime. [Transcript.]

But -- see also health care -- some wonder if the President is going far enough: "The problem with concentrating on the banking system is that it allows the administration to present an overly optimistic assessment of its actions...Taking credit for stabilizing the financial system after feeding it with massive amounts of federal money is like a teacher bragging about turning around the academic performance of a failing student after handing them all the answers to the big tests."

Continues economist Nomi Prins, in an analysis that dovetails quite tellingly with the health-care situation:"A strong CFPA is a sensible plan...This proposal has drawn the most ire from the banking community, so you know it's good...But Obama's reforms do not strike deeply enough. The banking crisis has been subdued, not fixed, because of enormous amounts of government assistance. Ignoring that fact, and failing to overhaul the sector, leaves us open to another crisis. And the next round will be worse, because there is now so much more federal money invested in the banks."

"That large-heartedness - that concern and regard for the plight of others - is not a partisan feeling. It is not a Republican or a Democratic feeling. It, too, is part of the American character. Our ability to stand in other people's shoes. A recognition that we are all in this together; that when fortune turns against one of us, others are there to lend a helping hand. A belief that in this country, hard work and responsibility should be rewarded by some measure of security and fair play; and an acknowledgment that sometimes government has to step in to help deliver on that promise."

As I'm sure you know, President Obama delivered his health care reform address to Congress last night. [Transcript.] My thoughts on it are mixed.

On one hand, speaking in terms of rhetoric, style, and delivery, this was an amazing speech, his best since the campaign days. While it's an open question how long its effects will linger, the address clearly and decisively helped move the reform ball forward. And the emotional closer, featuring Ted Kennedy's heartfelt final words to the President, was incredibly moving. In sum, it's the exemplary address we knew Obama had in him on this issue, and he brought it home perfectly.

But, all that being said, I can't shake the nagging feeling that [a] the policy being outlined last night didn't quite jibe with the wonderful speech, and, as all too common of late, [b] the president far too readily threw his left flank -- the very people who sweat blood and tears to get him elected -- under the bus.

To take the second part first, Obama early on indulged in an irritating and textbook case of Beltway false equivalence by setting himself up as the sensible middle between those cuh-rrrrazy single-payer types on the left and the free market fundies on the right. ("There are those on the left who believe that the only way to fix the system is through a single-payer system like Canada's...") Uh, yes, and not so long ago, Mr. President, you were among them. I feel like I've said this several times recently, but painting the left as dingbats to shore up one's centrist bona fides is a pretty tired parlor trick at this point, and it never gets any less insulting.

As an aside, on the way into work yesterday, I -- and everyone else around the Metro -- was accosted by guys in Grim Reaper costumes and bullhorns, telling us all, basically, that violence will erupt and we will all die if this health care bill passes. Y'know, there's a term for telling people they'll be killed if a political event happens -- We call it terrorism. (As it turns out, there's a term for wearing a hood while telling people they'll be killed too.) Well, imagine my surprise to hear -- from the president I've vocally supported for two years now -- that me and my fellow clowns on the left are just as part of the health care problem as these jokers are on the right. I have to admit, it kinda tempers the enthusiasm.

And then there was the discussion of the public option. Yes, the President did make a case for the public option in last night's remarks: "[A]n additional step we can take to keep insurance companies honest is by making a not-for-profit public option available in the insurance exchange...It would also keep pressure on private insurers to keep their policies affordable and treat their customers better." In addition, the President correctly pointed out, "It's worth noting that a strong majority of Americans still favor a public insurance option of the sort I've proposed tonight."

But what the President giveth, the President also taketh away. The public option was clearly brought up in the speech after the non-negotiable section. ("While there remain some significant details to be ironed out, I believe a broad consensus exists for the aspects of the plan I just outlined.")

Indeed, in case we missed the point, President Obama later made it clear: "To my progressive friends, I would remind you that...[t]he public option is only a means to [an] end - and we should remain open to other ideas that accomplish our ultimate goal."

He then went on to float two "compromise" ideas that, for all intent and purposes, are public option killers: (1) a trigger and (2) co-ops. ("For example, some have suggested that that the public option go into effect only in those markets where insurance companies are not providing affordable policies. Others propose a co-op or another non-profit entity to administer the plan.")

The trigger notion -- the idea that if the insurance companies don't fix the problem themselves, a public option would then be "triggered" into existence -- is in effect, as one progressive well put it, a threat made with an unloaded gun. It's kabuki theater, pure and simple, because everyone knows that Congress never pulls the trigger in question. (See also the cost of prescription drugs in Medicare Part D.) As Slate's Tim Noah recently ably pointed out, triggers are used all the time as "compromise" fodder, and what they really mean is we're going to pretend to have addressed the problem and let things go on as they have. And, really, how much worse would insurance companies have to fail before this trigger kicked in? We're talking about health care reform right now because the system is already broken.

As for co-ops, there's a good reason they are the compromise that the insurance industry tends to favor. Most likely, they'll be too small, weak, and scattered to bring real competition to the market.

So, granted, we don't have a final bill yet, and there are many strong advocates of a public option in the House who will continue to fight for it. But, if the public option is as expendable to the administration as it seemed last night, then we may have some problems.

To wit, if a health care reform bill passes that has an individual mandate (i.e. everyone has to buy insurance), limited subsidies (to keep costs down), and no public option, than what's basically happening is this: People are being forced to buy insurance they likely still can't afford from the very private companies that are making vast amounts of coin from the current, broken system. If this sounds like a huge boon for private insurance companies, it is. (One might even start to think they had a hand in writing the legislation.) Yes, a larger risk pool should make health insurance cheaper -- but without a public option keeping rates honest, what guarantee do we have that these savings would be passed on to the consumer?

Along those lines, President Obama also made the case last night for a tax on premium plans to help pay for reform. ("This reform will charge insurance companies a fee for their most expensive policies, which will encourage them to provide greater value for the money - an idea which has the support of Democratic and Republican experts.") But, again, without a robust public option holding the private industry's feet to the fire, what will stop said insurance companies from just passing these costs down the line, in the form of higher premiums across the board?

(I'll confess to being confused about this element of the plan anyway. The article I just linked on this premium plan tax says: "The hope is that employers would buy cheaper, less generous coverage for employees, thereby reducing the overuse of medical services." Uh...cheaper, less generous coverage for employees? That's a good thing? And I'm by no means an expert on these matters -- far from it -- but is "the overuse of medical services" really the main problem afflicting our health care system? It sounds a bit to me like "too many notes.")

All of which is to say that I really hope the substance of the final plan matches the beauty of last night's rhetoric. Now, I understand the counter-arguments: As Paul Begala recently reminded us, the Social Security Act of 1935 had serious problems too, and look how that turned out. The great is the enemy of the good. Politics is the art of the possible, etc. etc.

I don't disagree with any of that. But I also believe that leadership is the art of expanding the horizons of the possible. (Cue RFK: "Some men see things as they are and say why. I dream things that never were and say why not.") We always knew that the President is a master of oratory, and that he would move us all with his eloquence when the time came. But, in setting their sights so low on this bill, the administration, in my view, have come close to squandering both the historical moment and the president's once-in-a-generation gift.

A historical puzzle lingers over the entire health care reform enterprise at the moment: How is it, with a Democratic House, a filibuster-proof Democratic Senate, and a Democratic president, that the proposal for health care reform on the table basically remains to the right of Richard Nixon? (See also: The Family Assistance Plan.)

Well, the short answer, imho, is lack of meaningful campaign finance and lobbying restrictions. (A key problem that's about to get a whole lot worse.) But I would also argue in favor of another cause. For decades now, Democrats have tried to find that safe happy moderate middle, while Republicans -- flaks, representatives and presidents alike -- have willfully and consistently pushed that center to the right. The president's address, however magnificent and even moving at times, felt like another step in the same old vicious cycle. And at this crucial historical moment, I strongly believe it would be a better demonstration of "our American character" if we Dems -- and this administration -- showed the courage of our convictions in words and deed.

"Somewhere in literary-character hell, John Galt is spending an eternity getting beat down by Tom Joad & his pick handle." Ah, Ayn Rand...come for the vaguely kinky sex, stay for the self-serving, thoroughly reprehensible philosophy. Salon's Andrew Leonard asks if the recent economic downturn has discredited Rand's Objectivism once and for all, prompting -- as you might expect -- a war in the comments section between the true believers and the gleeful cynics.

Among the many funny comments, this one, reposted from here: "There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs."

"The Federal Reserve was supposed to do this, but they were asleep at the switch." In light of recent shenanigans, the Obama administration contemplates creating a new regulatory commission for the financial services industry. "Responsibility for regulation of consumer financial products is currently distributed among a patchwork of federal agencies. Some of these regulators regard consumer protection as a low priority. And some financial products are not regulated at all. The proposal could centralize enforcement of existing laws and create a vehicle for imposing tougher rules." Sounds alright by me.

"'This is landmark legislation that is going to make the credit card marketplace more transparent and more fair for millions of consumers,' said Travis B. Plunkett, legislative director for the Consumer Federation of America. 'In particular, it's going to prevent credit card companies from suddenly and unjustly increasing interest rates which is pushing many consumers with credit card debt into bankruptcy.'" The Senate passes legislation aimed at reining in the more blatant and arbitrary instances of credit card usury by a vote of 90-5, with a bill expected on President Obama's desk by Memorial Day.

This sounds like a clear step in the right direction...but funny how times change, isn't it? It doesn't seem like all that long ago that many of these same Senators passed the 2005 bankruptcy bill, which dug the financial hole deeper for millions of Americans in the name of an easy buck for the credit card industry. Better late than never, I suppose.

"But while many stakeholders made sacrifices, some did not. In particular, a group of investment firms and hedge funds that hoped to hold out for a taxpayer-funded bailout. I don't stand with them. I stand with Chrysler's employees, management and suppliers. I don't with stand with those who held out when everybody else made sacrifices." President Obama announces that Chrysler will file for bankruptcy, and lays the blame squarely at the feet of hedge funds who rejected an 11th-hour deal to save the company, apparently in the hopes of garnering more bailout cash.

The hedge funds in question have fired back, of course. Apparently, they're all for the "rule of law" and upholding our "world-leading bankruptcy code." I'd probably be more inclined to take them seriously on these matters if they weren't also trying to spike regulation of their industry that is long overdue. At it is, i'm thinking profit is more of a motivator here than principled civil disobedience.

At any rate, I think Salon's Andrew Leonard is exactly right about where public opinion will come down on this one. Says one observer (cited by Leonard) of what happened today: "The banksters are eagerly, shamelessly, and openly harvesting their pound of flesh from financially stressed average taxpayers, and setting off a chain reaction in the auto industry which has the very real risk of creating even larger scale unemployment than the economy already faces. It's reckless, utterly irresponsible, over-the-top greed." From my admittedly limited vantage, that sounds like a plausible reading.

"I believe it is not in our character, American character, to follow -- but to lead. And it is time for us to lead once again. I am here today to set this goal: we will devote more than 3 percent of our gross domestic product to research and development. We will not just meet, but we will exceed the level achieved at the height of the space race, through policies that invest in basic and applied research, create new incentives for private innovation, promote breakthroughs in energy and medicine, and improve education in math and science."

It's poetry in motion: In a clear break with his predecessor, President Obama pledges $420 billion for basic science and applied research. "And he set forth a wish list including solar cells as cheap as paint; green buildings that produce all the energy they consume; learning software as effective as a personal tutor; prosthetics so advanced that you could play the piano again and 'an expansion of the frontiers of human knowledge about ourselves and world the around us.'" Huzzah! (And fwiw, I would also like more manned spaced exploration...and a jetpack.)

"In a remarkable illustration of the power of lobbying in Washington, a study released last week found that a single tax break in 2004 earned companies $220 for every dollar they spent on the issue -- a 22,000 percent rate of return on their investment." A new study by three University of Kansas profs tries to quantify exactly the amount of lucre generated by the lobbyists and influence-peddlers aswarm in Washington for their employers. And the answer? A whole lot. "The paper...examined the impact of a one-time tax break approved by Congress in 2004 that allowed multinational corporations to 'repatriate' profits earned overseas, effectively reducing their tax rate on the money from 35 percent to 5.25 percent. More than 800 companies took advantage of the legislation, saving an estimated $100 billion in the process." [Hattip: Tim C. and Marginal Revolution.]

"Even for the hardest-core Obama loyalists, it's rather difficult to attribute these increasingly harsh condemnations of Obama's civil liberties, secrecy and executive power abuses to bad motives or ignorance when they're coming from the likes of Russ Feingold, Talking Points Memo, the Center for American Progress, Nancy Pelosi, EFF, the ACLU, The New York Times Editorial Board, Keith Olbermann, Jonathan Turley, The American Prospect, Bruce Fein, Digby, along with some of the most enthusiastic Obama supporters and a bevvy of liberal law professors and international law experts -- those who were most venerated by progressives during the Bush era on questions of the Constitution and executive power."

Salon's Glenn Greenwald surveys the growing progressive consensus that something is rotten at Holder's DOJ with regard to state secrets and the continuation of Bush-era policies antithetical to, if not downright contemptuous of, civil liberties. (In case you missed it here or here, I'm not happy either.) "That the Obama DOJ has repeatedly embraced the very legal theories responsible for much of the intense progressive rage towards the Bush/Cheney regime is now beyond dispute. The question of motive -- of why Obama is doing this -- is far less clear."

Now, obviously, the president has a lot on his plate these days, and a finite amount of political capital with which to achieve an enormous number of objectives. Still, it's well past time that the administration explain what's going on on the civil liberties front from start to finish, akin to Obama's economic overview speech at Georgetown this morning. These are not piddling matters.

"After Gates was confirmed as George W. Bush's defense secretary in December 2006, he gave several speeches outlining major reforms that his successor should undertake--in weapons procurement, promotion policy, and the whole careerist culture inside the Pentagon. (With only two years in office, combined with a plateful of crises in Iraq and elsewhere, he knew he wouldn't have time to take those steps himself.) When he stayed on at Barack Obama's request, and thus became his own successor, many wondered whether he would turn his words into action. With this budget, he has begun to do just that."

A holdover from the bookmarks of last week: Slate's Fred Kaplan offers a concise overview of the proposed Obama-Gates military spending reforms. (These are not spending cuts, by the way, despite what you may have heard -- just some much-needed and long-overdue reprioritizing over at the Pentagon. I also like the idea of phasing out defense contractors in favor of presumably much more cost-conscious civil servants.) "This budget will not go down easily in the Pentagon or in Congress. The F-22, the DDG-1000, and the Future Combat Systems are the favored systems by much of the Air Force, Navy, and Army brass, respectively...The F-22 in particular is also a favorite of many legislators -- the result of politically shrewd subcontracting that spread out production of the plane to key districts in 46 states."

"Officials said the proposal would seek a broad new role for the Federal Reserve to oversee large companies, including major hedge funds, whose problems could pose risks to the entire financial system." With the AIG bonuses setting the table, the Obama administration prepares to unveil an overhaul of the nation's financial regulatory apparatus. "It will propose that many kinds of derivatives and other exotic financial instruments that contributed to the crisis be traded on exchanges or through clearinghouses so they are more transparent and can be more tightly regulated. And to protect consumers, it will call for federal standards for mortgage lenders beyond what the Federal Reserve adopted last year, as well as more aggressive enforcement of the mortgage rules."

Whatever malarkey you hear from the GOP about "creeping socialism" over the next few weeks, keep in mind that no less a Republican than Teddy Roosevelt deemed this sort of solution -- accountability, transparency, tighter oversight of the financial sector by the federal government -- the "New Nationalism" a century ago. In this arena, at least, President Obama clearly seems to be living up to his Progressive promise.

Update: "'Our system failed in basic fundamental ways,' Geithner told the committee. 'Compensation practices rewarded short-term profits over long-term returns. Pervasive failures in consumer protection left many Americans with obligations they did not understand and could not sustain. The huge apparent returns to financial activity attracted fraud on a dramatic scale..,To address this will require comprehensive reform. Not modest repairs at the margin, but new rules of the game. And the new rules must be simpler and more effectively enforced.'" Secretary of the Treasury Tim Geithner unveils the new regulatory package. [Highlights.] "He said financial products and institutions should be regulated according to their economic function and the risks they pose, not their legal form. 'We can't allow institutions to cherry-pick among competing regulators and shift risk to where it faces the lowest standards and weakest constraints,' he told the committee."

"As Congress and President Obama rush to balance solidarity with a new wave of populist anger alongside the need for smart policy during a crisis, they might reflect on how well previous politicians fared at the task. History does not repeat itself. But sometimes it does hum a familiar tune." In the wake of the furor over the AIG bonuses, and borrowing heavily from Alan Brinkley's Voices of Protest as well as his own work, historian Michael Kazin gives a brief historical overview of populism in Newsweek. (See also Rick Perlstein in the same magazine, who thinks that recent cries of "populist rage" might be somewhat overstated: "What makes this rage 'populist'? This is ordinary rage, rational and focused...You might more accurately call that common sense.")

I must confess, I find the very-recent press fascination with its latest toy, "populism," to be more than a little irritating. This is partly because, as with the "socialism!" craze of a few weeks ago, the discussion -- above articles excluded -- rarely goes any more than an inch deep, and is clearly fueled more by whatever dodgy sound-bites emanated from the Limbaugh-types that morning than any sort of grounded historical thinking. It's also because, to my mind, the endless tirade of ignorant, self-satisfied, surface-skimming blather vomited forth by the establishment media these days is as much a cause for a populist uprising as the rapacious greed of the asshats at AIG.

From the manifestly idiotic and off-topic lines of questioning of the White House press corps last night, to partisan hacks like AP's Ron Fournier carrying water for the broken GOP by pushing dumb memes about teleprompters (see also Rick Santelli a few weeks ago), and from self-important blowhards like Howard Fineman conjuring up nonsense out of thin air about the purported dissatisfaction of his chummy club to the host of distractions and non-issues we are endlessly barraged with these days, the mainstream press is worse than failing us -- it's part of the problem.

This is nothing new, of course. From l'affaire Lewinsky to Judy Miller's WMD to any number of other issues, the establishment media has been at best lazy, simpering, ratings-driven schlock and at worst dangerously ennabling of corrupt GOP behavior over the years. It's aggravating at the best of times. But we really can't afford this idiotic water-carrying for Republcans or the smug sense of entitlement that exudes from every pore of the establishment-media overclass, at the moment, as we try to extricate ourselves from the gimongous economic hole dug over the past eight years.

So, Lou Dobbs and your like, next time you endlessly prattle on about how angry the people are getting at Wall Street and/or Obama right now, just remember: Be careful what you wish for. If push comes to shove, there's a good bet you'll end up on the wrong end of the pitchfork as well. (AL link via Liam.)

"We have begun the essential work of keeping the American Dream alive in our time. Now, I don't want to pretend that today marks the end of our economic problems. Nor does it constitute all of what we're going to have to do to turn our economy around. But today does mark the beginning of the end...The American Recovery and Reinvestment Act that I will sign today -- a plan that meets the principles I laid out in January -- is the most sweeping economic recovery package in our history." Back in Denver for the day, President Obama signs the ARRA economic stimulus bill into law. [Remarks.] "'We have done more in 30 days to advance the cause of health-care reform than this country has done in an entire decade,' Obama said, prompting a standing ovation."

As with the initial versions, the final bill passed without a single GOP vote in the House and only three Republicans -- Snowe, Collins, Specter -- in the Senate. Y'know, it's bad enough that these situationally-ethical jokers stand in the way of what obviously needs to be done to get our economy moving again. (I don't remember any calls for spending restraint, or any worries about pork, in the flush times when Boss DeLay was running the show, or when both Reagan and Dubya were ratcheting up the deficit to all hell.) But, it offends the senses to have to listen to the aggressively stupid talking points Republicans tend to trot out these days. For example, the party's new leader, Michael Steele: "Not in the history of mankind has the government ever created a job." (The armed services notwithstanding, who does he think the runs the government? Elves? Hey, Mr. Steele, look down -- we call those roads.) Or consider South Carolina Sen. Jim DeMint: "This is not a stimulus bill. It's just a spending bill." Econ 101: A stimulus bill is a spending bill. (They do in fact teach this in SC -- I can attest to it.)

Worse still, the national newsmedia has been failing miserably in their coverage of the stimulus battle, by continually enabling these Republicans to spout their inanities without comment. It reminds me of Paul Begala's "Neil Armstrong Principle," which I heard him break down on Charlie Rose a few months back: "If John McCain and Sarah Palin were to say the moon was made of green cheese, we can be certain that Barack Obama and Joe Biden would pounce on it, and point out it's actually made of rock. And you just know the headline in the paper the next day would read: 'CANDIDATES CLASH ON LUNAR LANDSCAPE.'" Too true.

Well, at least the durned thing passed. I'm sure the bill has its problems, not the least that it was transformed and watered down in an attempt to placate a bunch of Republicans who were never in a million years going to vote for it anyway. Perhaps, when we move forward now, we can focus on writing good policy that will get this economy and our country moving again, rather than catering to the whims of the naysayers, political opportunists, and/or flat-earth morons that comprise today's GOP.

"Marijuana is California's largest cash crop. It's valued at $14 billion annually, or nearly twice the value of the state's grape and vegetable crops combined, according to government statistics...But the state doesn't receive any revenue from its cash cow. Instead, it spends billions of dollars enforcing laws pegged at shutting down the industry and inhibiting marijuana's adherents." Also in Slate: In the wake of California's money troubles, Daniel Gross makes the economic case for marijuana decriminalization.

"So what are the numbers? A national legalization effort would save nearly $13 billion annually in enforcement costs and bring in $7 billion in yearly tax revenues, according to a study by Harvard University economist Jeffrey Miron...That doesn't include any indirect revenues as, for example, rural farming communities grow or marijuana tourism, which has been lucrative for the Netherlands, takes off."

The obvious economic benefits aside, it's well nigh time to establish a sane drug policy in this country. And weed in particular is an easy call. We haven't had a drug-free American president since 1992 (at best), and yet we still pretend that a goofball like Michael Phelps ripping bong hits is some sort of egregious sin? Time to grow up, people.

"'There will be people in districts all over the country that will wonder why, when there's a good bill to get the economy moving again, we still seem to be playing political gotcha,' White House press secretary Robert Gibbs said in an interview." Well, so much for the post-partisan era. Despite several attempts at across-the-aisle diplomacy by the new administration, the House passes President Obama's stimulus bill 244-188 without a single Republican vote. Sigh.

Perhaps a little history lesson is in order. Journey with me, if you will, back to 1993, the last time a new Democratic president tried to work with this same crew of jokers on a new, recession-busting economic plan. As you may remember, Clinton's 1993 budget also passed the House and Senate without a single GOP vote. Let's see what the Republicans had to say back then (courtesy of some old, off-line research of mine):

Dick Armey (who, btw, made an embarrassment of himself on national television last night): "This bill would grow the Government...shrink the economy" and "will mean fewer jobs for ordinary Americans." [Congressional Record, 8/5/93]

Newt Gingrich: The bill will "kill jobs and lead to a recession" that would "force people off of work and onto unemployment and will actually increase the deficit." [Houston Chronicle, 8/7/93, 1993; AJC, 8/6/93]

Bob Dole: The bill "would take America in the wrong direction." [WP, 8/4/93]

Ronald Reagan (yes, they wheeled him out with talking points): The bill will "only cause the deficit to increase and will likely wreck any hopes for economic recovery." [“Just Say No to Clinton’s Package,” NYT op-ed, 8/3/93]

Rush Limbaugh: True to form, the GOP's poster boy bet the DNC $1 million on the air that three of the following five things would happen by 1996: 1. The deficit would grow. 2. Unemployment would rise. 3. Inflation would swell. 4. Interest rates would surge. 5. The President's approval rating would fall below 45 percent. [ James McTague, “Off to the Races,” Barron’s, 3/18/96]

Well, I'm sure I don't need to remind you of the untold economic devastation that was the remainder of the Clinton years. (If you're keeping score, Rush went 0-for-5, and never paid up.) As it turns out, just as with Boehner this time around, the GOP had decided beforehand they weren't going to vote for any Clinton bill. As Bob Woodward notes in The Agenda (p. 109), Dole told Clinton this three weeks before the bill was even proposed.

Then as now, the modern Republican party doesn't seem to understand the first thing about basic economics (their right-wing dogma precludes any grasp of Keynesianism, I guess.) They don't seem to "get" rudimentary American history. (I've seen so many dumb things written about Herbert Hoover and the 1937 "Roosevelt recession" -- which was caused by spending cuts and fiscal retrenchment by the FDR admininstration, not "over-regulation" -- by right-wingers of late that it's hard to even know where to begin.)They don't seem to understand basic politics. (The American people have obviously voted for action, and a path away from Dubyanomics. Getting in the way of this bill won't "reboot" their party in any way, shape, or form.) At this point, it's an open question whether they can distinguish their asses from their elbows.

So...can we please stop spoon-feeding these guys now? The GOP has proven yet again that they're not looking to play ball. If they want to be on the wrong side of the problem as usual, let them. It's useless to spend any more time bending over backwards to accommodate their lousy, discredited ideas and inchoate, faith-based economic beliefs. It's time to move on.