For all of the good things President Obama has tried and accomplished during his tenure, I’m going to take a break from deriding the idiotic, cruel and selfish things Republicans have done over the same time and play a little Monday morning quarterbacking for the two things I really really wish President Obama could have done but didn’t.
Monday morning quarterback…yes, I was always too slow and too ugly to be a Friday night quarterback, much less a Saturday or Sunday quarterback, but by gawd I’m as good a Monday morning quarterback as anybody. And in my mind, these two things helped cost the Democrats the House and Americans much much more.
Now granted, Debbie Wasserman Shultz has been a total screwup and by far the worst DNC chairperson in my lifetime. Totally benefited the Republicans in everything from losing the Scott Walker recall to trying to fix the current Democratic primary in favor of Hillary Clinton.
But President Obama at least shares the blame. When Barack Obama took office Democrats controlled the White House, both houses of Congress and had outright control (both houses of the state legislature and the governorship) of 27 states. Republicans controlled 17. In 2010 Democrats lost the House and the number of Democrat to Republican-controlled states almost exactly reversed. In 2014 Republicans won the Senate and the score regarding state control now stands at an astonishing 32 to 7 in favor of Republicans.
Nothing Obama could have done would have avoided the tidal wave of vicious racist and xenophobic hatred that washed over him and the country, aided and abetted by the savagely partisan and vitriolic FOX news and hiding in plain sight bigotry still thriving in America. Nothing would have stopped obscenely rich and intensely self-interested individuals like the Koch brothers from pouring hundreds of millions of dollars into campaigns to discredit and defile the President and the government in general.
But Obama might well have inhibited the rise of a rightwing populist movement if he had pursued an aggressive populist strategy of his own, one that demonstrated government could effectively challenge giant corporations and unbridled private greed on behalf of small business and the average family; not to mention that he had the real balls to take them on in his early rather than later—too later–years.
And it started with his refusal to hold the greedy, callous, self-serving rich folks on Wall Street who willfully and with full knowledge that it was happening, stood by and benefited from the 2007 crash of the real estate and Investment Banking conglomerates. Instead of aggressively going after them, he allowed the problem to get progressively worse with no consequences whatsoever to the perpetrators.
Obama certainly had the opportunity. The economy was in free fall. Millions lost their homes, their savings and their hard-earned retirements. Millions more were losing their jobs. After freeing itself of most government restrictions and oversight the financial sector had become not only dysfunctional but evil. Even stalwart defenders of laissez faire capitalism were confessing the error of their deregulatory ways.
“Do you feel that your ideology pushed you to make decisions that you wish you had not made?” Representative Henry A. Waxman (D-CA) asked Ayn Rand acolyte Alan Greenspan, Chairman of the Federal Reserve in October 2008. “Yes, I’ve found a flaw,” Greenspan reluctantly conceded, and added, “I’ve been very distressed by that fact.”
The other most obvious blunder was in trying to placate big Insurance instead of attempting to correct the real problem in health care of over-pricing; especially in the Big Pharma piece that makes it illegal for Medicare, the single largest payer of prescriptions in the world, to negotiate drug prices; one of Medicare’s largest single expense categories. The only reason I can think of for President Obama to ignore this and pursue the insurance angle is ego. He wanted a signature event for his own legacy; and it’s predictably being picked apart by Republicans daily.
The crisis in the health care sector was less visible but the sector’s inefficiencies and callousness were and still are reprehensible. At a cost 30-100 percent higher than other nations were paying for universal health care, (which I personally experienced as equal to but less expensive in Ecuador, one of the poorest countries on earth) the America health care “system” left over 40 million uninsured. As many as 45,000 people died each year because they lacked health insurance. Medical expenses caused 60 percent of all personal bankruptcies and had been rising by twice the inflation rate for several decades. Shrinking numbers of companies were offering employees adequate health care insurance and those that did were requiring more of the premium to be paid out of the workers’ paychecks even while insurance companies increased the level of deductibles.
This despite a country which professes to be grounded in Judeo-Christian values of caring for the poorest, the weakest, the most vulnerable. Although there are a lot of good Judeo-Christian values practiced every day, Donald Trump’s unfathomable popularity among the true fascist element in America today proves there are equal numbers of reprehensible haters who self-pity their own admirable sacrifices into what they feel is weakness.
To his credit Obama did try to make some systemic changes in both the financial and health care sector. To his everlasting discredit he tried to make these changes without actually structurally changing the system and backing down when challenged when he had the most leverage.
But instead of confronting power, he bribed the powerful: $700 billion in direct support and trillions in low cost money for the banks, $500 billion for the health insurance companies. He enlisted the support of giant pharmaceutical companies, among the most profitable of all manufacturing firms, by refusing to cap drug prices. He enlisted the support of giant insurance companies by embracing an individual mandate he had opposed during the campaign, thus guaranteeing the companies millions of new mostly healthy younger customers, whose premiums would be heavily subsidized by the government.
At one point Obama met with the CEOs of the nation’s 13 largest banks. He accurately warned them, “My administration is the only thing between you and the pitchforks.” But rather than make demands, he pleaded with the bankers: “Help me help you.” They were only too glad to do so.
Those with the pitchforks were enraged. Anti-government activists were delighted. The American public needed someone to blame and if Obama wasn’t willing to blame those who deserved it, the Koch brothers and Fox News and others were more than willing to step into the vacuum and blame the government, Democrats and Obama.
Obama could have chosen a different path. But doing so would have required that he tell the American people who really deserved blame for the crises and why the system that allowed them to do so must be changed.
In 1933, in his first Inaugural Address, Franklin Delano Roosevelt identified the cause of the economic collapse and declared war on Wall Street…and followed through, to all of our benefit. “Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men,” he declared. “They only know the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish…the money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.”
Forty-five years later Ronald Reagan came to office in the midst of another economic crisis but unlike FDR he declared war on government. “It is no coincidence that our present troubles parallel and are proportionate to the … unnecessary and excessive growth of government…. government is not the solution to our problem; government is the problem.” Reagan’s narrative eventually became the guiding philosophy of both political parties. Recall Bill Clinton’s famous declaration, “the era of big government is over.” Indeed one might argue that it was not Ronald Reagan who undid the New Deal. It was Bill Clinton.
In his Inaugural Address Obama needed only to change two words of Reagan’s to begin to change the narrative and foster a new populism: “It is no coincidence that our present troubles parallel and are proportionate to the … unnecessary and excessive growth of giant corporations.… corporations are not the solution to our problem; corporations are the problem.”
The time was ripe for taking on corporate pseudo-capitalism. Corporate, not individual welfare. A month before the election, responding to popular outrage, Congress had rejected the first no-strings-attached bailout bill despite warnings that it had to act within hours or risk a total financial meltdown and against the wishes of the White House and leaders of both parties. The American people wanted public money used for the public good rather than to satisfy private greed. A revised bill directed the use of bailout money to increase lending and prevent foreclosures.
The banks responded by thumbing their collective noses at the American public.
In the early days Obama promised to take on the banks. A few weeks after taking office he told Congress, “I intend to hold these banks fully accountable for the assistance they receive, and this time, they will have to clearly demonstrate how taxpayer dollars result in more lending for the American taxpayer.”
He had the tool to make that happen, and more. Congress had given the White House authority to own the banks. Indeed, support for government ownership had surprisingly broad support. In February 2009 Mr. Greenspan told the Financial Times, “It may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring,” The Financial Times reported, “policymakers across the political spectrum appeared to be moving towards accepting some form of bank nationalization.” Senator Lindsey Graham (R-SC) told the FT. “We cannot keep pouring good money after bad…If nationalization is what works, then we should do it.”
By early 2009 the federal government had effectively taken control of Fannie Mae, Freddie Mac and AIG and it also acquired equity shares in the nine largest banks. In late February the US government took a 36 percent equity stake in Citigroup, gained control of half the seats on the Board of Directors, and gained the right to fire senior management. The government acquired a more modest share in the nation’s largest bank, Bank of America, but only because they refused to bargain with the banks the way banks bargained with their customers. The government had provided $40 billion to Bank of America. The Wall Street Journal noted that at the time the entire market value of Bank of America was about $25.5 billion.
The government, however, went out of its way to structure its equity investments in ways that would not permit it to dictate, but that was a policy path that wasn’t inevitable. The business world would have understood if the government had called what it was doing a “hostile takeover”.
If he did so, Obama would have earned undying hatred from Wall Street, as FDR had. But the American public likely would have supported him. Public opinion polls at the time consistently show that Americans wanted to break up the banks.
Public opinion polls also showed a deep suspicion of health insurance and pharmaceutical companies. Between one third and half supported redesigning the medical system to significantly reduce the role of private profit oriented insurance companies.
Obama succeeded in dramatically expanding one public insurance program, Medicaid. During the campaign he had supported a broader public option. The Public Option Act would have allowed all citizens and permanent residents to participate in the nation’s largest single payer insurance program, Medicare.
Expanding Medicare would have given the American people the ability to choose public over private, non-profit over profit. Would there have been any role remaining for private insurance companies? Possibly. Many nations with excellent universal health plans also rely on private insurance companies. But these companies are so tightly regulated as to make them essentially public utilities. Their profits are capped. The menu of basic services mandated is extensive. Drug prices are strictly regulated. The companies compete less on price than on service.
In both the health care and financial sectors Obama could have educated Americans about how the profit motive provides a powerful incentive for corporations to do the wrong thing. To maximize profit for shareholders, health insurance companies deny services to policyholders. Even conservative federal Appeals Court Judge Richard Posner observed that the “incentive [of some insurers] is to keep you healthy if it can but if you get very sick, and are unlikely to recover to a healthy state involving few medical expenses, to let you die as quickly and cheaply as possible.”
In early 2009 an investigation by the House Subcommittee on Oversight and Investigations concluded that over a five year period three large health insurers had denied payments to 20,000 customers in order to increase profits by $300 million. An investigation by Senator Jay Rockefeller found that just 74 cents of every premium dollar for individual health insurance actually went to pay for health care. One company paid out only 66 cents on the premium dollar. Medicare, America’s largest (although not the only) single payer system, spends 95-98 cents on the dollar it receives in taxes for medical expenses.
The same dynamic infected the financial sector. Bonuses were based on selling products, toxic or not. Banks pushed no-down-payment mortgages on people without jobs setting payments artificially low for the first few years. After putting together millions of little ticking time bombs banks then bundled mortgages and offloaded their fiduciary responsibility to investors. Rating agencies fraudulently gave the securities high ratings. Appraisers fraudulently inflated the market value of the properties.
To accomplish a systemic restructuring of the health and financial sectors Obama would have had to mobilize the American public. He was and is an excellent communicator. And he could have taken a page from the right-wing playbook by putting a human face on his message. He could’ve restructured Ronald Reagan’s own Welfare Queens references and applied them correctly and bravely to corporate subsidies.
But he didn’t. If he did, I certainly missed it, and if I missed it I’m sure millions more missed it.
Obama would have had no trouble offering the American people horror stories from both the financial and health sectors. In early 2010 a Google search for the term “health insurance horror stories” generated 419,000 hits. Former Cigna insurance company executive Wendell Potter observed, “If you’re not outraged, you’re not paying attention.” Obama’s job should have been to make Americans pay attention.
Obama could have featured real individuals and couples in real life situations where private profit-oriented corporations were terrorizing them. Like the woman who was denied breast cancer surgery because she had been treated for acne in the past or the man whose policy was rescinded just as he needed costly medical intervention because his insurance agent had incorrectly entered his weight on the application forms.
And Obama could have highlighted some of the many horror stories stemming from the unquenchable greed of giant pharmaceutical companies. Congressional hearings held in 2008 found one company that acquired an existing drug to treat breathing problems in newborns and hiked the price from $100 a unit to $1,500. Another company acquired a decades-old drug for infantile spasms and raised its price from $40 a vial to over $23,000! And another scumbag doing the same thing was just jailed, but not for his crimes against humanity for price-gouging, but for securities fraud.
Obama could have informed an ignorant public that in 2006 private lending institutions issued about 85 percent of subprime mortgages. But he could and should have gone much further and performed an ideological smack-down on the right-wing narrative by agreeing with Rubio that the collapse was in large part driven by “reckless government policies” but then explain that the recklessness was in eliminating safeguards that for more than two generations had protected the American economy and households.
In 1999, under Bill Clinton’s approval, Congress recklessly repealed the Glass-Steagall Act that for 50 years had stopped Wall Street from speculating with government guaranteed deposits. A year later Congress recklessly deregulated the derivatives market. The next year the new federal bankruptcy act gave derivatives priority for payment. In 2004 the SEC recklessly waived the rules that limited lenders to a maximum debt-to-net-capital ratio of 12 to 1 for five giant Wall Street firms– Goldman Sachs, Merrill Lynch, Lehman Brothers, Bear Stearns and Morgan Stanley. They promptly ratcheted up ratios to 30 and even 40 to 1. Three years later Washington overturned effective state anti-predatory lending laws.
But Obama did none of those things. One result is that today if you do a Google search with the term “insurance horror stories” you’ll get over 1 million hits. But now many if not most are horror stories about Obamacare. Another result is that economic power has become even more concentrated as the number of community banks shrinks while the assets of the 5 biggest banks are almost 40 percent larger than they were before the crisis. These five banks now control over 44 percent of the nation’s banking assets and 39 percent of the nation’s GDP. In the health sector, insurance companies, hospitals, drug companies and doctor organizations have engaged in a frenzy of mergers and acquisitions.
Frederick Douglass once declared, “Power concedes nothing without a demand. It never did and it never will.”
Obama should have challenged two unethical and inhumane systems dominated by giant private corporations whose sole aim was to maximize corporate and individual profits. He should have realized that he needed to convince a skeptical public that government could act on their behalf. And he could do so only be clearly acting on their behalf, which meant confronting power with power.
But we’ll never know how that would have played out. The haters were going to always hate anyway. Donald Trump would probably still be bringing today’s equivalent of abject fascism to the forefront to the delight of people who want their voices as “masters” back instead of wanting equality. We might even have not had to endure 1,050 mass shootings, the vast majority perpetrated by radical white males who go unnamed as the domestic terrorists even after having callously gunned down school children in Sandy Hook, while radical Muslims, in exponentially smaller numbers, create less havoc but bear the brunt of white outrage.
Again, I’m nothing more than a Monday morning quarterback, but I could die much more proud of America had President Obama, our best shot at taking on real corporate evil, attempted to do the above in spite of the hatred and ignorance that was going to be ever-present anyway.
Happy Holidays, do something nice for someone else.
Harvey A. Gold