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“Kick the Can”

Nov 06, 2009 | By: Mr_Blue | (0) Comments | Permalink | Tags: economic stimulus, health care reform, financial regulations

It’s a game - kick the can but in this case its a very dangerous game called “kick the can down the road.” That is exactly what the Obama Administration and Congressional Democrats are doing from health care reform to financial regulation reform to economic stimulus. Kick the economic can down the road so that it buys them enough time to leave office on their terms to write a biography or become a high paid Washington lobbyist.

Today, we heard from the Bureau of Labor Statistics that unemployment rose from 9.8% to 10.2% in October. Only the second time since post-World War II to cross over 10% (the other time 1983). We also heard that we lost 190,000 jobs. The private sector is not producing jobs and may not be able to for quite some time. So the question is do we tolerate long-term staggering unemployment until private sector starts generating jobs again (and the jobs hole is very deep)?

The answer from the Democrats is let’s wait and see maybe we can ‘kick the can down the road’ so that this is someone else’s problem because we don’t want to act bold enough to address the fundamental problems in our economy. We don’t want to jeopardize our comfortable positions in the White House or Congress. Meanwhile, hundreds of thousands of more people are losing their jobs and health insurance and HOMES.

These times, the Great Recession, the deepest recession since the Great Depression require bold actions by policy makers in Washington. Right now they are not up to the task. But if they aren’t careful they may be forced to seek those lobbyists jobs much sooner because come 2010 they will be voted out of office. This isn’t the time for moderation.

Health Care Reform

House of Representatives is about to vote on a health care reform bill that includes a weak version of a public option. The purpose of “public option” (stress option) was to provide price competition with private insurance companies because in many cases private health insurance industry lacks competition. This isn’t government run health care. This isn’t socialized medicine. This is an insurance plan operated by the government. But Democrats were too scared that this “public option” may work too well and provide too much competition with private insurance companies and we can’t have that. WTF, like we need private insurance companies to continue to profit off healthy and sick people. So, Democrats, the courageous bunch they are, didn’t want to upset their big money contributors in the insurance industry so they weakened the “public option”.

The Obama Administration is OK with the weak form of public option because they just want to get something passed so that they can say they got some health care reform bill passed. Forget about the fact that it has been so weakened to not be effective and probably will be killed in future congresses and a return to status quo of 70+ million people without health insurance and millions of people filing for bankruptcy because of health care bills. For what, so that the President can say he “did something.”

Financial Regulatory Reform

What a joke this whole process has been. Democrats both in Congress and White House have shown who owns them - big business including the financial conglomerates. Every proposal so far has been rendered useless by huge exceptions made for corporate special interests. Just take a look at the latest proposal to exempt companies with less than $75 million in market capitalization from complying with Sarbanes Oxley. Sarbanes Oxley was passed in the aftermath of the Enron and Worldcom accounting fraud schemes. Some Democrats say this hurts small businesses but these are publicly traded companies (these are not mom and pop businesses) that we are talking about and the integrity of the markets and information provided to investors outweighs the cost of compliance.

The other example is the Consumer Financial Protection Agency. As it stands right now, the legislation creating the CFPA would exclude over 90% of the financial institutions in the U.S. What’s the point of a CFPA with that many institutions aren’t covered?

The list of watered down financial regulatory reform proposals is long. So, what was the Obama Administration doing while Democrats in Congress were gutting proposal after proposal? It ranged from silence to active encouragement. So much for bold leadership.

Economic Stimulus

Instead of having the stimulus focus on more job creating programs such as investments in infrastructure or research and development it gets watered down to include tax incentives for Cash for Clunkers and First Time Homebuyer Tax Credit and other tax rebates. The size of the stimulus plan may not have been enough and at least one of the President’s economic advisers indicated that a bigger plan was needed. All of this done in the name of ‘bipartisanship’ and to convince some moderate Democrats.

Oh, well. Nothing has really changed. We have politicians in Washington more concerned about preserving their jobs instead of using this crisis as an opportunity to transform our economy into one that can generate jobs, help the Middle Class and prepare us for the future. All I know is that the last time we were faced with such a dire economic climate - Great Depression - we had political leaders that acted boldly to do what they thought people elected them to do - to solve an economic crisis. Sadly, we don’t have that now.

Good luck.