Follow-up Post to Reason to Believe

The flying spaghetti monster interferred with my previous post. The point of all this about populist rage is that the Democrats and President Obama can ride this further than the Republicans. The President yesterday announced new initiatives to regulate the banks. He also signed an executive order to create a commission to study putting Social Security, Medicare and Medicaid on a firm economic footing. The commission is to report on its recommendations by the end of the year.

The left is screaming about this as Obama selling everyone out. Reagan did the same thing and worked with Bill Bradley to save Social Security until 2047. I rather doubt President Obama, who is far more in touch with the suffering of ordinary people than his critics allow, would do anything that would cut benefits for the middle and lower classes. Stripping John McCain of his social security--which he receives--I can see. The commission is also aimed at addressing one major component of our long-term structural deficit. This has a political benefit as showing he is active on dealing with future deficits and it also ensures the survival of the social welfare net, when a Republican comes back to office. Look where we would be if Social Security had been privatized. (Howard Dean claims Bush would have gotten health care by now--look how fare he got with this his most treasured policy initiative.)

President Obama is also going to push hard on his idea for the Consumer Agency. There is no better spokesperson for this than Elizabeth Warren , who has the confidence of everyone. She is begrudgingly admired by conservative critics of the President. Her argument on regulation is very simple--if something broke in the financial system, you don't want this to happen again. That's why you regulate and that's why FDR regulated during the Depression. Weren't we all told it would never happen again?

President Obama's call on a tax on the banks and Wall Street has drawn fiscal conservative support as witnessed by David Stockman's rise from the dead and Paul Volcker, who blasted bankers at a private meeting. Republicans will have to resist this move as a return to the regulation of economy, which they spent a generation undoing. This will not sell well with the populists they're trying to control.

The return of the Steagall-Glass amendment is supported--even by John McCain. The removal of this amendment, which was opposed at the time by Byron Dorgan, led the way to the speculations in derivatives, which was a major contributing factor in the collapse of the global economy.

President Obama "is nationalizing Student Loans". My student loans were nationalized. But this Republican criticism ignores the terrible fact that more students can not afford to even attend college when they qualify and end up leaving with B.A.s with six figure debts, which can't possibly be repaid. The crisis in the student loan industry is because private banks found this was a very lucrative business and ripped the students off. President Obama's measure is aimed at lowering the cost of these loans and making more available to students. resistance to this doesn't play well with this great populist base Republicans want to attract.

I expect President Obama to come out next week in the State of the Union on fire. he will propose a new jobs bill and probably some new version of health care because no one in their right mind believes we can go much longer with the system we have. If Republicans really want to filibuster all these initiatives, they do so at enormous peril.

Republicans and the Democratic Leadership Committee seriously expect President Obama to move right. This isn't Clintonland anymore. As I've outlined, President Obama is trying to knit back together the social net, which we've allowed to grow tattered and weak. Clinton presided during prosperous times and not in a depression. As it was, to his shame, Clinton agreed to go along with the elimination of welfare, a signature failure but an achievement mentioned only yesterday by Democrats urging Obama right-ward. It's just not in the cards. I think President Obama read the tea leaves on Massachusetts correctly and will be moving more aggressively toward Main Street, not Wall Street.