Obama and the Economy

As I watched Barack Obama's stunning speech to the joint session last night, I couldn't help but feel a little distrought. This President has been the foremost symbol of the American Left and his spectacular campaign finally brought the overdue end of Reaganism and Neo-Conservatism to a spectacular implosion. Social-Democrats and Progressives (like myself) had given in to the platitudes and theatre of electoral-politics, and had hope for a new birth of Progressivism within the United States. That hope climbed to great heights throughout the campaign and into the Inaugural. I must confess, President Obama's masterful oratory and skillful wordcraft has given me chills more than a few times. But since his taking of Office, the President has backed away from the Left and has filled his administration with Clintonian deregulator's and centrists of the highest order. Cringe-worthy names like Larry Summers and Paul Volcker were given powerful advisory positions; the embrace of half-hearted and poorly screened nominations and the further pounding of war drums for an unwinable escalation in Afghanistan proved rather dissalusioning.

That's not to say all has been disheartening. The President has closed Guantanamo, he has openly condemned torcher, he has expanded women's rights within the workplace, and has increased child healthcare coverage. But on the issue of our day (the failing of the Free Market) Mr. Obama has shown very little command or certainty of action. His woefully inadequate choice of Timothy Geithner as Secretary of the Treasury, being the first among many stumbles during his term's early days. Followed by a botched attempt at bi-partisanship (courtesy of the Republican Congressional Cretins) and a non-plan for starting up the Banks, has left the nation in malaise.
All of this aside, this Presidency's success and our economic recovery are still not out of reach. I still have great faith in President Obama and his potential to reach historic heights. I believe that he is a man of incredible intellect and a profound leader. The type of figure destined perhaps for Presidential grandeur. It should also be noted that he is uncannily practical and fantastically open minded. So it is with great faith that I offer these suggestions for kickstarting our economy:

First off, bite the bullet and fire Tim Geithner. This man's nearly scandalous record with the New York Reserve's should have been a warning from the start, not to mention his extraordinary lack of charisma and gravitas. He was/is a poor choice, and should be replaced. There are many incredible economists that our preferable, perhaps FDIC Chairwoman Sheila Bair or Nobel Prize Winner Paul Krugman (my personal preferance). We need a salesperson, as well as an intellectual in this position and I think that the current Secretary is neither.

Secondly, Obama's stimulus package was good...but nearly half the size it should have been. Not to mention the fact that it was nearly 40% unnecesary tax cuts. Bipartisanship is a pipe dream, with the mental dwarves running the GOP merely playing the role of obstructionists. The President should pass the proper stimulus, Republicans be damned. If they fillibuster, the minority party would drive themselves into electoral oblivion by preventing recovery. The current stimulus package, although too small, is very effective in many regards. But HE MUST return for a second stimulus. Leave out tax breaks and increase infastructure money by about ten times. This would effectively create an effective stimulus, reaching somewhere around the 2 trillion dollar zone, creating the correct amount of government spending percentage in the GDP, and provide the necessary boost.

Thirdly, the mortgage plan the administration has outlined is very good. But once again, not good enough. The government payoff of mortgages and the oversight of the housing industry is a good start for future crisis prevention, but does not allow for a kickstart of the housing industry. Instead of simply allowing the group in the mortgage hole to refinance, the Government should allow for refinancing for everyone. Thus preventing accusations of class warfare AND boosting the housing industry.

Lastly, and perhaps most importantly, the administration has utterly failed to outline a major reform of the banks. We have simply continued to pour more and more money in the Banking system without a clear guarentee of loaning or credit flow, as well as an outrageous lack of oversight with a bunch of hollow tough talk. The government continues to hand out money without seperating the bad assets and we continue to stagnate. In order to allow for true banking reform the Fed has to be able to temperarily take ownership of failing banks. This way we are guarenteed credit flow as well as accountabillity within the bank itself. The government can then seperate good assets from bad assets. The bad assets would then be placed in a "Bad Bank" and auctioned off to investors. This would then create money that could then be payed back to the taxpayers. This plan worked for the Swedes and it can work for us.

But thus far President Obama has merely offered us half-baked "Centrist" solutions for the economic meltdown. These were the sort of ineffective reforms that gave Japan their "Lost Decade." We can only hope that this President will offer us the dramatic reform we need, and the reform that will match his awe inspiring rhetoric.