Wednesday, July 27, 2011

New Entrant for Worst. President. Ever.

Barak Obama has thrown his hat in the ring as a contestant for Worst. President. Ever. He follows on the heels of the unequivocal worst two term President ever, GW Bush. He is not there yet, he has some powerful competition, but like a pitcher winning games after 300, he is rapidly going to pass many of them. Of course, no one can be as bad as Buchanan, who brought America to the brink of civil war, but the number two slot is up for grabs. And Obama's debt game, is him seizing a chance to be the most nakedly criminal President since Nixon.

Breaking Bad

Most people don't read the obscure bits of history, for example the story of the only independent President of the United States: Tyler. Tyler was elected as the Vice-President of the Whig Party, and as such he is listed, but that was before he was voted out of his own Party, and for good measure, they brought articles of impeachment to the floor of the House. All of the items went down, so there was no trial in the Senate, but he remains one of the Big Four of impeachment: a President who had a serious impeachment attempt made.

Tyler was of a piece with President Andrew Johnson, a man who though that he, and only he, knew the center point of equilibrium. Men of this kind are not without legacies: in the case of Tyler, he expanded the use of the Veto, and pushed through the "Independent Treasury," which, while intended to prevent corrupt taking of notes, since the government was not in the business of controlling the money supply after the "Bank of the United States" was allowed to expire, it ended up being a lead weight around the economy's neck, because it required the Treasury to do business only in silver, gold, or notes that amounted to same. Or in short, when the economy got bad, the government sucked up even more of the circulating medium, and could not do anything about it. Eventually it was repealed. He also directed the annexation of Texas. Later, he would be an official in the Confederate government. History often picks strange men to establish precedent, because, of course, Tyler is most known to history as the first Vice President to enter the Presidency on the death of the elected President.

When looking at such Presidents, those of iron will who hear political music that wafts down from a completely unreachable place, one realizes that, in general, they are terrible Presidents. Buchanan, Pierce, Tyler, Johnson are often labelled "weak" Presidents, but in fact, they were all iron willed to the point of reaching a political explosion. Having neither popular nor congressional support, the each served one term and were gone. The star of the class, is George W. Bush, who, I think it unequivocal, is the worst two full term President in American history. Two term Presidents are an elite club, men who are bad Presidents, in general, do not get two full terms. Let's look at the list:

Truman - short only 100 days.
George W. Bush

Note that Nixon resigned well before his second term was over, TR had 1 1/2 terms, Coolidge one term plus a bit over a year, Lincoln a few months of a second term. Less than two full term Presidents are, therefore, a wildly varying lot, with greats – and Lincoln is generally regarded as number 1 or number 2 of all Presidents - mixed in with dregs: Coolidge, the architect of the Great Depression, Buchanan, the architect of the Civil War, and Carter, the man who lost liberalism. Two Term Presidents are seldom truly horrible, which is why GW Bush stands out in the crowd. Even if their policies were not the best, generally they had either powerful political forces behind them, or capable administration of their policy regime. Reagan and Grant both have their very rabid detractors, with plenty of ammunition, but they were able to put their stamp on American government, for better and for worse, because they were able to marshal the political forces around them.

Which brings us to the question of Worst. President. Ever. and Obama's place on that list. The President who Obama most resembles is Herbert Hoover, another one of those chief magistrates of government who became inflexible and iron willed. His idea of compromise is that he cuts out what he thinks is a compromise, and then relentlessly grind on it. He's dealing with people whose idea of compromise is a woman having an orgasm while she is raped. Neither of these two sides have actually compromised very much, other than compromising on extending the Bush tax breaks for the wealthy.

Hoover was a malfortunate president. Unfortunate is not a sufficient adjective to describe it. He inherited an economy that was about to explode. He takes office in March of 1929, the move to January would, to no small extent be because the long gap between election and inauguration paralyzed the country when later he would lose the Presidency, and in October of 1929, the stock market plunges in what is know as "The Crash." In reality such a crash was essentially inevitable after the Olmstead Break in August. In effect he had 5 months of Presidency. The rest was a long grind and heavy flail. His response was not without compassion and, within his understanding, he worked hard to do what was right. He simply was a mammoth in a lake that had been swamped by a breaking glacier dam, to be found, frozen, as an oddity. His failure was that as his policies failed, he doubled and tripled down on them. In essence, he turned a single large downturn, into three back to back downturns, and left the very faith in capitalism and democracy bruised behind him.

FDR and Hoover had once been political friends, but his rants and threats, the most famous being his offer to let FDR be President early, if FDR would scrap the "so-called New Deal." FDR replied tartly that he was still a private citizen until inauguration, his term as Governor of New York having ended.

The Faking of the President

Obama, at least, had the advantage of knowing what he was walking into. The great downturn had started, but it was not yet a Depression, or "L shaped recovery," in the jargon of those who make their living by avoiding the truth. He inherited the worst economic problems since the Great Depression, with even JFK and Reagan, the two previous malfortunates of the post war era, being the only real contenders for working out of a similiar mess. Compared to the downturn that started in 2007, the Recessions of 1969, 1991, and 2001 are puny blips.

Thus it is not by pure results that one should measure a President, but instead how History takes the measure of the man. Coolidge inherited an economy that was, if not solid, powered by a few key industrial sectors. While there were downturns during the 1920's, they were short, shallow, and easy, compared to previous "panics." Coolidge was a terrible President, because he used the space to sweep under the carpet the problems. Hoover was terrible, because he faced terrible times, and was not their match. Fewer men, could have prevailed over the events that Hoover faced.

Obama's economic track record, however, can be measured now, and it is poor. While he inherited a slide, his policies have done little to do more than blunt that slide. By now, all of the Post War Recessions, a period that covers from 1948 to 1983, had recovered in all sectors. The Bush-Obama Depression, however, hangs on for year after blood year, with no hope of full employment until a decade has passed from the original downturn. This after a not very good expansion after the shallow 2001 downturn. The Bush-Obama Depression is of a piece with three Post-Cold War downturns: 1991, and 2001, which had a slow protracted period without real recovery. In fact, their cardinal feature is the lack of a "rebound," a period where people are rapidly returned to work. While depression like features are present in almost every Recession, including deflation in 1948, a slow hiring back in after 1958-59, the permanent disemployment after 1975, none had all of the features of a depression.

This is because Depressions are made, not born. They are the result of a failure to recover and restructure. Recovery is the government spending to hold up demand. Make it so that work is being done, people are getting checks, and thus buying the products of the industrial system. There is a powerful argument for the government acting this way, namely, it is never cheaper or better to do the work, than when prices have halted their normal march upwards in a modern economy, when fewer people are otherwise at hazard from the work, and when there are more people out of work to do the work. When is a better time to repair a road, than when fewer people need to be to work in the morning?

The other part is restructuring. Why did the economy fall into the pit? Because either it could not pay for its raw materials, or it had done all that it could at the previous level of profit taking. To continue forward it is essential not merely to prop up demand, but to address the reasons for the fall. If the fall is short, relatively based in temporary mismatch of capital and labor, then it takes much less than if the fall is steep. Until there is a new avenue of demand which is met by new production, the economy will stall.

And Obama's policies are directly at the center of the creation of a depression for the majority of the economy. Let us number some of the most important:

1. TARP. While technically signed into law by Bush, it was passed because Obama whipped for it. It is legalistic fantasy to call this a "Bush" policy, when it would have failed had Bush been the only one behind it.
2. Reappointment of Bernanke. Of a piece with TARP, it is fantasy to say that TARP is a Bush policy alone, when Obama re-appointed one of its two architects.
3. The Middle Class Tax Cut Bill. Obama stated early what he wanted the stimulus to be, in both size and percentage of tax cuts to spending. The evidence at the time was that tax cuts would do less for the economy than spending, and that the entire package was too small. Obama's advisors, including Romer, lied to sell the package. That's lied. With an "L." It blunted the fall, but did not reverse it.
4. Failure to restructure: other than raising cafe standards, and a few very small and marginal tax breaks, there was no progress in addressing the problem that structurally, Americans are rewarded for extracting rents: health care, defense, telecom, finance, or generating suburban sprawl, which creates a demand for imported oil, which is another rent. Instead...
5. Failure to break the banks. This was the key, the American financial system, more than any other single group, created the crash, and rewarded itself. As long as the banks are in place, they will have the money to buy influence, even among those who do not want it to be so. At the end of the day, all rents must be laundered through the banking system so that those collecting them can cash out and consume.
6. So called Health Care Reform, which is simply a law requiring everyone to pay health insurance companies high rates in return for a few consumer protections. It would be like a law requiring everyone to buy a first class air line ticket, with the assurance that you won't have to sit with your foot in your ear.
7. Failure to end the wars, and shift the expenditure of the bloated defense and security budget to productive ends.
8. Failure to engage in the simple act of removing the dictator of Libya once that course was decided upon, and allowing the rest of the Arab Spring to become like the Revolution of 1830 in France: replace one dictator with another. In case you don't know they are still beating protestors in Egypt.
9. Failure to engage the Eurozone to make a full resolution to their debt problems.
10. Failure to address the ongoing protectionism in China.
11. Failure, abject failure, to address global warming, which is of a piece with 4. So far the plan is let the sun dim and volcanos erupt.
12. Failure to provide effective regulation in a host of areas. Dodd-Frank is, effectively, an act that provides a few gifts for upper middle class checking accounts, while leaving millions to be sucked dry by "pay day loans."

I could extend this list. However it is in one of the better policies that the real mean pettiness of the man is visible, namely in DADT and in his change of heart on DOMA. The first brief defending DOMA was straight out of Bush, the result was an explosion by political activists for equal marriage and equal access on the basis of sexual orientation. They were brutal in their language, withheld donations, and stopped working for the administration. Obama caved, not to his conscience, but to the dearth of cash. Those that put this pressure on him are deserving of praise: they did the right thing for their people, regardless of tremendous social pressure to back Obama at all times in all ways on the left. Obama, however, comes off looking the worse, precisely because he did not listen to a language of coming together, but to a language of pain.

This leaves aside the list that would have made him a great President, it is, instead, a list of failures of almost obviously vital actions. This is what he has bungled.

The Crime of the Century

The debt crisis, so called, because it is entirely manufactured, is however, the stunning work of complete corrupt venality. It is a naked display that Barack Obama cares only for his future as a well paid acolyte of the banks. It is, in a phrase, an abuse of power, as well as being stupid politics.

Let us review:

For decades, there was in place, with skips, a rule in the House of Representatives called the "Gephardt Rule." This rule stated that if the House passes a budget resolution, than a matching increase in the debt ceiling has been "deemed" to be passed. That is, if they spend, then they are going to get the funds from those who can lend. It was not always needed, and there were other reasons to increase the debt ceiling, but it was the fall back, at least the Senate would get a clean piece of legislation to do what they were about to do. As reported early in the new Congress, the Republicans expressly removed the rule. This was in the national press. They went farther, there are several back doors to get legislation to the floor. One is to have a trojan horse amendment, where someone friendly to the chair ambushes them by proposing an amendment that the chair likes, but then turns around and allows an amendment the chair would be hostile to be an amendment to the amendment. The proposer of the original amendment deems it "friendly," and it is on the floor. This has been stopped because any budget bill can now be subject to a "Point of Order" if it, in the sole discretion of the Chair of the Budget Committee, raises the deficit.

Play that out, suppose someone gets 217 signatures for a discharge petition, that would force a vote. The Budget Chair says it raises the deficit, raises a point of order. The Speaker rules that the petition is out of order, and does not get a vote. To over-rule the Chair takes a 2/3 vote. So, to get a vote on something the Chair does not like, even on a back door, requires not a majority, but 2/3, at least as long as the Chair of the committee is on the Speaker's side. And frankly, Boehner's pecker probably goes against his wishes more often.

In otherwords, the debt ceiling show down was one of the Republican's time and choosing. It was a fight that they picked to pick, and set the rules for.

In addition, Obama has chosen to play a game of chicken in order to do something which is overtly corrupt, namely he is acting at the direct behest of Standard and Poors, which threatened a downgrade of US debt, unless there was a 4 trillion dollar over 10 years deficit reduction. Now that means 400 billion dollars a year of anti-stimulus, about the size of the stimulus bill, in fact, and all of it on spending, so likely to produce a full effect. This demand is a demand for an Ireland style collapse in the country, policy so bad as to put it with the unequivocally worst acts of government ever: The Fugitive Slave Act, the 1930 FY Budget, Jim Crow, and the Alien and Sedition Act.

By setting this as a baseline, alone, Obama vaults into contention for worst ever. First because it is policy wrong, and second because it is so obviously tied to securing funds for re-election which he is pursuing and almost 40K a plate, that's the median individual income in the US. According to his opponents, who are only a bit off the mark, one third of his money is from Wall Street.

But then, having done the corrupt thing, and taken on the fight in a way that the Republicans wanted, in the way that they wanted, he has renounced weapons in the fight itself.

To explain. The law requires that the President spend the money that Congress allocates. In 1996 Congress passed a law, which Clinton signed, that included "recision" for individual line items in the budget. In 1998 a case reached the Supreme Court, Clinton v. Cit of New York. Stevens delivered the majority opinion, which unequivocally stated that this violated separation of powers. Thus, the President is required to spend what the Congress allocates. Contrast this with the "government shut down" where the Congress refused to pass a budget, giving the President no legal authority to spend. However, the debt limit just as unequivocally requires Congressional approval for borrowing. The President then must engage in an illegal act, by unilaterally and unconstitutionally engaging in recision, or he must illegally borrow.

Or must he?

The law specifically contemplates conflicting laws. Legislatures are not models of consistency, and it is easy, even if they were of good intent, that one law might miss another in the process of reconciliation. Obama could, easily decide to simply keep paying the bills. Several legal excuses for this, including the XIVth Amendment have been provided, but at the end of the day, look at City of New York. Bill passed in 1996, used in 1997, decided in 1998. That is forever. The only requirement for the legal excuse from Obama, is that it not get the Supreme Court to issue an emergency injunction. That standard is, more or less, that Obama would have to produce legal bullshit. However, since the Debt Ceiling and Budget are in conflict, he has a case. Even if ruled against, that is two years down range from now. Don't believe me, believe Former President Bill Clinton.

There are various other accounting tricks proposed, including the Federal Reserve illegally allowing the Treasury to overdraft the Treasury's account with the Fed. For an institution that illegally swelled its balance sheet with risky securities to bail out the banks, saying that it is an illegal move is in the "I'm shocked, shocked to find out that gambling is going on here." The Fed already has broken the law, and then for almost a year and half completely stonewalled Congressional subpoena. Go. Pound. Sand. To the tune of 1.6 Trillion dollars of loans to the big banks.

So if Obama thinks it essential to break the law, he has done it, and for numbers bigger than next years budget. Once you are willing to just write checks to banks for hundreds of billions, a sudden attack of legal propriety is unmasked as completely dishonest.

To be blunt: the Republicans set this fight up. Obama has legal and quasi-legal means to avoid this fight. He is proposing legislation at the behest of his major donor group which is against the interest of the country, and is nakedly a concession to Standard and Poors, which is the same company that told us that Mortgage Back Securities were better in 2007 than US Treasuries are now. Since worse Treasury rating means higher interest rates, this is really a raid on the American public: S&P and the bond holders are telling Obama they want more return on their bonds, or more poor people on the streets.

What is worse is that the actions of the President are irrational even in his own political lexicon. He is either insane, which I do not for a moment believe, or he is lying, which he pretty clearly is. Let's review his own words:

For the last decade, we have spent more money than we take in. In the year 2000, the government had a budget surplus. But instead of using it to pay off our debt, the money was spent on trillions of dollars in new tax cuts, while two wars and an expensive prescription drug program were simply added to our nation’s credit card.

This is red meat for liberal base, but it is clear that Obama does not believe this. If Obama believed that Bush's policies created the problem, then why has he continued virtually all of them: Bush tax cuts, both occupations, subsidies for the health insurance and pharma industries, and almost all of the spending. In otherwords, he's saying one thing for liberal base people, but his budget proposal does not:

1. End the tax breaks.
2. End the occupations and wars.
3. End most subsidies for the health care industry.
4. End expansion of the military.

Instead, it cuts entitlements, and domestic discretionary spending. In fact, he comes as close to closing the domestic government, absent spying on Americans, groping their genitals, and locking them up, as is possible.

If he believed that Bush's unsustainable spending is unsustainable, then why is he sustaining it. It also isn't that he believes that the housing bubble and crash is the cause, because there is nothing in this bill that would redirect effort from building houses we don't need, to something else.

If he believed that Bush lead to Bubble, that is, something many of the graphs circulating argue by layering the deficit, then he's addressing neither part.

In reality, the action and the excuse are unrelated to each other. He might as well say "We were attacked on 9/11, and therefore we have to invade Iraq." This is a corrupt fiasco of the same size as the Iraq war, and one that will, though less directly, cost as many lives. Dead from car accidents on roads unrepaired, dead from medical malpractice, dead from uninspected food, dead from dangerous streets. Instead, the only explanation that makes sense, is if you believe in the Peterson Principle that the economy gods want more poor people sleeping under bridges, more old people dying from lack of medicine, and more billionaires to count the loot.

Yes, this imaginary crisis that the Republicans and Obama have provoked to force ordinary people to pay for their wars and tax cuts, and bank bail outs and health insurance give aways, is proof that Obama is now an official entrant for Worst. President. Ever. He is, in every meaningful sense, Bush's third term, with a few exceptions that while heartening for those that get them, are not enough to even begin to salvage his term. Remember that George Herbert Walker Bush passed a major piece of civil rights legislation too: the Americans With Disabilities Act, which is, indeed, a humane and important step forward. But it isn't going to wash the stains of his failures.

Make of it what you will.