No Honeymoon for Obama

The election of Barack Obama to the office of the presidency with the margin that occurred has sparked talk of a mandate. This has in turn sparked conversation about priorities and what obama is going to do first and how he is going to use the mandate before it runs out. The time frame given for Obama to get something done has merged with talk over Obama's first hundred days in office based on a "honeymoon period" where congress would be afraid to oppose such a popular president. This talk is wildly off base.

The American Prospect has an article up right now that discusses patience. Patience in acting and governing. It dovetails well with the point i am trying to make which is that Obama will not have a honeymoon period so he should not count on one but use his typical long term strategy to make the best out of his entire term.

Obama will need a full reservoir of that same patience in the White House, because he'll face similar frantic pressure and second-guessing. He will be surrounded by a crippling crowd of people and groups convinced that if their own No. 1 cause isn't enacted in the first 100 days, it will never happen. The conventional wisdom about the presidency is very much the same as the advice Obama was given in the primaries: Move quickly. Overwhelm the forces of the establishment. Use the momentum of the election to achieve the biggest things possible. You'll never be more powerful than on Jan. 21.
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For all the romance of Franklin D. Roosevelt's first 100 days, history suggests that presidents do not get a mandate as a mechanical function of their electoral margin, but in fact they build it over time. They earn it not by winning but by governing. They assemble coalitions and use them again and again, and build institutions and make them work. While many good policies and necessary emergency measures were passed in the first 100 days of the New Deal, the innovations that lasted -- those that defined politics until Reagan -- came later, after FDR had consolidated power, forced the Supreme Court to accept a new set of assumptions about government's role in the economy, and won the 1934 mid-term election. Similarly, Reagan did not win a decisive mandate for conservative policies in 1980; rather, like Obama, he was the beneficiary of a coalition made up of equal parts support for his conservatism and revulsion at the previous administration's incompetence. It was not until August 1981, when he assembled bipartisan coalitions to pass his budget- and tax-cutting plans, that Reagan can be said to have had a mandate for conservative policies.

This is not to say that there aren't things that need to be done immediately, such as economic stimulus, closing Guantánamo, and a plan to get out of Iraq. But the changes that will bring about a new political era call for a more patient and steady approach.

Like Roosevelt and Reagan, Obama has the opportunity to become what the political scientist Stephen Skowronek calls a "reconstructive leader," a type that he notes often follows a failed presidency. "John Adams and Thomas Jefferson, John Quincy Adams and Andrew Jackson, James Buchanan and Abraham Lincoln, Herbert Hoover and Franklin Roosevelt, Jimmy Carter and Ronald Reagan -- these repeated historical pairings ... suggest nothing so much as an intimate connection between manifest incapacity and towering success in presidential leadership," Skowronek wrote the year George W. Bush was elected. Reconstructive leaders "are party builders; they use their authority to consolidate a coalition that will support the new agenda and dominate electoral politics."

Obama is acutely aware of the need for careful planning to achieve success. He is constructing a team of people designed around legislating and governing. He is also an organizer at heart and good organizers understand the value of patience and laying a good foundation before acting. Current indicators point to Obama trying to do what the TAP article suggests, a party and national restructuring presidency.

I mention that Obama should not focus too much on the first 100 days because he is not likely to find that time period more friendly than any other. The GOP minority is committed to fighting him on pretty much everything. People like John Kyl are ready to try and filibuster any judicial nominee and are committed to fighting a bail out of the auto industry.

Senators Richard Shelby of Alabama and Jon Kyl of Arizona said it would be a mistake to use any of the Wall Street rescue money to prop up the automakers. They said an auto bailout would only postpone the industry’s demise.

“Companies fail every day and others take their place. I think this is a road we should not go down,” said Mr. Shelby, the senior Republican on the Senate Banking, Housing and Urban Affairs Committee.

“They’re not building the right products,” he said. “They’ve got good workers, but I don’t believe they’ve got good management. They don’t innovate. They’re a dinosaur in a sense.”

Mr. Kyl, the Senate’s second-ranking Republican, added, “Just giving them $25 billion doesn’t change anything. It just puts off for six months or so the day of reckoning.”

There is no talk there of letting a president Obama go forward unopposed because he was just elected and we know the gop does not believe that obama has received a mandate,

When Franklin D. Roosevelt won his second term for president in 1936, the defeated Republican candidate, Gov. Alf Landon of Kansas, won only two states, Maine and Vermont, and Democrats controlled both houses of Congress by wide margins.

But Obama's win was nothing like that. He may have opened the door to enactment of the long-deferred liberal agenda, but he neither received a broad mandate from the public nor the needed large congressional majorities.

The Democrats fell several votes short of the 60-vote filibuster-proof Senate that they were seeking and also failed to get rid of a key Senate target: Republican leader Mitch McConnell of Kentucky.

Republicans, though discouraged by the election's outcome, believe Obama will be hard-pressed not so much to enact his agenda but to keep his popular majority, which he considers centrist, as he moves to enact ultra-liberal legislation, particularly the demands of organized labor.

Obama is going to have to fight the GOP every step of the way. He will take his time and map out a strategy that he best believes will deliver success over his entire term. he gets 4 years in office so why would he waste all but the first 100 days? he wont.

Obama is committed to long term thinking. Everyone has probably heard his quote about how we cant solve global warming with him changing his light bulbs. He views the solutions to our problems as solvable only through collective action sustained over time. Instant fixes are not sufficient to deal with out problems. The notion that Obama, a cautious and pragmatic person is going to commit to the first 100 days or bust idea is wrong. He has no honeymoon period so dont look to see him acting as if he does.

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Institutional Failure

The bailout is such a rich source of data for any political scientist or civics lover. I wrote yesterday on the bailout as it related to the job of the individual congresspeople in either a capacity as representatives or as a function of direct democracy. Today i think the focus should be on the institutional side of things and how the bailout is really a failure of the model on which our government sits.

I was going to cover this any way but i saw the ezra klein post on it and he had some very good points.

...my hunch is it was a victory for the system. We have a political structure biased against Big Things (this is less true when it comes to foreign policy). Blocking change is far easier than passing it. Health care fails, and so does cap and trade and Social Security privatization and immigration reform and bailout bills and most major initiatives. Doing big things slowly is almost impossible. Doing them very fast is similarly tricky. A lot of the theoretical reasons are well-explained in Sven Steinmo and Jon Watts paper, "It's The Institutions, Stupid." But it's a lesson worth remembering. In any large scale initiative, the odds are against success.

That's one reason most bills come out so badly: if the Democrats could just pass health care or a bailout bill, they'd simply build the bill they wanted to pass, and it would be clean and ideologically coherent. They'd respond to the financial crisis much as the Swedish did, with a plan for nationalization. On health care, they'd shoot for single payer. Instead, they need the president, and a bill that doesn't trigger a filibuster in the Senate, and to attract all sorts of House members who have little to fear from party discipline as the system is regional and entrepreneurial and fractured rather than parliamentarian. This is why I argued yesterday that what we're seeing is bigger than the bailout. No one quite knows how to harness our political system in opposition to major problems. No one knows how to get real health reform through, or pass a global warming bill that could actually avert catastrophe, or shepherd a capital infusion that will avert possible economic collapse. Those problems are all different, to be sure, with different coalitions and different messaging strategies, but much of what blocks action is structurally similar. When it comes to the American political system, you can almost never believe in change.

It is not a new or novel point. Our system is designed to be conservative. Bush might like the theory of the imperial presidency but really it does not fit into the model design for our government. Our system is supposed to prevent rapid change. When originally drafted the entire purpose of the senate was to prevent the rabble in the house from moving to fast or being carried away with some idea for rapid change. One person can hold up everything in the senate.

The congress is supposed to be able to check the power of the president with the power of the purse, the judiciary checks congress and the president through the review of constitutionality of laws and actions. The president checks the congress through his role as the head of executive agencies and the veto power. The system is designed to have numerous delays and bottlenecks in it.

The plurality system of elections is going to lead to a stable two party system according to the spatial model of elections. It is hard to imagine that the balance of power ever gets to out of equilibrium for too long. The parties should roughly split the electorate with a small middle who vacillate back and forth. Of course that all depends on rational actors.

So when ezra talks about the system being biased against big things he is totally correct. It is generally just not possible for one side to totally ran something through without the help of some of the other side. The problem is that one side sees everything as a political issue. Because of this politicization of every major crisis and the nature of the system one side may hold the issue hostage, bog it down, kill it, if it so chooses. This is especially true on the biggest issues and challenges where the legislators have to take some risk. the process becomes more delicate and more easily upset.

So it has become a case where the gop and house republicans can obstruct change and big ideas because the system is designed to be conservative in that nature. Whether they should do it is a totally separate question. Leaving it up to them to be adults and not to blow up the process and instead to do things for the good of the country is asking a lot.

The conservativeness of our system is also embedded in its stability. We run everything on a clock. You get a set number of years in the position and then we have elections and you get that number again. It is predictable and stable and allows for people to do what they want in the period of time between elections. It prevents the italian style failing of every government every two weeks. that would be bad. It also limits our ability to choose new leaders in a crisis or throw out failed ones when it becomes clear they have failed. We have to wait for the clock to run out.

Instead of bush lingering in office and draining confidence in a solution he would be out. He would have been out a long time ago. Instead we are like a ship that sees a big set of rocks ahead but has a rudder to small to turn out of the way. Everything was good in calm seas but when decisive action is needed to avoid catastrophe we have issues.

Until we become a more dynamic system big ideas and radical change is always going to face big opposition. That is why the shock doctrine is so key. There is a window of opportunity in crisis where big ideas can get through but once it closes or the idea fails the going becomes very tough.

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Bail Out is 100% Essential

The Bail Out is a fascinating political phenomenon for a number of reasons and i believe it will be studied in poli sci classes around the country. Here we have an apparently catastrophic crisis at the height of an election that could cripple the potential presidency of the next President and the bill proposed as a solution is designed swindle the american people. There does appear to be a case for Bush playing political games with this but that does not mean that it is not essential.

What is being asserted is that Bush and Paulson either let the crisis get out of hand in order to allow them to come to the rescue later or that there really is no crisis that will take down the entire banking world and with it the global economy. The reason for this is apparently two fold. One is to give all the us treasury to wall street bankers and to create an issue so big and so important that it can bury the democrats in this election and handicap them should they win the election. There is some evidence being put together out in the tubes to prove this. First is the assertion that the Bush people have been putting the plan together for months

Fratto insisted that the plan was not slapped together and had been drawn up as a contingency over previous months and weeks by administration officials. He acknowledged lawmakers were getting only days to peruse it, but he said this should be enough.

This of course means that they were fully cognizant of the problem and were choosing not to deal with it for some reason. When would they have decided to put something like this together? Probably right after Bear Stearns was dragged down by the toxic mortgages and their capital problem back in march.

US Government offers $29 billion of credit in the form of guarantees for the toxic mortgage-backed debt held on the books of Bear Stearns. The credit was made available as part of a deal where JPMorgan Chase acquired its smaller rival. US Federal Reserve also extends the availability of cheap financing to investment banks as well as commercial banks

There is an example of the US stepping in to deal with the issue of toxic mortgage debt that was crippling a piece of the financial industry. Bear was an investment bank just like merril and just like lehman. It is not difficult to assume that the underlying cause that brought bear down would also be afflicting the other investment banks. There was even speculation at the time about what happens if the other investment banks start to go.

People knew that there was an issue with the system. So it is not unreasonable to think that the government began prepping at that point for what would happen if the investment banks started to fail. So the bail out plan is created. In order to make it politically effective and to take full advantage of the shock doctrine the pump needs to be primed. That means getting the public ok with a big bail out and making a demonstration of what happens when their is a failure. This is where Fannie Mae and Freddie Mac along with lehman come into play.

There is an issue here about why exactly this particular time frame would be used for a political play of this magnitude. The fact that Fannie Mae and Freddie Mac were taken over the rationale went out that they were too big to fail and that the consequences would be dire if they were not bailed out. We had to. So then lehman, who had been on the rocks since june, finally gave out. They were allowed to fail. The reason for this seems to be something of a mystery,

This might not have been needed, at least not now, if the Fed and Treasury had stuck to their own game plan in Bear Stearns, to bail out creditors but not shareholders. We need to learn who pressed to force Lehman to fail completely. That decision led directly to the run on money market funds and to panicked trading conditions for credit default swaps at other brokerage firms.

This created panic and induced the BofA purchase of Merril on the theory that the gov might let them fail too. Bam! Crisis initiated. Now people are freaked and they dont know whats going on.

At this point AIG gets nationalized. Now there are actually only two investment banks left, Goldman Sachs and Morgan Stanley. Surely they must be next on the fail list? So on September 18 we finally get the action that seems needed to save the entire banking industry from collapse. The Great Bail Out of 2008. 700 Billion.

The issue here seems to be the speed from 0-1 trillion. what is the rationale? The one given was the potential for a global credit seizure where no one could get capital for anything because banks could not tell when other banks were solvent. So it seemed like the sky was falling. The plan appeared to be working as Dems were getting behind this idea of a $700 Billion dollar bail out. Something strange began to happen though. People read the plan.

I think their first mistake was making it only three pages. It is hard to hide the massive power grabs in such a short document. i mean people actually have time to read the thing. The patriot act, now there is a proper power grab. So when people started to read the thing they began to have questions like, why isnt there any oversight? Why do you need 700 Billion, that seems like a lot of money? The Administration has done its best to steam roll through these questions on the fear generated by the collapse of Lehman and the nationalization of AIG. But they are like the boy who cried wolf, they dont have the credibility they had on Iraq. This has lead from the original questions about lack of oversight to bigger questions about the premise,

Ask this question -- are the credit markets really about to seize up?

If they are then lots of business owners should be eager to tell how their bank is calling their 90-day revolving loans, rejecting new loans and demanding more cash on deposit. I called businessmen I know yesterday and not one of them reported such problems. Indeed, Citibank offered yesterday to lend me tens of thousands of dollars on my signature at 2.99 percent, well below the nearly 5 percent inflation rate. That offer came after I said no last week to a 4.99 percent loan.

If the problem is toxic mortgages then how come they are still being offered all over the Internet? On the main page AOL generates for me there is an ad for a 1.9% loan (which means you pay that interest rate and the rest of the interest is added to your balance due.) Why oh why or why would taxpayers be bailing out banks that are continuing to sell these toxic loans?

How does the proposal help Joe and Mary Sixpack who can afford their current monthly payment, but not the increased interest rate that has been or soon will take effect? Every day bankers work out loans with customers -- so why are taxpayers being asked to act when banks are largely on strike, refusing to negotiate revised deals with many loan customers?

and Krugman

So the plan only helps the financial situation if Treasury pays prices well above market — that is, if it is in effect injecting capital into financial firms, at taxpayers’ expense.

What possible justification can there be for doing this without acquiring an equity stake?

No equity stake, no deal.

Then we get news that the deal applies to healthy banks too,

"With respect to executive pay, again, I'm not going to get into specific, point-by-point details on what our views are on that, other than the Secretary of Treasury said it would make more difficult to make this plan work and effective if you provide disincentives for companies and firms out there who are holding mortgage-backed securities and other securities from participating in the program. You have to remember, these are not all weak or troubled firms that own mortgage-backed securities. A lot of them are very successful banks and investment houses that have done very well, have been responsible, are holding performing assets that have value. They were not necessarily irresponsible players, and so you have to be careful about how you deal with them."

At this point the shit has really hit the fan for Paulson and crew. Their plan is being hammered and is very unpopular with the people. The worst of this though is that there is actually a need to do something. Thats right, there is a need. The entire way this has been handled has put the bail out in jeopardy. Here is an explanation of why this is such a problem.

Last week we were all sitting there watching the crisis progress from one institution to the next. Now that the blaze on the bottom floor is under control, people are like, “but we don’t know that it would have spread to the top floor!” And it’s not as if the threat has entirely diminished. Days after the bailout was announced, the spread between interbank lending rates and rates on loans from the government is some five times higher than it would be under normal circumstances. That’s huge. And it rose on Monday and Tuesday after falling over the weekend.

That’s one reason why time is of the essence. Confidence that a comprehensive solution is forthcoming has calmed markets for the moment, but if markets begin to doubt that a firewall against collapse is going to be there, then the downward spiral will begin again. Another reason is that jammed credit markets aren’t exactly healthy for the economy. Does this need to be done this week? No, but can it wait until January? Almost certainly not.

But what about the amount? How do we know that $700 billion is needed and not, say, $500 billion or $300 billion? Well, we don’t. But if that amount is off, then the correct amount is almost certainly higher. Read this to see the scope of the problem and the challenges involved. If Paulson didn’t request more, it’s probably because he thought this is the least he could get that would make a difference.

Get the oversight in there, please. Get a bipartisan team of experts involved. Get measures in there to ensure that taxpayers get a healthy share of whatever upside there is to the deal. Make the bill a good bill. But let’s not play around here. Healthy skepticism is healthy. Blind assessments of the situation as not dire, simply because you can still use your credit card are not.

and here is another explanation. Both Make it absolutely clear that something needs to be done. That Bush and Paulson put forth a proposal that was so bad when things are really on the line is just appalling. They have actually perpetuated the crisis by failing to put forth a bill that was even the least bit acceptable and failing to properly lay out the case for the american people.

The Democrats should not go along with the Paulson Plan but they need to get something together. What we appear to have is Bush playing politics and political games with something that is vital to the countries interest.

People have also been speculating on the political ramifications of passing the bill if rs all vote no. Well if the dems manage to construct a bill that helps from the bottom up as opposed to just the top then there is nothing to run against. Treat the underlying issue if you can and it will save election headaches. Can you imagine McCain and the other republicans voting against a bill that actually helps homeowners? Or middle class people? If the Dems cant win on something like that then they should just quit.

remember there is something does need to get done. We have lost time thanks to the Bush Admin's inability to let a chance to grab total power go by.


For a primer on the whole mess see here

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