Obama's Troubles: A lesson for Liberals

Let Obama troubles be a lesson to the Liberals and indeed the country. The American political system is an unmediated disaster. The Democrats control both houses, the sitting president is a Democrat and until recently they had filibuster proof lead in the Senate. Still they could not pass a watered down Health care bill. US presidents should stop ending their speeches with "God Bless America" and instead sign off by saying "God help America".

The next time someone says that Canada too needs a triple E senate and free votes, smack them up side the head.

Of course a bad political system only goes so far. Obama deserves a lot of the blame. The most straightforward way of bailing out the banks was to nationalize them. Instead, Obama decided to go with a plan to buy and then resell toxic assets. That always meant that if the value of these toxic assets went up, the investors would profit, but if they went down, the investors could always walk away from their debt. Tails the investors win, heads the tax payers lose. What Obama did not foresee was that not nationalizing the banks also meant that the very people responsible for accumulating those toxic assets in the first place were then free were free to hand out politically toxic bonuses. He should have listened to Krugman Stiglitz and others. He then would have been able to say to those troublesome bankers. "You screwed up. We own you. No bonus for you. Your fired."

Obama's health care strategy was equally misguided. In many parts of the world haggling over a price is a art form. One starts high and the person on the other side counters such a high price with an equally low one. Despite having been born in a far away land -- Hawaii -- Obama seems unaware of such a game. His idea is to start low and let an overmatched oppenent bid him even lower. That is what happened with the Health care bill. Instead of trying to sell the merits of single payer option, the thing that works for the rest of the developed world, he tried to sell the public on complicated government option and when that did not work the status quo plus a subsidy to the uninsured.

It is a lot easier to sell a straightward good idea, then it is to dress up a less contentious, but fatally compromised bad idea. Compromised policy is not a starting point and certainly not something one should aspire to. It is a failure of nerve.