What Obama isn't mentioning about Egypt (like the economy)

Since the protests began in Egypt, Obama has adopted a stance of 'coyness-with-conviction.' Given the diplomatic and economic relations between the United States and Egypt, he has spoken very little of the financial conditions of Egyptians, while indicating opportunistic support for their pro-democracy demands. I say, opportunistic, because - well - it's not like anybody in DC (on either side of the political aisle) was ever jumping up and down, livid about Egypt's growing poverty or youth unemployment rate. (Not that those stats are any better in the United States, so of course, that would have been awkward.)

That aside, the easiest way to not address the economic plight of Egyptians (the rising poverty, unemployment, income and wealth inequality, and cost of everything) is to focus solely on the issue of 'democracy.' On the one hand, it's not wrong. We can all (except for Glenn Beck) empathize with the Egyptian population's desire for fair representation and a non-dictatorial government. 

On the other, it omits discussion of a major reason for the protests, not just in Egypt, but throughout other countries in the region, in Europe, and soon to spread to Africa and Central America - people's economic situations. Obama has steadfastly kept his comments aligned with freedom and democracy while avoiding this personal economics topic. It's no different from what he did in his State of the Union speech, when he talked about recovery and innovation and destiny a lot, but discussed jobs only a little, and did not mention the specifics of increasingly difficult financial conditions for most of the country at all.

And, it equally misses the mark. 

On January 28th, he focused on the basic human rights to which the Egyptian's are entitled, which included "the right to peaceful assembly and association, the right to free speech, and the ability to determine their own destiny." He said that the United States stands behind those. 

So far so honorable.  He went on to say that "the United States has a close partnership with Egypt and we've cooperated on many issues, including working together to advance a more peaceful region.  But we've also been clear that there must be reform -- political, social, and economic reforms that meet the aspirations of the Egyptian people." He underscored that Mubarack had also said, when he addressed Egypt on TV that night, that he "pledged a better democracy and greater economic opportunity."

Obama concluded by stating, "the United States will continue to stand up for the rights of the Egyptian people and work with their government in pursuit of a future that is more just, more free, and more hopeful."

That was the last time, he officially mentioned anything regarding the economic plight of the Egyptian people. 

On February 1, with the protests growing, he didn't bring up the notion of economic reform or hardship at all. He spoke loftily of the core principals for which the United States stands, "we oppose violence", "we stand for universal values, including the rights of the Egyptian people to freedom of assembly, freedom of speech, and the freedom to access information" and "we have spoken out on behalf of the need for change." Ah, change. That magical word.

He said that it wasn't his place to dictate to another country how to change, but that the process "should include a broad spectrum of Egyptian voices and opposition parties.  It should lead to elections that are free and fair.  And it should result in a government that’s not only grounded in democratic principles, but is also responsive to the aspirations of the Egyptian people."

As to the nature of those aspirations from an economic perspective, as to any public recognition of what they could possibly be, beyond the compelling need to overthrow the Mubarak regime,  Obama provided no detail.

Today, with reports of Mubarak stepping aside, which later turned out to be premature, because instead, Mubarak restated he's planning on sticking around until elections, give or take an internal power shift, Obama remarked that the situation in Egypt was "a moment of transformation taking place because the people of Egypt are calling for change" and called for an "orderly and genuine transition to democracy in Egypt" as he had in his speech on January, 28. Nancy Pelosi called it a 'victory for the young people of Egypt" whose actions were "an inspiration to the world."

And, yes - they absolutely are. And, one reason is absolutely that the Egyptian's want a freer, fairer government and have revolted against the corrupt one they have. But, they also want a fairer economy, and that is something about which Washington has been very silent. 

The Washington Times stated that the only way for a new Egyptian government to fix the economy was to "liberalize it" and that some people mistakenly think this has already happened. (I guess I'd be one of them - though, I can't see how, for example, Egypt could ask for less than zero long-term capital down as a requirement for foreign businesses or speculators or charge less than zero local taxes for local profits from international investors, but maybe that's quibbling.) 

At any rate, what has happened in Egypt is truly amazing, exciting and as Pelosi called it, an inspiration. But, it was an accelerating tanking of economic prospects that catalyzed a 26-year old unemployed Tunisian man to spark a revolution across the region. And, it was a policy of catering to the short term needs of foreign investors and the wealthy internal elite, above the long-term ones of citizens that intensified the income inequality gap that so angered Egyptians. 

In order to truly meet the demands of the population, a new Egyptian government must address this problem. Properly. Because if people still can't afford to feed their families or themselves, they will not remain quiet. That is the true inspiration of the Egyptian protestors - that they did not remain quiet. Here, with similar unemployment, particularly growing for our youth, and rising inequality, poverty and basic needs prices, we are too quiet. 

Obama's Mid-Way Economic Report Card

(Happy New Year! This piece of mine was posted on Truthdig on Dec. 31, 2010)

There are two potential ways to measure the economic performance of a political leader. One is by the profitability, stock prices and executive bonuses of a nation’s corporations. The other is by the financial condition of the majority of its population. Since he came to power, President Obama and his economic team have propped up the former and failed miserably to aid the latter.  (For the record, ever since the first paragraph of Obama’s pre-primary website economics plan put free markets before people, this is where we were going, but it still hurts to get there.)

The S&P 500 index is up 50% since Obama took office. But unemployment remains higher than it was when he entered the White House, home foreclosures continue to mount to the detriment of borrowers and entire neighborhoods, health insurance companies responded to his health care “reform” bill by raising premiums, and the financial system’s largest banks continue to prosper in the wake of a multi-trillion dollar bailout with no strings attached to share their subsidizations with the rest of American citizens. To top it all off, as he approaches the midpoint of his first, and likely last, term, Obama bowed to the pressure of the Republican Party and extended tax cuts for the richest Americans in order to be able to also extend them for everyone else more sorely in need. There’s only so long you can blame another administration for your actions.

Obama’s economic policies have either been continuations of his predecessor’s, as in the case of taxes and bank bailouts, or bills so watered down to appease corporations, notably banks and insurance companies, that they are ineffective. In the process, he continues to alienate his supporters—individual voters, not the companies that funded his candidacy—leaving their economy in shambles. Here’s the recap.

Taxes

Just in time for Christmas, we got Obama’s big tax-cut compromise. Obama’s reverse Robin Hood deal with the Republicans disproportionally takes from the poor to give to the rich. The plan adds another $1 trillion to the record United States deficit, $700 billion of which would be the cost of extending tax breaks to the wealthiest 2 percent of the country, the rest going toward jobless benefits—necessary to help those victims of the wider economic problems, but not complemented with a job-creation program.

According to the Center on Budget and Policy Priorities, American millionaires would get 22 percent (or $200 billion over two years) of the benefits of the deal, while the bottom 20 percent of American workers would get less than one-half of one percent. According to David Cay Johnston, the 45 million households that make less than $20,000 a year will be slapped with a tax increase of $150 to $200.

Even though the majority of his own Democratic Party supported extending cuts only to Americans making less than $250,000 a year (on TV anyway, apparently not at their seats once the compromise was inked, notables with balls like Sen. Bernie Sanders aside), Republican “all-or-nothing” pressure was met by Obama’s capitulation. He could have bargained harder—say by suggesting that tax cuts not be extended for people making more than a million dollars, rather than punting the tax cut issue into the 2012 presidential election period.

What Obama effectively did was adopt George W. Bush’s tax policy in total rather than come up with a better deal, even though the Bush tax cuts increased the net worth of the wealthiest Americans while the wages of the rest of Americans (the ones that had jobs) stagnated or decreased per hour worked. The Republicans obviously considered the deal a victory, to hell with any Republican voters in the bottom 98 percent of the country. Wall Street thought it was better than expected. Jamie Dimon was all but salivating. Even though the majority of Americans wanted to end tax breaks for the wealthiest, plus extend unemployment benefits, Obama couldn’t pull it off.

Housing

Obama’s $75 billion Home Affordable Modification Program (HAMP) was an unmitigated disaster for the borrowers who tried to take part, despite his promises that it would help 3 to 4 million struggling borrowers keep their homes.

On Dec. 15, I spoke at a mortgage fraud seminar in Ontario, Calif., and, let me tell you, there’s more fraud going on in modification-land than there was in loan-origination-land. The next day, over in Washington, Tim Geithner spoke glowingly of everything the administration has done to help the financial system, gloating laboriously over the bells and whistles of the various asset purchase and loan extension bank bailout programs and how much money we taxpayers made as a result. As for borrowers—you know, the little people—he stressed the number of modification applications in the pipeline instead of actual permanent modifications. This was primarily because it was a voluntary program on the part of the banks, which had no incentive, economic or legal, to work with borrowers. In the meantime, 8 million to 13 million foreclosures are expected to have taken place from the time the banks got their bailouts until 2012. If you figure on average there are three people living in each home, we’re talking 24 million to 39 million displaced people.

I really wish Geithner could have been standing in front of the borrowers at the seminar I attended, if only to get a clue.

Half of the 1.4 million borrowers that entered the HAMP program were kicked out. Only 2 percent of the loan modifications so far have involved lasting principal reductions. Most of the rest were given temporary reprieve, only to see their payments rise at the end of their trial periods or their banks rush to foreclose on them anyway.

To fix this problem, Obama has just created a $14 billion principal reduction program – something that should have been done on a far grander scale about two years ago. It remains to be seen whether this will be any more effective than the larger initial program, since participation is equally voluntary on the part of lenders, notably the biggest five banks that control two-thirds of the nation’s mortgages. I’m not holding my breath.

Unreformed Banking System

Throughout his presidential campaign and his first 18 months in office leading up to the passing of the Dodd-Frank so-called financial reform bill this summer, President Obama asserted that the crippled economy was predominantly the result of failures in the banking system.

He admonished bankers for their greed and vowed that those days were over.  Never again. Blah, blah, blah. But, the financial reform bill that he championed stopped none of the risky practices of the most powerful banks. (If you want to buy a package of distressed mortgages, call any of them today.) Nor did it break them up into smaller, more easily regulatable entities. Indeed, the largest banks in the United States are now bigger and stronger than they were before the bailout, even as smaller banks continue to close, creating a far less stable banking environment than before the crisis.

Geithner, as Obama’s treasury secretary, remains an apologist for the bailout, and it was Obama who moved to reconfirm Ben Bernanke as head of the Federal Reserve instead of making good on his major promise of “change” in the financial system. That’s why Wall Street bonuses this year are expected to be 5 to 10 percent higher than last year, even though bank profits are lower and lending remains muted. Because things have changed so much.

Jobs

On the job front, the picture remains bleak, as everyone is keenly aware. Nearly 11.5 million people have lost their jobs since Obama took office, despite claims that the $787 billion stimulus package saved 3 million to 4 million jobs. The unemployment rate of 9.8 percent is 32 percent higher than the 7.4 percent rate it was before Obama was inaugurated, and it has steadfastly stood at that level throughout his term.

Even worse, the number of workers who have been unemployed for over six months remains the seventh-highest on record at 6.1 million. There are still 4.4 unemployed workers for every available job (compared to 2.8 workers per job during the early 2000s recession). Thus, one in six U.S. workers is either unemployed or underemployed, which amounts to nearly 26.8 million workers.

Meanwhile, corporate profits have jumped back to near-historical highs, and banks are hoarding an extra $1 trillion in reserve at the Fed instead of using it to restructure mortgages or lend to small businesses that could create jobs with the money. Obama’s administration has been unable to find a way to force more job creation by tying corporate and bank well-being to that of the greater economy, either because it can’t or doesn’t want to.

Health Insurance

There were 59 million Americans without any health insurance in 2010, up from 46.3 million, or about 15.4% of the population in 2009, which was a slight increase from 2008. That 27% increase in 2010 is the highest per year under any presidency.

Sure, Obama promised that his new health-care-so-called-reform bill would help when it takes effect in 2014 and expand coverage to more than 32 million uninsured Americans. Meanwhile, health insurance companies hiked premiums by 14% this year and dropped the amount of coverage they provide for those increases. Why? Because they can. At that rate, even people that do have insurance coverage will see their costs nearly double by the time the reform bill takes effect, because “reform” never capped the premiums insurance companies can charge, which is not a tiny omission. This while attempting to mandate that everyone purchase health insurance, a double gift for insurance companies, now being battled out in the courts for the constitutionality of the mandate, not the extortionist cost of health care and insurance.

Meanwhile, the top 10 health insurance company CEOs bagged $228 million in 2009, up nearly 162% from the year before Obama took office, and they anticipate even more for 2010—and yet there are no major audits of their business practices on the horizon.

Citizen Sentiment

Despite his rhetoric to the contrary, Obama’s policies are far more pro-corporate than pro-populace, not a huge surprise, but still the reason that the Main Street economy isn’t improving. According to a Bloomberg survey from early December, more than 50 percent of Americans say they are now worse off economically than they were when Obama took office, a third think they are doing better, and two-thirds believe the country is headed in the wrong direction.

Those poll numbers, considering the weakness in the economy, aren’t necessarily horrible. President Ronald Reagan’s numbers were even worse after his first two years, and he still won his second term decisively. Plus, Obama inherited an abysmal economy, as he continues to remind us.

But just because you get on the train after it’s already rushing out of the station doesn’t mean you can’t find a way to stop it before it decimates a town or something bigger. The guys in the film “Unstoppable” ignored the dumb ranting of their suited bosses and saved the day. It can be done. (Go see the film; it’ll make you smile.)

A higher stock market is of little comfort to the millions of Americans who don’t have jobs, are facing foreclosure, fraudulent or otherwise, or have no health coverage. Equally, it’s of little comfort that, rather than finding the money to help this swath of citizens, the Obama administration added $700 billion to the deficit by giving the wealthiest Americans more tax breaks. Hell, if you’re gonna go for broke on the deficit, why not fight to spread that same $700 billion over the rest of the citizenry instead?

Obama’s economic priorities are primarily benefitting a small and influential part of the population, but they have not provided the rest of the country with anything to be optimistic about this holiday season. In that regard, he’s more Scrooge than George Bailey.

Obama: "Shellacked" but already capitulating

The Republicans stormed the House, but Wall Street really won.

Last night, as I obsessively flipped around cable TV channels, I noted that whether I landed on Fox or CNBC or MSNBC, the same two main coverage items were being debated: 1) the Tea Party, and 2) the victorious Republicans (including the ones also labeled Tea Party candidates – even though they were not actually running as a separate Party – a trick that progressives have never managed to pull off). All the TPGOP's were singing from the same song sheet: extend Bush’s tax cuts, kill what they refer to as Obamacare, and cut spending in some manner devoid of specific detail – and of course, get Americans back to work – the free-market way – by reducing government constraints on businesses so they can stop worrying about rules and thus somehow spontaneously start hiring more. (Note: to underscore this strategy, CNBC paraded a bunch of CEO’s on screen throughout the night.)

The TPGOP left the innocuous financial reform bill alone for the most part, except to make clear, as Incoming House Majority whip (aka 2012 contender), Eric Cantor did, that they don’t want onerous regulations (much better to wait until the next leg of this crisis and the loss of more jobs and homes, apparently.)

There was far less discourse about what the winning Democrats wanted, because beyond mentioning how this vote was really a referendum on Obama anyway. Though, let’s face it, we’re all tired of the promises anyway, not because we’re impatient – it takes time to create jobs – but because it’s no fun being lied to.

Here’s what wasn’t mentioned – first, as many other have noted, the cost and logic of two wars, and second, the cost and logic of bailing out  and now, propping up, Wall Street as it heads decisively (despite Obama and Pelosi’s promises of ‘those days of fill-in-the-blank being over'.) No winning Republican mentioned repealing the financial reform bill, since it doesn’t really reform finance. Score 1 for Wall Street. No winning Democrat thought that maybe since the Republican Tea Partiers were so anti bailouts, they should suggest a strategy that dials back ongoing support for the banking sector that continues to foreclose on homes, deny mass lending restructuring despite their federal windfall, and rake in trading profits, or underscore commitment to put the Fed in check. The Democrats can’t suggest that, because they were complicit. Score 2 for Wall Street.

In other words, nothing will change. And that, more than the disillusionment of his supporters that he would actually stand by his campaign rhetoric, is why, Obama will lose the White House in 2012.

Post election day, the Dow shot to a 2010 high, bank stocks rallied 2% on average, and the Fed announced they’d buy (read: shift to their books) another $600 billion of Treasury bonds (read: our debt.) The fictional boosting of the financial economy, absent the real boosting of the general economy marches on sans debate.

This morning, Obama had the chance to at least attempt to re-engage the voters who believed in his mantra of change. In his contrition speech, he took responsibility (read: apologized) for making it seem like he extended government too much (thereby taking on the language of the Republican opponents) explaining that we were in an emergency situation (not that the banks screwed up and stole the life rafts). He ensured businesses he was still on their side (in case the fact that he’s keeping Wall-Street lackey, Treasury Secretary, Tim Geithner on, and extolled Larry Summers on the Jon Stewart show, wasn’t enough of a sign).

It is likely, the Democrats will fear losing their seats in 2012, and vote more with the pro-business center going forward. That would be a mistake for them, and bad for the country. It would be better to be honest with themselves. The health care bill, for example, really did lead to a 14% increase in premiums this year for 90 million Americans (and that's just counting the ones covered by the Blue Cross /Blue Shield complex.) The solution to this hike shouldn’t be repealing the bill as the Republicans want, but capping costs (like every one wants) and providing single payer to all, which will force a competitive pricing structure relative to the private insurers – at thus, reduce an endlessly growing business and personal cost. The financial reform bill still leaves the biggest banks, too big. 

Sadly, Obama showed preemptive signs of capitulation with two words; ‘free market.’ Towards the end of the Q&A session following his speech, Obama said that the free market has to be “nurtured and cultivated”, and that he had to take responsibility to make clear to the business community and the country that the most important thing we can do is boost and encourage our business sector and make sure that they are hiring. His facial expression was as hollow as his words. He added that “we” (I’m assuming him and Geithner) have been talking to CEO’s constantly (and don’t we all feel good about that?) – and that next week in Asia, his whole focus is how to open up markets, so “we can prosper, sell more goods and create more jobs in the United States” (that playbook is from Bush’s Treasury Secretary, Hank Paulson, because that policy works so well). He pointed out that a whole bunch of corporate executives will join “us”.

And that, is the second reason he will not be re-elected, businesses won’t need to fund him, when they can fund the Republicans, now that they are back in vogue, they will just extract what they can meanwhile, and Obama will see this in 2012, if he doesn’t now. He could go all out and ignore those CEOs and focus on the general populace, but it doesn't seem like it. Whether he has learned something or not from this election about loyalties to his votes, he isn’t showing it. So maybe progressives should stop defending him and start yelling at him. Or seriously look for another 2012 candidate to run against Sarah Palin.