Saturday, January 21, 2017

Obama to Trump

A had a few thoughts during Donald Trump's inauguration about the difference between him and former President Obama. The quick version is that Obama's main priority was trying to transform America while Trump's seems to be trying to help Americans.

The XP Pipeline is a perfect example. Studies said that it imposed no significant risks and that the amount of oil produced from it would not affect global warming in any measurable way. Blocking the pipeline stopped American jobs and hurt relations with Canada. But Obama did it anyway for symbolic reasons.

After the Sandy Hook shootings, there was a major push for gun control. None of it would have stopped the tragedy. It was just an excuse for gun control.

The regulatory state went into overdrive during the Obama administration with the EPA claiming control over such diverse things as automobile mileage which had previously been under Congressional control.

Obama claimed that he was forced to use executive orders to reform immigration law because Congress refused to act. The reason Congress didn't act was because the legislation was highly unpopular. Pressure from illegal immigrants depresses wages of American workers.

Obama seemed to give more support to the Black Lives Matters movement than to police officers who were killed directly because of BLM protests.

Obamacare may have insured millions who didn't have insurance, but it also stifled tens of thousands of small companies. In every previous recession, small businesses were responsible for most of the new jobs during the recovery. Without the hiring from small business, the recovery has been, at best, tepid.

The Obama administration and the Democrats in general went out of their way to be as harsh as possible on dissenters. In 2008, Obama felt that he could not be elected if he admitted he favored gay marriage and the State of California passed an anti-gay marriage constitutional amendment. Regardless of that, any business that refused personal services for gay weddings was fined enough to put it out of business.

The same was true for religious exemptions for birth control under Obamacare. The Obama administration was very unforgiving in awarding exemptions.

I could go on. These are just examples off of the top of my head but they illustrate my point - that Obama and his administration valued conformity with its principles over the desires and well-being of the populous. This was especially true in coal country and managed to push a solidly blue state (West Virginia) to being solidly red.

All I have to go on so far from Trump is his campaign promises and his inaugural speech but he seems to desire to put American workers first, ahead of ideology. That is a huge change from the previous administration.

Sunday, January 08, 2017

Obama's Legacy - Foreign Policy

Obama opposed the Iraq war. This gave him a big advantage in the 2008 primaries since Clinton and Edwards had both voted in favor of it. Of course, he was a state senator at the time but it gave him credibility when he made ending the wars in Iraq and Afghanistan the center of his campaign. During one of the debates he stated that he was willing to meet with the heads of hostile countries without pre-condition and spoke disparagingly of treating a presidential visit as a reward to foreign countries. THis was met with disbelief by Clinton and others with foreign policy experience. Regardless, Obama doubled down, implying that nations were hostile to us only because we hadn't approached them properly.

Although never stated publicly, this was the main thrust of Obama's foreign policy: approaching hostile nations and trying to forge friendly relations. He also was a proponent of nuclear disarmament. 

This sounds good in practice but requires careful implementation and care that traditional allies are not slighted.

The Obama years were not a good time to be a friend of the US, especially one who had good relations with the Bush (43) administration. The Obama administration decided that Germany was more important to us than England. India, which had been growing close to the US, got a cool reception from the US under Obama. Israel received the worst treatment as Obama put "daylight" between the two countries culminating with a UN resolution that declares that Judaism's holiest spots are illegally occupied conquered territory.

The various policies are so interconnected that it's hard to know where to start. An easy one is Cuba. The best policy would have been to wait fo the Castro brothers to die of old age and strike a bargain with their successors to lift sanctions in exchange for liberalizing Cuba. But that meant that a different president would get credit for reopening ties with Cuba and Obama wanted that to be part of his legacy. So he opened relations on nothing more than a vague promise from the Castros to release some political prisoners in the future. Unsurprisingly, the opening of Cuba was accompanied by government crackdowns instead of liberalization and Fidel Castro never softened his anti-American speeches until his death.

Iran is a more difficult case. Obama dreamed of being responsible for Iran being accepted back into the brotherhood of nations. He planned for it to take it's place as a regional power and to take our place as the peacekeeper in Iraq. The first step to that was to conclude the talks that were supposed to stop Iran's nuclear program. This cast a long shadow over all of Obama's other dealing in the middle-East. It was obvious to Iran that Obama wanted a treaty more than they did so they were able to dictate his actions elsewhere, particularly Syria. Syria is a client state of Iran and they let it be known that any actions we took to dispose the Syrian government would end the treaty negotiation.

This gave a sanctuary for the radical groups who had been forced out of Iraq to come together to form Isis. When he was finally forced to fight, Isis, Obama limited his efforts to Iraq. There was an effort to find and train Syrians to fight Isis but it was nearly impossible to find people who would promise not to take part in the raging Syrian civil war.

Since Obama had no intention of sending American combat troops to fight Isis, he had to rely on the Kurds. This caused tension with Turkey which has a Kurdish minority that wants to join with the Iraqi Kurds to form their own state. Obama's refusal to establish a no-fly zone over Syria caused more tension (the no-fly zone was vetoed by Iran). Eventually Turkey turned to Russia.

The Syrian civil war has caused humanitarian disaster. Hundreds of thousands are dead and millions displaced. Obama keeps saying that there is no military solution to Syria, only a diplomatic one and engaging in his favorite rhetorical device the straw-man choice (doing nothing vs a full scale invasion which no one has asked for). At this point, the Russians have proved that there is always a military solution if you are ruthless enough.

Libya is another humanitarian disaster, one we were responsible for. Obama supported a rebellion that overthrew a corrupt but stable government. The result is that Libya became a failed state.

The refugees from Syria and Libya are streaming into Europe and threatening to break apart the European Union. Anti-immigrant parties are on the rise in several countries across Europe and resistance to Europe's open border policy was a factor in the Brexit (Obama made things worse by threatening Great Briton that they'd go to the back of the queue in trade talks if they split from Europe. The Brits resented being lectured on their future by an American president and probably helped the leave faction).

We had a chance to change the governments of both Iran and Syria. After a rigged election, the Green Revolution broke out. We could have helped it. The CIA had a group that assists in organizing groups pushing for democratic reforms. Rather than assisting the Green Revolution, Obama ordered a hands-off policy. Later, the Iranian government was on the verge of collapse because of sanctions so he lifted some and lifted even more after the nuclear treaty was signed. He even shipped pallets of cash in small bills to Iran to pay for a hostage release.

At one point, early in the Syrian civil war, Russia offered to force the Syrian government out but we passed on that offer because we were sure it would collapse on its own soon.

Relations with Russia were already strained when Obama took office. He sent Secretary of State with a symbolic "reset button" then followed up personally. Instead of improving, relations continued to deteriorate. The Ukraine was invaded and the Crimea annexed. During a 2012 debate, Obama mocked Romney for calling Russia our biggest geopolitical rival. By his last month in office he was sanctioning them for interfering in the presidential election. Along the way Obama managed to convince Putin that we were planning on overthrowing him.

Egypt has had two revolutions on Obama's watch. In both cases, we started by supporting the current government, then supporting the revolution. The Obama State Department allowed the Muslim Brotherhood to take over Egypt because they were curious to see if it could turn into a responsible government. They couldn't and we supported a military coup which has turned out to be at least as repressive as the two previous governments.

One indirect benefit of Obama's pro-Iran policy is a stronger Israel. The Saudis and their allies are worried by Obama's support for Iran and see Israel as a strong ally, one that the US has similarly turned it's back on.

All of this for a treaty that was supposed to stop Iran from getting nuclear weapons but instead gives them a timetable for becoming a legal nuclear power. Like Cuba, Iran was far from grateful. Instead they are working on ballistic missiles capable of striking all of Europe with the nuclear bombs that they are allowed to build in just a few years. And they have already declared that the US is in violation of the treaty which allows them to do anything they want (and can now afford after sanctions were lifted and billions of dollars delivered).

In 2004 Obama accidentally drew a red line for Syria - no chemical weapons. By 2005 it was obvious that they had been using them. Obama and Secretary of State Kerry promised that we would retaliate but it would be "unbelievably small". Then, after Britain's Parliament voted against taking action, Obama decided that he would not act without Congressional approval. Keep in mind that he had already expended his drone war into a half dozen countries and overthrown the government of Libya without Congress but he needed their approval for an unbelievably small retaliation. Congress refused. Russian intervened and Syria gave up its chemical weapons stockpiles and resorted to using chlorine gas instead. This was a terrible outcome. Obama and the US looked weak for making threats that we had no intention of following through on and for needing Russia to clean up after us and it didn't even stop Syria from using poison gas.

That sums up the world's view of the US under Obama. We talk a lot, often talking down to other nations, but we fail to follow through in any meaningful way. The world has stopped looking to the US and now goes it alone or looks to Russia for support.

I've rambled on long enough so I won't even mention China's incursions into the South Sea or Korea's weapons program.

Saturday, January 07, 2017

Obama's Legacy - Obamacare

Early in his presidency, Mr. Obama announced to his staff that he needed something big as his legacy. "Isn't saving the world's economy enough?" they asked. "No, it has to be bigger than that," the President told them.

Obama wanted to be remembered as the Roosevelts are for national parks and Social Security, respectively or LBJ and Medicare/Medicaid. He wanted something big.

Surprisingly, health care wasn't the first thing that came to mind for him. The Democratic party had been waiting impatiently since the early 1990s when Hillary Clinton's proposed health care reform collapsed under it's own weight. But health care reform was never a priority for Obama. He'd only included it in his platform to counter Hillary's proposal in the primaries. He'd even mocked her individual mandate. But health care reform was big - big enough to be his legacy.

Since he wasn't that interested in it, he left the details up to Congress and provided no guidance at all except that it should be something to address the uninsured instead of a total overhaul of the health care system. Even that was going to be a hard sell. And it was. Several Congressmen cut deals in exchange for their votes. It was decided early on that the Republicans would be cut out of writing the legislation which meant that they were unanimously against it. The Democrats had enough votes to go it alone but just barely.

The result was a mess but that was acceptable since it could be cleaned up during the reconciliation process with the Senate's version.

Then things got difficult.

Most Americans were happy with their insurance and worried that they'd end up with worse coverage. Opposition started to show up during the August recess when Democrats held town hall meetings to try to sell the legislation. It got worse when it came out that the Congressional leaders had no intention of actually reading the legislation. Public opinion turns against the bill. The final blow came when Ted Kennedy died and a Republican was elected to replace him on an anti-Obamacare platform.

That should have been the end of it. But Obama needed his legacy and the Democrats were convinced that the legislation would eventually become popular and assure them generations of majority status. With only 59 votes in the Senate they could not get past a filibuster so they used a legislative sleight-of-hand and used the House's bill, as written which only required a simple majority vote.

Obamacare became the law of the land without a single Republican vote and with more than half of the country against it.

The bill was flawed and they knew it but Obama and the Democrats preferred to pass something than nothing and they kept telling themselves that it would pay off in the long run.

It didn't. Obamacare never became popular and while Obama was reelected in 2012, the Democrats lost everywhere else.

As different parts of the law went into effect, left-leaning writers bragged about the number of people who were covered but neglected to mention that enrollment was always millions short of projections. This was an important shortfall. In order to work, a lot of young, healthy people needed to be enrolled to pay for the older, sicker ones. The program had no problem signing up the sick ones but the shortfall of healthy members meant that the participating insurance companies had huge losses. This lead to several insurance companies pulling out and others raising their rates much faster than inflation.

In selling the program, Obama promised "if you like your doctor, you can keep your doctor". This was named the lie of the year.

One rather cruel part of Obamacare was the Cadillac Plan tax. If your employer-provided plan was too good then it was taxed at a punitive rate to pay for subsidies. This meant that millions of people (and I'm one of them) had their insurance cut because their employer couldn't afford the taxes. In my case, the cuts amount to hundreds a month in out-of-pocket costs and I'm not alone.

Obamacare called for the states to set up insurance exchanges. Many Republican-controlled states refused so Obama simply ordered that the federal government would provide an exchange instead. The roll-out of the federal system was a complete disaster and it was months before the exchange was working properly.

The states that did set up their own exchanges had similar problems and several of those have since folded.

There was an employer mandate in Obamacare but Obama used an executive order to push that back, regardless of not having any actual authority to do this.

Despite being 2,000 pages long, a lot in Obamacare was left to bureaucrats to write. That included what birth control methods would be mandated. At first the Obama administration wanted this mandate to be universal but religious institutions objected. A waiver was allowed for them but the definition of who could get a waiver was very strict. A church could but a school run by that same church could not. This lead to two court cases. In one, Hobby Lobby objected to three out of fifteen types of mandated birth control on the grounds that they caused abortions. The Supreme Court ruled in their favor. The Little Sisters of the Poor, a group of Catholic nuns, objected to providing any birth control. This is still pending after being sent back to the lower courts. When no one in the Obama administration or the Democratic party noticed was that these administrative choices sent a clear message that the Democratic party was anti-religion. This cost them in the 2016 election when Evangelicals and Catholics turned out heavily for the Republicans.

As of this writing, it is unclear exactly what will become of Obamacare. The Republicans have vowed to Repeal and Replace Obamacare. Even if Hillary Clinton had won and the Democrats had swept back into office, the program couldn't survive without a major overhaul.

Obama saw Obamacare as his legacy, something that future generations would look back on. Instead, it will be looked back on as a cautionary tale against rushed, unpopular legislation.

Wednesday, January 04, 2017

Obama's Legacy - The Financial Crisis

No other president in my lifetime entered office worrying about his legacy as much as Barack Obama. As his second term ends, I'll look back at his tenure and rate his legacy.

The financial crisis of 2008, also known as the Great Recession, was a terrible thing for most people but it helped President Obama in many ways.

The crisis itself was not very well understood. During the 2016 campaign, Hillary Clinton insisted that it was caused by the Bush tax cuts. Even the left-leaning fact checkers rated this one false. The reason for Hillary's prevarication is that the crisis had its roots in Bill Clinton's presidency. During that period, it was decided that increasing home ownership, especially among minorities, would be a good thing. As part of this, many of the qualifications to get a mortgage were eliminated. Previously you needed a large down-payment and the mortgage could be no more than 15%-20% of your income. That made it unlikely that you would default.

At the same time, a weak-dollar policy designed to reduce the trade deficit and historic-low inflation pushed mortgage rates to the lowest in generations. Variable-rate mortgages pushed the rates even lower. All of this created a housing boom. Rising home values allowed people to constantly refinance their house for more than they paid for it while keeping payments low. The Bush administration continued these policies.

All of these mortgages were used to create something new. They would be bundled together and sold as a package along with some insurance against default. With stocks and bonds paying so little because of the low interest rates, these financial instruments were the best way to get an easy return on investments.

The problem was that the whole thing was a house of cards that depended on rising housing values and those couldn't rise forever. That should have been obvious but people were making so much money on all levels that no one seriously questioned  the bubble that they were creating.

The crash was inevitable but not the timing. This is where Obama had an amazing stroke of luck. The crisis hit after the conventions, just in time to derail Senator McCain's campaign as the voters blamed the Republicans. But the worst of it hit before Obama was sworn in. The parts where the world economy were in danger were handled by President Bush, who usually gets the blame for causing it but little credit for saving the world's economy. Many of the steps taken were unpopular, such as bailing out banks. Obama was there  as Senator and president-elect and supported Bush's actions but was able to distance himself from it.

By the time Obama was sworn in, his main job was to not mess up the recovery. But that's not how he was received. People expected him to work miracles. Some (including New Your Times Columnists) called on him to suspend Congress for a year so he could just fix things from the way Bush messed them up.

Congress acted on a stimulus bill that was supposed to save the economy by financing "shovel-ready" jobs that were already planned but needed funding. These didn't really exist and most of the $700 billion went for a grab-bag of programs as well as for propping up cash-strapped states.

Obama also had a free hand to save GM and Chrysler. He did that by having them go through bankruptcy but, in what would become an Obama trademark, by ignoring bankruptcy laws and dividing GM up by executive fiat.

Obama moved to shore up the banks, forcing them to take funds so no one could tell which banks actually needed the money then telling them that "he owned them" and that he was all that stood between them and the crowd with pitchforks.

Obama also announced a program to help people who defaulted on their mortgages. This provoked a backlash by people who felt that Obama was rewarding those who broke the rules and ignoring the ones who followed by the rules. The backlash gave rise to the Tea Party.

After the 2010 election, the Republicans took back the House. There would be no second stimulus. Without that, Obama relied on the Federal Reserve which cut interest rates to as close to zero as is possible to get.

How did all of that work out? Not so well. The recovery was the slowest since the Great Depression. Years later the interest rates are still near-zero. Unemployment has dropped below 5% but the participation rate is the lowest ever and a large percentage of the workforce is under-employed. Given that the Fed is still keeping the economy on life-support, it can be argued that we never actually recovered at all.

It's quite possible that the underlying problem is increased regulation. This is the only recovery ever where increases in employment came from large businesses instead of small ones. The Obama administration has issued a record number of new regulations and those might be dragging down small business. Or it may be other factors. Regardless, Obama's claim that he saved the economy rings hollow to large sections of the economy.

As a final exercise, let's imagine what would have happened if the crash had come a year earlier or later to see why Obama was so lucky.

McCain seemed totally out of his depth when the crisis hit. Had it hit earlier, then either he'd have managed to come to terms with it or a different candidate would have won the nomination - possibly Mitt Romney. The shock of the hundreds of billions in bail-outs would have passed, too.

Obama may not have even managed to capture the nomination if the crisis had hit in 2007. Hillary Clinton was the presumed candidate and her message of returning to the prosperity of the Clinton years would have resonated. Obama was a dark horse until after Super Tuesday when he dominated the news by winning caucus after caucus, giving him a sense of inevitability. An earlier crisis may have crowded that out of the news.

Had Obama managed to overcome all of that, he still would have taken office well after the crisis was passed and the recovery had begun. He'd still have been able to take credit for it but he wouldn't have had the same urgency.

Think how much worse it would have been for Obama if the crisis had struck after he was in office. Just as many Democrats blame Bush for not stopping 9/11 (Michael Moore is still going on about it), many would have blamed Obama for not stopping the economic melt-down. Far from having people clamoring for him to save the economy, he'd be trying to cobble together the same bi-partisan group that Bush needed to save the economy. But, Bush was much better at bi-partisanship that Obama. Obama barely gets along with the Democrats in his party. He might not have been able to salvage things. Or he might not have been willing to rescue banks given his antipathy to the wealthy.

It's very likely that the country would have been willing to elect a turn-around artist in the 2012 election and elect Romney.

So, like I said, Obama was very lucky that the crisis hit exactly when it did.