Thursday, July 15, 2010

Fighting Complacency and the Latest Obama Legislative Victory

The Republican Party has had some electoral success since Obama's election in 2008. They won the governorships of New Jersey and Virginia, and Ted Kennedy's senate seat in Massachusetts to name the most prominent. However, that has not really stopped Obama's agenda. As usual, Charles Krauthammer has trenchant analysis of the direction Obama is taking the country and it is not pretty. I write this because we see another legislative victory for Obama that vastly increases governmental power while simultaneously harming jobs growth with the passage of the financial overhaul bill in the Senate today. From the WSJ article:

Now, the legislation hands off to 10 regulatory agencies the discretion to write hundreds of new rules governing finance. Rather than the bill itself, it will be this process—accompanied by a lobbying blitz from banks—that will determine the precise contours of this new landscape, how strict the new regulations will be and whether they succeed in their purpose. The decisions will be made by officials from new agencies, obscure agencies and, in some cases, agencies like the Federal Reserve that faced criticism in the run-up to the crisis.
The legislation creates a council of regulators to monitor economic risks; establishes a new agency to police consumer financial products; and sets new standards for the way derivatives are traded. "These reforms will benefit the prudent and constrain the imprudent," Treasury Secretary Timothy Geithner said in a press conference. "Strong banks, the well-managed financial innovators, will adapt and thrive under the new rules of the road."

Republicans said the bill could jeopardize the recovery by constraining credit and crimping the banking industry, and chided the expansion of government power it envisions.

To quote The Joker (Jack not Heath) "Who you gonna believe?" I always put my faith in economic incentives over regulation as a means of modifying behavior. The fact that there will be a council of regulators, a sort of Über-regulator, only disperses responsibility and guarantees the next financial meltdown will happen sooner. Ask yourself this, by way of analogy. Did creation of the position of Director of National Intelligence, who was supposed coordinate all those intelligence agencies, prevent the snafu that allowed the crotch bomber to buy airline tickets for cash in Ghana, travel to Yemen, Amsterdam and then the U.S. while his father tried to warn the authorities of his son's intent? I boldly predict the same outstanding results for the council of financial regulators.

Meanwhile, the Hammer points out that Obama has in fact been wildly successful in implementing his agenda, even if his poll numbers tank and he has set the stage for a protracted struggle for the soul of the American economy. Obamacare and this financial Peronism (thanks KT) are going to have lasting impact. Most worrisome he has built out a structural deficit that is very tough to deal with, because it accrues primarily to entitlements. KT points out that it is all unaffordable, but considerable damage may be done before we come to our senses.

I spread this gloom and doom not for its own sake, but because I think the Tea Party is too complacent due to some of these recent electoral successes and the primary victories for Nikki Haley, Sharon Angle and Rand Paul. The work to undo the Obama legacy is a marathon, not a sprint, even though we pride ourselves on not being a movement with definite leadership, we need to be thinking about how to be organized for the long haul.

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