After his historic inauguration, President Obama turned his attention to the nation’s economy. In February 2009, Congress passed its stimulus – American Recovery and Reinvestment Act or ARRA – for an estimated cost of $785 billion. Amazingly, with the Dow dropping precipitously and the auto industry collapsing, there were only three Republican votes for ARRA – all in the Senate. The largest component of ARRA included tax incentives for individuals and businesses – $285 billion – including the GOP hated Alternative Minimum Tax that primarily benefits wealthy investors.
Following ARRA, Obama turned his attention to the auto industry. Ford had already leveraged its assets to obtain a line of credit in 2008. And in December 2008, President Bush provided an initial line of roughly $17.5 billion in credit from TARP funds to ensure that GM and Chrysler could make it through the presidential transition to when President Obama could make a decision about whether to extend additional funds to GM and Chrysler. This was after Congress led by the GOP Senate rejected a straight auto bailout.
What was at stake if GM and Chrysler went bankrupt? Initial projections suggested a total loss of 3 million jobs and 151 billion in personal income within 12 months, and 450 billion in personal income within 36 months. Additionally it was suggested that an additional 1 million cars would be imported annually.
Honestly, I have no idea if these projections would have come true. What did ultimately happen though is that the US Treasury led a planned bankruptcy filing where:
- GM shed 47,000 jobs, reduced the number of plants it operated, sold or eliminated several car models or brands
- Chrysler shed 3,000 jobs, reduced its capacity by one shift, and sold or eliminated several car models. It also shed 25% of its dealerships.
- The US and Canadian governments became the primary shareholders in the post bankruptcy GM and FCA (Fiat joined Chrysler) by providing between 80 and 130 billion in cash to save the companies.
Ultimately, the US and Canadian governments were paid back when new GM and FCA stock was issued after having these two companies nationalized.
What was the impact of this time period? In my mind, two lessons can be learned. First, it showed a clear difference between governing and legislating.
Regarding ARRA and the auto rescue, President Bush and President Obama had to make tough, executive level decisions that would forever be associated with their legacy. They needed to propose plans to achieve outcomes. Therefore, they worked toward making a deal.
Legislators though were able to pick through and critique details, stay aligned with ‘philosophy’ and say ‘no’ because the decision would not harm their legacy. No one would say that Senator ‘X’ killed the automotive industry. Or the Great Recession became the Great Depression #2 in the Obama presidency. History would conclude that President Bush or President Obama decided to kill the auto industry by…or President Obama oversaw the nation’s second Depression. Legislators would be off the hook in the annals of history.
The second lesson was President Obama decided he would lead ‘from behind,’ by not proposing a specific healthcare plan in the upcoming debate because no matter what he proposed it would be knit-picked and killed as evidenced by the universal GOP no votes on ARRA and auto rescue packages. He would let Congressional Committees lead the discussion on healthcare reform.
Ultimately, it’s my belief that the American people saw that the federal government was not working for them. There was a financial crisis and ‘perfect became the enemy of the good’. The American people were forgotten. Bi-partisanship vanished. The drive for power and ability to blame/shame became prominent.
One of President Obama’s big election commitments was healthcare reform so it led the non-crisis domestic policy agenda. Two overarching thoughts:
- Ultimately the Democrats jammed it through the House and Senate using the reconciliation process due to the death of Senator Kennedy and Senator Scott Brown, a Republican replacing him which permitted the GOP filibuster legislation in the Senate. This caused lasting damage to the Congressional institution and relationships..
- The reason why it was jammed through was because the Republicans refused to participate in the legislative process let alone actually identify or offer solutions for healthcare problems. This caused lasting damage to the Congressional institution and relationships, especially because what emerged in the Affordable Care Act was essentially the Heritage Foundation plan from the 1994 Clinton Healthcare debate.
In 1994, Hillary Clinton led a healthcare committee to recommend legislation. Afraid that a universal payer system would emerge, the conservative Heritage Foundation proposed using the marketplace and competition to drive down costs.
In general terms the theory went that if healthcare plans were the same and people had to buy a plan, transparency would emerge and costs would be driven down because insurers need to acquire members in order to benefit from economies of scale and population level health benefits. The marketplace could innovate how they provided services, use data to drive improvements, and be rewarded when they reduced costs and improved care.
That is in a nutshell what the ACA is along with policies that:
- Require coverage until age 26 for children on a parents healthcare plan
- Require private business to offer plans for full-time workers
- Provide subsidies to help individuals and families buy plans for those who cannot afford the company plan
- Allow individuals to purchase healthcare on an open market without penalty or denial due to preexisting conditions.
- Allow states to expand Medicaid coverage for low income families
- Pay a penalty if one decides not to purchase healthcare via the IRS code. (this has since been removed.)
Without bi-partisan support, the ACA became known as Obamacare, and was panned in conservative circles even though the ACA is based on the plan put forth by the Heritage Foundation.
Again, what was the impact of this? The entire idea of not supporting the development of the ACA was made clear when Senator McConnell said: “The single most important thing we want to achieve is for President Obama to be a one-term president.”
Obtaining power became the clear objective of the national GOP. And we have continued to see this behavior since 2010 when Senator McConnell stated these words. My question regarding all of this is: To what end is obtaining power worth it if you don’t use it?
Obama won a second term, and between 2010 when the GOP took control of the US House of Representatives until the end of President Obama’s term, there was not a major bi-partisan policy enacted. Speaker John Boehner could not (or would not) pull the strings on tax reform or immigration to risk upsetting certain parts of his caucus. Contrast that with Speaker Gingrich and President Clinton. They negotiated and moved the country forward even achieving a budget surplus by 2000.
Policy became pointless under Boehner and McConnell, even if it was a Heritage Foundation idea. Heck, the Heritage Foundation even disowned its previous healthcare policy recommendation. Moreover, the GOP never created a comprehensive policy recommendation to contrast what the ACA proposed. And lest we forget that Representative Joe Wilson yelled ‘You Lie’ during a joint address to Congress by President Obama breaking every level of decorum possible. Plus we had an entire fake conspiracy grow within the GOP regarding whether President Obama was really an American and born in Hawaii…even after his birth certificate was produced. (My point to bring this up is not to place blame, but describe what happened to create the current circumstances.)
The GOP continued its march of making the federal government dysfunctional when Justice Scalia died in February 2016, and McConnell refused to permit a vote on the confirmation of Judge Myrick Garland to the Supreme Court. Granted, McConnell used his power in this instance and Justice Gorsech was confirmed to the Supreme Court after President Trump’s 2016 win. In contrast, McConnell pushed through Justice Comey’s nomination after Justice Ginsberg passed away this fall.
In my mind, this Supreme Court nomination fight is just another example of power being the ultimate goal instead of good governance.
Again, what damage did all of this cause? It created an environment of partisanship that we continue to live through today. Everything on the right and left is an argument about perfection and purity. The needs of the American people are lost in an ever arching quest for power.
Three other major issues contributed to this partisanship and overall frustration about government. The development of Fox News and then MSNBC allowed Americans to find news that suited their preferences, and then shaped them further to the right or left. In my mind, Rupert Murdoch followed the Rush Limabaugh financial model, and wanted a part of the financial windfall. So he created Fox News and found Roger Ailes to bring in the money. NBC saw an opportunity to counter that and make money by creating MSNBC as a left of center counter to Fox News. Consequently, Americans cannot agree on facts because it ruins the financial model of these two major power players.
The second issue we often sweep under the rug, but is real was President Obama’s race. Would a birther argument ever have been brought up if the president targeted was white? Would the tea party emerged in 2010 if a white president would have won in 2008? To pretend that America’s greatest sin of racism did not effect the political environment within the past 12 years is not realistic. It created strong emotions within people that were brought to the surface by some in their search for power.
The other issue that we don’t talk about enough is that decentralized democracy moves slowly even when it works well, and the technology growth in the past 20 years across the world has increased the pace of change in every part of our life. Our government cannot keep up with the natural disruption of our capitalist economy and meet the needs of people who are having their worlds economically disrupted.
It is my thought that this reality led to the growth of Trumpism because Trump played on all of the grievances technology, globalism, and power created. No longer can Americans have middle class jobs unless their technology skills or critical thinking skills are exceptional. That is a 180 degree shift from the 1970s and 80s, and has displaced thousands of Americans into the lower-middle class.
When I think about what has occurred in the past 20 years, the one person who I think is loving this the most is Osama bin Laden. His disgusting 9/11 attack on the American homeland created a cascade of events that is tearing our society apart. We cannot agree on facts. Our political parties cannot work together effectively. We do not trust one another. Heck, we cannot agree on who won an election.
Of course this is an overview of the past 20 years and there is more to say. Some people have suggested I try to turn this into a book to dig into details and really create a comprehensive argument. I don’t know if I am up to that, but when I think back over the past 20 years we are in a more dangerous place now in comparison to 2000. Getting out of it will be a challenge our nation will face for the upcoming future. And solving it will take systemic changes and creative thinking.
See you in the new year. I’m taking off writing until then. If you could let me know if you are appreciating these essays I would love to hear from you. Thanks for reading!