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Tuesday, February 2, 2010

Irrational Anger

In the wake of the surprise election result in Massachusetts where unknown Republican Scott Brown beat current Attorney General of Massachusetts, Democrat Martha Coakley, many people have tried to make sense of the outcome. There are a variety of possible explanations; some have said Coakley was a weak candidate or that she rested on her laurels after the primary, thinking she could coast to victory in overwhelmingly Democratic Massachusetts. But more then anything it seems that there is a widespread populist anger at what has been going on in Washington from the bank bailouts to the debate surrounding healthcare. I know this first hand because I volunteered to call registered Democrats on behalf of Coakley; I ended up making 200 calls the day before the election. The people I called voiced their general displeasure with Coakley, Washington, and more than anything, the fact that I was yet another call disturbing them to solicit a vote. My numbers showed that 25% of Democrats planned to vote for Brown. This is an extraordinary result given which political party was in power when the economy collapsed.

As a close observer of the political scene and an enthusiastic student of history I was not surprised that the Government sought to prop up the banks and then pass a bill to stimulate the economy. These actions were a combination of Economics 101 and History 101. That is, we learned from the Great Depression of 1929 what did and did not work, and then we acted accordingly. Among experts there is really little debate that the Government had to prop up the banks to avoid a catastrophic failure of the financial system. The reason is simple: From car loans to employee paychecks the U.S. economy relies heavily on credit-without it the whole system ceases to function. Obama made this known and he has made it known more since the Massachusetts election, that the bank bailout was a necessary evil. Despite this, many Americans are still angry with the Government for the bailout. It would seem to me the anger should be directed almost exclusively at the banks.

The other target of populist anger is the Healthcare bill now on permanent hold in Washington. Massachusetts provided an interesting venue to test people's reaction to that bill since they already have privately run universal healthcare subsidized by the state. Notably, the system they have is very expensive and apparently over budget. Regardless, there appeared to be a general consensus that the bill in Washington was too expensive. A closer look at the Senate Bill which seemed destined to be closest to the finished product shows that the bill actually reduced the budget deficit by $130 billion dollars over 10 years; it also trimmed Medicare costs, extending the life of that almost insolvent program by 10 years. So while it may have been an expensive bill (about 1 trillion over 10 years) it actually saved money for taxpayers over the long haul according to the non-partisan Congressional Budget Office. What is unclear is how the new bill will affect individuals: Will they pay more or less? The failure to lay this out for the public caused extreme discomfort to many Americans. The changing nature of the bill and the fact that it was never clear what final form it would take probably made this a difficult question to answer. Regardless, few Americans would disagree that we need reform and yet much venom flowed toward the President even though the Republicans ignored the issue for 8 years and then refused to debate it on orders from the Republican National Committee.

Finally, some anger was directed toward the stimulus bill, a $700 billion package designed to get the economy going again after the near depression type event that occurred in October of 2008. Once again, following the lessons of the Great Depression, there is little debate we needed a stimulus, although some debate as to the size.

What then? Why would Democrats (forget Independents and Republicans for a minute) vote to give more power to the party that got us in the mess to begin with scarcely a year after the collapse? My answer is probably going to sound condescending: I think many people fail to understand that we narrowly missed a serious economic depression like the one in 1929 which saw 25% unemployment and 27 years before stock prices returned to their pre-crash levels. The bank bailouts and the stimulus package were desperate (yet successful) efforts to avoid worse damage and suffering by the American people. Meanwhile, the healthcare bill is an attempt to bring down medical costs that threaten to bankrupt Medicare and the Federal budget, while insuring 33 million Americans who lack insurance. Given that a Harvard Medical School study found in 2007 that 45,000 Americans die each year from a lack of healthcare insurance, the necessity for this bill cannot be understated. The need for Government subsidized insurance is even more acute given the current economic realities.

The fault of the Obama administration may have been in its failure to educate the public. Obama did make clear in appearances before the press what he was doing, but I think it lacked the urgent note in his voice necessary to express its importance. The former professor should have tried harder to let the people know, step by step, what he was thinking and why he was acting the way he was-especially when opinion polls went south. Clearly, no President has dealt with more weighty issues at one time than Obama, yet addressing the issues right away as opposed to waiting for the healthcare bill to pass appears in hindsight to have been a tragic mistake.

In the midst of the Great Depression and during WWII, Franklin D. Roosevelt conducted a series of "fireside chats" broadcast by radio, discussing the issues of the day. It is said that FDR managed to quell the fears of the populace and give hope to all, while also keeping them informed. Certainly, Obama is capable of a similar bi-weekly address in response to the current fears and concerns of the American public. Otherwise, Obama may find himself making the right decisions for the country but losing the information war and thus the support for his agenda.