Below is a list of what, in my view, the most important to-dos on the president’s lengthy to-do list are.
Of course I could be a smart aleck and just put –
1. THE ECONOMY
2. THE ECONOMY
3. THE ECONOMY
But that would be both unintellectual and too crude a way to make a point. Nevertheless – and quite coincidentally – all of the priorities listed below do link to the economy in some way or other. Here they are:
1. Fix the subprime mess. The subprime mortgage crisis was the forerunner of the current recession. Although the latter has and does draw far more attention, the subprime crisis hasn’t magically disappeared just because nobody reports on it anymore. It’s the reason banks still have balance sheets in the red. The danger – which goes mostly unmentioned nowadays – is that the U.S. is headed for a Japan-style “lost decade.” Administrations may pile on stimulus after stimulus, but if they don’t address the fundamental poison – the housing market – then growth will remain constrained.
The goverment has unveiled several plans to help the subprime market. The jury’s still out on their effectiveness.
2. Reform the banking industry. The widely accepted consensus is that Wall Street’s wild, uncontrolled culture was a major catalyst of the current crisis. More stringent regulation, nearly everybody agrees, is urgently needed.
So it is with great alarm that I read reports (e.g. enormous profits at Goldman Sachs, new bonuses handed out to AIG) of Wall Street going back to the “good old days,” whose practices were responsible for the worst recession in the past half century. The administration’s outline for reform was critiqued as too mild to the bankers; more broadly, it seems to view Wall Street as a friend and ally rather than as a foe.
3. Cut health care costs. While the above two priorities are aimed at the here and now, rapidly rising health care costs are the greatest long-term crisis facing this nation; everybody agrees on this. The retirement of the Baby Boomer generation and the tension on Medicare and Medicaid may bankrupt this country if not stopped.
Obama is rightly focusing enormous energy and political capital on health care. However, I think this energy is being misdirected. The problem with health care is the cost. Unfortunately, officials seems more concerned with expanding coverage than lowering cost – when low coverage is simply a symptom of high cost. While there is some truth to the common argument that one can expand coverage and lower cost at the same time, the two are fundamentally different things. The current plan does not seem to lower cost – the Congressional Budget Office actually states that it raises costs, making the problem worse.
Democrats have been obsessed with expanding health care coverage to everybody, to a large extent because they have failed so many times before. While this is a laudable goal, it redirects energy from the real problem: rapidly rising health care costs. The cost problem will eventually bankrupt the country if unchecked. The coverage problem, while a great tragedy, will not.