Barack Obama: Unfulfilled Hope

Every political election is marked by promises that can't be kept.  But almost every candidate, even the one's I don't support, have something to say that I agree with.  In the last Presidential election, I had different hopes and fears for each of the candidates, based on promises that I believed they had control over.  The best case scenario is when the winning candidate lives up to your hopes, and proves your fears to be unfounded.

In President Obama's case, I hoped that he would bring more transparency to government, and feared that he would successfully live up to three little words he accidentally slipped out during the campaign, "redistribute the wealth".  It is very disappointing to see him succeed and fail in the wrong areas.

Obama has failed  the transparency hope in two ways.

His ability to organize a grass-roots campaign, and to collect unprecedented campaign funds using the Internet earned him high-tech accolades from the media.  After his victory, I hoped he would use his Internet prowess to create the new interactive government, giving a voice to those of us who are not actively asking the government for a handout.  We are the voices that are not being heard.  Not only has President Obama been silent on this front, but it is now clear that he did not deserve credit for the workings of his cash machine, and probably understood little about it.

He also failed the transparency hope when managing the Wall Street bailout mess.  From what I could tell at the time, powerful Wall Street execs had a seat at the table in back-room deals between Wall Street and Washington.  It's clear to me, from the outcome, that deals were cut to benefit the players at the table.  Evidence of "change" from the past are nowhere to be found.

Obama's government randomly chose which companies lived and died--they were unable to explain why Lehman's could die, but others were too big to fail.  They not only kept some banks alive, but they did it so poorly that  executives who over-leveraged their firms were allowed to keep their jobs AND their bonuses, and they were able to protect the bonuses of hundreds (probably thousands) of others who had some culpability in the mayhem.   This is like making a long-shot bet at the horse track where winners keep the profits when they're right, and losers get their money back courtesy of tax payers.

Leading up to the meltdown, banks made huge bets against each other.  When losers didn't have the cash to payoff their bets, we the tax payers made the bets whole...explain that to me!   We gave one bank our hard earned money so it could pay another bank for its gambling losses.  Is there a form for that?  Next time I'm in Vegas I'll probably want to submit one.

My biggest disappointment, however, is that Obama has proven my fears to be well-founded.  While I have no problem with Health Care Reform, I do have a problem when the resulting legislation is a mess, doesn't effectively and dramatically reduce costs, and will be very difficult for everyone to navigate.  I have no confidence whatsoever that the federal government is capable of implementing this program effectively, or that the stated assumptions will be realized.  Our national debt will skyrocket, and our tax rates will have to follow.

Obama clearly believes that government can solve our problems, despite little empirical evidence to support this belief.  I don't know what would have happened if the government didn't bailout the banks, but I do know that its interference has thrown off an inherent market force.  For the first time in our history, it is unclear to big banks exactly who bears the risk of failure, even if they (the banks) are responsible for catastrophic misjudgment.

As a result, we now "need" massive new legislation to prevent the banks from failing again.  If Obama had let them fail the first time, opportunists would likely have stepped in to recreate the financial system, or to fill gaps made available in the current system; incompetent banking executives would be gone instead of receiving continued bonuses from us; a lot of risk-takers would have lost their bets and their money; and it would be dead-clear who bears the risk of incompetence and misjudgment.  In addition, oversight legislation could either be eliminated or dramatically reduced in scope.

I clearly misjudged Obama's strengths.  I was duped into believing he would make inroads toward a more participative, and more transparent government--an objective that was well within his control.   I hoped that he was more pragmatic in his view of governments role and in the tax consequences of his proposals.  Sadly, I couldn't have been more wrong.