Bold Lite

Maybe President Obama's jobs plan will succeed in making congressional Republicans look bad before the 2012 election, especially if they reject it and demonize it as another socialist plot.

But even in the unlikely event that the congressional Republicans pass it whole, would the president's $440 billion grab bag offer significant solutions to Main Street’s most pressing problems – reducing the unemployment rate and halting the foreclosure crisis?

Probably not.

It’s true that the president and his administration did not dig the deep economic hole the country is in. And the president deserves some credit for stepping out of Washington’s deficit obsession bubble just long enough to recognize that nothing the government has done so far has been enough to lift those outside Wall Street out of that hole – the worst economic downturn since the Great Depression.

But throughout his administration, and again last night, he has not offered big enough shovels, to dig us out of it.

As Paul Krugman [who labels the plan “a lot better than nothing”] points out, the collapse of the housing bubble blew a  $1 trillion a year hole in the economy, a hole that last night’s jobs plan won’t come close to filling.

But a comparison of the jobs plan’s $440 billion price tag with the unsuccessful $16 trillion bank bailout suggests its relative timidity. Remember that the federal government handed over that money to the bankers with no strings attached and no questions asked.

While the administration likes to tout the bank bailout’s success by bragging that most of the money has been repaid, by its most important measure – ensuring that the banking system helped restore the Main Street economy - it remains a costly failure.

Still you have to at least acknowledge that the bank bailout was a bold scheme. The same can’t be said for the American Jobs Act, which as the president stressed, was a collection of non-controversial proposals that even corporate Republicans have endorsed in the past.

Call it Obama’s “bold lite.”

Yes, it was bolder than what the president has suggested since the original $700 billion stimulus. It includes $240 billion of tax cuts and about $200 billion in infrastructure spending and aid to local governments, along with regulatory review, a vague housing scheme, plus a significant new round of budget cuts to pay for it, including unspecified threats to Medicare.

According to an estimate by Economic Policy Institute, the new plan, if passed whole, would create 2.6 million new jobs over the next several years and prevent the loss of another 1.6 million jobs.

That’s not chopped liver – but the country is still staggering under the weight of persistent 9 percent unemployment, with 14 million Americans unemployed, another 8.8 million working part-time but seeking fulltime work, and another 2.6 million who don’t show up in unemployment numbers because they’ve given up looking for work. In addition, we face a continuing foreclosure crisis and the threat of future budget cuts.

While I hope that the congressional Republicans don’t just decide to block the proposal, experience suggests that they are stuck on that strategy as a way to undermine the president. Will “a lot better than nothing” be good enough to help millions of Americans for whom the recovery has only been a mirage? Or is the president setting himself up, and the rest of us, for another round of dashed hopes and failure?

A Yes Vote for a National Ballot Initiative

While the long-predicted tsunami of voter anger is about to break across the national political landscape, oddly enough this may just be one cataclysmic event that California won’t experience. Yesterday the New York Times has pronounced the House of Representatives all but lost to the Democrats, but today’s Los Angeles Times reports that Jerry Brown’s lead over Meg Whitman doubled over the last month.

That might have something to do with Whitman’s obscene spending for the post – Californians have a tradition of rejecting the candidacies of people who treat high office as a new found hobby – and it couldn’t have helped that Whitman hired (and then cruelly fired) an undocumented housekeeper.

But wait. The Times’ polling also showed that in California, “Democrats have gained strength and GOP motivation has ebbed slightly in the last month.”

So what’s up with California voters? People elsewhere might attribute it to the weather, or our mythical blessed out state. But that’s not it: 81% of Californians told the pollsters that the state is “seriously off on the wrong track.”

I have a theory to explain why California voters aren’t reflecting the national trend, and it’s based on a political safety-valve unique to California: our often-maligned ballot initiative process.

This year, as in most elections, California voters will not only fill over a dozen federal, state and local elective offices. They will get to decide some major public policy issues, including legalization of marijuana, reapportionment, climate change, and majority rule in the state Legislature – a total of nine ballot propositions.

Californians rightly complain about the initiative process – that it’s increasingly invoked by the powerful special interests, that we shouldn’t have to do the politicians’ jobs for them – but the fact is, we love initiatives. Ballot measures empower Californians, giving us the opportunity – for better or worse – to shape our own destiny.

For many Californians, politicians are already a lost cause. What excites and inspires people to pay attention to politics here is the dynamic, creative and often chaotic opportunity to sidestep the political establishment and take matters into their own hands.

“For all the problems ballot initiative politics present today, the ballot measure offers the best part of modern politics,” says California citizen leader Jamie Court in his new book, “Raising Hell.” That’s “the ability to directly change injustice, without the main problem with politics today, politicians who are too corrupt or inept to make changes.”

In most states, angry voters can only vent their frustration by choosing from an often deeply unsatisfying list of candidates, a  desperate exercise in the “lesser of two evils.” When politicians are the only available target, the electorate’s outrage is by necessity narrowly focused. And it also gets amplified, like when you pump water through a fire hose. So it’s “throw the bums out” – as is likely to happen next week throughout the nation, whether or not they deserve it. Then the voters get to welcome a whole new bunch of bums.

Ballot initiatives offer a much more precise weapon: for example, an initiative to roll back auto insurance premiums, like I wrote in 1988, in the middle of public indignation over skyrocketing insurance premiums, when California lawmakers were too afraid of their industry patrons to do anything about it.

I’m as angry as everyone else these days about how Washington and Wall Street got together and betrayed us. If we had a national initiative process, I’d propose a cap on the interest rates banks and credit card companies can charge us for borrowing our own money from them.

What Would Pecora Do?

There have been lots of positive comparisons between Phil Angelides and Ferdinand Pecora, who led an earlier investigation of Wall Street excesses that led to the Great Depression.

Pecora was a no-holds barred former prosecutor who ran his hearings with meticulous preparation and theatrical flair, and his work galvanized public support for widespread reforms.

Some have been impressed by Angelides’ reputation as a reformer from his days as California treasurer, when he tried to use the power of the state’s investments for socially worthy causes and implemented some protections for shareholders. Angelides was widely praised after public hearings earlier this year for his understanding of high finance and his scolding of the head of Goldman-Sachs, Lloyd Blankfein, comparing him to a used –car dealer.

I’ve been less impressed by Angelides, who doesn’t seem to have a grasp on the opportunity he has to marshal support for real financial reform. And he’s too cozy with a Democratic leadership that’s been soft on Wall Street in the wake of the financial meltdown.

I’m also suspicious of Angelides, the politician and former real estate developer who unsuccessfully ran for governor against Arnold Schwarzenegger, because of his close ties to the Democratic Party elite. In addition, I’m wary of the impact of Angelides' main job running a coalition promoting green technologies. That’s certainly a laudable goal, but Angelides and his Apollo Alliance aren’t going to get very far without lobbying the Obama administration and the Democrats, who would not be happy with a hard-hitting report.
Whatever drama Angelides manages to muster at any given moment, I’m concerned that his multiple roles and background will cause him to soft-pedal his investigation. Those concerns were only heightened after Angelides surfaced as part of a curious SEC report last week that cautions firms about “pay to play” in the state investment business.
According to the SEC, when Angelides was running for treasurer in 2002 he hit up a top J.P. Morgan official to co-chair a fundraising event. It wasn’t just an honorary position. The price tag for the co-chairmanship? $10,000.

According to the report, the official didn’t co-chair the event but donated $1,000 to Angelides” campaign personally ­– and helped raise $8,000 more. In asking other J.P. Morgan brass to contribute to Angelides, the official noted that that the state of California was an important client for the firm.

Just how important became clear in the next couple of years, when J.P Morgan received about $37 million in fees from the state on more than 50 bond offerings totaling $15.8 billion – overseen by Angelides as state treasurer.

In the SEC’s curious take on the matter, neither Angelides nor J.P. Morgan is accused of doing anything improper.  Angelides isn’t even mentioned by name. The agency merely uses its report to caution finance officials about not running afoul of SEC regulations.

OK, so the SEC doesn’t think Angelides did anything wrong soliciting funds from J.P. Morgan and then giving them the state's business. But the report serves as a bitter reminder that those who we’re counting on to get to the bottom of the financial meltdown are steeped in the toxic brew of cash and politics that has seeped into the core of our government.

I hope I’m proven wrong about Angelides; that his intimacy with this unseemly world has left him with a sense of sustained outrage and not empathy for it.  But it will take more than a few zingers to convince me. I mean, let’s be serious. Would Ferdinand Pecora have solicited money from J.P Morgan? Not much chance. After Pecora grilled the son of the legendary banker, J.P. Morgan, Jr. described the investigator as having “the manners of an assistant prosecuting attorney who is trying to convict a horse thief.”