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Letting Serious Crises Not Happen

As E.J. Dionne says, "Things could have been a whole lot worse" is not a very effective political slogan. Not only that, but it's not a very effective political strategy. The history of social change in America is that periods of catastrophe are pretty much the only moments able to overwhelm the system's natural resistance to change.

Rahm Emanuel famously said that you never want a serious crisis to go to waste. But the Obama administration made the mistake of effectively managing the financial emergency when they entered office. They faced a serious threat, but they never let it become a serious crisis. As such, the normal laws of political gravity never lifted, and everything went on pretty much as normal, albeit with the Federal Reserve sitting atop a much-larger balance sheet. The political dynamic right now is a lot closer to the mid-90s than the mid-30s.

That's to the Obama administration's credit. Serious crises are bad things. It's one of the system's more perverse incentives that you don't get political capital from preventing them so much as pulling the country out of them. Luckily, politicians aren't actually as cynical as people like to believe, and they tend to try and prevent depressions, even if letting them happen would make it easier to pass health-care reform.

By Ezra Klein  |  August 24, 2009; 12:08 PM ET
 
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Comments

I'm confused. How did the Obama administration "prevent a Depression"? What specific steps from Obama accomplished this magnificent feat?

Posted by: Dellis2 | August 24, 2009 1:02 PM | Report abuse

Well, we may get a chance to have the catatrophe after all, if economists are right about the need for a second stimulus. Republicans went along with the bank bailout last fall, because it was one of their own (Paulson) screaming for it. But they would almost surely block any similar action if things started to go south again.

Posted by: exgovgirl | August 24, 2009 1:22 PM | Report abuse

I don't buy it either. All I saw was the Fed protecting it's banking masters on my dime. Don't get me started on the auto bailout.

Posted by: obrier2 | August 24, 2009 1:25 PM | Report abuse

The Democrats should table healthcare reform -- in other words, STOP it for now -- and make a virtue of taking the issues into the next election.

As it stands now, passage of anything without a public insurance option will be a political disaster for the Democrats.

The bill is too complicated and it lacks the one thing that will keep it honest in the future: the public option.

It's a thousand pages of fine print. You can try to guarantee cost controls all you want, and the public won't buy it. They see red tape, and they see industry crooks buying back Congress in the future, using complicated maneuvers to change things back to where they are now.

Where are they now? A 20% of your health insurance bill, for no objective reason, no quantfiable value added.

How about a manuever not so complicated, right now: townhall meetings and congressional mailboxes are being overrun with health insurance employees to stop the public option. According to the Wall Street Journal, about 50,000 of them:

"All told, AHIP spokesman Robert Zirkelbach says, about 50,000 employees have been engaged in writing letters and making phone calls to politicians or attending town-hall meetings."

[AHIP = America's Health Insurance Plans, a trade lobbying group]

This will never end. Get a public option to keep it honest.

The Dems should say, "We can't make it simple until we get more Dems in Congress. We had to make this bill really complicated to answer the Republican concerns, but they still won't allow a public insurance option to cut costs and keep it honest... No surprise -- they don't really like Social Security or Medicare either! We need a public medical option so we don't keep getting ripped off by Wall Street. Because that's what the insurance industry is: Wall Street. We just bailed them out to the tune of trillions but they still want some of your healthcare money. The U.S. can't survive, it can't compete with other countries that treat their people better than this."

Posted by: Lee_A_Arnold | August 24, 2009 1:30 PM | Report abuse

Polls showed for months that more than 1/2 the populace thought a depression was a strong possibility or likelyhood.

Now months later, it's been averted by the Fed and the stimulus psychology.

I thought a few times about this idea that the administration would get little credit, and I think the conclusion is lacking adequate homework.

Now...if you suggest that only about 1/2 the population would believe the adminstration and the Fed saved us from a depression (which by the way...still isn't 100% off the table!)...well, this more modest claim I bet is realistic.

So if in order to get say 70% of the population to intellectually comprehend the reality of economic depression as something that can happen, it must actually happen to them...

Ok, I'd buy that.

A sizeable minority doesn't have much understanding of economics or much imagination, and won't believe something until it literally hits them in the face, burns down their house, etc....

But...given the choice, I'm satisfied that about 1/2 the population comprehends we skirted a depression (so far), and the Fed and the stimulus saved us (so far).

That's good enough.

If health care cannot be communicated, then...that's a language challenge.

It reflects more on the media than on the issue.

Posted by: HalHorvath | August 24, 2009 2:13 PM | Report abuse

So this means we can cancel the rest of the stimulus, yes?

Posted by: tomtildrum | August 24, 2009 2:29 PM | Report abuse

Do you think Bill Clinton would have been better off politically if the recession of the early 90s hadn't been warded off?

My suspicion is that he would have.

Posted by: HerooftheBeach | August 25, 2009 2:07 AM | Report abuse

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