After the Massachusetts Massacre

As always, Frank Rich's enlightened commentary is right on the mark.  President Obama has been handed a very full and difficult plate; but there have been some serious missteps.


Merely days after the 2008 election, he hired an economic team comprised of people who played a key role in wrecking the economy.  In 1999, Chief Economic Advisor Larry Summers teamed up with Sen. Phil "Americans-are-whiners" Gramm to repeal the Glass-Steagall Act.  And under Tim Geithner, Treasury became a principle employer of former Goldman-Sachs executives.  This team blocked any kind of real help for people struggling to avoid foreclosures and successfully funneled billions to the unrepentant bankers who now use the taxpayers' billions to lobby Congress and the Administration to make sure they never get regulated.


Most Americans recognize the blatant injustice of it all.  We see that Wall Street is populated by pirates whose rash actions hurt us all and who control our government and write the rules with impunity.


What would an alternative course of action look like?  A few ideas:

1. Remove the Wall Street insiders - they are too enmeshed with the power-brokers to get it.  Left to their own devices, they will tend to favor their brethren . . . at the expense of the rest of us.
    
2. Replace them with credible, skilled people like Simon Johnson, Volker, Reich, Stiglitz and Krugman.
   
   
3. Tax the Wall Street pirates.  Their reckless risk-taking won't stop until their wings are clipped.  And the simplest way to stop them would be to impose confiscatory taxes - say 75% tax rate after the first $50,000 in bonuses.  This single action would remove some of the incentive to over-leverage, would reduce the deficit and would let Americans know whose side the administration is on.  And, if they threaten to run away to work elsewhere . . . well, is that really a bad thing?  Again, their actions endanger all of us.  (Incidentally, the administration's proposal to tax the banks which pay excessive bonuses would be worse than doing nothing - the bankers will simply increase the fees they charge customers to pay the tax.  No, they have to tax the bankers' bonuses.)
   
   
4. The media is only now beginning to shed light on the new foreclosure tsunami.  A new round of foreclosures is ramping up as a new wave of toxic loans come due.  The Obama Administration - or a revitalized economic team - can simply stop homes from entering foreclosure unless there has been good-faith mediation between borrower and lender.  The administration can also simply stop loans from resetting so families that can afford their current monthly payments would remain in their homes.
   

These are the kinds of steps that would match meaningful action to the soaring rhetoric.  We are all waiting . . .