Robert B. Reich, a co-founder of The American Prospect, is a Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. His website can be found here and his blog can be found here.
Former Treasury Secretary Hank Paulson admitted in his recent memoir that Lehman Brothers' balance sheet was bogus before the bank collapsed in 2008. Nonetheless, Lehman paid out $5.2 billion in bonuses in 2006 and $5.7 billion in 2007. Lehman's investors lost a fortune, of course. But Paulson doesn't extend his logic to its natural conclusion. Lehman's practices weren't all that different from those of every other big bank on Wall Street. Lehman was just the first to go under, causing a financial run that led George W. Bush to warn "this sucker could go down" unless the federal government came up with hundreds of billions to bail out the remaining banks.
Few presidents get a second honeymoon of their own making. Barack Obama’s victory on health-care reform has breathed new life into his administration, recharged the Democratic base, and given the rest of America a sense of someone who fights for average working people.
The question now is: What does he do with his second honeymoon?
Some say it should be used to enact financial reform. Most Americans despise Wall Street and want to be assured there’s no repeat of the grotesque sequence of river-boat gambling with the economy followed by a taxpayer bailout followed by seven-and eight-figure bonuses. Democratic strategists would love to let Republicans hoist themselves on their own petard by defending Wall Street.
It’s not nearly as momentous as the passage of Medicare in 1965 and won’t fundamentally alter how Americans think about social safety nets. But the likely passage of Obama’s health-care reform bill is the biggest thing Congress has done in decades and has enormous political significance for the future.
Nothing that’s legislated is perfect, and in my view the good that will come from passing health-care legislation outweighs the bad. But be warned: The pending House bill (that will go to the Senate for a “reconciliation” vote) does not repeal the antitrust exemption for health insurers, nor does it contain a public insurance option. It thereby will allow health insurers to continue to consolidate into even larger entities, gain as much market power as they can, and charge ever higher prices. Yet Americans will be required to buy health insurance from them. Assuming the bill becomes law, this dissonance spells trouble. It will have to be addressed before 2014, when the bill takes effect.
Health-care reform is necessary, and House Democrats should vote for it because it’s best for the nation.
They should also remember the political lessons of history. To paraphrase Mark Twain, history doesn’t repeat itself but it does rhyme. As the White House and the House Democratic leadership try to line up 216 votes to pass health-care reform — and as Republicans, aided by the National Association of Manufacturers and abetted by fierce partisans like Newt Gingrich, try to kill it – I can’t help thinking back to 1994 when the lineup was much the same.