I've never submitted so much as a slip of paper through the slot of a suggestion box before, nor have I ever worked for a political campaign. But, there's a phrase that pops up in my head so often I can't keep it to myself any longer. It's sticky in that way I've heard some pundits claim Obama needs in his campaign. I feel it's got the same glue that Clinton's "it all began in a place called Hope" had, but, at the risk of sounding immodest, mine is shorter and far less sentimental.
In five syllables my phrase describes what eight years of Republican leadership under Bush has done to the US economy. It encapsulates an entire web of failures, acts of hubris, negligence, recklessness, ignorance, and greed. It is a reminder of the importance of government leadership in times of crisis and of the pain when government is MIA, out to lunch, or, if you will, caught buying a pair of Ferragamo shoes while the roof blows off America's house. And so I submit it to Barack Obama with the hope that it may serve him well in the next crucial weeks.
I submit to Obama the phrase: "Fiscal Katrina."
It came to me while watching a round table discussion on Charlie Rose last week. Mohamed El-Erian of Pimco, Floyd Norris and Gretchen Morgenson of the New York Times, and Nouriel Roubini, Professor of Economics at New York University, discussed the federal take over of Fanny Mae and Freddie Mac. They all agreed that there has been a lack of any serious discussion by the presidential candidates about the deeper issues of the economy. When Rose asked Mr. El-Erian what he would suggest that Obama or McCain propose in terms of the economy, Mr. El-Erian said the following: "You've got to build a levee. We've had a hurricane and levee after levee have broke in the U.S. and the consumer is now exposed, and the problem with the consumer being exposed is that it's going to hit the most vulnerable segment of the population next." Where had I seen this reckless disregard for the country by our government before? How can two seemingly disparate acts - one of God and the other of man -- be so uncannily and eerily alike?
Fiscal Katrina happened when levees built into our economic system were left to break. Like vulnerable land in the face of a flood, the economy needed its built-in regulators and safeguards. Instead, at the start of his first term, Bush chose the-private-sector-is-always-right style deregulation with the all too easy exception of the Federal Reserve pushing down the interest rate. Just consider the following observation by Floyd Norris: "Greenspan never much liked regulation . . . he believed that this would all lead to risk being transferred to the people who could best stand it and away from the banking system, which was his responsibility." Yes, the banks where our weekly paychecks get routed.
Levees were breaking as the Feds, the SEC and bank regulators all looked the other way and neglected to do their jobs. They were breaking when the Bush administration repeatedly denied that there were economic problems and when Greenspan pled he didn't know what was happening on the ground, even when the facts were seemingly obvious to pretty much everyone else. More levees broke when the Administration chose to spend more and borrow more, making the country the biggest net debtor in the world. When questioned about a recession, the Bush administration would insist year after year, in the face of all evidence to the contrary, that the economy was doing fine.
Each denial of the problem, each claim of ignorance, was another breakdown. Without the levees, there were no requirements for disclosure by financial institutions or for transparency in transactions. This led to rampant abuse of the system at the cost of shareholders, home-buyers, consumers, and employees of newly insolvent companies. With the DOW at an all time low and people wondering whether the money in their savings accounts is protected, we are now testing the final levee El-Erian was talking about.
In these upcoming debates, I'd like to see Obama confront McCain with deeper, pointed questions about Fiscal Katrina, and I'd like to hear what in the world the man with a self-proclaimed need to understand the economy better and (not coincidentally) a record of voting with Bush ninety percent of the time has to say.