The Obama campaign has launched a new film. It’s beautifully shot. (No wonder: Davis Guggenheimwas the director.) It’s beautifully narrated. (No wonder: Tom Hanks is behind the mike.) It’s got a beautiful story arc. Lighting’s great. Hey, I’m no judge of these things, but whoever they got to do hair and make-up probably did a great job too.
Stupid is as stupid does…..
Only, you know, the facts?
The film talks about the American Recovery and Reinvestment Act (ARRA), saying the bill laid, ‘the groundwork for a new economy and restor[ed] the possibility of growth.’ Which sounds good. Indeed, the administration released graphs at the time which looked even better. The graphs ‘proved’ that with the ARRA to protect American jobs, the joblessness rate would never climb over 8% – a wonderful way to justify ARRA’s projected cost of almost $800 billion.
The trouble is that reality has this tricksy way of escaping from Hollywood’s clutches. In fact, joblessness rocketed to more than 10%. There is an unprecedented level of discouragement in the jobs market with the long term unemployed near record highs. And even now, when the economy is supposedly on the ‘upswing’, the official joblessness rate is still above the rate is was never meant to have reached.
Or again: in talking about Obama’s health care reforms, Tom Hanks’s mellifluous tones tell us that ‘health care costs have been climbing at three times the rate of inflation’. That’s perfectly true and the film even includes a scary graph to prove it.
Trouble is, the film then pulls a bait-and-switch, ignoring the topic of cost completely, and switching to a human-interest story (Obama’s own mother’s struggles with cancer) and on his political achievement in getting his health bill passed.
But what about cost? David Bowen, the former health staff director of the Senate Health Committee, said of Obamacare that it was ‘a coverage bill, not a cost reduction bill.’ And sure enough, he was righter than right. According to CBO projections at the time, the bill added about a trillion dollarsto government medical costs over the next decade and will add increasing amounts thereafter. TheCBO’s longer term forecasts of health care are, pretty literally, budget busting. Oh, and the problem (inevitably) is getting worse. Did Tom Hanks not feel these things worth mentioning?
Or take the bailout of General Motors. Hanks’s voiceover rightly draws attention to George W. Bush’s gift of $13 billion to a failing industry, but it goes on to state that ‘because of the tough choices the President made, the stage was set for a resurgent US auto industry.’
And sure, if you fling money at a company, that company is likely to have a spring in its step, at least temporarily. But these things cost money. In the words of the Congressional Oversight Panel, ‘The CBO earlier calculated a subsidy rate of 73%for all automotive industry support under TARP and recently raised its estimate of the cost of that assistance by approximately $40 billion over the previous estimate.’
Those are huge numbers. According to Christy Romero, the acting inspector general, the taxpayer is still owed about $133 billion in bailout money, by GM, AIG and others. For GM to repay its share of those funds, its stock price would have to more than double from its current levels of around $25 to more like $58. In blunt terms: that money is never coming home.
Or take AIG. Not only has it taken in excess of $173 billion in bailout funds - money which flowed on to such needy firms as Goldman Sachs, Morgan Stanley, Deutsche Bank, and the like – but the firm is now reporting ‘profits’ that arise almost entirely from tax-breaks. In the words of the former chairwoman of the Congressional Oversight Panel, ‘It’s been more than three years since AIG lost its reckless bet on mortgage-backed securities, yet today AIG continues to get special tax breaks that last quarter accounted for 90% of its profits.’
Robert H Benmosche - Total compensation 7.02 Million, nice work!
Although the Treasury is happy to tout the ‘profit’ it has made on its (very modest) sale of shares, those profits are overwhelmed by the cost to the taxpayer of those tax breaks. Oh, and the sale of those shares is boosting the profits of Goldman Sachs and others – those banks who were, in effect, bailed out by the rescue of AIG. Ain’t it strange how some guys collect the money, both on the way in and on the way out?
It would be quite wrong to focus excessively on the flaws of Barack Obama and the Democrats. The truth is that the current administration inherited a mess that it had taken thirty years to build up. Every President, every session of Congress bears their share of the responsibility.
So why not say so? Why not set out the facts – the full facts – clearly and responsibly. Trust that voters have the sense to make up their own minds, reasonably and wisely? That is, you’d think, what democracy should be all about. Sadly, in an election year, Hollywood plays better.
Mitch Feierstein is the author of Planet Ponzi and CEO of the Glacier Environmental Fund.
Follow Mitch Feierstein on Twitter: www.twitter.com/PlanetPonzi