Obama on Fox: a Self-Styled Progressive Who Voted for Tort Reform & Dislikes Govt. Regulation of Business

by D. Cupples |   Economist Paul Krugman indicated months ago that Barack Obama is not really that progressive.  Yesterday, during a Fox interview with Chris Wallace, Obama made his lack of progressiveness as clear as a crystal Champagne flute. 

I don't know if Sen. Obama was being disengenuouis (trying to score Fox viewers' votes)  or if he really meant what he said about having voted for tort reform and opposing some forms of government regulation of industries.  Neither option reflects well on him.  Below are pieces of the show's transcript:

WALLACE:  Over the years, John McCain has broken with his party and risked his career on a number of issues, campaign finance, immigration reform, banning torture. As a president, can you name a hot button issue where you would be willing to cross (ph) Democratic party line and say you know what, Republicans have a better idea here.

OBAMA:  Well, I think there are a whole host of areas where Republicans in some cases may have a better idea. (Fox)

This is not the first time Obama has uttered such things.  He made a similar comment in January, stating that the GOP was the "party of ideas."

Admittedly, GOP big-wigs did have some ideas, things like:

- Deficit spending

- Tax breaks for wealthy people (who don't need them)

- Going easy on corporate criminals

- Privatizing government to the point that it costs far more

- De-regulation

- Tort "reform"....

Wallace asked Obama for an example of how he would cross party lines on a big issue, and Obama responded:

"Well, on issues of regulation, I think that back in the ‘60s and ‘70s, a lot of the way we regulated industry was top down command and control. We’re going to tell businesses exactly how to do things.

"And I think that the Republican party and people who thought about the margins (ph) came with the notion that you know what, if you simply set some guidelines, some rules and incentives for businesses, let them figure out how they’re going to for example reduce pollution.

"And a cap and trade system, for example, is a smarter way of doing it, controlling pollution, than dictating every single rule that a company has to abide by, which creates a lot of bureaucracy and red tape and oftentimes is less efficient." (Fox)

You've just read the talking points of big lobbyists and corporate execs who want to be left alone to do whatever they want (i.e., minimal pesky rules with tons of lucrative "incentives") -- while the rest of us pay the price of funneling money into their pockets. 

I wonder how the environmentalist sector of Obama's supporters feel about using "incentives" and some form of the honor code to reduce pollution.

Then there's the ultimate in reducing corporate accountability: tort reform.  Here's a clip from Obama's Fox interview:

WALLACE: ...  And so people say, do you really want a partnership with Republicans or do you really want unconditional surrender from them?

OBAMA: No, look, I think this is fair. I would point out, though, for example, that when I voted for a tort reform measure that was fiercely opposed by the trial lawyers, I got attacked pretty hard from the left. (Fox)

Does Sen. Obama think his progressive fans wouldn't watch Fox yesterday or that they're so infatuated that they wouldn't care that he has just voiced support for two core Bush-style, corporate-friendly, Republican goals: de-regulation and tort reform?

Once and for all, would the real Barack Obama please stand up and reveal his true essence?

None of this surprises anyone who knows where Obama gets his campaign funds.  Yes, some of his support comes from ordinary folks donating $10 at a time -- but Obama has also taken millions of dollars linked to lobbyists, PACs, and big corporations.

I know: Obama keeps saying the opposite on the campaign trail, but his words severely clash with reality on this issue.

Memeorandum has commentary.

Related BN-Politics Posts:

* ABC Ignored Obama's Misleading Message re: Lobbyists' Money

* Obama Helped Donor Get State Grant

* Studies Show Pro-Obama (or Anti-Hillary) Media Bias

* Media Misleads Public about Florida, Michigan, & DNC Rules

* Dems do Want Change -- in DNC Leadership
.

Comments

[Adam]

As I've said before, I consider Obama and Hillary to be pretty similar on most issues, but where they differ, I tend to like Obama's policies more. I have a strong fiscal conservative streak (my top issues are the environment and the national debt). That said, I think you are slightly overblowing the contrast here.

I thought it was clear that by "incentives", Obama meant negative incentives, like pollution taxes. Which I am 100% behind. I absolutely agree with him that taxing pollutants is a much easier and more effective approach then requiring specific equipment to be used. We've seen numerous examples of the latter approach breaking down. For example, industrial facilities that are told they need to replace polluting machinery with newer, cleaner equipment will be given a waiver to wait until the machinery needs to be replaced, only they will "maintain" the old machinery indefinitely. If you take that same company and say, "we're going to monitor all emissions from this plant and levy fees based on them", suddenly that same plant will discover that replacing the old equipment makes financial sense. It's a more efficient, easier approach that gets results and, by the way, increases government revenue in a progressive way.

[Adam]

As an aside, while Krugman has plenty of solid economic ideas, he's COMPLETELY in the tank for Hillary at this point. It's one thing to support Hillary because he thinks she's more progressive, but at this point he willfully ignores examples of Hillary taking bad economic stands and Obama taking ones that he likes. Two major examples:

1) Krugman, if true to his long-held economic beliefs, should have gone orgasmic over Obama's Mar. 27 speech on financial markets:
http://www.barackobama.com/2008/03/27/in_major_speech_obama_calls_fo.php
In stead, the main portion of this speech gets only a passing reference in his next column:
http://www.nytimes.com/2008/03/28/opinion/28krugman.html
The line I'm referring to is "I was pleased that Mr. Obama came out strongly for broader financial regulation, which might help avert future crises." That's IT? Then he goes on to focus on how Hillary's plan is slightly more aggressive in bailing out homeowners than Obama's plan. (For the record, I like Obama's plan better in that respect.)

Now, I want to be clear: Krugman never says anything in that piece that explicitly conflicts with his core views. But if you had switched Obama's and Hillary's speeches from the days before, Krugman's piece would have focussed HEAVILY on how wonderful "Hillary's" (Obama's) plan for financial regulatory reform was, and noted with disdain how "Obama" (Hillary) had missed this important issue.

If you have any doubt that Krugman considers this the key part of any financial reform strategy, note the tiny followup blog post a few days later:
http://krugman.blogs.nytimes.com/2008/03/31/and-then-there-were-two/
Translation: "Oh, by the way, my favorite candidate supports the important part of financial market reform, too."

2) Krugman's failure to slam Hillary for her support of the terrible "gas tax holiday" idea. He's already slammed McCain for it as part of a broader slam of McCain's policies. And he slammed the idea when Bush floated it years ago. If it were Obama supporting this idea, Krugman would be all over how it showed his lack of wisdom and/or lack of progressive credentials.

Again, nothing explicitly dishonest is coming out of Krugman on this. He just acts as if he hasn't heard about Hillary's failings and Obama's good points.

[D. Cupples]

Good morning, Adam!

How are you? I've been grading finals, which is generally an overwhelming task.

Incidentally, I'm DYING to know what you think of Larry Johnson's guest post on Ayers (front page).

I suspect that when you say you're a "fiscal conservative," you mean it in the same way I do: pay as you go and think long term. Am I right?

I ask, because to Bush and the "Pioneers" mean "conservative" means "let big corporate interests have freedom to do whatever they want, whatever it costs taxpayers and citizens."

We've all seen where that gets us.

About environmental regulations: you (and Obama) bring up only two ideas -- 1) top-down "command and control" regulation, and 2) pollution taxes.

It's not an either-or. What about better drafted "command and control" regulations? That some of it was poorly drafted in the '70s doesn't mean that we automatically have to adopt an "incentive" approach.

For example, if companies are required to replace equipment, Congress isn't limited to forcing them to do it ONLY after they need new equipment (say, 10 years or however long the equipment lasts).

Congress COULD set earlier deadlines and make it easier for companies to replace equipment via tax breaks (or even credits).

My point: let's not throw out "command and control," just because prior Congresses failed to draft efficient legislation of that type.

Given my studies (both from the legal and political angles), I just don't trust incentive-based regulation that corporations would be happy with, because they don't lobby based on what's good for the nation.

Second, the "command and control" approach breaks down partly at the enforcement level (i.e., executive branch). We've seen that in the Bush Administration.

For example, laws clearly require Oil companies to pay royalties when they drill on gov-owned lands, yet the Interior Department refused to enforce that law.

The Department's Bureau of Minerals Management Services head Johnnie Burton resigned last year after media exposed her refusal to enforce.
http://bucknakedpolitics.typepad.com/buck_naked_politics/2007/10/inspector-oil-c.html

It wasn't even a new issue: oil companies even settled DoJ suits for $400+ million in 2001 over failure to pay royalties. No doubt, DoI knew of the problem, yet BMMS continued for six years to refuse to enforce.

The FDA is another example: it has been co-opted by drug companies, partly due to the Prescription Drug User Fee Act (Bush I) and partly due to the revolving door.

http://bucknakedpolitics.typepad.com/buck_naked_politics/2007/12/again-fda-tries.html

http://bucknakedpolitics.typepad.com/buck_naked_politics/2007/05/fdas_latest_pha.html

Yet another example: the Justice Department's non-enforcement of the False Claims Act with respect to Iraq-war contractors.

http://bucknakedpolitics.typepad.com/buck_naked_politics/2007/12/congressional-c.html

I could go on, but I think you get my point: it's not just the laws that matter in the regulatory realm; it's also the enforcement (exec branch).

What unnerved me is that Obama was speaking that way about ANY regulatory issue. As he well knows from having tried (and failed, through NO fault of his own) to take on the nuke industry (Exelon), leaving corporations too free and relying too much on their honor doesn't work.

What also unnerved me was that he voted for tort reform (as I mentioned). I did a lot of research on that (med-mal in particular) a few years ago: no matter how practical it sounds, it really is just another way of diminishing corporate accountability.

All I'm saying is that he didn't sound very progressive on Fox -- in fact, he sounded like someone using the Chicago School of Economics talking points.

As I acknowledged in my post, he might have been misrepresenting his real thoughts to appeal to Fox voters.

If that's the case, I have a problem with it, because I've found on several fronts that he doesn't market himself accurately.

If he was being sincere on Fox, then I suspect that he would cut far too many deals if he were in the White House.

[Adam]

"I suspect that when you say you're a "fiscal conservative," you mean it in the same way I do: pay as you go and think long term. Am I right?"

Basically, yes. Unchecked deficit spending really drives me up the wall. But I am also much more of a free marketeer in general than most people who vote Democratic. This leads me to some positions that are anathema to some progressives, like vouchers for school choice.

I believe that if you set up market incentive structures PROPERLY, you can get positive social outcomes.

"That some of it was poorly drafted in the '70s doesn't mean that we automatically have to adopt an "incentive" approach.

For example, if companies are required to replace equipment, Congress isn't limited to forcing them to do it ONLY after they need new equipment (say, 10 years or however long the equipment lasts).

Congress COULD set earlier deadlines and make it easier for companies to replace equipment via tax breaks (or even credits)."

In the abstract, I agree with everything you just said. But there are problems with top-down regulation of this sort. Three issues are:
1) These sorts of regulations require lots of government regulation and oversight to fucntion properly, with all the attendant potential of corruption, which can prevent anything from getting done.
2) As technology changes, the regulation has to change to keep up. It rarely does.
3) This sort of legislation is inherently vulnerable to watering down and bad compromises. Everything from the amount of time to replace equipment, to the type of equipment that is considered acceptable, to tax incentives or compensation or penalties, to the strength of the regulatory structure, is open to debate.

"Given my studies (both from the legal and political angles), I just don't trust incentive-based regulation that corporations would be happy with, because they don't lobby based on what's good for the nation."

I agree that "incentive-based legislation" drafted by industry is going to be easy on industry. It's not that hard to write legislation that looks like regulation but ends up being a subsidy.

But that's not what I'm a fan of, and I don't believe that's what Obama was talking about. I'm talking about establishing a simple fee/tax structure for pollutants. This drastically simplifies the debate - in stead of tons of moving parts in the regulation that muddy the issue, you basically have one number - the tax rate. Simple is good.

"Second, the "command and control" approach breaks down partly at the enforcement level (i.e., executive branch). We've seen that in the Bush Administration.

[several excellent examples]

I could go on, but I think you get my point: it's not just the laws that matter in the regulatory realm; it's also the enforcement (exec branch)."

Agreed, certainly. If anything, though, this suggests that the simpler the regulatory structure, the more transparent the process and the more likely it is to be properly enforced.

"As I acknowledged in my post, he might have been misrepresenting his real thoughts to appeal to Fox voters."

I don't think he was out-and-out misrepresenting himself. He was basically noting areas where some Republican PRINCIPLES are OK in his mind, without actually agreeing with the way any of those policies have been implemented of late.

You have to realize, almost every question Wallace asked Obama was designed to give Obama opponents ammo one way or another. The question about Republican stances he likes is a great example of this. So was the question where he asked for examples of controversial statements he HAD heard from Wright. Obama basically had to walk a rhetorical tightrope through the whole interview. He had to reject the premise of almost every question without sounding like that was what he was doing.

[D. Cupples]

Adam,

Isn't it possible that Krugman is "COMPLETELY in the tank for Hillary" precisely because of his grasp of our nation's economy (and other issues)?

I doubt he's ga-ga over her based on her wardrobe. :)

About Obama's March speech: I already told you that I agree with some of his broad strokes (which were largely other people's, i.e., Dodd's).

I also said that at some points Obama sounded like someone who was merely pretending to understand the words that were flowing from his mouth (example at end).

If I saw that, Krugman likely did too. That's probably why Krugman left it at being "pleased" that Obama is willing to impose financial regulations.

Remember the context: Krugman has been pointing out for months that Obama's speeches and promises are vague. Many of us have noticed that.

Krugman also has problems with Obama's health care plan(s), his misleading criticisms of Hillary's plan, and his stance on universal health care. Krugman hated the Harry & Louise ad (its original run and Obama's version), because it unduly frightened people about the mere concept of universal health care.

Naturally, the original ad was created by insurance interests, which are largely opposed to the citizenry's interest in getting universal health care.

Before I was regularly covering the campaign, I vaguely remember thinking about one of Obama's earlier plans, "Boy, that sounds like a give-away to insurance companies." I wish I could point you to that plan, but it's not on the website anymore.

Since then, Obama's health care plan has undergone major changes (yes, he borrowed pieces from Edwards and Hillary).

Apparently, Obama hadn't really thought out his health care ideas before throwing his hat into the ring -- which isn't a major point, but it IS worth noticing.

Frankly, from what I've read, I think Krugman doubts Obama's sincerity when he takes stands on economic regulations. In know I do. Case in point -- these two paragraphs from Obama's March speech:

"...The concentrations of economic power - and the failures of our political system to protect the American economy from its worst excesses - have been a staple of our past, most famously in the 1920s, when with success we ended up plunging the country into the Great Depression. That is when government stepped in to create a series of regulatory structures - from the FDIC to the Glass-Steagall Act - to serve as a corrective to protect the American people and American business.

"Ironically, it was in reaction to the high taxes and some of the outmoded structures of the New Deal that both individuals and institutions began pushing for changes to this regulatory structure. But instead of sensible reform that rewarded success and freed the creative forces of the market, too often we've excused and even embraced an ethic of greed, corner cutting and inside dealing that has always threatened the long-term stability of our economic system. Too often, we've lost that common stake in each other's prosperity. "

Obama doesn't make sense here, despite the impressive-sounding language. "Freeing" the markets "creative foces" (i.e., scaling back regulation) IS PRECISELY what fertilizes an "ethic of greed."

It's like the teacher leaving the classroom or the cat's going away.

That's just what happened after Glass-Steagall was repealed (thanks, in PART, to Bill Clinton). Repeal of the G-S Act, incidentally, had less to do with the CURRENT lending crisis but a ton to do with WorldCom (et. al.)

Ordinary folks who don't know about these issues would likely find Obama's arch speech impressively erudite.

Krugman, however, has been writing and teaching about these issues for years. He likely noticed that Obama's words (cited above) didn't have much concrete meaning.

For that reason, I think Krugman's vague praise of Obama's purported willingness to regulate was generous (i.e., giving Obama doubt's benefit).

Obama seems to be trying to walk a fine line: 1) appeal to big corporations; and 2) protect investors, taxpayers, consumers, and citizens.

Given how diametrically opposed the two groups' interests tend to be in practical terms, I don't think any politician can genuinely walk that line. If they want to truly protect investors, taxpayers, et. al., they'll have to say no to big corps in a lot of instances.

My take: the walking-the-line thing is all about imagery, which makes me wonder what Obama would actually do if he takes the White House.

[D. Cupples]

Adam,

You and I have different ideas on "free market" issues. First, I don't think the "free market" really exists (think Bear Stearns, Chrysler, Silverado Savings & Loan, et. al.).

Second, I don't think it's really principle-based. I think "free market" is a neat sounding notion that works out on paper only if one ignores practical realities.

That and it was easier for the Ken Lays and Dick Cheneys to credibly lobby for market "freedom" than to come right out and say, "We don't want to give up any piece of our personal funds just to do right by consumers, investors, or taxpayers."

In practical terms, if you leave the "markets" alone, the major players will ruthlessly do whatever necessary to take money from others and to avoid spending it. Think about inflated executive compensation while companies ship jobs to India (which harms shareholders as much as our nation).

If we regulate various industries/markets poorly, players will look for loopholes allowing them to rob shareholders, consumers, etc. Think stock-options accounting and auditor independence (pre-Enron).

Maybe pollution COULD be better reduced with an incentive program -- but I'd have to see the details of that program before giving in on that point.

It would still require a lot of government oversight -- to see if people were actually staying within their allotted amount of polluting.

As for creating bureaucracy: ALL effective regulation requires oversight, because the honor-system doesn't work.

A major failure of the Bush Administration was its intentionally scaling back oversight. That's why so many war contractors have robbed us taxpayers (and drove our war costs up incredibly).

That's why so many shareholders have been robbed over the last seven years, while corporate executives take home tens- or hundreds- of millions of shareholder dollars.

That's why so many oil companies refuse to pay royalties they owe us taxpayers for OUR oil.

We OWN those mineral rights -- yet our govt let the companies pay shit for royalties AND later gouge us at the pumps. That's just bad business for us taxpayers.

Yes, regulations must keep up with technology, but that idea doesn't oppose the notion of oversight.

In fact, technology should make oversight easier. That didn't happen under Bush, because he wanted to give corporate players as free a ride as possible.

I still believe that Congress could come up with effective and efficient top-down regulation.

Coming off my tangent, I don't like hearing Obama try to appease so-called "free market" ideologues, because I know what they're really about -- as opposed to the image their specious talking points convey.

None of this is new. Before the Lochner decision (1937 or so), our Supreme Court bent over backwards -- to the point of consistent self-contradiction -- simply to uphold big corporate interests against ordinary citizens.

That was true "free market" advocacy, and it had nothing to do with actual principle (or else they wouldn't have repeatedly contradicted themselves from case to case).

It was all about keeping rich, government-connected people rich -- and not caring about other taxpayers and citizens. (I have nothing against wealth, incidentally -- in fact, I like the concept.)

[Adam]

I'm willing to believe that Krugman thinks Hillary will do a better job. My point is, he distorts things to hide his disagreements with her policies and amplify his disagreements with Obama's. There's absolutely no way he would have glossed over the bulk of Obama's speech had that exact speech been delivered by Hillary in stead.

It's a bit of a stretch to say that anything that "frees creative forces" amplifies the "ethic of greed". One post back, you were talking about re-configuring regulations to be more effective. To go back to my pat example, I would argue that pollution taxes are precisely the sort of approach that allows every industry to seek out creative ways to solve problems, as oppose to prescribing a mandatory solution from above.

I don't see Obama's speeches or interviews in this area as trying to walk a fine line between corporations and "investors, taxpayers, consumers, and citizens". I see it as trying to walk a fine line between appealing to progressives who want stronger environmental, financial, and labor standards in the economy, and moderates who are instinctively distrustful of new large government programs.

[Adam]

When I say I'm MORE of a free marketeer than most who vote Democratic, what I mean is that I prefer regulation that changes market incentives in a simple and transparent way, as oppose to large government organizations that step in to handle a situation. We need to look at a situation and say "is there a way to change the incentives that lead to this problem?" And if so, that can often lead to more effective policies.

I've commented here on executive compensation in the past - I see these hyperinflated salaries as nothing but corruption, unless it's approved by a full stockholder vote. I'm not against protecting stockholders from corporate excesses.

By the way, just a bit off the subject, do you know what Hillary and Obama are talking about when they mention taking away tax breaks for companies that ship jobs overseas? It makes a great soundbite, but I'm not exactly sure what they're talking about.

To me, the no-bid contracts awarded to military contractors are simply another form of corruption. Actually, this is also related to the a particular enormous government bureaucracy - in this case, the military. A no-bid contract has NOTHING to do with a free market. Just like mineral rights, those contracts should be broken up and made smaller so that more companies can bid on them, and the bidding process should be opened up and made transparent.

This is not to say that all top-down government organizations are bad. We have the best postal system in the world, after all, and that's a government organization. But it's entirely self-funded and in many ways operates like an enormous private nonprofit. So, in a weird way, that sort of argues for a market approach. On the flip side, some of the most well-meaning government programs, like welfare, set up perverse incentives that do a lot of harm.

When I say regulation must keep up with technology, I mean that a regulation that says "technology X must be replaced with technology Y" becomes bad legislation when technology X+Z becomes a more effective approach than technology Y. You're right that it's easier to, say, monitor CO2 emmissions with newer technologies.

I apologize for the rambling nature of this post. I don't really have a single coherent response to everything you said.

[Adam]

I'm not sure if you still check his site, but Markos's reaction to the Fox News appearance may not be what you would expect.

http://www.dailykos.com/storyonly/2008/4/28/113834/884/670/504797

Personally, I don't think there is anything inherently wrong with appearing on Fox, as long as he makes it clear, whenever the issue comes up, that Fox news is simply a place for right-wing punditry, and should not be taken as source of serious journalism.

[Adam]

Krugman has come aroud to criticizing Clinton's silly gas holiday proposal, although of course he did it in his low-profile blog rather than his high-profile column:

http://krugman.blogs.nytimes.com/2008/04/29/gas-tax-follies/

He has the issue pinned correctly. Refining capacity is a big issue in the summer, and was the key issue driving the post-Katrina gas price spike.

[D. Cupples]

HI Adam,

I'm playing catch-up. 'Sorry I'm late answering.

I don't know what's inside Krugman's head. I do know that you were very impressed with Obama's speech and I was less so. I SUSPECT that Krugman is even less so.

People talk about achieving balance, but in SOME contexts competing interests can't be reconciled or balanced. Some times, there's just a winner and a loser. Not forcing public companies to expense stock options, for example, leaves some shareholders and analysts downright deceived about a companies' value.

There's no "balancing" that, there's no center point. Either shareholders and analysts can get a clearer pic of how many hundreds of millions are going toward stock options BEFORE they choose to invest in a company, or that info is hidden from them.

You mentioned "changing the incentives that cause" certain problems. Often, that requires making stuff illegal -- and law enforcement requires either monitoring or psychic computers. :)

RE tax breaks that allow companies to ship jobs overseas -- I think what they mean is what I've been saying for a while: if we give companies big tax breaks, we should attach job-creation strings. Bush didn't do that (though he could have).

No-bid contracts are one problem of MANY. One costly practice is awarding of cost-plus contracts (which creates the incentive for the prime contractor to use multiple layers of sub-contractors, who each mark things up).

Failure to properly negotiate contracts with the taxpayers' interests at heart is another problem. As a party to a contract, the US Gov could insist on all sorts of provisions but often doesn't.

Even contracts awarded based on competitive bidding can result in expense padding or outright fraud.

Failure to monitor contractors is another big problem. The Bush Admin achieved this failure on purpose (cutting monitoring staff and relying on honor system).

I could go on -- and have in our two govt. contractor sections.

Our post office isn't a great argument for the market approach, because it's a NEAR monopoly in terms of domestic delivery. Economists consider monopolies to be "market failures."

I don't mind that Obama went on Fox, either. They're all campaigning: any free media they get is ok by me.

I've already read Krugman's critique of Hillary's gas-tax idea. He sees her version as a "wash," because it's tied to the windfall tax.

I don't mind her gas-tax holiday as a short term thing -- especially because she has other ideas for longer term solutions (taking on OPEC through the WTO, investigating market manipulation, promoting green industries, promoting alternative energy research....)

McCain, on the other hand, I don't think has any real concern for solving the probs.