A Simple Test

I have always had a simple test for any public policy: who does it benefit the most, and who does it benefit first? If the main or biggest beneficiary is the big majority of poor and middle income people, I rate it a success. If the first and biggest beneficiaries are the wealthy and powerful, then I rate it a failure -- after all, they generally do just fine without special benefits from the government. And the who-it-benefits-first thing is a critical part of the equation, because as John Maynard Keynes famously said, in the long run we are all dead. The reality is that policy, politics, other unexpected circumstances change too rapidly in this country that if poor and middle income folks are not benefiting early from some policy change, they probably aren't going to benefit at all (See trickle down economics in general as an example of what I mean.)

By this simple test, even though it is now clear that the stimulus package passed earlier this year was clearly too small, I still rate it a success in some important ways. It has saved the jobs of a lot of teachers, firefighters, police officers, social workers, and others doing important work, and it has created new jobs in the environment, health care, science, technology, the arts, construction, and road building.

By this simple test, Obama's health care plan as proposed will be a success if it's passed -- it helps the uninsured and hard pressed middle class families, and makes it tougher for rich and powerful insurance and drug companies to screw people.

By this simple test, Obama's first budget will be a big success, as it invests in things that help poor and middle class folks.

I congratulate the president on all of this.

But I have to be blunt here, too: also by this simple test, Obama's policies related to overall banking and economic policies are currently failing. Goldman Sachs and JP Morgan Chase are becoming bigger, richer, and more powerful, while unemployment, home foreclosures, small business bankruptcies are going up. Goldman Sachs and JP Morgan Chase are not only too big to fail, they are so big that everyone else is failing. As Paul Krugman pointed out, the things they do actually are harmful to the rest of the economy.

This whole Too Big To Fail thing (especially with Goldman and Morgan getting ever bigger and more powerful) is the elephant in the room, the issue on the table central to most of the most serious problems in our economy, but it's the issue almost everyone is too scared to take on. Reporters tell me stories of (relatively progressive) Democratic Congresspeople too frightened to attack Goldman Sachs by name on the record. The White House completely avoids the Too Big To Fail issue in their banking regulatory reform policies (many of which are actually quite good, by the way) because, as folks on the WH staff have told me, they know they would get beaten by the Wall Street lobby on the hill. Even the progressive groups working on banking issues, the ones doing very admirable work on other aspects of the financial issues such as Elizabeth Warren's great idea of a new consumer protection agency on financial products, are mostly taking a pass on Too Big To Fail related issues because, as one consumer lobbyist told me, "We don't want to lose our credibility on the Hill."

FDR did some very good things in his first hundred days, but the New Deal as we think of it today didn't really pick up momentum until FDR started to move left. I hope when we look back at this era, historians will be saying the same thing, because unless FDR takes on Goldman Sachs and JP Morgan Chase very directly, breaks them up, and then puts into place policies that will really start to create good jobs, unless that happens, the economics and political fortunes of the president will crash into the shoals created by Goldman and Morgan.

When President Obama starts focusing on policies with that simple test -- does it benefit poor and middle class people, or does it benefit Goldman and Morgan? -- he will start getting this right, and moving the country's economy forward. Until then, everything we care about as progressives and Americans will be in a world of hurt.