Good point. Then how do we guage the current situation?

“Hopefully Summers doesn’t blow it again (or, Obama fires him).”

Unfortunately, a mini-recovery would probably give validation to Summers and his policies.

Well, that is where the upward redistribution of wealth that has been taking place for a generation is taking us. Maybe not to being ditch-diggers per se, but servants of the ruling class.

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We transferred two trillion from the taxpayers to the banks with no transparency and no accountability and not so much as a Congressional hearing. I’d call that a breakthrough — especially if I were a bankster.

The country is now officiallly a kleptocracy.

First, it underestimates the real danger to the world that could have resulted from the panic (a danger that Baseline frequently discussed back in November-January). We very nearly saw a worldwide meltdown. Even the after-effects of a near meltdown are immense.

Second, Team Obama was heavily constrained by the obscene failure of TARP under Paulson; which gave the Senate opposition more flexibility to oppose everything (as they have done, along solid party lines), using a fillibuster if necessary. The US system is designed to move slowly. It is not a parliamentary system.

Third, good legislation is complex to write. This post presumes that we could have just passed a well-written health care law. Remember two critical things. Consider health care. Team Obama probably entered 2009 with a health care “plan” that evolved during the election cycle. This plan was deliberately kept vague. The opportunity to radically broaden the scope of that plan did not emerge until the unemployment rate started increasing (December/January timeline). At this point, Obama launched an initiative to begin writing that legislation – and we can expect that process to take nearly a year.

In other words – passing fundamental legislation to alter deep structural issues unrelated to finance (like health care) in the 2.5 months of high drama after January 20th may neither have been possible nor desirable. (Just getting the stimulus bill, which everyone agreed needed to be passed in some form, took till late February to get through Congress even after a pledge of Jan 20.)

Nor, I would argue, is immediacy necessary for long term structural legislation. The supposition that good legislation _only_ gets passed in the middle of crises is incorrect. Some of the most serious reformist laws in the US have passed a year or more after crises. Consider the Freedom of Information Act ammendments of 1974 that followed on Nixon’s abuses (passed by Congressional override of Ford’s veto), and the Government in the Sunshine Act of 1976 that followed two years later… These laws have had an immense impact on government (except when they were abrogated by executive decree under Reagan’s broad expansion of the definition of “national security”, and then later Bush’s expansionist definition of “executive privilege”).

If we look at Team Obama, they have been doing an acceptable job in several policy domains. Arguably, they have not done enough, but they have actually done more than they promised during the campaign in some cases (the stimulus bill + budget have stronger energy subsidies than initially promised, although still not nearly enough to reverse long term energy trends).

The great failures have really been in the domain of financial policy – and were entirely foreshadowed in Obama’s inauguration speech in which he aggressively defended the notion that govt. should reignite debt-financed growth (“credit is the lifeblood of the modern economy”). And most of the truly awful policies can be traced directly to Summers, and to a lesser extent Geithner. (I took Bernanke off of my hate-list in March when he finally stood up for himself.)

The real danger is not that the general public – or even Congress – doesn’t have the willpower to pass new regulation on the financial sector. It most certainly does according to all the polls.

The real danger is that Summers still has the ear of the President, and that Summers’ worldview seems remarkably resistant to change. “Change” doesn’t just happen by itself. Someone needs to lead, and Summer is leading in the wrong direction.

But the window of opportunity is not closed. In fact, IF we do experience a mini-recovery later this year, that will be the point of maximum opportunity. Obama will be able to claim credit, raise the banner of Never Again, and he’ll (probably) have 60 Democrats in the Senate.

Hopefully Summers doesn’t blow it again (or, Obama fires him).

There will be plenty of opportunity yet for change but I’ve practically given up that it will be top down. Change is going to come from the bottom because the people are smart enough to see what has been done to them.