Liberal La-la Land

There's a big New York article by Frank Rich on "Obama's Original Sin." Obama oughta have dealt out a "reckoning from the moneyed interests who brought the economy down" in 2008, he writes.

Good idea. But why wasn't there a mention of Fannie Mae or Freddie Mac in the article? Just a tear-jerker about a retired policeman that got a foreclosure notice on his debt-free home.

Now that the New York Times's own financial reporter Gretchen Morgenson has a book out on the Times imprint, Times Books, and that book, Reckless Endangerment, fingers the Community Reinvestment Act, Fannie Mae, and Fannie Mae CEO James A. Johnson as the culprits for the meltdown, you'd have thought that Timesman Frank Rich would at least make a nod towards the CRA/Fannie explanation. But he doesn't, and I trawled through the comments looking in vain for a commenter that got it. OK, there was one commenter that referenced George Will's review of Reckless Endangerment.

Look, I understand that the liberal line is that the meltdown was caused by greedy bankers and slack regulation, but even liberals need to know the time of day. As Noam Chomsky wrote about the Wall Street Journal: the news side is solid because the rich need to know the truth about the economy for they need to manage their riches. But it doesn't matter to them that the opinion side is deluded right-wing craziness.

Liberals need to know the truth about their favorite government programs, especially when they are going badly wrong.

Then there's Medicare. According to Michael F. Cannon:

The three most salient characteristics of Medicare and Medicaid fraud are: It’s brazen, it’s ubiquitous, and it’s other people’s money, so nobody cares.

A conservative estimate of Medicare fraud is that it is 10 percent of spending. Maybe it's worse; maybe it's 20-30 percent.

The point is, of course, with Medicare and with the financial meltdown, that the problem is not the fraudsters. The problem is the government. Medicare was set up as a fee-for-service operation, so medical providers have an interest in gaming the system to maximize the number of reimbursable procedures. The government's affordable housing programs forced lenders to lend to borrowers without proper income and credit. So of course we ended up with toxic debt swilling around all over the world.

You can fool some of the people all of the time, said Abraham Lincoln, and it certainly seems that liberals are completely fooled about the financial meltdown and about Medicare.

But at some point, the people that understand what is going down are going to have to stand up and be counted. It was government that set up the financial meltdown and nearly broke the economy. It is government that is breaking Medicare, and forcing the end of Medicare as we know it. Until we get to that point, where the American people understand this and insist on it, we are still heading downriver for the waterfall.