Did The GM Bailout Kill Healthcare Reform?

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The surprising poll numbers out of both the NYT and WSJ yesterday have fuelled more of the “Obama is a lame duck” or at least “the honeymoon is over” chatter.

Megan McArdle: There’s a lot of sadness on liberal blogs these days.  What happened to Hope and Change?  Climate change is coming sometime next year, maybe.  Financial regulation also isn’t coming anytime soon, and what’s proposed is the minimum set of politically feasible propositions rather than a sweeping overhaul.  And health care?  What the @#%! is Congress doing messing around with expensive, incremental [expletive deleted]?  How can such a popular president be so powerless?

There are a lot of answers to this.  The first is to point out, as The Economist ably does, that the reports of the end of the honeymoon have been greatly exaggerated

But two things are also clear:  the Democrats overestimated the boost they’d get from both the crisis and Obama’s popularity.  And they dissipated a hell of a lot of the money and political capital they’d now like to spend on the stimulus and the GM bailout.  They got very carried away with visions of 1932.

The amount of money spent on the GM bailout is insignificant in the grand scheme of things — and insignificant, even, compared to the amount spent to prop up Wall Street, as many will point out. But money aside, the propping up of an American icon that so clearly has been a big, labour welfare basket case for years occupies a lot of mental space. And for about a month (or maybe a little more) the situation at GM and Chrysler were the main things on the President’s plate.

Those were not popular moves, though the President should pursue things that are politically unpopular.

So his political capital has taken a hit, but the other problem is that Congress isn’t nearly so popular. Barney Frank, Nancy Pelosi, Chris Dodd. These are not popular people, folks! In fact, these are some of the least popular people in Washington, and they’re the ones Obama has to stand side by side with. Add to them the thoroughly establishment characters like Geithner and Summers, and it’s clear that Obama’s glow doesn’t spread beyond him, at all.

For more reading, see Tyler Cowen and this piece by liberal writer Matthew Yglessias, who says the Democrats need to acknowledge sooner, rather than later, that paying for all this stuff without a Middle Class tax hike is a pipe dream.

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