By Peter Roff, Thomas Jefferson Street blog
Tuesday's exit polls, while far from an exact science, showed that nearly 80 percent of those who turned out to vote in both Virginia and New Jersey cited the economy as a major concern. New Jersey Gov. Jon Corzine's mishandling of his state's economy certainly played a significant role in his ouster while Republican Bob McDonnell's "jobs, jobs, jobs" campaign clearly resonated with voters in Virginia.
If there is a message for the national politicians buried somewhere in the elections returns it is that Washington's handling of the economy needs to change, and quickly.
By all accounts, however, the Obama administration continues tacking to port, and at full speed. Not only is House Speaker Nancy Pelosi trying to rush a healthcare bill through Congress, the administration—despite the new 10 percent unemployment numbers—continues to hint that another stimulus package is in the offing, the first one having proven to be so successful.
Voters also remain angry over the federal bailouts of the big banks and Wall Street firms and two of the three major U.S. automobile manufacturers, which one would think would be a rallying point for President Obama's political constituency. Apparently not, because the administration, like the Energizer bunny, just keeps "going and going and going."
As Bloomberg reported Wednesday, GMAC—which the White House regards as "as crucial to the survival of the U.S. auto industry"—is getting set to receive yet another round of government aid after it "reported a third-quarter loss tied to mortgage defaults."
General Motors, the former parent company of GMAC, and Chrysler both rely on the lender to finance the purchase of automobiles they sell. But GMAC is also in the home loan business and, after receiving a reported $13.5 billion in not one but two rounds of government bailouts, is back at the table negotiating for a third.
All this suggests several problems with the policies emanating from Washington. One, that the direct bailout of the auto industry and the "cash-for-clunkers" program really did not work as the White House has advertised, making indirect bailouts through industry-affiliated financial intuitions like GMAC necessary. Second, that despite the promises that were made, the programs that were created and the controls that were supposedly instituted on mortgage lending to shore up the market following the collapse of the subprime market, things may be continuing on there pretty much as usual.
Whether the administration is living up to its promises is something Congress should take a long and hard look at before corporate bailouts become a matter of policy as usual.