Monday, January 25, 2010

Bernanke Confirmation Fallout: Death of the "Med Fed" Idea

I wrote this for Politico's "Arena" section:

The consensus seems to be that Ben Bernanke will be confirmed for another Fed term. And thus the Ulysses Grant-ization of Barack Obama’s presidency--substitute Wall Street, now, for railroads, then, to complete the analogy--continues apace.

But along the way, one bad idea seems to have disappeared, crashed along with the market. Which bad idea was that? A “Med Fed,” as pushed, most notably, by former Sen. Tom Daschle. In his book, Critical: What We Can Do About The Health-Care Crisis, Daschle wrote, “I propose a Federal Health Board, modeled loosely on the Federal Reserve System.” Unfortunately for Daschle, that book was published early in 2008, before the various meltdowns and bailouts discredited both financial wizardry and Wall Street.

Amidst the controversy swirling around Bernanke and the policies that he has so closely coordinated with Larry Summers and Tim Geithner, it’s almost humorous to re-read Daschle’s idea, based as it was on the premise that the Fed was such a great success that we needed more Feds. But when the Fed was riding high, the Med-Fed idea made sense to many. As Daschle put it two years ago, “Like the Federal Reserve, the Federal Health Board would be composed of highly independent experts insulated from politics. Congress and the White House would relinquish some of their health-policy decisions to it.”

It’s hard to think of a policy proposal that better reflected the pro-financialist Zeitgeist of the Greenspan-influenced, pre-crash era. Indeed, it seems like only yesterday.

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