As we anticipate another primetime Obama press conference tonight, we are also approaching a defining moment in his presidency but also in our recovery as a country.  What Obama chooses to do on healthcare, and perhaps even more importantly, how and when he charges forward will make a huge impact on our politics and psyche.

On the economic front, the news is relatively good.  Although unemployment continues to rise and is expected to continue to do so for the next few quarters, the second quarter results for many companies have surprised on the upside and the stock market is enjoying a nice summer rally.  The recovery is clearly in process and the unprecedented moves to stabilize our financial system are clearly working.  While the stimulus plan and its impact are in question, the verdict on the massive government spending will likely be positive as a meaningful economic recovery will be shown to have been more difficult without the stimulus.  Take one look at how the stimulus in China has worked and it is clear the same argument will be made for how it made sense here in the US.

But these positive trends do not mean that these future outcomes are guaranteed.  We've got a long way to go and the steps taken now by Obama and our government on healthcare could dampen or slow the recovery, or possibly accelerate it.  While Obama is clearly passionate about the need to offer a government healthcare option and to cover the uninsured, he also seems compelled to use every ounce of political capital to make it happen quickly and early in his first year as President.  This "damn the torpedoes" approach belies the judgement and temperment that he has displayed in the election as well as his first six months, and if he recalls this was part of the problem with Bush. 

Tonight we will see what is likely to come.  Obama will either highlight that Congress is the problem and the American people elected him to move quickly and aggressively on healthcare, or he will display the shrewdness of a President and a leader who has the potential to be great.  If he takes the argumentative fast track, the downside is great with limited upside to be seen and felt during his time as President.  If, however, he displays the judgement to slow down to avoid slowing the recovery and throwing more fuel on the partisan political fire, he may just live for another day.

The American people know that getting healthcare reform right is much more important that getting it done fast.  This is a defining moment for Obama and my bet is that he's smart enough to put the blame on Congress for moving too slow and take credit for being the wise leader who is committed to getting it done right.  If he takes this tack, the markets will love it and this summer rally may just have some legs.

What do you think?  Does Obama only have one speed, "spend it fast and do it now"?    

As we all know, the debate rages on as free market advocates wrestle with the almost unprecedented government intervention led by the Obama administration.  While The New Deal legislation in response to the Great Depression is the historical comparison, we've entered a new era and looking to the past gives us perspective, not a roadmap.  This week, General Motors declared bankruptcy in what most expected would come, but the reaction to the government's activism raises questions again from the free marketers.

During the last several months, I've had this conversation with many of the brightest minds in business.  From CEOs and CFOs of large corporations to senior partners in some of the world's most successful private equity firms, the conversation is very similar.  Experienced business leaders are uncomfortable with the government's role in TARP, the "stimulus" plan, AIG and GM, and the prospect of a big government spending plan and intervention in healthcare raises further anxiety.  The argument is simple - government's share of GDP is becoming unsustainable and will squeeze out the more efficient and productive influences of free markets.  With very few exceptions, business leaders do not like big government.

In spite of such a consistent chorus of doubters in today's business circles, Obama's popularity remains high as the general public continues to look to Washington to cure our economic woes and the stock market rebounds while most believe the financial system crisis is almost certainly in the past for good.  What hasn't been factored in however is the rising cost of doing business, and what is sure to come from massive government spending - higher taxes, higher interest rates, higher rates of inflation and lower standards of living.  Today, few feel these effects as the Fed fights to maintain low interest rates to support housing and the consumer, and the contraction of our economy has dampened the inflationary pressures that will come. 

While most leaders in business today oppose the massive government spending on the horizon, few have confidence in the Republican Party leadership and most blame Congress and not Obama for the inefficiency of government.  What surprises me is that the Republican Party hasn't figured this out - the party doesn't need to radically change or even take on Obama directly.  All they really have to do is lead with great ideas based on strenghtening our economy and foreign policy.  After quieting Cheney, leaders in the party should join Obama on foreign policy and demonstrate the patriotism Americans expect.  On the economy, they should simply promote efficiency of government and restraining it's share of GDP rather than use the "tax and spend liberal" argument - a subtle difference but an important one.

By avoiding the traps set by the talking heads from the right wing of the party, the Republicans could harness the strength of business leaders and provide some useful balance to the big government advocates.  Bigger government is certainly not the answer over the long term, but in a vacuum there is no other attractive choice.  Where is the Republican Party and why haven't the reasoned voices of today's business leaders made an impact in Washington?

Let me know your thoughts.

We're all angry about the bonuses at AIG and on Wall Street but I say, "Enough about the bonuses!"  Going back to the day several weeks ago when Wall Street announced $18B in bonuses, we've been listening to the outrage and feeling more and more angry.  Remember when Obama called those bonuses "irresponsible" just a couple of weeks into his presidency?  Well, AIG then announces bonuses of $165M this past week and we've reached the tipping point.

Well I say, enough already.  This debate is topical and we all can relate to it, but that's exactly why it's been blown out of proportion.  In the grand scheme of things, these bonuses are small rounding errors in the whole mess, but it really puts things in perspective.  When the news is dominated by multi-billion dollar bailout packages nearly every week for one thing or another, the money starts to lose it's meaning.  How many zeros are in a trillion?  So when we think about some executive at AIG or some Wall Street firm bringing home a $5M or $10M bonus, we get angry.  Why should they get paid when their companies got us into this mess?

What we should really be angry about is that Congress has been acting just as irresponsibly, and in the name of fixing things!  How can Congress honestly get on their high horse and grandstand when they didn't even take the time to read the bill that gave AIG the discretion to determine the amount of these bonuses?  You can't have it both ways.  Regardless of your political leanings, Congress is being exposed for how irresponsibly they spend our money.  It's really that simple.

The bottomline from my perspective is that we need continued action by Treasury and the Fed to fix the financial system.  Let's keep Congress out of the spending business and allow our companies to make their own decisions on how to allocate capital.  Executives in financial services make a lot of money.  Unless the government plans to nationalize the banks (and they don't), we're just going to have to let great CEOs like John Mack and Jamie Dimon make those decisions.  Quite frankly, I'd rather have those two guys making more decisions, and I hope this uproar over bonuses doesn't empower Congress to really screw things up.

What do you think?  Do you think that capping bonuses or having AIG executives pay them back will make any positive difference?  Could it actually have huge negative consequences?