By Tony Tassell, the FT’s financial news editor

It seems the Obama charisma is waning with even his most ardent supporters. One of the more unlikely chapters of the presidential campaign was the rise of the Obama girl.

Amid the wave of hype and hope that drove the Illinois senator to the White House, a risqué video appeared on YouTube fearing a shapely but previously obscure model called Amber Lee Ettinger lip-synching a song called “I’ve got a crush on Obama”, declaring her love for watching the man on C-Span.

James Mackintosh

Barack Obama has decided to side with a state solution, if not yet a well-thought-out one, to preventing bank failures bringing down the world economy. But there is a market alternative: fix the banks so the bondholders keep bank risk-taking under control – and bear the costs if they fail in that task.

This important debate is not being framed as a state vs market discussion, but it should be. Remember state control has a dismal record in general, and in the finance sector in particular. Regulators entirely missed the bubble, missed the banks’ reliance on short-term financing and missed the fact that so much regulatory arbitrage was going on. Don’t expect things to be much different in 20 years if a state solution is accepted.

The problem is the banks (and potentially non-banks) being too big to fail, creating perverse incentives to take risks and leaving the taxpayer paying for mistakes. The state solution accepts banks are too big, but tries to control that through regulations, restrictions on what they can do (no prop trading or hedge funds), and potentially a cap on size.

A working market solution would obviously be better, as it would be pretty much immune to the high likelihood of regulatory capture – but can a market solution be made to work? I think so.

James Mackintosh

Republican Scott Brown’s stunning victory in Massachusetts (I had a hunch it would happen after Martha Coakley’s stupid comments about Curt Schilling, the Red Sox pitcher supporting Brown, being a Yankees fan, not to mention spelling Massachusetts wrong in a campaign ad) has left most commentators taking the obvious line: healthcare reform is dead.

But the liberals have not given up. Ezra Klein at The Washington Post and Paul Waldman in American Prospect separately argue that the Democrats still have two ways to pass healthcare reform using quirks in the system (arch-liberal Paul Krugman supports the idea).

The first path would be for the House - where they have this strange tradition in which the majority rules - to simply pass, as is, the bill that already passed the Senate. Obama would sign it, and the infrastructure of reform would be in place. Then they could attempt to correct some of the Senate bill’s weaknesses in the reconciliation process, which only requires 51 votes (though it does limit which parts of the bill can be addressed).

The other path - and the preferable one, from a policy perspective - would be to get the bill done before Brown is sworn in.

Jim Webb, Democratic senator for Virginia, has already moved to spike this second route, saying last night that it would be fair to suspend healthcare reform until Brown takes his seat – in other words, forget trying anything funny. Without Webb, of course, the Dems still don’t have the 60 votes to override the Republican filibuster to get it done in the next two weeks or so before Brown moves to Capitol Hill.

The first “nuclear” option has already been floated by Senate majority whip Dick Durbin, the Illinois Dem, on the same principle as Waldman: once people wake up to the benefits of the healthcare reforms, they’ll like them, even if they were passed in an underhand unusual way. Nancy Pelosi, in the House, says there will be a healthcare bill – although she has not yet spelled out the tactics.

The idea, though, is dismissed by Daniel Indiviglio in the Atlantic as bad politics:

…is this wise? As mentioned, the most recent Rasmussen poll indicates that support for Congress’ healthcare bill is at its lowest level yet. Do Democrats really want to alienate 56 per cent of Americans and please just 38 per cent? The poll further finds that 44 per cent are strongly opposed to health care reform, while only 18 per cent strongly favor it. Even Ross Perot got more strong support than that - 19 per cent of the popular vote - in the 1992 presidential election.

Meanwhile, the debate over how Obama can save the mid-term elections in November is already under way. Ross Douthat in The New York Times concludes that Americans liked liberalism “more in theory than in practice” – bad news for Obama’s agenda, in spite of the resounding dismissal of the argument from the left (no surprise there). In the FT, meanwhile, Simon Schama calls on Obama to get down and dirty with the Republicans and start the fightback. In The Wall Street Journal, Iain Martin takes exactly the opposite line: Obama needs to be less divisive. Clive Crook shares Martin’s view: Obama is just not cut out for Chavez-style populism, and should respond to the anger of independent voters by stopping the partisan politics and fixing Washington – like he promised.

What will happen now? Given that exactly a year ago, when he took office, Obama’s agenda seemed pre-destined to make it into law, who can tell? But it is worth noting that the Republican party, in spite of Brown’s victory, remains pretty much leaderless, with a message made up purely of a return to Reaganite tax cuts and opposition to Obama. This is not much of a basis for popular support, especially with the tea party and wacky birther movement undermining their credibility with independents. Although perhaps, by offering to marry off his daughters, Brown is trying to widen his appeal to young unmarried men, at least.

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Christopher Cook is an FT editorial writer. Before joining the FT in 2008 as a Peter Martin Fellow, he worked for three years for the Conservative party.

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