Amid all of the television news specials, turgid essays and grim pictorials we have seen on the tenth anniversary of the September 11 attacks – there have been a few encouraging glimpses of sanity. Several commentators have pointed out that Osama Bin Laden got exactly what he wanted when America reacted to that tragedy by spending trillions on military assaults, which ended up killing unknown thousands of innocent Muslims – also known as “collateral damage”.
How many otherwise peace-loving Muslims will be attracted to Islamist extremism because of outrage over a “war on terror” they perceive as a “war on Islam”? How badly has our economy been damaged because a military invasion of Iraq was sold as an effective way to prevent another 9/11?
Another tragic change Bin Laden brought to America was the inflammation of a pre-existing National Security Gestapo, which had always been hell-bent on having its way – individual freedom and privacy be damned! We have witnessed how Barack Obama has been more than happy to accommodate those forces – many of which are private contractors – deliberately placed out of the reach of that pesky Freedom of Information Act.
How did we get to this deteriorated situation? The mass media bear a large share of the responsibility. Their need to out-sensationalize the competition helped fuel a consensual mindset, ginned-up with rage and ready to support whatever junta could strike back at our enemy with unrestrained force. We were told that this enemy was terrorism itself – a tactic. Our government had declared war against a tactic. Anyone who questioned that battle was characterized as weak or unpatriotic.
It is only now – ten years after the tragedy – when people are willing to take a rational look at how our political leaders and our media establishment reacted to (or took advantage of) these events.
Spencer Ackerman wrote an article for Wired with the title, “How to Defeat Terrorism: Refuse to Be Terrorized”. In the political world, the refusal to be terrorized requires the courage to stand up to intimidation and accusations of being “weak on terror”. In fact, our political leaders have been rendered weak from terror. That weakness has resulted in significant deterioration of our personal liberties as well as capitulation to those lobbyists and pressure groups demanding unlimited expenditures in the name of “homeland security”. Spencer Ackerman provided this explanation:
Look at the charts that Danger Room’s Lena Groeger compiled. She tallies $6.6 trillion in defense spending after 9/11. There is nothing that al-Qaida could possibly do to justify even a slice of such a monster expenditure. Why did it happen?
Former White House counterterrorism chief Richard Clarke has an answer. “There’s going to be a terrorist strike some day,” Clarke told Frontline for its “Top Secret America” documentary this week. “And when there is, if you’ve reduced the terrorism budget, the other party, whoever the other party is at the time, is going to say that you were responsible for the terrorist strike because you cut back the budget. And so it’s a very, very risky thing to do.”
* * *
It’s much harder to be the one to stand up and say the threat of terrorism is too minor for such expanded surveillance, and the government needs to stop. When libertarian Sen. Rand Paul (R-Kentucky) made precisely that case, Democratic Senate leader Harry Reid (D-Nevada) subjected him to cheap, hypocritical demagoguery.
The only way this changes is if citizens change the political incentives for politicians. Two-bit terrorists will always be around, sadly. But when the Harry Reids get major political blow-back for attacking the Rand Pauls, then – and only then – will the 9/11 Era be truly over.
Another important theme of Ackerman’s essay is the absence of an “end game” for this war on terror. After conceding that Defense Secretary Leon Panetta may be entirely justified in claiming that al-Qaida is on the verge of strategic collapse, Ackerman emphasizes that “it would be foolish” to relent at this point:
When Barack Obama ran for president, his national security team told me, in an extensive series of interviews, that a major focus of his presidency would be to confront what they called the “politics of fear” – the national-security freakout that led to counterproductive post-9/11 moves like invading Iraq. But since coming to power, Obama has accommodated himself to the politics of fear far more than he’s confronted it.
* * *
Only when citizens make it acceptable for politicians to recognize that the threat of terrorism isn’t so significant can the country finally get what it really needs, 10 years later: closure.
President Obama created a new challenge for himself: By killing off Bogeyman Bin Laden and with the imminent destruction of the world’s largest terrorist organization, he is now faced with the duty to lead America out of this dark age of terrorphobia.
It was during Barack Obama’s third month in the White House, when I realized he had become the “Disappointer-In-Chief”. Since that time, the disappointment felt by many of us has progressed into a bad case of the creeps.
Gretchen Morgenson of The New York Times has been widely praised for her recent report, exposing the Obama administration’s vilification of New York State Attorney General Eric Schneiderman for his refusal to play along with Team Obama’s efforts to insulate the fraud-closure banks from the criminal prosecution they deserve. The administration is attempting to pressure each Attorney General from every state to consent to a settlement of any and all claims against the banksters arising from their fraudulent foreclosure practices. Each state is being asked to release the banks from criminal and civil liability in return for a share of the $20 billion settlement package. The $20 billion is to be used for loan modifications. Leading the charge on behalf of the administration are Shaun Donovan, the Secretary of Housing and Urban Development, as well as a number of high-ranking officials from the Justice Department, led by Attorney General Eric Hold-harmless. Here are some highlights from Ms. Morgenson’s article:
Mr. Schneiderman and top prosecutors in some other states have objected to the proposed settlement with major banks, saying it would restrict their ability to investigate and prosecute wrongdoing in a variety of areas, including the bundling of loans in mortgage securities.
* * *
Mr. Schneiderman has also come under criticism for objecting to a settlement proposed by Bank of New York Mellon and Bank of America that would cover 530 mortgage-backed securities containing Countrywide Financial loans that investors say were mischaracterized when they were sold.
The deal would require Bank of America to pay $8.5 billion to investors holding the securities; the unpaid principal amount of the mortgages remaining in the pools totals $174 billion.
* * *
This month, Mr. Schneiderman sued to block that deal, which had been negotiated by Bank of New York Mellon as trustee for the holders of the securities.
The passage from Gretchen Morgenson’s report which drew the most attention concerned a statement made to Schneiderman by Kathryn Wylde. Ms. Wylde is a “Class C” Director of the Federal Reserve Bank of New York. The role of a Class C Director is to represent the interests of the public on the New York Fed board. Barry Ritholtz provided this reaction to Ms. Wylde’s encounter with Mr. Schneiderman:
If the Times report is accurate, and the quote below represents Ms. Wylde’s comments, than that position is a laughable mockery, and Ms. Wylde should resign effective immediately.
The quote in question, which was reported to have occurred at Governor Hugh Carey’s funeral (!?!) was as follows:
“It is of concern to the industry that instead of trying to facilitate resolving these issues, you seem to be throwing a wrench into it. Wall Street is our Main Street — love ’em or hate ’em. They are important and we have to make sure we are doing everything we can to support them unless they are doing something indefensible.”
I do not know if Ms. Wylde understands what her proper role should be, but clearly she is somewhat confused. She appears to be far more interested in representing the banks than the public.
Robert Scheer of Truthdig provided us with some background on Obama’s HUD Secretary, Shaun Donovan, one of the administration’s arm-twisters in the settlement effort :
Donovan has good reason not to want an exploration of the origins of the housing meltdown: He has been a big-time player in the housing racket for decades. Back in the Clinton administration, when government-supported housing became a fig leaf for bundling suspect mortgages into what turned out to be toxic securities, Donovan was a deputy assistant secretary at HUD and acting Federal Housing Administration commissioner. He was up to his eyeballs in this business when the Clinton administration pushed through legislation banning any regulation of the market in derivatives based on home mortgages.
Armed with his insider connections, Donovan then went to work for the Prudential conglomerate (no surprise there), working deals with the same government housing agencies that he had helped run. As The New York Times reported in 2008 after President Barack Obama picked him to be secretary of HUD, “Mr. Donovan was a managing director at Prudential Mortgage Capital Co., in charge of its portfolio of investments in affordable housing loans, including Fannie Mae and the Federal Housing Administration debt.”
Obama has been frequently criticized for stacking his administration with people who regularly shuttle between corporations and the captured agencies responsible for regulating those same businesses. Risk management guru, Christopher Whalen lamented the consequences of Obama’s cozy relationship with the Wall Street banks – most tragically, those resulting from Obama’s unwillingness to adopt the “Swedish solution” of putting the insolvent zombie banks through temporary receivership:
The path of least resistance politically has been to temporize and talk. But by following the advice of Rubin and Summers, and avoiding tough decisions about banks and solvency, President Obama has only made the crisis more serious and steadily eroded public confidence. In political terms, Obama is morphing into Herbert Hoover, as I wrote in one of my first posts for Reuters.com, “In a new period of instability, Obama becomes Hoover.”
Whereas two or three years ago, a public-private approach to restructuring insolvent banks could have turned around the economic picture in relatively short order, today the cost to clean up the mess facing Merkel, Obama and other leaders of western European nations is far higher and the degree of unease among the public is growing. You may thank Larry Summers, Robert Rubin and the other members of the “do nothing” chorus around President Obama for this unfortunate outcome.
We are now past the point of blaming Obama’s advisors for the President’s recurrent betrayal of the public interest while advancing the goals of his corporate financiers. Yves Smith of Naked Capitalism has voiced increasingly harsh appraisals of Obama’s performance. By August 22, it became clear to Ms. Smith that the administration’s efforts to shield the fraud-closure banks from liability exposed a scandalous degree of venality:
It is high time to describe the Obama Administration by its proper name: corrupt.
Admittedly, corruption among our elites generally and in Washington in particular has become so widespread and blatant as to fall into the “dog bites man” category. But the nauseating gap between the Administration’s propaganda and the many and varied ways it sells out average Americans on behalf of its favored backers, in this case the too big to fail banks, has become so noisome that it has become impossible to ignore the fetid smell.
* * *
Team Obama bears all the hallmarks of being so close to banks and big corporations that it has lost all contact with and understanding of mainstream America.
The latest example is its heavy-handed campaign to convert New York state attorney general Eric Schneiderman to a card carrying member of the “be nice to our lords and masters the banksters” club. Schneiderman was the first to take issue with the sham of the so-called 50 state attorney general mortgage settlement. As far as the Administration is concerned, its goal is to give banks a talking point and prove to them that Team Obama is protecting their backs in a way that the chump public hopefully won’t notice.
* * *
Yet rather than address real, serious problems, senior administration officials are instead devoting time and effort to orchestrating a faux grass roots campaign to con a state AG into thinking his supporters are deserting him because he has dared challenge the supremacy of the banks.
I would include Eric Schneiderman in a group with Elizabeth Warren and Maria Cantwell as worthy challengers to Barack Obama in the 2012 Presidential Election. I wish one of them would step forward.
Comments Off on Obama Presidency Continues To Self-Destruct
It’s been almost a year since the “Velma Moment”. On September 20, 2010, President Obama appeared at a CNBC town hall meeting in Washington. One of the audience members, Velma Hart, posed a question to the President, which was emblematic of the plight experienced by many 2008 Obama supporters. Peggy Noonan had some fun with the event in her article, “The Enraged vs. The Exhausted” which characterized the 2010 elections as a battle between those two emotional factions. The “Velma Moment” exposed Obama’s political vulnerability as an aloof leader, lacking the ability to emotionally connect with his supporters:
The president looked relieved when she stood. Perhaps he thought she might lob a sympathetic question that would allow him to hit a reply out of the park. Instead, and in the nicest possible way, Velma Hart lobbed a hand grenade.
“I’m a mother. I’m a wife. I’m an American veteran, and I’m one of your middle-class Americans. And quite frankly I’m exhausted. I’m exhausted of defending you, defending your administration, defending the mantle of change that I voted for, and deeply disappointed with where we are.” She said, “The financial recession has taken an enormous toll on my family.” She said, “My husband and I have joked for years that we thought we were well beyond the hot-dogs-and-beans era of our lives. But, quite frankly, it is starting to knock on our door and ring true that that might be where we are headed.”
The President experienced another “Velma Moment” on Monday. This time, it was Maureen Dowd who had some fun describing the confrontation:
After assuring Obama that she was a supporter, an Iowa mother named Emily asked the president at a town hall at the Seed Savers Exchange in Decorah what had gone wrong.
* * *
“So when you ran for office you built a tremendous amount of trust with the American people, that you seemed like someone who wouldn’t move the bar on us,” she said. “And it seems, especially in the last year, as if your negotiating tactics have sort of cut away at that trust by compromising some key principles that we believed in, like repealing the tax cut, not fighting harder for single-payer. Even Social Security and Medicare seemed on the line when we were dealing with the debt ceiling. So I’m just curious, moving forward, what prevents you from taking a harder negotiating stance, being that it seems that the Republicans are taking a really hard stance?”
President Obama can no longer blame the Republicans and Fox News for his poor approval ratings. He has become his own worst enemy. As for what Obama has been doing wrong – the title of Andrew Malcolm’s recent piece for the Los Angeles Times summed it up quite well: “On Day 938 of his presidency, Obama says he’ll have a jobs plan in a month or so”.
Lydia Saad of the Gallup Organization provided this report on the President’s most recent approval ratings:
A new low of 26% of Americans approve of President Barack Obama’s handling of the economy, down 11 percentage points since Gallup last measured it in mid-May and well below his previous low of 35% in November 2010.
Obama earns similarly low approval for his handling of the federal budget deficit (24%) and creating jobs (29%).
* * *
President Obama’s approval rating has dwindled in recent weeks to the point that it is barely hugging the 40% line. Three months earlier, it approached or exceeded 50%.
The voters have finally caught on to the fact that Barack Obama’s foremost mission is to serve as a tool for Wall Street. In Monday’s edition of The Washington Post, Zachary Goldfarb gave us a peek at Obama’s latest gift to the banksters: a plan to provide a government guarantee of mortgage backed securities:
President Obama has directed a small team of advisers to develop a proposal that would keep the government playing a major role in the nation’s mortgage market, extending a federal loan subsidy for most home buyers, according to people familiar with the matter.
The administration’s reaction to curiosity about the plan was a tip-off that the whole thing stinks. Mr. Goldfarb’s article included the official White House retort, which was based on the contention that the controversial proposal is just one of three options outlined earlier this year in an administration white paper concerning reform of the housing finance system:
“It is simply false that there has been a decision to move forward with any particular option,” said Matt Vogel, a White House spokesman. “All three options remain under active consideration and we are deepening our analysis around how each would potentially be implemented. No recommendation has been made to the president by his economic advisers.”
And if you believe that, you might be interested in buying some real estate located in . . .
Zachary Goldfarb explained the plan:
Fannie, Freddie or other successor firms would charge a fee to mortgage lenders and banks and use the money to create an insurance pool to cover losses on mortgage securities caused by defaults on the underlying loans. The government would be the last line of defense in case of another housing market meltdown, using taxpayer money to cover losses only if the insurance pool ran dry.
It would be difficult to find an economic rationale for this policy other than subsidizing the financial industry. The government can and does directly subsidize the purchase of homes through the mortgage interest deduction. This can be made more generous and better targeted toward low and moderate income families by capping it and converting it into a tax credit (e.g. all homeowners can deduct 15 percent of the interest paid on mortgages of $300,000 or less from their taxes).
There is no obvious reason to have an additional subsidy through the system of mortgage finance. Analysis by Mark Zandi showed that the subsidy provided by a government guarantee would largely translate into higher home prices. This would leave monthly mortgage payments virtually unaffected. The diversion of capital from elsewhere in the economy would mean slower economic growth and would kill jobs for auto workers, steel workers and other workers in the manufacturing sector.
For these reasons, if President Obama was really against big government and job killing measures, he would oppose this new scheme to subsidize mortgage securitization. On the other hand, if the goal is to ensure high profits and big salaries for top executives in the financial sector, then a government subsidy for mortgage securitization is good policy.
Frustration with the inevitability that the 2012 Presidential Election will ultimately become a choice between two corporatists has inspired a movement to encourage a Democratic Primary challenge to Obama. The organization – StopHoping.org – is based on this simple objective:
The majority of U.S. citizens favor protecting Social Security, Medicare, and Medicaid; taxing the rich; cutting military spending; and protecting the environment. We don’t have a candidate . . . yet. Potential candidates supported on this site will be notified and encouraged to run.
I’ve been reading a great number of articles by commentators who have expressed outrage concerning President Obama’s shocking capitulation in the negotiations involving the debt ceiling bill. Despite the Democratic Party’s tactic of blaming the “Tea Party terrorists” for the all cuts – no revenue, pro-billionaire legislation, a few pundits have seen through this fog to point out that Obama actually got the bill he secretly wanted all along. Glenn Greenwald presented a solid case for this theory at Salon.
Polling guru Nate Silver wrote two items on August 1, in which he analyzed the Congressional voting and demonstrated that President Obama – despite having been afforded the opportunity to include provisions in the bill to make it more economically stimulative and less onerous for those experiencing the greatest hardship from the economic crisis – decided to leave some available provisions “on the table”.
Fiscal austerity at a time of economic distress, and on largely Republican terms, is not what Democrats thought they were getting when they elected Mr. Obama in 2008. Mr. Obama might have done more to make short-term stimulus – like further reductions to the payroll tax, which would not have violated the Republicans’ ostensible goals – the price for long-term austerity.
Although it is impossible to prove one way or the other, I am not persuaded by the notion that Mr. Obama could not have delivered a better result to Democrats had he done more to stand his ground. Despite the dissent in the Republican caucus, which had originally seemed like a tactical victory for Democrats, the compromise wound up looking more like Mr. Boehner’s original bill than Mr. Reid’s.
Later that evening, Mr. Silver provided an analysis, which exposed Obama’s abandonment of the objectives he was elected to promote:
These results seem to suggest that Mr. Obama left something on the table. That is, Mr. Obama could have shifted the deal tangibly toward the left and still gotten a bill through without too much of a problem. For instance, even if all members of the Tea Party Caucus had voted against the bill, it would still have passed 237-to-193, and that’s with 95 Democrats voting against it.
Specifically, it seems likely that Mr. Obama could have gotten an extension of the payroll tax cut included in the bill, or unemployment benefits, either of which would have had a stimulative effect.
* * *
With that payroll tax cut, the deal becomes a much easier sell to Democrats – and perhaps also to swing voters, particularly given that nobody spent much time during this debate talking about jobs. Plus, it would have improved growth in 2012 and, depending on how literally you take the economic models, improved Mr. Obama’s re-election chances.
As many observers have noted, the plutocracy has been able to accomplish much more with Obama in the White House, than what would have been achievable with a Republican President. This latest example of a bipartisan effort to trample “the little people” has reinforced my belief that the fake “two-party system” is a sideshow – designed to obfuscate the insidious activities of the Republi-Cratic Corporatist Party.
What follows is the transcript of an imaginary telephone conversation between President Obama and Roger Ailes of Fox News:
Obama: Hi Rodge!
Ailes: Hi Barry! Congratulations on the debt ceiling bill! Great work!
Obama: Thanks. I won’t have to renew the Bush tax cuts again until after the election. That’s a relief! Unfortunately, we’re getting some bad polling numbers now. Problems with the base. I need you guys to lean on the “liberal” stuff a little harder. Both O’Reilly and Hannity have been doing OK on it – but I just wish they would get back to some more of the “socialist” accusations. That would really help rehabilitate my cred with my estranged base.
Ailes: The “socialist” shtick was more Beck’s routine – but I’ll get them on it.
Obama: I found some old pictures of myself with Bill Ayers that you guys might want to use . . .
Ailes: Ayers is sooooo 2008! We need something new. We need to get you to Syria for a meeting with Bashar al-Assad. When you shake hands with him – make sure you bow! We can get a lot of mileage here from that!
Obama: No! That will piss off too many liberals – especially the Jews. I’m trying to keep the smart people in my corner!
Ailes: OK. OK. We just really need to get you on some sort of apology tour or something. You could start traveling around to abortion clinics and promising them some federal aid . . .
Obama: Great one, Rodge! I love that!
Ailes: I’ll plant some of our protesters along the way – the ones who’ve already been cleared by the Secret Service.
Obama: Yeah! Bring back that guy with the fake assault rifle! He was a trip!
Ailes: I have someone better. This guy has been posing as a “Tea Party activist” at “town meetings”. He’s a great new talent!
Obama: We could set up another “Joe the Plumber”-type of confrontation with that guy!
Ailes: Definately! I’ll have my people put a script together. That story will have some legs that will carry us all the way to the election! . . . Speaking of legs – I’m getting some good numbers in on Bachmann!
Obama: How’s our girl doing?
Ailes: Great! She’s really gonna’ kick some ass in Iowa!
Obama: I saw her on with Sean the other day. She’s doing a great job! Are you guys going to start a scandal involving Mitt?
Ailes: I need to maintain plausible deniability about what Rupert’s operatives are up to. You know . . .
Obama: Gotcha! ‘Nuff said!
Ailes: Well, I’ll let you get back to work. You must have loads of angry campaign donors trying to bend your ear right about now . . .
Obama: Yeah . . . But that’s not where the real money is.
Comments Off on Disappointing Diatribe From A Disillusioned Dionne
Poor E.J. Dionne! He is suffering through the same transition process experienced by many Obama supporters who have been confronted with the demise of the President’s phony “populist” image. The stages one passes through when coping with such an “image death” are identical to those described in the Model of Coping with Dying, created in 1969 by Psychiatrist, Dr. Elisabeth Kübler-Ross. For example, a few weeks ago, Bill Maher was passing through the “Bargaining” stage – at which point he suggested that if we elect Obama to a second term in the White House, the President will finally stand up for all of those abandoned principles which candidate Obama advocated during the 2008 campaign. As we saw during Friday’s episode of Maher’s Real Time program on HBO, the comedian has now progressed to the “Acceptance” stage, as demonstrated by his abandonment of any “hope” that Obama’s pseudo-populist image might still be viable.
Meanwhile E.J. Dionne appears to be transitioning from the “Denial” stage to the “Anger” stage – as exemplified by his dwelling on the issue of who is to blame for this image death. Dionne’s conclusion is that “Centrists” are to blame. Dionne’s recent Washington Post column began with the premise that “centrism has become the enemy of moderation”. While attempting to process his anger, Dionne has expounded some tortured logic, rambling through an elaborate “distinction without a difference” comparison of “Centrists” with “Moderates”, based on the notion that Moderates are good and Centrists are bad. Dionne’s article was cross-posted at the Truthdig blog, where many commentors criticized his argument. One reason why so many Truthdig readers had less trouble accepting the demise of Obama’s false “populist” image, could have been their exposure to the frequent criticism of Obama appearing at that website – as exemplified by this cartoon by Mr. Fish, which appeared immediately to the left of Dionne’s article on Saturday.
An easy way to make sense of Dionne’s thought process at this “Anger” stage is to replace any references to “centrists” or “centrism” by inserting Obama’s name at those points. For example:
Because centrism Obama is reactive, you never really know what a centrist Obama believes. Centrists are Obama is constantly packing their his bags and chasing off to find a new location as the political conversation veers one way or another.
* * *
Yet the center’s devotees, in politics and in the media, Obama fear(s) saying outright that by any past standards—or by the standards of any other democracy—the views of this new right wing are very, very extreme and entirely impractical. Centrists Obama worr(ies) that saying this might make them him look “leftist” or “partisan.”
Instead, the center Obama bends. It He concocts deficit plans that include too little new tax revenue. It He accepts cuts in programs that would have seemed radical and draconian even a couple of years ago. It He pretends this crisis is caused equally by conservatives and liberals when it is perfectly clear that there would be no crisis at all if the right hadn’t glommed onto the debt ceiling as the (totally inappropriate) vehicle for its anti-government dreams.
It’s time for moderates to abandon centrism Obama and stop shifting with the prevailing winds. They need to state plainly what they’re for, stand their ground, and pull the argument their way. Yes, they would risk looking to “the left” of where the center Obama is now – but only because conservatives have pulled it him so far their way.
Toward the end of the piece we see how Dionne is getting some glimpses of the fact that Obama is the problem:
But when this ends, it’s Obama who’ll need a reset. At heart, he’s a moderate who likes balance. Yet Americans have lost track of what he’s really for. Occasionally you wonder if he’s lost track himself. He needs to remind us, and perhaps himself, why he wants to be our president.
In reality, Barack Obama was able to deceive Americans by convincing them that he was for populist causes rather than corporatist goals. The President never “lost track of what he’s really for”. He has always been Barry O. Tool – a corporatist.
At the conclusion of Dionne’s essay we learn that – contrary to what we were told by Harry Truman – “the buck” stops at the desks of Obama’s “centrist advisers”:
His advisers are said to be obsessed with the political center, but this leads to a reactive politics that won’t motivate the hope crowd that elected Obama in the first place. Neither will it alter a discourse whose terms were set during most of this debt fight by the right.
We’ve heard the “blame the advisers” rationale from others who passed through the Kübler-Ross phases at earlier points during the Obama Presidency: There were those who sought to blame Rahm Emanuel when the “public option” was jettisoned from Obama’s healthcare bill. We then heard from the “Hope fiends” who blamed Larry Summers, Tim Geithner and Peter Orszag for Obama’s refusal to seriously consider the “Swedish solution” of putting the zombie megabanks through temporary receivership. In fact, it was Obama making those decisions all along.
I’m confident that once E.J. Dionne reaches the “Acceptance” stage, we will hear some refreshing, centered criticism of President Obama.
It seems as though every time some venal politician breaches a campaign promise while attempting to grab a payoff from a lobbyist, the excuse is always the same: “I’ve decided to tack toward the center on this issue.” “The Center” has become stigmatized as the dwelling place of those politicians who lack a moral compass.
I get particularly annoyed by those who persist in characterizing Barack Obama as a “centrist”, who is mimicking Bill Clinton’s “triangulation” strategy. During his campaign and throughout the early days of his Presidency, Obama successfully posed as a centrist. Nevertheless, his track record now demonstrates a policy of what Marshall Auerback described as “gutting the Democratic Party of its core social legacy.” I particularly enjoyed reading the comments to Auerback’s above-quoted piece about Obama entitled, “Worse Than Hoover”. Most of the commentators expressed the opinion that Auerback went way too easy on Obama. Here are some examples:
Sandra:
We have to stop comparing Obama to these iconic American figures. Obama is an opportunistic corporatist. There is no there there.
Rex:
I’m beginning to wonder if we are still giving Obummer too much credit. Common view seems to be trending toward he’s a manipulative scumbag.
Wasabi:
He’s very useful to the plutocracy. A Repub president could never persuade Dems to cut SS, Medicare, and Medicaid and all sorts of other essential programs.
Z:
He got the glory and the thrill of winning the election to become the 1st black president and I suspect that’s all the narcissio-path ever really wanted as far as the presidency is concerned. He certainly doesn’t look like he’s enjoying himself right now. I think he’s ready to cash out and is trying to create a scenario where he becomes an untenable candidate. He also wants to maintain his celebrity appeal so he’s going to try to posture as the adult of adults that was just too good for dc …
Steelhead23:
From a more technocratic perspective, I tend to see Obama as a consummate politician – able to inspire – but sadly lacking in intellectual curiosity and overflowing with ego, thus unable to quench his ignorance. This leaves him extremely susceptible to “experts” whom he parrots with enthusiasm. It was experts who helped him pick his advisers and now his expert advisers are misleading him and making him complicit in this quest toward neo-feudalism.
Keep in mind that those comments were not posted at Fox News or some right-wing website. They were posted at Naked Capitalism, where the publisher – Yves Smith – offered a comment of her own in reaction to Marshall Auerback’s “Worse Than Hoover” posting.
Yves Smith:
Obama is an authoritarian narcissist, an ugly combination.
He also seems unaware of the limits of his knowledge. That can render many otherwise intelligent people stupid in their decisions and actions in their blind spots.
Obama’s foremost critic from the Left is Glenn Greenwald of Salon. Mr. Greenwald has frequently opined that “… Obama wants to be attacked by liberals because of the perception that it politically benefits him by making him look centrist, non-partisan and independent . . . It’s not merely that he lacks a fear of liberal dissatisfaction; it’s that he affirmatively craves it.” Greenwald emphasized the foolishness of following such a course:
But that’s a dangerous strategy. U.S. presidential elections are very closely decided affairs, and alienating the Left even to some degree can be lethal for a national Democratic campaign; shouldn’t the 2000 election, along with 2010, have cemented that lesson forever?
I doubt that Obama is attempting to follow anything similar to Bill Clinton’s “triangulation” strategy. If Obama had been attempting such a plan, it has already backfired to an embarrassing degree, causing irreparable damage to the incumbent’s reelection prospects. Barack Obama has lost his credibility – and in the eyes of the electorate, there is no greater failing.
To get an appreciation for how much damage Obama has caused to his own “brand”, consider this article written by Columbia University economist Jeffrey Sachs for the Huffington Post:
Thus, at every crucial opportunity, Obama has failed to stand up for the poor and middle class. He refused to tax the banks and hedge funds properly on their outlandish profits; he refused to limit in a serious way the bankers’ mega-bonuses even when the bonuses were financed by taxpayer bailouts; and he even refused to stand up against extending the Bush tax cuts for the rich last December, though 60 percent of the electorate repeatedly and consistently demanded that the Bush tax cuts at the top should be ended. It’s not hard to understand why. Obama and Democratic Party politicians rely on Wall Street and the super-rich for campaign contributions the same way that the Republicans rely on oil and coal. In America today, only the rich have political power.
* * *
America is more militarily engaged under Obama than even under Bush. Amazing but true.
* * *
The stimulus legislation, pushed by Obama at the start of his term on the basis of antiquated economic theories, wasted the public’s money and also did something much worse. It discredited the vital role of public spending in solving real and long-term problems. Rather than thinking ahead and planning for long-term solutions, he simply spent money on short-term schemes.
Obama’s embrace of “shovel-ready” infrastructure, for example, left America with an economy based on shovels while China’s long-term strategy has given that country an economy based on 21st-century Maglev trains. Now that the resort to mega-deficits has run its course, Obama is on the verge of abandoning the poor and middle class, by agreeing with the plutocrats in Congress to cut spending on Medicaid, Medicare, Social Security, and discretionary civilian spending, while protecting the military and the low tax rates on the rich (if not lowering those top tax rates further according to the secret machinations of the Gang of Six, now endorsed by the president!)
* * *
America needs a third-party movement to break the hammerlock of the financial elites. Until that happens, the political class and the media conglomerates will continue to spew lies, American militarism will continue to destabilize a growing swath of the world, and the country will continue its economic decline.
The urgent need for a third-party movement was also the subject of this recent piece at The Economic Populist:
If the country had a legitimate third party to vote for, the Democrats and Republicans would be in serious trouble. Of course, the political system is geared to prevent third parties from emerging, so the country flounders about, looking for leadership from pusillanimous Democrats or ideological Republicans who consider raising taxes a mortal sin. The voters are probably a few steps away from concluding what is meant to be hidden but by now should be obvious: American democracy doesn’t exist, and the political system in Washington is beyond repair. What is worse: there are people and organizations who like things just the way they are and will fight any attempts at reform.
* * *
None of this suggests that Barack Obama is even considering abandoning his servitude to corporate interests. He’s merrily going along from one fundraiser to the next, raising millions of dollars each week from hedge fund managers and corporate lobbyists, so that he can get reelected as a “centrist” and bipartisan deal maker. This is based on his reading of what The People want – an end to the divisiveness in Washington – but Obama is fundamentally misreading the problem in Washington. It isn’t the rancor, name-calling, and petulance that is constantly on display which worries the American people. It is the backroom deals, the hidden bailouts, the tax evasions, the deregulation initiatives, the lack of prosecution for criminal behavior, that is more than frustrating Americans, because the beneficiaries of all this are wealthy people and corporations who have shifted power and money to themselves. Voters want this system overthrown – even the Tea Party voters, who keep searching for Republicans who will finally say no to corporate money.
In the mean time, we are stuck witnessing America’s demise. If you think that Obama’s critics from the Left are the only people voicing a dispirited attitude about our country’s future, be sure to read this essay at Counterpunch, “An Economy Destroyed”, written by Paul Craig Roberts – Assistant Secretary of the Treasury during the Reagan Administration and the co-creator of Reaganomics:
Recently, the bond rating agencies that gave junk derivatives triple-A ratings threatened to downgrade US Treasury bonds if the White House and Congress did not reach a deficit reduction deal and debt ceiling increase. The downgrade threat is not credible, and neither is the default threat. Both are make-believe crises that are being hyped in order to force cutbacks in Medicare, Medicaid, and Social Security.
* * *
The US economy is driven by consumer demand, but with 22.3 per cent unemployment, stagnant and declining wages and salaries, and consumer debt burdens so high that consumers cannot borrow to spend, there is nothing to drive the economy.
Washington’s response to this dilemma is to increase the austerity! Cutting back Medicare, Medicaid, and Social Security, forcing down wages by destroying unions and offshoring jobs (which results in a labor surplus and lower wages), and driving up the prices of food and energy by depreciating the dollar further erodes consumer purchasing power. The Federal Reserve can print money to rescue the crooked financial institutions, but it cannot rescue the American consumer.
As a final point, confront the fact that you are even lied to about “deficit reduction.” Even if Obama gets his $4 trillion “deficit reduction” over the next decade, it does not mean that the current national debt will be $4 trillion less than it currently is. The “reduction” merely means that the growth in the national debt will be $4 trillion less than otherwise. Regardless of any “deficit reduction,” the national debt ten years from now will be much higher than it presently is.
The longer you think about it – the more obvious it becomes: We really need to sweep all of those bastards out of Washington as quickly as possible and replace them with intelligent, honest individuals who are willing to represent this country’s human inhabitants – rather than its corporations, lobbies and “special interests”.
Comments Off on Elizabeth Warren Should Run Against Obama
Now that President Obama has thrown Elizabeth Warren under the bus by nominating Richard Cordray to head the Consumer Financial Protection Bureau (CFPB), she is free to challenge Obama in the 2012 election. It’s not a very likely scenario, although it’s one I’d love to see: Warren as the populist, Independent candidate – challenging Obama, the Wall Street tool – who is already losing to a phantom, unspecified Republican.
A good number of people were disappointed when Obama failed to nominate Warren to chair the CFPB, which was her brainchild. It was bad enough that Treasury Secretary “Turbo” Tim Geithner didn’t like her – but once the President realized he was getting some serious pushback about Warren from Senate Republicans – that was all it took. Some Warren supporters have become enamored with the idea that she could challenge Scott Brown for his seat representing Massachusetts in the Senate. However, many astute commentators consider that as a really stupid idea. Here is the reaction from Yves Smith of Naked Capitalism:
We argued yesterday that the Senate was not a good vehicle for advancing Elizabeth Warren’s aims of helping middle class families, since she would have no more, and arguably less power than she has now, and would be expected to defend Democrat/Obama policies, many of which are affirmatively destructive to middle class interests (just less so than what the Republicans would put in place).
A poll conducted in late June by Scott Brown and the Republican National Committee raises an even more basic question: whether she even has a shot at winning.
* * *
The poll shows a 25 point gap, which is a massive hurdle, and also indicates that Brown is seen by many voters as not being a Republican stalwart (as in he is perceived to vote for the state’s, not the party’s, interest). A 25 point gap is a near insurmountable hurdle and shows that Warren’s reputation does not carry as far as the Democratic party hackocracy would like her fans to believe. But there’s no reason not to get this pesky woman to take up what is likely to be a poisoned chalice. If she wins, she’s unlikely to get on any important committees, given the Democratic party pay to play system, and will be boxed in by the practical requirements of having to make nice to the party and support Obama positions a meaningful portion of the time. And if she runs and loses, it would be taken as proof that her middle class agenda really doesn’t resonate with voters, which will give the corporocrats free rein (if you can’t sell a liberal agenda in a borderline Communist state like Massachusetts, it won’t play in Peoria either).
Obviously, a 2012 challenge to the Obama Presidency by Warren would be an uphill battle. Nevertheless, it’s turning out to be an uphill battle for the incumbent, as well. David Weidner of MarketWatch recently discussed how Obama’s failure to adequately address the economic crisis has placed the President under the same pressure faced by many Americans today:
He’s about to lose his job.
* * *
Blame as much of the problem on his predecessor as you like, the fact is Obama hasn’t come up with a solution. In fact, he’s made things worse by filling his top economic posts with banking-friendly interests, status-quo advisers and milquetoast regulators.
And if there’s one reason Obama loses in 2012, it’ll be because he failed to surround himself with people willing to take drastic action to get the economy moving again.
In effect, Obama’s team has rewarded the banking industry under the guise of “saving the economy” while abandoning citizens and consumers desperate for jobs, credit and spending power.
There was the New York Fed banker cozy with Wall Street: Timothy Geithner.
There was the former Clinton administration official who was the architect of policies that led to the financial crisis: Larry Summers.
There was a career bureaucrat named to lead the Securities and Exchange Commission: Mary Schapiro.
To see just how unremarkable this group is, consider that the most progressive regulator in the Obama administration, Federal Deposit Insurance Corp. Chairman Sheila Bair, was a Republican appointed by Bush.
* * *
The lack of action by Obama’s administration of mediocrities is the reason the recovery sputters. In essence, the turnaround depends too much on a private sector that, having escaped failure, is too content to sit out what’s supposed to be a recovery.
* * *
What began as a two-step approach: 1) saving the banks, and then 2) saving homeowners, was cut short after the first step.
Instead of extracting more lending commitments from the banks, forcing more haircuts on investors and more demands on business, Obama has let his team of mediocrities allow the debate to be turned on government. The government caused the financial crisis. The government ruined the housing market.
It wasn’t true at the start, but it’s becoming true now.
Despite his status as the incumbent and his $1 billion campaign war chest, President Obama could find himself voted out of office in 2012. When you consider the fact that the Republican Party candidates who are currently generating the most excitement are women (Bachmann and the undeclared Palin) just imagine how many voters might gravitate to a populist female candidate with substantially more brains than Obama.
The disillusionment factor afflicting Obama is not something which can be easily overlooked. The man I have referred to as the “Disappointer-In-Chief” since his third month in office has lost more than the enthusiasm of his “base” supporters – he has lost the false “progressive” image he had been able to portray. Matt Stoller of the Roosevelt Institute explained how the real Obama had always been visible to those willing to look beyond the campaign slogans:
Many people are “disappointed” with Obama. But, while it is certainly true that Obama has broken many many promises, he projected his goals in his book The Audacity of Hope. In Audacity, he discussed how in 2002 he was going to give politics one more shot with a Senate campaign, and if that didn’t work, he was going into corporate law and getting wealthy like the rest of his peer group. He wrote about how passionate activists were too simple-minded, that the system basically worked, and that compromise was a virtue in and of itself in a world of uncertainty. His book was a book about a fundamentally conservative political creature obsessed with process, not someone grounded in the problems of ordinary people. He told us what his leadership style is, what his agenda was, and he’s executing it now.
I expressed skepticism towards Obama from 2005, onward. Paul Krugman, Debra Cooper, and Tom Ferguson among others pegged Obama correctly from day one. Obama broadcast who he was, through his conservative policy focus (which is how Krugman pegged him), his bank backers (which is how Ferguson pegged him), his political support of Lieberman (which is how I pegged him), and his cavalier treatment of women’s issues (which is how Debra Cooper pegged him). He is doing so again, with his choice to effectively remove Elizabeth Warren from the administration.
I just wish Elizabeth Warren would fight back and challenge Obama for The White House. If only . . .
Many commentators have expressed surprise about the extensive criticism directed against President Obama by liberals. During the new President’s third month in office, I pointed out how he had become the “Disappointer-In-Chief” – when he began to elicit groans from the likes of Keith Olbermann and Rachel Maddow. President Obama has continued on that trajectory ever since. More recently, Obama’s mishandling of the economic crisis resulted in a great cover story for New York Magazine by Frank Rich, entitled, “Obama’s Original Sin”. Although Frank Rich may have been a bit restrained in his criticism of Obama, Marshall Auerback didn’t pull any punches in an essay he wrote for the New Economic Perspectives website entitled, “Barack Obama: America’s First Tea Party President”:
Cutting public spending at this juncture is the last thing the US government should be doing. Yet this President is pushing for the largest possible cuts that he can on the Federal government debt. He is out-Hoovering the GOP on this issue. He is providing “leadership” of the sort which is infuriating his base, but should endear him to the Tea Party. This is “the big thing” for Barack Obama, as opposed to maximizing the potential of his fellow Americans by seeking to eliminate the scourge of unemployment. Instead, his big idea is to become the president who did what George Bush could not, or did not, dare to do: cut Medicare, Medicaid and Social Security. What more could the Tea Party possibly want?
Glenn Greenwald of Salon has been a persistent critic of President Obama for quite a while. Back in September of 2010, I referenced one of Glenn Greenwald’s exceptive essays about Obama with this thought:
Glenn Greenwald devoted some space from his Salon piece to illustrate how President Obama seems to be continuing the agenda of President Bush. I was reminded of the quote from former Attorney General John Ashcroft in an article written by Jane Mayer for The New Yorker. When discussing how he expected the Obama Presidency would differ from the Presidency of his former boss, George W. Bush, Ashcroft said:
“How will he be different? The main difference is going to be that he spells his name ‘O-b-a-m-a,’ not ‘B-u-s-h.’ ”
John Ashcroft’s prescient remark could not have been more accurate. Who else could have foreseen that the Obama Presidency would eventually be correlated with that of President George W. Bush? Although it may have seemed like a preposterous notion at the time, it’s now beginning to make more sense, thanks to a very interesting piece I read at the Truthdig website entitled, “If McCain Had Won” by Fred Branfman. Branfman began with a list of “catastrophes” we would have seen from a McCain administration, followed by this comment:
Nothing reveals the true state of American politics today more, however, than the fact that Democratic President Barack Obama has undertaken all of these actions and, even more significantly, left the Democratic Party far weaker than it would have been had McCain been elected.
More important, the sentence immediately following that remark deserves special attention because it forms the crux of Branfman’s analysis:
Few issues are more important than seeing behind the screen of a myth-making mass media, and understanding what this demonstrates about how power in America really works – and what needs to be done to change it.
From there, Branfman went on to explain how and why McCain would have made the same decisions and enacted the same policies as Obama. Beyond that, Branfman explained why Obama ended up doing things exactly as McCain would have:
Furious debate rages among Obama’s Democratic critics today on why he has largely governed on the big issues as John McCain would have done. Some believe he retains his principles but has been forced to compromise by political realities. Others are convinced he was a manipulative politico who lacked any real convictions in the first place.
But there is a far more likely – and disturbing – possibility. Based on those who knew him and his books, there is little reason to doubt that the pre-presidential Obama was a college professor-type who shared the belief system of his liberalish set …
* * *
Upon taking office, however, Obama – whatever his belief system at that point – found that he was unable to accomplish these goals for one basic reason: The president of the United States is far less powerful than media myth portrays. Domestic power really is in the hands of economic elites and their lobbyists, and foreign policy really is controlled by U.S. executive branch national security managers and a “military-industrial complex.”
The ugly truth strikes again! The seemingly “all-powerful” President of the United States is nothing more than a tool of the plutocracy. It doesn’t matter whether the White House is occupied by a Democrat or a Republican – the policies (domestic, foreign, economic, etc.) will always be the same – because the people calling the shots are always the same plutocrats who control those “too big to fail” banks, the military industry and big pharma. As Branfman put it:
. . . anyone who becomes president has little choice but to serve the institutional interests of a profoundly amoral and violent executive branch and the corporations behind them.
Perhaps in response to the oft-cited criticism that “if you’re not part of the solution – you’re part of the problem”, Fred Branfman has offered us a proposal that could send us on the way to changing this intolerable status quo:
But however important the 2012 election, far more energy needs to be devoted to building mass organizations that challenge elite power and develop the kinds of policies – including massive investment in a “clean energy economic revolution,” a carbon tax and other tough measures to stave off climate change, regulating and breaking up the financial sector, cost-effective entitlements like single-payer health insurance, and public financing of primary and general elections – which alone can save America and its democracy in the painful decade to come.
Wait a minute! Didn’t Obama already promise us all of that stuff?
Perhaps the only way to achieve those goals is by voting for Independent political candidates, who are not beholden to the Republi-cratic Corporatist Party or its financiers. When the mainstream media go out of their way to pretend as though a particular candidate does not exist – you might want to give serious consideration to voting for that person. When the media try to “disappear” a candidate by “hiding” that person “in plain sight”, they could be inadvertently providing the best type of endorsement imaginable.
The same level of energy that brought Obama to the White House could be used to bring us our first Independent President. All we need is a candidate.
The clowns in Washington seem to be going out of their way to ignore the advice of respected economists as they focus on deficit reduction while ignoring the worsening unemployment crisis. The fact that mainstream news outlets are oblivious to the consequences of foolish economic policy doesn’t really help. President Obama now finds himself wedded to a policy of economic destruction, while at the mercy of his opponents, simply because he ignored the good advice he was receiving back in 2009.
The urgency of our current predicament is lost on the asshats vested with the responsibility and authority to implement a “course correction”. As I pointed out last month, bond guru Bill Gross of PIMCO made an effort to debunk the myth that balancing the budget “will magically produce 20 million jobs over the next 10 years”. More recently, Princeton economics professor and former vice-chairman of the Federal Reserve, Alan Blinder, wrote an article for The Wall Street Journal entitled, “Our National Jobs Emergency”. After discussing the most recent non-farm payrolls report from the Bureau of Labor Statistics, Professor Blinder made this observation:
The horrific June employment number made it two in a row. With the latest revisions, job growth in May is now estimated to have clocked in at only 25,000 jobs. So that’s 25,000 and 18,000 in consecutive months. Given the immense size of total U.S. payroll employment (around 131 million) and the sampling error in the survey, those numbers are effectively zero. Job creation has stopped for two months.
If we were at 5% unemployment, two bad payroll reports in a row would be of some concern yet tolerable. But when viewed against the background of 9%-plus unemployment, they are catastrophic.
* * *
All this adds up to a national jobs emergency. Tragically, however, it is not being treated as such. When is the last time you heard one of our national leaders propose a serious job-creating program?
The operative word here is “serious.” Every day brings new proposals to slash government spending. But as I noted on this page last month, those are ways to kill jobs, not create them. As a matter of fact, despite all the cries of “big government” or even “socialism,” public-sector employment has been falling.
Fortunately, Professor Blinder had some good ideas for private-sector job creation. One such idea was a tax credit for firms that create new jobs:
As one concrete example, companies might be offered a tax credit equal to 10% of the increase in their wage bills (over 2011 levels, say). No increase, no reward.
You might think Republicans would embrace an idea like that. After all, it’s a business tax cut and all the new jobs would be in the private sector. But you’d be wrong. Frankly, I’m not sure why. Maybe it’s seen as “left-wing social engineering.”
Professor Blinder then proposed an alternative:
Suppose we allow firms to repatriate profits at some super-low tax rate, but only to the extent that they increase their wage payments subject to Social Security. For example, if XYZ Corporation paid wages covered by Social Security of $1.5 billion in 2011, and then boosted that amount to $1.6 billion in 2012, it would be allowed to repatriate $100 million at a tax rate of 5% or 10% instead of the usual 35% rate. The tax savings to the company would thus be $25 million-$30 million for raising its payroll by $100 million. That’s a powerful incentive.
Did anyone in Washington pay serious attention to Professor Blinder’s Wall Street Journal article . . . or were they all too busy shorting Treasuries to give a damn?
Oxford-educated economist Martin Wolf wrote a piece for the Financial Times, in which he lamented the antics of those entrusted with the power of managing financial and economic policy:
It is not that tackling the US fiscal position is urgent. At a time of private sector deleveraging, it is helpful. The US is able to borrow on easy terms, with yields on 10-year bonds close to 3 per cent, as the few non-hysterics predicted. The fiscal challenge is long term, not immediate. A decision not to allow the government to borrow to finance the programmes Congress has already mandated would be insane…. Yet, astonishingly, many of the Republicans opposed to raising the US debt ceiling do not merely wish to curb federal spending: they enthusiastically desire a default. Either they have no idea how profound would be the shock to their country’s economy and society of a repudiation of debt legally contracted by their state, or they fall into the category of utopian revolutionaries, heedless of all consequences.
* * *
These are dangerous times. The US may be on the verge of making among the biggest and least-necessary financial mistakes in world history. The eurozone might be on the verge of a fiscal cum financial crisis that destroys not just the solvency of important countries but even the currency union and, at worst, much of the European project. These times require wisdom and courage among those in charge of our affairs. In the US, utopians of the right are seeking to smash the state that emerged from the 1930s and the second world war. In Europe, politicians are dealing with the legacy of a utopian project which requires a degree of solidarity that their peoples do not feel. How will these clashes between utopia and reality end? In late August, when I return from my break, we may know at least some of the answers.
At this point, those “answers” are beginning to look pretty scary. Of course, the Republicans are not the only ones to blame. Let’s take a look at the wonderful job Mike Whitney of CounterPunch did when he dropped the entire matter back onto President Obama’s lap:
How do you light a fire under Washington, that’s the question? Is Congress even aware that we’re undergoing a major jobs crisis or are they too busy bickering over tax cuts for fatcats or how much money they can divert from Social Security to Wall Street?
Look; unemployment is over 9% and rising. The states are firing tens of thousands of teachers and public employees every month because they need to balance their budgets and they’re not taking in enough revenue. The stimulus is dwindling (which means that fiscal policy is actually contractionary in real terms) And the 10-year Treasury has dipped below 3 percent (as of Monday morning.) In other words, the bond market is signaling “recession”, even while the dope in the White House is doing his utmost to slice $4 trillion off the deficits.
Does that make any sense?
Maybe if you’re Herbert Hoover, it does. But it makes no sense at all if you were elected with a mandate to “change” the way Washington operates and put the country back to work. Obama is just making a bad situation worse by gadding about in his golf togs blabbering about belt tightening. It’s enough to make you sick.
Get with the program, Barry, or resign. That would be even better. Then maybe we can find someone who’s serious about running the country.
As I pointed out on November 4, 2010 . . . someone has to challenge Obama for the 2012 Democratic nomination and I have someone in mind . . .
You’ve been reading it everywhere and hearing it from scores of TV pundits: The ongoing economic crisis could destroy President Obama’s hopes for a second term. In a recent interview with Alexander Bolton of The Hill, former Democratic National Committee chairman, Howard Dean warned that the economy is so bad that even Sarah Palin could defeat Barack Obama in 2012. Dean’s statement was unequivocal: “I think she could win.”
I no longer feel guilty about writing so many “I told you so” pieces about Obama’s failure to heed sane economic advice since the beginning of his term in the White House. A chorus of commentators has begun singing that same tune. In July of 2009, I wrote a piece entitled, “The Second Stimulus”, wherein I predicted that our new President would realize that his economic stimulus program was inadequate because he followed the advice from the wrong people. After quoting the criticisms of a few economists who warned (in January and February of 2009) that the proposed stimulus would be insufficient, I said this:
Despite all these warnings, as well as a Bloomberg survey conducted in early February, revealing the opinions of economists that the stimulus would be inadequate to avert a two-percent economic contraction in 2009, the President stuck with the $787 billion plan. He is now in the uncomfortable position of figuring out how and when he can roll out a second stimulus proposal.
President Obama should have done it right the first time. His penchant for compromise – simply for the sake of compromise itself – is bound to bite him in the ass on this issue, as it surely will on health care reform – should he abandon the “public option”. The new President made the mistake of assuming that if he established a reputation for being flexible, his opposition would be flexible in return. The voting public will perceive this as weak leadership.
Stephanie Kelton recently provided us with an interesting reminiscence of that fateful time, in a piece she published on William Black’s New Economic Perspectives website:
Some of us saw this coming. For example, Jamie Galbraith and Robert Reich warned, on a panel I organized in January 2009, that the stimulus package needed to be at least $1.3 trillion in order to create the conditions for a sustainable recovery. Anything shy of that, they worried, would fail to sufficiently improve the economy, making Keynesian economics the subject of ridicule and scorn.
* * *
In July 2009, I wrote a post entitled, “Gift-Wrapping the White House for the GOP.” In it, I said:
“If President Obama wants a second term, he must join the growing chorus of voices calling for another stimulus and press forward with an ambitious program to create jobs and halt the foreclosure crisis.”
With the recent announcement of Austan Goolsbee’s planned departure from his brief stint as chairman of the Council of Economic Advisers, much has been written about Obama’s constant rejection of the “dissenting opinions” voiced by members of the President’s economics team, such as those expressed by Goolsbee and his predecessor, Christina Romer. Obama chose, instead, to paint himself into a corner by following the misguided advice of Larry Summers and “Turbo” Tim Geithner. Ezra Klein of The Washington Post recently published some excerpts from a speech (pdf) delivered by Professor Romer at Stanford University in May of 2011. At one point, she provided a glimpse of the acrimony, which often arose at meetings of the President’s economics team:
Like the Federal Reserve, the Administration and Congress should have done more in the fall of 2009 and early 2010 to aid the recovery. I remember that fall of 2009 as a very frustrating one. It was very clear to me that the economy was still struggling, but the will to do more to help it had died.
There was a definite split among the economics team about whether we should push for more fiscal stimulus, or switch our focus to the deficit. A number of us tried to make the case that more action was desperately needed and would be effective. Normally, meetings with the President were very friendly and free-wheeling. He likes to hear both sides of an issue argued passionately. But, about the fourth time we had the same argument over more stimulus in front of him, he had clearly had enough. As luck would have it, the next day, a reporter asked him if he ever lost his temper. He replied, “Yes, I let my economics team have it just yesterday.”
By May of 2010, even Larry Summers was discussing the need for further economic stimulus measures, which I discussed in a piece entitled, “I Knew This Would Happen”. Unfortunately, most of the remedies suggested at that time were never enacted – and those that were undertaken, fell short of the desired goal. Nevertheless, Larry Summers is back at it again, proposing a new round of stimulus measures, likely due to concern that Obama’s adherence to Summers’ failed economic policies could lead to the President’s defeat in 2012. Jeff Mason and Caren Bohan of Reuters reported that Summers has proposed a $200 billion payroll tax program and a $100 billion infrastructure spending program, which would take place over the next few years. The Reuters piece also supported the contention that by 2010, Summers had turned away from the Dark Side and aligned himself with Romer in opposing Peter Orszag (who eventually took that controversial spin through the “revolving door” to join Citigroup):
During much of 2010, Obama’s economic advisers wrestled with a debate over whether to shift toward deficit reduction or pursue further fiscal stimulus.
Summers and former White House economist Christina Romer were in the camp arguing that the recession that followed the financial markets meltdown of 2008-2009 was a unique event that required aggressive stimulus to avoid a long period of stagnation similar to Japan’s “lost decade” of the 1990s.
Former White House budget director Peter Orszag was among those who cautioned against a further big stimulus, warning of the need to be mindful of ballooning budget deficits.
By the time voters head to the polls for the next Presidential election, we will be in Year Four of our own “lost decade”. Accordingly, President Obama’s new “Jobs Czar” – General Electric CEO, Jeffrey Immelt – is busy discussing new plans, which will be destined to go up in smoke when Congressional Republicans exploit the opportunity to maintain the dismal status quo until the day arrives when disgruntled voters can elect President Palin. Barack Obama is probably suffering from some awful nightmares about that possibility.
TheCenterLane.com offers opinion, news and commentary on politics, the economy, finance and other random events that either find their way into the news or are ignored by the news reporting business. As the name suggests, our focus will be on what seems to be happening in The Center Lane of American politics and what the view from the Center reveals about the events in the left and right lanes. Your Host, John T. Burke, Jr., earned his Bachelor of Arts degree from Boston College with a double major in Speech Communications and Philosophy. He earned his law degree (Juris Doctor) from the Illinois Institute of Technology / Chicago-Kent College of Law.
