Sunday, August 22, 2010

For Later Citation

[FAIR USE and that that]

Pasting some passages from John Judis's "The Unnecessary Fall", an excellent piece even though published by the most useless rag in all of "liberal" journalism:

In the United States, politics pivots around the allegiance of the middle class, even as its identity has changed from yeoman farmers and mechanics to store clerks, office workers, x-ray technicians, and small business owners. They are, in Bill Clinton’s words, “those who work hard and play by the rules.” They are the central characters in a populist rhetoric that goes back to the early republic. It depicts the middle class as embattled and threatened either from forces below (impoverished immigrants, welfare cheaters, ghetto rioters) or above (Wall Street speculators, state bureaucrats, K Street lobbyists). Populism can be embraced by Glenn Beck or Tom Harkin. It is intrinsically neither left-wing nor right-wing.

Politicians, such as Franklin Roosevelt or Ronald Reagan, who found a way of using populism’s appeal during downturns have enjoyed success, while those who have spurned it have suffered accordingly. If, in circumstances like the present one, you don’t develop a populist politics, your adversaries will use populism to define you as an enemy of the people. That’s what Carter discovered during the stagflation of the late ’70s. And that’s what has happened in the last 20 months of the Great Recession to Barack Obama and to the Democratic Party he leads.

Obama took office with widespread popular support, even among Republicans, and some of his first efforts, including the $800 billion stimulus, initially enjoyed strong public favor. But that wide appeal began to dissipate by the late spring of 2009. Disillusion with Obama fueled the November defeat of Democratic gubernatorial candidates in New Jersey and Virginia. By January 2010, it was a crucial factor in Republican Scott Brown’s astonishing victory over Martha Coakley in Massachusetts.

In the postmortem debate over these defeats, some Democrats have blamed Obama’s dogged pursuit of health care reform while the economy was hemorrhaging jobs. That may have been a factor, but the real damage was done earlier. What doomed Obama politically was the way he dealt with the financial crisis in the first six months of his presidency. In an atmosphere primed for a populist backlash, he allowed the right wing to define the terms.


As Obama was delivering his inaugural address, the financial crisis was already in full swing; and it was already apparent that financial speculation, outright fraud, and irresponsible and sometimes illegal housing-loan practices had played a very large role in precipitating the crisis. The public was up in arms. But, instead of rallying the public against the “money changers,” as Roosevelt had done in his first inaugural, Obama, taking a leaf from Jimmy Carter’s infamous “malaise” speech, put the blame on the public as a whole. “Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some, but also our collective failure to make hard choices and prepare the nation for a new age,” he declared.

Over the next month, Obama would periodically criticize bankers after embarrassing revelations–at various times calling the bonuses they gave themselves “shameful” and an “outrage”–but, after hearing complaints about his rhetoric from the bankers, he would back off. At a private meeting on March 28 with 13 Wall Street CEOs, the president, his spokesman Robert Gibbs said, “emphasized that Wall Street needs Main Street and Main Street needs Wall Street.” And, in his Georgetown speech, Obama returned to his theme of collective responsibility. The recession, Obama said, “was caused by a perfect storm of irresponsibility and poor decision-making that stretched from Wall Street to Washington to Main Street.”

Obama’s policy followed the same swerving course as his rhetoric. One week, he would favor harsh restrictions on bank and insurance-company bonuses, but, the next week, he would waver; one week, he would support legislation allowing bankruptcy judges to reduce the amount that homeowners threatened with foreclosure owed the banks; the next week, he would fail to protest when bank lobbyists pressured the Senate to kill these provisions. But, more importantly, Obama–in sharp contrast to Roosevelt in his first months–failed to push Congress to immediately enact new financial regulations or even to set up a commission to investigate fraud. (When Congress finally appointed a commission in July 2009, Obama and his party put a milquetoast Democratic politician, former California State Treasurer Philip Angelides, in charge of it.)

Obama’s appointments also conveyed an impression that he wanted to let Wall Street off the hook. He appointed Timothy Geithner to be treasury secretary. Geithner claimed that he was not part of Wall Street, but, in his capacity as president of the Federal Reserve Bank of New York, he had served under a board of directors headed by JP Morgan Chase CEO Jamie Dimon. As New York Fed president, Geithner had been partly responsible for the decision to let Lehman Brothers go under, for the unpopular tarp program, and for American International Group (AIG) paying back its Wall Street creditors with government money. Geithner chose as his chief of staff a former lobbyist for Goldman Sachs. Retiring Democratic Senator Byron Dorgan told me, “Most Americans were reading about the massive compensations and bailouts, and the administration largely hired people from the culture of Wall Street.”

By the spring, Obama’s apparent tilt to Wall Street had sparked a right-wing populist revolt in the country. The newly formed Tea Party movement, Beck and Fox News, and a host of right-wing bloggers were leading the charge; but, in a less extreme form, the general public shared their anger. In an early April New York Times/CBS News poll, the public disapproved of Obama’s aiding the banks by 58 percent to 33 percent. In this same poll, public approval of Obama’s handling of the economy began to fall. Pollsters who did focus groups also traced disillusionment with Obama’s economic policies to his handling of the financial crisis.

Congressman Barney Frank, who defends Obama’s policies, acknowledges that the president’s political difficulties began with the revelation that AIG, which had received $170 billion from the government, had paid out $165 million in bonuses to the division that had brought the company down. Geithner had known about the bonuses but insisted there were no legal grounds to block them. (It then came out that Geithner had pressured Senate Banking Committee Chairman Chris Dodd to insert a provision in the stimulus bill that protected the bonuses.) “The pitchforks were out. It added injury to injury,” Frank says. That’s when public opinion of Geithner plummeted. According to a Rasmussen poll, 24 percent had a favorable view of Geithner and 44 percent an unfavorable one.

The public’s view of the bank bailout and the AIG bonuses colored its view of the auto bailout, the stimulus, and health care reform. One of the rallying cries for the populist opposition to Obama was “where’s my bailout?” (Obama himself acknowledged that it was “one of the most frequent questions” he was asked in letters.) The auto program became a bailout for the GM and Chrysler CEOs; the stimulus became a bailout of government itself; and health care reform was a bailout for the uninsured–or “reparations,” as Rush Limbaugh put it. Wrote right-wing blogger Michelle Malkin, “hardworking citizens were getting sick of being played for chumps” by “moochers, big and small, corporate and individual, trampling over themselves with their hands out demanding endless bailouts.” Obama and the Democrats were successfully portrayed as aiding “the moochers,” but not the “hardworking citizens.” In American politics, that’s a recipe for political disaster.


Some in the White House political operation recognized in the late spring that the administration’s economic efforts were being defined by right-wing populism and tried to push Obama to take a more populist tack. A group within the White House began calling themselves the “pitchfork gang,” but they would find their attempts to convince Obama to get tough on Wall Street or on insurance companies undermined by Geithner and by National Economic Council head Larry Summers, who were worried about upsetting business confidence. “There was a continual tension in the White House,” says a person who was privy to the discussions. “One week, we would be very hot, and then, the next week, we would dial it back.”


Contrast Obama’s attempt to develop a politics to justify his economic program with what Reagan did in 1982. Faced with steadily rising unemployment, which went from 8.6 percent in January to 10.4 percent in November, Reagan and his political staff, which included James Baker, Mike Deaver, and Ed Rollins, forged a strategy early that year calling for voters to “stay the course” and blaming the current economic troubles on Democratic profligacy. “We are clearing away the economic wreckage that was dumped in our laps,” Reagan declared. Democrats accused them of playing “the blame game,” but the strategy, followed to the letter by the White House for ten months, worked. The Republicans were predicted to lose as many as 50 House seats, but they lost only 26 and broke even in the Senate.

Some commentators have noted Reagan’s popularity was even lower than Obama’s. But, on key economic questions, he did much better than Obama and the Democrats are currently performing–and voters expressed far greater patience with Reagan’s program. According to polls, even as the unemployment rate climbed, a narrow plurality still expressed confidence that Reagan’s program would help the economy. On the eve of the election, with the unemployment rate at a postwar high, a New York Times/CBS News poll found that 60 percent of likely voters thought Reagan’s economic program would eventually help the country. That’s a sign of a successful political operation. If Obama could command those numbers, Democrats could seriously limit their losses in November. But Obama has not been able to develop a narrative that could convince people to trust him and the Democrats.

Why has the White House failed to convince the public that it is fighting effectively on its behalf? The principal culprit is clearly Barack Obama. He has a strange aversion to confrontational politics. His aversion is strange because he was schooled in it, working as a community organizer in the 1980s, under the tutelage of activists who subscribed to teachings of the radical Saul Alinsky. But, when Obama departed for Harvard Law School in 1988, he left Alinsky and adversarial tactics behind.


He was not a typical blue-collar, bread-and-butter Chicago Democrat, but the kind of good government liberal that represents the upscale districts of the city, seeing in politics a higher calling and ill at ease with (although not in open opposition to) the city’s Democratic machine. He was also a post-racial politician who eschewed the hard-edged, angry rhetoric of Jesse Jackson. (That, too, is oddly reminiscent of Carter, who partly campaigned in 1976 as the white Southern antidote to George Wallace’s angry racial populism.)


These efforts to elevate Obama above the hurly-burly of Washington politics have been disastrous. Obama’s image as an iconic outsider has become the screen on which Fox News, the Tea Party, radicalright bloggers, and assorted politicians have projected the image of him as a foreigner, an Islamic radical, and a socialist. He has remained “the other” that he aspired to be during the campaign, but he and his advisers no longer control how that otherness is defined.

The White House and cabinet officials he appointed have reinforced his aversion to populism. As Jonathan Alter recounts in The Promise: President Obama, Year One, Geithner and Summers repeatedly blocked attempts to get tough on Wall Street on the grounds that doing so would threaten the recovery itself by upsetting the bankers. For most of his first year, Alter writes, “Obama bought the Geithner-Summers argument that the banks were fragile and couldn’t be confronted while they remained in peril.” Its reluctance to come down on the bankers crippled the administration politically, making it far more difficult for it to get its way with Congress on a second stimulus program that would have boosted the recovery and Democrats’ political prospects. Bad politics can trump good policy.