By Robert E. Prasch
Professor of Economics
Last night, President Obama gave a great speech. He almost always does. And to that ever-shrinking group of die-hards who continue to insist that somehow, and in someway, President Obama will validate the hope kindled by his 2008 presidential campaign, it was a moment of triumph. Yes, they are saying, in his heart – very deep down, perhaps – Obama does in fact share our values and concerns, etc., he just has a hard time finding ways to express it, etc.
But let’s take a different tack. Let us begin with the old adage that “talk is cheap.” The fact is that this president has had six years to demonstrate – in deeds rather than words – what exactly constitutes his priorities. Let us, as this is a website devoted to economics issues, set aside the Obama Administration’s genuinely horrific record on civil liberties (The sordid record is long, but highlights include unchecked domestic spying by the NSA; drones deployed to terrorize the citizenry of numerous foreign nations; proclaiming and defending the prerogative to unilaterally kill American citizens with ever stating charges, much less presenting evidence or seeking convictions in the courts; solely and exclusively prosecuting those brave individuals who alerted the public to the Bush Administration’s war crimes, even as he comforted or promoted those who committed the crimes, etc.). Let us focus solely on economic policy. What follows is a brief review of the low moments thus far. These are not presented in any order and is not a comprehensive list:
(1) Appointing failed regulators (Geithner and Bernanke) and failed economists (Summers) to senior positions to oversee the recovery of the economy and the reregulation of the financial system.
(2) Overseeing the bailing out the Too Big To Fail Banks (TBTF) through TARP, the several Fed QE programs, and (early on) accounting rules changes, while flat-out failing to admit that straight-out subsidies constituted the core of the “recovery” plan. By contrast, homeowners, including those that had been defrauded by these same TBTF banks or their subsidiaries, were left to the tender mercies of these same banks.
(3) Repurposing that modest element of the TARP legislation that was supposed to assist struggling homeowners into a ruse that would further bleed those same homeowners in order to further assist the banks and the fat cats that oversaw their collapse (Geithner’s memorably stated that bleeding homeowners through misrepresentation of their chances to have their mortgages refinanced was good public policy because drawing out a few last payments from broke families would “foam the runways” for the failed banks).
(4) Blocking (through highly visible inaction) the rewriting of U.S. bankruptcy law in a manner that would enhance the bargaining power of underwater homeowners vis-à-vis the TBTF banks.
(5) Working diligently to assist in the denial or outright cover-up of widespread and flagrant fraud on the part of TBTF banks and bankers. This fraud occurred in the origination of the mortgages, the sale of mortgage-backed securities, in the stringing along of struggling homeowners, and in the course of foreclosing on customers (and foreclosing on people who weren’t customers, also). Foreclosure fraud included the widespread forging of mortgages and liens that had been misplaced or destroyed. These forgeries were then presented in court proceedings as original documents.
(6) Working long and diligently to provide ex post legal immunity for bankers from Federal and State criminal proceedings on tens, if not hundreds, of thousands of instances of mortgage and foreclosure fraud.
(7) Working diligently to ensure that financial regulation would be a mishmash of meaningless sturm und drang that could – as all the adults knew at the time that it would – be unwound during the rule writing process that was to take place at a later date and largely behind closed doors.
(8) Participating in, and then promoting, the outright lie that the US government “made money” on the bailout of the financial system, including the bailout of AIG.
(9) Participating in the unwinding of the (all-too-few) meaningful Dodd-Frank Act reforms. Granted, we know that Treasury lobbied against the inclusion of these few meaningful reforms at the time, and that everyone knew that they would never become law, so the only remaining point of interest was how they would come to be annulled. Now we know.
(10) Passing George W. Bush’s investor protection (a.k.a. “free trade”) agreements with South Korea, Columbia, and Panama even though his government knew, at the time, that these agreements would harm the United States economy.
(11) The aggressive, unrelenting, and absolutely secretive pursuit of those monsters of all investor protection agreements dubbed the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP).
While we are on this subject, I am in awe that in the State of the Union address Obama had the temerity to say, “We should write those rules [on trade]…That’s why I’m asking both parties to give me trade promotion authority to protect American workers with strong new trade deals from Asia to Europe.” They say that if you have to lie, go big. After all, who is the “We” in that sentence? Not working Americans, we can count on that. Not civil society organizations concerned with workplace or environmental issues, to say nothing of people concerned with the cost of excessive patent or copyright protections that have become simple giveaways to firms. No, “We” does not include them, either. The “We” of that sentence refers to the hundreds of corporate lobbyists and trade lawyers who have been working, secretively, cheek-by-jowl with the most virulently anti-labor office in the entire executive branch, the Office of the United States Trade Representative. “We.” I love it. That’s real chutzpah.
(12) The persistent pursuit, albeit without a triumph (yet), of that greatest dream of all New Democrats, a “Grand Bargain” that would significantly cut payments to the elderly on Social Security (keep in mind that over ½ of all retirees have no measurable retirement incomes other than this enormously effective program).
(13) The aggressive and unrelenting effort to undermine teachers and privatize schools (or privatize school dollars in the case of “Charter schools”), on the thinnest of rationales such as the results of standardized test scores. This agenda has been maintained even though prominent studies appeared soon after the Obama Administration came into office demonstrating that Charter schools did not outperform traditional public schools, and often did somewhat worse.
(14) The eager adoption of the core of Sarah Palin’s energy program, “drill baby, drill,” by facilitating virtually unhindered hydraulic fracturing along with extensive offshore drilling.
(15) As with the Clinton presidency, anti-trust action against large and uncompetitive firms is most noteworthy for its absence. Personal favorites include last year’s US Air-American Airlines merger, which is an even worse deal for consumers than the United-Continental merger of 2010. But lets not overlook the forthcoming merger of Time-Warner with Comcast. Wow, could either of those firms achieve new lows in customer service? Stay tuned!
After six years in office, even the most loyal of Democrats can no longer feign to be ignorant of the substance and consequences of President Obama’s economic policies. Remarkably, the income of the median American household declined more during Obama’s recovery than during Bush’s recession! An optimist might describe the Obama Administration’s performance as pathetic or, as is the norm, present multiple excuses for it.
But the agenda and its consequences have not been pathetic by accident, or even from Republican Party interference, but by design. The failure is a consequence of a betrayal of the traditions and ideals of the Democratic Party so complete that it might, I say might, have shamed Bill Clinton (think NAFTA, WTO, the massive giveaway to the Telecoms, aggressive bank mergers, the repeal of Glass-Steagall & the ban against any regulation of derivatives, and so much more). Yet, despite this abysmal record, we are being asked to believe that President Obama and his senior economic advisors are concerned for the declining American middle class! That is to say that, after having lost both houses of Congress, we are to believe that the leadership of the Democratic Party is (finally) willing to do something about the ravages of thirty-five years of neoliberal economics.
Please excuse me for being skeptical. Excuse me for supposing that there may be an ulterior motive for this freshly minted interest in the economic fate of someone, anyone, who does not work on Wall Street or for a defense contractor. Indeed, I would like to remind readers that the last time we heard significant noise from the White House over the plight of working Americans, it was as part of an embarrassingly obvious effort to distract us from an upcoming Senate vote on the South Korea, Columbia, and Panama investor protection agreements.
Now, we know that the president and an embarrassingly large number of Congressional Democrats are anxious to rush through TPP and TTIP before the New Hampshire primary obliges them to pretend that they care about what mere voters, that is to say the sops that make up the rank-and-file of their own party, think about these certain-to-be-odious trade treaties. If I were to bet, it would be that concern over a coming backlash is the primary motivation behind Obama’s “liberal” State of the Union speech. But don’t take my word for it. Let’s test it. Let’s see how much of this agenda remains thirty days after these profoundly harmful treaties are ratified with, I am guessing, the affirmative vote of close to 50% of Democratic Party Senators.
So, what is to be done? I would suggest that those of us who still cling to the belief that the United States should and could be something other than a plutocracy have some serious thinking to do. While I have not addressed this topic here, I would also suggest that those of us who still believe that the 1st, 4th, 5th, 6th, and 14th Amendments were a good idea also have some serious thinking to do. This thinking is all the more important because, in this world of uncertainly and change, we can all rest assured that Hillary Clinton is not, and never will be, on our side. She and her long list of friends in the banks and amongst the defense contractors are opposed – adamantly – to our values and ideals. So, what are we to do?
Stated simply, it is time for those of us who are dissatisfied with the direction that this nation has taken over these past thirty-five years to begin to think and act strategically. I would submit that the dominant strategy pursued thus far – that of unquestioned loyalty to the Democrats — has been put to the test, repeatedly. We now have definitive evidence that, considered as a strategy, this approach been an absolute failure. Remember that in 2008 we voted for “Hope and Change. The issues of the day were President Bush’s random wars and the collapse of the financial system that was a consequence of the unthinking deregulation pursued by both parties. What did we get? The reappointment of Bush’s Defense Secretary Robert Gates who, as a prominent CIA official, previously disgraced himself in the course of his involvement in the Iran-Contra Scandal. In what world did such a reappointment constitute “Change”?
And what of the economy? Proven failures from Bill Clinton’s frenzied deregulation drive — Larry Summers and Timothy Geithner (amongst many others) were appointed to the highest offices. There they were joined by a bevy of Goldman and Citigroup alums who, we were told, would oversee the reregulation of the financial system. Really? When did that ever constitute “Change”? What about it constituted “Hope”? Was all the prattle about “Hope and Change” simply a joke? Was it just a marketing gimmick? I believe that we can now answer that question, definitively.
Returning to strategy, we can now conclude that “lesser evil” voting has, in no way or form, advanced our programs, ideals, or values. It has been tried, repeatedly, and it has failed. We now know that the DNC treats the rank and file of the Democratic Party contemptuously because they know that they, at least implicitly, have our permission to do it. Should we ever decide that we are tired of their contempt, this implicit permission will have to be revoked in a manner that this is both unmistakable and dramatic. This means, operationally, that the DNC’s contempt for us must be returned, and in kind.
Holding the leadership of the DNC accountable does not mean adding our signature to an online poll, or holding a sign at a “peaceful protest,” and then turning out to vote for the 1% favored candidate. Holding the DNC to account means denying them, and their massive entourage of Washington-based apparatchiks, something that they ardently desire – election or appointment to high office. This means that those whom Howard Dean once labeled the “Democratic wing of the Democratic Party” must be prepared to stand on the sidelines while “centrist Democrats” lose. We must not shy away from taking such action, rather we must openly embrace it. In the aftermath, we must be prepared for the massive opprobrium that will be directed at us by these same time-serving apparatchiks and sundry Washington hustlers who have long staffed the DNC, associated think tanks, and political campaign consultancies. As stifled would-be office-holders anticipating an easy passage through the revolving door, we can and should expect the DNC’s officialdom to be bitter about losing their best chance to acquire cushy jobs with low workloads and high payouts. To quote one of their icons, “I feel their pain.”
Let us be clear, what is being proposed here not about being “revenge” or “being in a huff.” It is a strategy, one that proposes to win by playing the “long game.” As the saying goes, first they will ignore us and then they will insult us, but if can hold the line and deny the time-servers in the DNC the things that they want, they will be forced to negotiate with us. The day after the professional insiders and boot-lickers of the DNC come to learn that they cannot win without their Democratic wing, is the day that they will begin to consider what we want, and actually begin to respond to it. This level of respect will not happen one day before our resolve has been forcefully demonstrated. Not one. So, the question is, for how long do we wish to forestall that day?
Excellent article. Thanks for putting all these issues together. I just got off the conference call with Bernie Sanders. I am beginning to think that I can leave Elizabeth Warren in the Senate and switch to pushing Bernie Sanders for President. He, at least, has shown some interest and some executive skills.
His appointment of Stephanie Kelton as his Senate Budget Committee Chief Economist has given me hope. The hosts of the conference call did not shoose to use my question to Sanders’ about what he and Kelton were planning to do. I guess asking about the impact of MMT would have been too specific a question for the conference call. I was just a tad disappointed that Sanders didn’t go into a tirade about needing an inflation constraint instead of a budget constraint on our government plans.
Well done! As an early convert, to the view that Mr. hopey changey was a right-wing sell-out, I certainly do like this posy!
Ha! The same thing could be written by a Republican who wants his party to actually respond to what Republican voters want. So we have this problem in both parties, people voting w/o critical thinking. There are 2 blocks of voters – those who vote for their party regardless, and those who vote for lesser of 2 evils. In reality, people are too busy to bother with anything like economics.
It is almost too difficult to contemplate the possibility that Sarah Palin was right about the hopey changey thing.
How long can we hold out? By the time the DNC catches on, democracy will no longer be an option. The TPP and TTIP will have simply eliminated any possible policy change that voters could hope to accomplish even with the right people. :\
Thanks for a bull’s-eye commentary.
As to action, I suggest voting for a progressive third party whenever possible. Doing so would not only deny neoliberal Democrats what they want, but also point the general direction for the Democratic Party to go in order to win a majority. (Of course, we should expect a repeat of 2000’s “spoiler” framing. But, as you note, if we simply “stand on the sidelines while ‘centrist Democrats’ lose,” we must still “be prepared for … massive opprobrium … directed at us by the same time-serving apparatchiks and sundry Washington hustlers who have long staffed the DNC, associated think tanks, and political campaign consultancies.”
Professor Prasch opened by appropriately dissing Obama’s “great speech” filled with meritless promises sagging under the weight of past broken promises. But I couldn’t understand why Professor Prasch didn’t get to the heart of the blame immediately. It’s more accurate, and useful, to blame the Democrat Party than it is to simply blame Obama. (And we know the Republican Party is even worse, just to be clear.) Moreover, it’s even more accurate to blame our two-party dictatorship system—as Ralph Nader has called it.
I appreciate Professor Prasch’s list of crimes against society committed by the Obama administration. It’s important we remember our history, especially recent history. And I appreciate Professor Prasch’s complaints against the DNC bosses. But I disagree with Professor Prasch’s notion of hoping to hold the DNC accountable through becoming “prepared to stand on the sidelines”, even as a long-term strategy. It seems much of the so-called “Democratic wing of the Democratic Party” has already been on the sidelines because voter turnout rarely exceeds 35%. With only two political parties, it’s easy for the two parties to collude and perpetually repel the non-die hard political buffs. The only people who seem to vote are the uncritical loyalists.
If we were really critical about our two-party dictatorship system, perhaps, we would see a need for ranked choice voting where we could feel confident in voting idealistically because if our first choice loses, our vote isn’t lost, but instead transferred to our second choice or third choice, fourth choice, etc.
Or, perhaps, we might see a need to have more than two political parties represented on major debates, such as the presidential debates.
Or, perhaps, we might see a need to resist ‘Top-Two Primary’ legislation infecting the nation state by state and creating barriers to ballot access.
Or, perhaps, we might see a need for publicly funded elections.
Or, perhaps, we might see a need to allow for left-wing extremists to counterbalance the right-wing extremism, which constantly pushes the political center rightward to the point that today almost everyone recognises that a ‘liberal’ or ‘centrist’ Democrat like Obama is actually to the right of Republican Ronald Reagan.
I’m glad intelligent people like Professor Prasch have grown frustrated with the Obama administration, for they should be. I just wish they would likewise grow frustrated with the whole corporate-bankster funded Democrat Party and the entire rotten two-party dictatorship. The American people, the working class, needs political clout—power. That requires a sincere people’s opposition party, which, in turn, requires a political system conducive to political alternatives. But as long as we keep thinking we must settle for “standing on the sidelines” until the DNC stops acting in the interests of their campaign donors instead of their voting constituency, we will continue to forfeit our political clout.
Well done. But, you forgot to mention Obama’s push to extend Bush’s tax give-away to the 1%.
Undergrad, I don’t think you can blame the “two” party system where one of the parties is Democratic. The two parties are the Oligarchs and the rest of us. The question is how are we going to stop the Oligarchs. I am not sure I see a third party as the solution. If we can plainly identify politicians as with the oligarchs or with us, then we might start to get somewhere. If an Oligarchic Republican or an Oligarchic Democrat keeps putting his or her Oligarchic paymasters first, then we will more easily be able to define who is working for us and who is working against us.
The other issue is how Obama has adopted the Republican strategy. The programs he touts sound good on the surface, but the words hide what’s underneath. “We” need to make the trade rules, indeed. What you mean “we” oligarch man?
Great article which should be on every fridge door in America.
Please let me know who a good candidate would be for our next president when one surfaces. It gets very complicated for the average person to keep up with all this in-depth philosophizing. I realize that the complexity of it all is what perpetuates it, but most people don’t have the time (or the will to have it be their highest priority) to keep up with all of this. The National Health care system wasn’t even mentioned. What a complicated mess that is. Offices have to hire someone full time to be able to interpret all the rules. Just let me know who is a good choice—let everyone know . Thanks!
I wrote it so I don’t have another reply…..?