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A Presidency in Peril: Warnings from Robert Kuttner
Like most progressives, Robert Kuttner had great hopes following President Obama's election in 2008. However, Kuttner also has been around long enough to realize the risk that President Obama might not live up to his potential in bringing about progressive change. His new book, A Presidency in Peril, documents how the Obama administration has been falling short.
The basic story is both straightforward and depressing. President
Obama surrounded himself with advisers that were close to Wall Street
and business in general. This undoubtedly reflected his disposition; he
had always been a political moderate. However, it was also partly
determined by his political backers. Wall Street's generosity with
campaign contributions was an essential part of his rise to the top of
the Democratic field in the presidential primaries. This guaranteed
that Obama would pursue a cautious business-friendly path.
Much of the book focuses on the response to the economic crisis, in particular the bank bailouts and the stimulus. In both cases Obama took a centrist path that that largely protected the interests of the wealthy. This is most clear in the case of the bank bailout. In the closing weeks of the presidential campaign Obama took time out to push for the TARP, a huge wad of money for the banks that came largely without strings. After TARP, the bailouts continued, with Citigroup and Bank of America nursed back to life thanks to the generosity of the taxpayers.
By contrast, the government could have taken a hard line, temporarily taking over insolvent banks, including these giants. This would have wiped out shareholders. It also would have meant giving bondholders a haircut, and sending the top executives packing. While this route was derisively termed "nationalization," including by some top Obama officials, the point was not to have the government own the banks. Rather the point was to do a quick clean-up operation that would involve selling the banks, possibly in smaller pieces, back to the private sector as soon as possible.
The Obama administration has boasted that its path prevented a second Great Depression and has allowed for most of the bailout money to be repaid. Of course, avoiding a second Great Depression is a rather low bar (this spectre was an invention of the Wall Street crew - it was never a serious possibility) and repaying the bailout money is essentially meaningless.
By telling private markets that it would support Citigroup and Bank of America in spite of their insolvent state, the government was giving these corporations a gift of enormous value. (Imagine that the federal government announced that it would guarantee all the debts of a corner lemonade stand. The lemonade stand could make billions from this guarantee.) Their profits are really just a portion of the dividend they received from this fairly explicit government guarantee. In other words, we gave them the money they used to repay us.
Kuttner points out that the stimulus was woefully unambitious and inadequate. The amount that they requested from Congress was only a bit more than half as large as Obama's top economists felt was necessary. Of course, they ended up with even less as Congress pared back the request. The result is that the unemployment rate is still close to 10 percent and is not projected to return to near full employment until 2016.
Kuttner also attacks the administration's strategy on health care. He argues that there were major failings of both timing and approach. On timing he argued that Obama would have been better off waiting until he established a record of accomplishment to give him the standing to press his case. On approach, he criticizes Obama's chief of staff Rahm Emanuel for taking an approach that involved cutting deals with the major business interests at the onset. This limited the opportunity for cost savings and therefore meant that the resulting health care plans would still be expensive for middle-income families.
In the wake of the bill's passage (after the book went into print), a bit more generosity might be appropriate here. The bill will extend coverage to 30 million people who did not have it. And it will give the rest of us real insurance, since we will still be able to get coverage if a serious illness causes us to lose our jobs and our insurance. But, Kuttner is absolutely right that the bill does not come close to fixing the health care system. We will have to go back and discipline the drug industry, the insurance industry, the hospital lobby and the other bad guys in the medical-industrial complex or we will end up with a health care bill that bankrupts the government and the country.
Kuttner's book does not give much cause for optimism. We are sitting in the middle of the worst downturn since the Great Depression listening to Robert Rubin lecture us about the need to cut Medicare and Social Security. Given that Rubin earned more than $100 million from the mortgage games that sank Citigroup, and set the economy on a glide path to disaster as Treasury Secretary, there is something seriously wrong with this picture.
However, we have real populist anger that will not go away as long as the economy is being run for the benefit of Wall Street. We also have the benefit of the Internet, which makes it impossible for the elites to shut out populist arguments in the way they did twenty years ago. This is not much to go up against the near infinite money commanded by the Wall Street crew and their lackeys, but it's a start. It also sometimes helps to be right.
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Show AllIn truth nothing very "Radical" has come out of the United States in over 200 years.
The USA is one of the countries built around preserving the power of the ruling class and has not really shifted from that position. They tend to lag behind other nations when it came to things like ending slavery, or giving women the right to vote or things like same sex marriage and the like.
So when you speak of Radical progressives...Radical and progressive relative to WHAT and whom?
I beg to differ. Ralph Nader supports regulated capitalism and so too does some of the Green Party. Capitalism itself is not the problem. Disaster capitalism is probably what you meant. Which countries currently lack capitalism of any kind and how are they faring?
-Capitalism itself is not the problem
I would have to ditto that. Capitalism, like democracy works just fine around the world. Just because Americans limit themselves to two corporate approved parties doesn't mean that things can't be done a better way. BP may have paid Obama's way to the white house, but it was you guys that voted for him. You get what you vote for.
I voted for Chuck Baldwin, Constitution Party, instead of Obama.
jlocke123
HA! In this case a lot of people did NOT get what they voted for my friend! Can I have my vote back now? (lol)
Re: I would have to ditto that. Capitalism, like democracy works just fine around the world.
Do you have ANY evidence for this statement? It is in the poorest countries of the world where capitalism is most "pure" (fewest regulations). Those same countries are also the LEAST democratic.
Capitalism is not synonymous with legalized fraud, bribery and completely unregulated markets. Adam Smith himself believed banks should be regulated, and F A Hayek believed society should provide a "safety net." What Hayek did not believe in was guarantees against loss -- ie, bailouts.
William Rood, patriotic citizen of the world
Hayek was a reactionary, and Smith was naive about being able to regulate capitalism.
You're still drinking the Kool Aid. Capitalism seeks to maximize profits, anything that gets in the way of that, capitalists will seek to eliminate including regulations (like Glass-Steagall). In the history of capitalism, the relatively modest (but important) reforms instituted during the New Deal and Great Society eras, were not representations of "normal" capitalist behavior, they were aberrations. The boom/bust, bubble/crisis cycle IS characteristic of capitalism and we are now in major crisis. As long as you continue to apologize for capitalism you might as well get used to it.
Capitalism may be an acceptable economic system, IF AND WHEN it's properly regulated and balanced so that it actually achieves its theoretical "free market" competitive incentives and benefits for the commonweal. When its "corporate personhood" takes over the sponsoring ownership of a nation's governing apparatus, however, it's not a really great substitute for the democratic representation of natural persons.
In other words, it's not capitalism per se. It's the fact that the U.S. badly confuses capitalism with "freedom and democracy." Even that might be barely tolerable if it didn't insist on "globalization" of that confused concept by force of arms.
i refer Capitalism as it is practiced today wherein it based on debt, fiat money and CONSUMERISM. The model of Capitalism is Growth and the consumption of resources for growth. This is not sustainable.
The end game of this model of Capitalism is the same EVERYWHERE and regulations will NOT help.
How "well" a country is doing is a realtive term. If I ran up my credit card to 50,000 dollars and borrowed 500k from the bank it might APPEAR I am doing very well indeed, but there will come a time where I have to pay the piper.
This is true of Capitalism as we practice it where our resources are consumed at a ever greater rate and we continue the buy and dispose of cycle. We are borrowing against the future and the future is closer then we think.
Sir, you have this precisely right. The move away from this circumstance will in all likelihood be caused by catastrophe.
Capitalism can work for the benefit of all if taxes are such that no one can accumulate great wealth, it's simply taxed away. For example, the incentive for wars would decrease - no profit!
We need to get people more involved in democracy and I think the "National Initiative" would be a good start. As it is now, most voters don't know what the hell their voting on or for. With a national initiative, the incentive to study issues would be greater and would change the nature of the dialogue. I think we could have passed single payer through a National Initiative. Instead, we were led by our noses by politicians! Look where that got us! Scammed ...again.
I never voted for him, never had any expectations from a candidate that is the product of a rigged process. Even his run for the senate, in which republican candidates drooped out of the race and provided an easy shot for that seat. Where did this guy come from? Lets just call him the manchurian candidate.
By now, we've probably all heard the speculation that he was CIA under cover with BCI. Today I read that his mom worked for Geithner's dad. My friends didn't believe me in late 2007 when I told them he was an establishment annointed candidate along with Hillary and John. They actually believed he was an "insurgent."
William Rood, patriotic citizen of the world
If Kuttner or any of you are progressives, then why aren't you calling for an end to Big Government meddling for the corporate interests? Progressives can take a few strategies from the Libertarians and make it easy for people like me to be a small business entrepreneur instead of an employee of a corporation because I had no opportunities. It should be obvious who government is meddling for by now. Why wait for Obama to turn a new leaf?
Poor Kuttner is a caricature of the well-meaning, agonized liberal-lite stranded in anachronistic political myth and analysis.
His appearance on Bill Moyers' Journal a few months ago was definitive. In the face of a palpably incredulous Moyers (and fellow guest Matt Taibbi), Kuttner gamely and loyally insisted that although he was troubled and disappointed by aspects of the Obama maladministration, he still admired Obama as a Historic President (code for a black president) and "on balance" reluctantly supported Obama's health insurance corporation bailout.
Kuttner pretty much buys into the partisan liberal-lite myth that the Democratic Party is essentially virtuous, at least in comparison to the depraved Republicans; he thinks that Elected Misrepresentatives like Barney Frank and Chris Dodd are "good guys" who struggle to do the right thing for the ordinary unprivileged citizen in the face of malevolent, reactionary Republican sharps and cheats.
In short, Kuttner seems to be a nice man still lost in bygone genteel delusions of good government.
And perhaps Dean Baker is, too-- ironically, Baker out-Kuttners Kuttner by suggesting that Kuttner, who as noted SUPPORTED the No Insurer Left Behind atrocity, was perhaps a little TOO critical of it. The paragraph beginning "In the wake of the bill's passage (after the book went into print), a bit more generosity might be appropriate here. ... " is the kind of shallow, reflexive boilerplate euphemism worthy of Kuttner himself.
'By contrast, the government could have taken a hard line...'
Here, lemme sum it up for all those still living in abject denial:
'Frankly, the Banksters own The Place.'
So anyone who expected the Employees hired by The Owners of The Place to take a 'hard line' against their own Owners is nothing less than a total moron.
But it is fun reading pieces by respected political pros who still can't accept the most important, undeniable fact that the US government is nothing more than a subsidiary of Big Corporate Inc.
Only in America! A corporatist President whose way to the White House was paid for by Big Finance, Big Banks, Big Pharma and Big Insurance and whose administration has taken its key players from those "Big" interests and is doing everything it can to protect those same interests is described as a "centrist". WTF????
Here the Democrats are Republicans and the Republicans are insane. This is what a generation or so of "lesser evilism" has wrought. The complete debasement of political discourse and the constant rightward shift of the political center.
In an atmosphere where many, many people actually believe that Obama is a Socialist it makes it that much harder for real left, socialist ideas to be heard. But lets be sure to rally round the Dems in November. After all, the Repubs are worse. To the Right, March!
I wholeheartedly agree the discourse continues to drift, along with the campaign advertising money, to the large Corporatist side. I have worked for 20 some years for campaign finance reform. Like healthcare this is a distasteful slug-it-out affair with very uneven results. To surrender to the apathetic and cede my life, and heirs future, to the vagaries of unregulated Capitalism has a sure result, however: misery and premature physical, spiritual and economic destruction. No " ism ", however grand or farreaching in scope will save you if it is corrupted. I try to march forward, carefully choosing where my next step takes me, and to the beat of best intentions for all concerned.
on the Norman Goldman Show...a "liberal" talk show, the level of discourse is as follows: "communism and socialism are against private ownership, obama is for private ownership, therefore obama is NOT a Socialist!".....when i emailed him that bush and obama were the same cat, his reply was: perhaps i'm naive but i think obama is somewhat better"............and you people thought amerika was going down the tubes..................peace
Goldman sounds a very conventional "liberal" indeed, someone rich in ignorance and happy with it.
Hey, I like Nor-Man Gold-Man. He's the only talk show host I heard who remained against the Health Care Bill. He gets a lot of hate mail from folk who despise him because he criticizes Obama for a lot of the same stuff we are all upset about. But he tries to be balanced in also listing the things he thinks Obama did right. He asserts that Obama is better than Bush but he's also made it clear that he's given up on the Democratic Party and is now a progressive Independent.
A disappointing book review by Dean Baker, who actually calls Kuttner a "progressive." Kuttner is to the Boston Globe what Krugman is to the NYTimes, a liberal economist with a Keynesian bent.
Baker writes:
"We will have to go back and discipline the drug industry, the insurance industry, the hospital lobby and the other bad guys in the medical-industrial complex or we will end up with a health care bill that bankrupts the government and the country."
Really? And who is going to do that? The Congress?
Baker writes:
"Kuttner points out that the stimulus was woefully unambitious and inadequate. The amount that they requested from Congress was only a bit more than half as large as Obama's top economists felt was necessary. Of course, they ended up with even less as Congress pared back the request. The result is that the unemployment rate is still close to 10 percent and is not projected to return to near full employment until 2016."
Not only did the Congress pare back the stimulus, they stuck in a lot of pork barrel tax cuts that are useless as a stimulus. And Baker, of all people, knows that the unemployment rate is closer to 20 per cent than 10 per cent. And as for a "return to near full employment" by 2016, the reason we had something "near full employment" before 2008 was the housing bubble. Is Baker suggesting we need another bubble?
Dean Baker wrote this article for a very specific crowd to maintain his Cred. Sorry Dean, but The American Prospect can deploy the term "progressive" all it wants, but it ain't progressive. It's actually schizophrenic, trying to be simultaneously mainstream and just edgy enough to be interesting to the Powers That Be.
What this country needs is a major mobilization not unlike that of the time of FDR, but it ain't gonna happen because the system is now corrupt beyond comprehension. (I could offer major specific local examples, but more than likely, so could you! When was the last time someone used the term, Big Dig?)
Suffice to add that Unemployment Comp is no longer cutting it here in the Midwest. Necessity knows no law.
-30-
You got your Compassionate Corporatists over here just to the left side of the right of center, and then you got your Callous Corporatists. So if you are a "corporate person" it's win or win big. If you are a poor schlub who works for a living the only time you even get to think you won is when your favorite Corporatists win an election.
Will the people rise up?
Answer: As soon as we are done eating this bread and the circus is over.
Disappointing to see Baker repeating the meme that forcing people to buy the products of private insurance companies is tantamount to "extending coverage to 30 million people." The Obama addministration is gradually sedating and stupifying the left, one pundit at a time.
For a free dowwnload of invective useful to the left -- Words that Draw Blood -- go to www.lost-vocabulary.com.
Cicero: "Freedom is participation in power."
I generally like Baker but this is a poorly written and neo-liberally tainted and flabby article. Baker has spent too much time around the Beltway and PBS News Hour and drifted into the genetically modified corporatist mutation plume of their collective toxic effluent. While I never have supported the bank bailout, neither do I buy his assertion that a second Great Depression "was never a serious proposition." The way the U.S. and other tainted governments are responding to the "downturn" by trying to create a downward deflationary spiral of less and less employment and less and less demand for goods coupled to drastic budget cuts, this "free trade" split-level Recession/Depression (Recession for stock market investors who as individuals make more than $49,000 a year; Depression for working-class folks who make less than $25,000 a year) may very well last longer than the original Great Depression and help destroy what's left of democracy and the environment here and elsewhere with it. Even a GOP invasion of Iran in 2013 with a full military draft won't create enough domestic jobs to keep pace with the number of people entering the workforce, let alone re-employ the long-term unemployed and chronically under-employed. We must restore post WWII rates of taxation on the super-rich into the 90 percentile for several years to even begin to dig our way out.