The Politics of Gesture

Looking forward to Tuesday's State of the Union address, we are seeing a somewhat bolder Barack Obama. The White House has already pre-announced or leaked several "fourth-quarter initiatives," in the president's words. Some of these can be accomplished by executive order; most will require legislation.

The measures that can be achieved by presidential order include reducing the down-payment or interest on federally insured mortgages to stimulate home ownership. Obama has already used his executive power to suspend deportation of some 5 million undocumented Dreamers and in some cases their parents. He has required federal contractors to pay something closer to a living wage. He recently ordered federal agencies to give new parents up to six weeks paid leave.

Among the measures requiring legislation is a tax plan that would increase taxes on the wealthiest in order to finance the tuition help for community college students and more generous child tax credits for working families. Obama also wants an excise tax on large banks and he is calling on Congress to pass a law giving all workers seven days of annual sick leave.

All this amounts to a salutary whiff of class warfare, of the sort that identifies the president with most Americans, against the one percent. And there will probably be a few more surprises in the actual address that have not yet been leaked.

These initiatives are welcome. It probably sounds churlish to say that measures such as these should have come much earlier in his presidency, and could have been a lot stronger. Late in the game, when there is no risk that his proposals will be enacted, Obama is belatedly pursuing policies that seek to underscore the differences between Democrats and Republicans in terms of the practical situation of regular people.

The Republican version of "tax reform," for instance, is more tax breaks for corporations and the rich, and a puny expansion of the child tax credit, but at the cost of cuts in social spending. Republicans have already said that Obama's community college initiative is dead on arrival, citing states rights. If Republicans want to oppose paid sick leave, let's have that debate; it's one that can remind ordinary people who is on which side.

The time to have fought for such policies was when Obama still had a majority in Congress. But back then, in 2010, he was promoting deficit reduction.

And there are two deeper problems. None of Obama's proposals will fundamentally change the distribution of wealth and power in America. None addresses the structural erosion of decent payroll jobs.

With one hand, the administration proposes some useful, if marginal, help to working families. With the other, it is promoting trade deals such as the Trans Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Partnership (TTIP), both of which will increase the power of corporations to weaken health, safety, labor and environmental regulations and increase the outsourcing of jobs.

Obama also insulted regular working people when he tried to appoint a Wall Street deal-maker, Antonio Weiss, to the top Treasury job in charge of financing the national debt. The problem was not only that Weiss had been a key figure in arranging strategies for U.S. corporations to avoid paying taxes. He had no background to qualify him for his proposed job at Treasury. He was a deal-maker, not an expert in the government bond market.

When key Senate Democrats objected to Weiss's appointment, the Treasury orchestrated a maneuver in which Weiss "withdrew" from consideration to be undersecretary in charge of domestic finance, and instead was appointed counselor to the Treasury Secretary -- a made-up job that does not require Senate confirmation. This was the administration's way of thumbing its nose at progressive critics, and signaling reassurance to its Wall Street allies.

Meanwhile, the 2010 Dodd-Frank Act is slowly being eviscerated, by the administration's glacial pace of issuing regulations, now compounded by the Republican strategy of dismantling the financial reform law through successive amendments to must-pass legislation. Wall Street profits are more lucrative than ever, too-big-to-fail banks are even bigger, and there is no fundamental change to the business model that further enriches the one percent and that crashed the economy in 2008.

The White House policy of business-as-usual for Wall Street plus marginally increased help for working families calls to mind a very useful British expression -- "horse and rabbit stew," a supposedly equal ragout made from one horse and one rabbit.

When you add it all up, it still amounts to Rubinism, the ideology associated with America's most influential Wall Street Democrat, Robert Rubin. The former Goldman Sachs co-chair, later chair of the executive committee of Citigroup -- with a stint as Clinton economic policy czar and later treasury secretary in between -- had a neat formula for serving the interests of Wall Street while signaling concern for America's struggling working families.

The policy was one part financial deregulation and trade deals crafted to enable banks and corporations to outrun the constraints of domestic law. The other part was small-bore initiatives to signal help for ordinary working families. Such proposals are unobjectionable, except for the fact that they don't fundamentally change the political economy of American inequality.

If Hillary Clinton should be the next president, we run the risk of having Rubinism as the dominant Democratic economic ideology for three successive Democratic presidencies -- and we will keep wondering why working people increasingly give up on Democrats and on government itself. (While Obama is cautiously proposing some modest spending initiatives, Bill Clinton keeps on showing up at events sponsored by the Peter G. Peterson Foundation, sounding the alarms about the federal deficit.)

Thanks to the historic accident of the date of Martin Luther King, Jr.'s birth, MLK Day will forever be on the eve of the president's State of the Union address. Dr. King's courage in fighting not just for racial inclusion but for economic justice should shame Democrats who invoke King's words but not his sense of mission and struggle.