This weekend seemed to be filled with lots of discussion all over the internet re: Matt Taibbi’s piece giving President Obama’s economic team a not undeserved beat down. I like Taibbi’s writing a lot and the fact that he doesn’t do conventional “objective” reporting doesn’t bother me (but the repetition of bad data does bother me, like the so-called “cost” of all of the bailouts being 23.7 trillion), but I still find it hugely remarkable that there are plenty of people on the left who are very comfortable blaming Obama for not being liberal or progressive enough – as if that is all it would take to get major legislation through Congress. One thing jumps out at me though:
Barack Obama ran for president as a man of the people, standing up to Wall Street as the global economy melted down in that fateful fall of 2008. He pushed a tax plan to soak the rich, ripped NAFTA for hurting the middle class and tore into John McCain for supporting a bankruptcy bill that sided with wealthy bankers “at the expense of hardworking Americans.” Obama may not have run to the left of Samuel Gompers or Cesar Chavez, but it’s not like you saw him on the campaign trail flanked by bankers from Citigroup and Goldman Sachs. What inspired supporters who pushed him to his historic win was the sense that a genuine outsider was finally breaking into an exclusive club, that walls were being torn down, that things were, for lack of a better or more specific term, changing.
Not only did Obama not campaign as an economic progressive, but actively reflected back to the Clinton/Rubin era as one of growth and sensible government that had much to aspire to. When the discussions on the bailouts caused the McCain people to “suspend” his campaign, Obama went to those discussions pretty vocally in favor of said bailouts. Taibbi wrote at great length about the Obama candidacy and was one of the more entertaining (if not still strident voices) against Hillary Clinton. This paragraph indicates to me that he drank the kool-aid and I think that much of the rage and disillusionment from the left comes directly from drinking the kool-aid. And now they are all mad that Obama isn’t the miracle worker that they thought he’d be.
Taibbi waits until the end of his piece to even mention Congress – the place where laws are actually made. He never really gets to the point that any Obama agendas are necessarily limited by how many votes he can get in the Senate. Most of the Obama-proposed initiatives – many of them not especially radical at that – get watered down and weakened in the House and especially in the Senate. How many people observed that the original figure proposed by the administration was too small? It was made smaller as it wound through the Congress and we now know for a fact that the stimulus as passed was too small.
The conspiracy theory spun out of a 6 Degrees of Robert Rubin game is also abit much (and also wrong in a key detail – the Jamie Rubin hired by the transition team was not Robert Rubin’s son, but Christiane Amanapour’s husband). No one seems to remember that this time last year, everyone was holding their breath about the state of the economy. It all seemed incredibly dire, but when Obama started announcing his picks for the core team the main reaction was relief – because he had picked people with government experience, who could hit the ground running and could make the financial world think that the US had its problems in hand. These criteria were important 11 months ago, as the credit markets were largely dead and as the rest of the economy kept falling off of its cliff. No one seems to remember that once approved by Congress, it was the Fed who pushed out bailout monies and other guarantees to the banks and most of that was done prior to the inauguration.
The real problem with this economic team – Tim Geithner especially – is that they have not played their cards as aggressively as they should have. While I still disagree with the bank bailouts, those bailouts could have been aggressively leveraged to provide more relief for homeowners. The Obama Administration has implemented at least two programs for rewriting mortgages and neither are doing what they should. Geithner should be making these banks an offer they can’t refuse – rewrite mortgages aggressively or the bailout and guarantee programs end for banks that don’t comply. Bank bailout and guarantee facilities should have come with more strings attached – like no paying of lobbyists while on the government dole. But making sure that taxpayers were well protected, had some upside in these deals and were getting something in value in return for these deals were well within the power of Tim Geithner and he never seemed to push for taxpayer value.
The old saying “What’s good for GM is good for the nation” is now “What’s good for banks is good for the nation” – but that has been true since the Reagan administration. Except that now we have been living through almost 15 months of proof that this orientation is quite broken. The opportunity missed (and not quite passed yet) is one that makes these same banks actually do something that will be good for the nation in terms of the still astonishing number of bad mortgages out there. The other opportunity missed seems to be the inevitable codification of Too Big To Fail – a codification that functionally seems to make GSEs out of the big banks with no chance at any upside for taking the exposure. But once you get past the
But for the missed opportunities and inept negotiating, you still get back to the main observation – President Obama can propose and write himself the most progressive legislation on the planet for whatever topic you name and if he can’t get 60 votes in the Senate for it, you are still in massive legislative failure mode. So while everyone rages away at Obama for not being progressive enough, these same eveyones are not counting votes in the Senate, where the work gets done. Replace Lieberman, Nelson, Snowe, Collins (and sometimes) Bayh, Baucus, Carper, Conrad with definitively more progressive Democratic versions and you’ve changed the game. The failure of these Senators is not Obama’s failure. It is true that the banking industry does “own this place” as Dick Durbin noted some weeks back and suffered quite the shitstorm over. It is also true that Obama got a great deal of money from banks and Wall Street during his campaign. But it is also true that progressives stayed pretty silent through the campaign as Wall Street money poured in — preferring to indulge in money horserace on the way to winning all of those seats just like everyone else, rather than ask what all of that money may mean. It is easier, really, to spin out a narrative with the fault clearly pinned in one place, but that doesn’t focus any energy on where the real change has to take place.