This is a guest note by Leo Hindery, Jr. Hindery is Chairman of the US Economy/Smart Globalization Initiative at the New America Foundation and a member of the Council on Foreign Relations. Currently an investor in media companies, he is the former CEO of Tele-Communications, Inc. (TCI), Liberty Media and their successor AT&T Broadband. He also serves on the Board of the Huffington Post Investigative Fund.
“Guilty of political malpractice in the first degree.” That’s what Rep. Jerrold Nadler (D-NY) said the other day about President Obama allowing himself to be negotiated in early 2009 into an economic stimulus package that was “far too small.”
The proof of this conclusion is found all over the November 2, 2010 election results. Of the 41% of voters who say their financial situation is worse, Democrats won just 35% of them and the GOP won 65%. Just two years ago, Democrats won this group 75% to 25%.
I will always believe that the administration’s decision to turn over the economy to an economic team led Larry Summers and Tim Geithner preordained the 2010 election debacle more than any other action. When Karl Rove indicts, as he did just before the election, President Obama’s “incoherent closing argument” for completely missing the fact that “the economy and jobs [were] the No. 1 issue in every poll” and then lauds the Republicans for “drawing attention to lackluster job growth and the failed stimulus”, you just want to cry.
As Michael Hirsh wrote in Newsweek, President Obama arrived in office perceived by many as the second coming of Franklin D. Roosevelt. Yet rather than acting like FDR, he “presented himself as completely unprepared to address the broken economy and financial system and faithfully channeled Summers and Geithner and their conservative approach to stimulus and reform”, while putting health care reform above all else.
To this point, just a week ago, on November 8, President Obama very mistakenly said that he and his administration “didn’t do what Franklin Delano Roosevelt did, which was basically wait for six months until the thing had gotten so bad that it became an easier sell politically.” The truth is that FDR took office on Saturday, March 4, 1933, called Congress into special session to meet five days later on March 9th, and by June 15th, at the end of the “Hundred Days”, had seen almost all of the early New Deal financial legislation passed.
The Obama economic team, all of whom were once acolytes of Clinton Treasury Secretary Bob Rubin, who was the champion behind much of the financial deregulation and the unfair free trading which have brought our economy to its knees, gave the President a too-small and misdirected stimulus package, with way too much going toward transfer payments and way too little to job-producing public works and infrastructure. Larry Summers said that unemployment would peak at 8 percent in 2009, and then at the team’s urging, the President claimed the package as the greatest early-term achievement ever by a first-term President, which immediately turned Bush’s Great Recession irretrievably into Obama’s.
As James Galbraith has written, “the original sin of Obama’s presidency was to assign economic policy to a closed circle of bank-friendly economists and Bush carryovers…who had no personal commitment to the goal of an early recovery, no stake in the Democratic Party, no interest in the larger success of Barack Obama.”
So when voters saw unemployment rise a lot further – there are now 5.2 million more real unemployed Americans than in December 2008 – there was no one left for the electorate to blame but Democrats.
Then the team, in this case led by Tim Geithner, let Wall Street off the hook by resisting and arguing against virtually every tough amendment to the proposed financial reform legislation. Behind his back and sometimes to his face, Geithner sabotaged the recommendations of Paul Volcker, especially his idea of barring commercial banks from indulging in heavy risk taking and proprietary trading. By letting his team win against Volcker and the likes of Rob Johnson and the Roosevelt Institute, President Obama lost his capacity to harness the justified anger of voters and gain the support of the disaffected.
In a blog I wrote back in March, I drew contrasts among: (1) President Roosevelt’s abiding commitment to workers, economic justice and a vibrant middle class that grows from the bottom up; (2) Candidate Obama’s amazing speech on July 2, 2008, to the United Steelworkers in which he said that, “The reason I’m running for President is because I don’t want to wake up one day many years from now and see that we’re still standing idly by while even more plants are shut down, and even more jobs are shipped abroad, and even more workers are denied the good benefits and decent wages they deserve”; and (3) President Obama’s seeming inattention until just this past Labor Day to actually fixing real unemployment and improving workers’ rights.
And by committing his administration to a too-small stimulus package early last year, now that John Boehner is soon to be the Speaker of the House, President Obama may have foreclosed achieving the only major remedy left to the nation to bring unemployment down and economic growth up, which is more and better-directed economic stimulus. By effectively conceding the argument over the role of government in a deeply depressed economy, the Obama economic team essentially left for now only the Fed and its imprecise quantitative easing to jumpstart the economy.
The Obama economic team also fell prey to the President’s and his most senior advisors’ belief that, in their own words, Mr. Obama won the 2008 election “because of character, not issues.” In fact, nothing could be further from the truth.
The administration’s almost complete failure to connect with voters on the jobs front – despite unflinching efforts on jobs creation by Nancy Pelosi in the House and by Sherrod Brown (D-OH), Debbie Stabenow (D-MI) and their comrades in the Senate – is just one example of voters’ disillusionment. The 2008 election was very much about “issues”, and everyone who voted in it had a strong sense of how Mr. Obama would govern and with what priorities, because his campaign promises were so precise. The story is often told of the man found weeping when Franklin Roosevelt’s funeral train went past, who when asked if he had known the President, replied, “I didn’t know him, but he knew me.” And frankly, we all thought Mr. Obama knew us.
Chris Lehane, an esteemed veteran of the Clinton White House, says that Barack Obama ran such an “aspirational campaign” that “if you were a centrist, or if you were a progressive, you projected that he was the kind of president you wanted.”
So, if your focus was health care reform, you envisioned the very precise reform that the Obama Campaign advanced, not the bill that was eventually passed. If you are gay or lesbian, you thought you had a President committed to all of your civil rights, including your right to help defend our country – instead, regarding the latter, the President called for a study of what he said he already fully understood, a study that is not even due until this coming December 1 when all the impetus in the House has shifted to the Republicans and the progressive majority in the Senate has been emasculated. And if one’s desire was to see workers have the unfettered opportunity to join unions and have their benefits and rights protected, well forget that too.
We hear from sources within the White House that the President and his closest advisors have concluded that the “electoral thrashing” we all just saw had more to do with larger economic forces and strategic decisions about health care and economic stimulus than with the particular operations of the White House. In their very own words, “it wasn’t that the White House did things wrong, but that it did the wrong things.”
How can the administration say on the one hand that it “did the wrong things” and then on the other hand exonerate itself by saying that “it wasn’t that the White House did things wrong?”
President Obama did attempt to advance some job-creation initiatives – albeit not nearly large enough or the ones I would have recommended as his first actions – and he was obstructed at every turn by Republicans, even his initiatives based on policies supported by the GOP in the past. But when the President got push back, he seemed to give up, without following the example of FDR who engaged the American people by telling them that “your government has unmistakable confidence in your ability to hear the worst without flinching and losing heart.”
A staggering 55 million voters who voted for Members of Congress in November 2008 didn’t vote for any Member in November 2010, and the critically important independent voters chose Republicans this year by a staggering 18-point margin. As I contend was also the case in 2008, the November 2010 election was again mostly about jobs and the economy – there is simply no hiding the dismal real unemployment figures, which show an unemployment rate of 18.7% (not the ‘official” figure of 9.6%), 29.9 million unemployed workers (not the ‘official’ 14.8 million figure), and a “jobs gap” of 21.9 million in order to be at full employment in real terms.
And now, because of this disaffection, come January, for only the second time in eight decades and for the first time in more than six, the House will have fewer than two hundred Democrats in it. And sadly – and ironically – the American people, who are unconvinced by vague promises of “green jobs” and even vaguer studies showing that offshoring creates two jobs in America for every one lost overseas, just rewarded the Republicans who not only opposed the stimulus but also blocked even the extension of unemployment benefits.
Yet even now, no one in the White House seems to have an economic plan or growth agenda to create these needed jobs. Nor does anyone seem able to explain and justify the President’s stimulus, health care, and financial regulation initiatives in ways that relate to workers or that eliminate the uncertainties which have been keeping American businesses ‘sitting on their [investment] wallets’.
You really do have to wonder what happened to the laser focus on the economy that Candidate Obama promised would be the hallmark of his administration. Instead, all we’ve really seen is a promise to double gross exports over the next five years, which would add a meager 2.5 million jobs (the administration’s own figure) when we need to find 22 million today and which ignores the fact that the only exports figure that really matters is net exports (namely, our balance of trade). This exports agenda of the President’s, which he described on November 5 on the eve of his post-election trip to India and elsewhere as “how we’ll create jobs, prosperity and an economy that’s built on a stronger foundation”, is so short of what’s really needed to create millions of American jobs that I want to cry again.
The point – and the ongoing problem – is the sharp contrast between FDR’s actions and Candidate-cum-President Obama’s promises and actions. President Obama needs to feel in his core what the two Roosevelts felt, and remember how to talk with angry working-class people. He needs to pursue jobs creation with the same priority, focus and determination that characterized his health care reform efforts. And then he needs to propose concrete initiatives to create jobs and rebalance incomes, whether the Republicans agree or disagree.
When he does these three things, his own promises will have turned into actions and the nation will again believe that he and his administration deeply care about and are working diligently to alleviate the plight of America’s workers and the middle class.
— Leo Hindery