Thursday, December 9, 2010

Progressivism and Obama

James K. Galbraith is an economist and a professor at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin. His, father, John Kenneth Galbraith, served in the administrations of FDR, Truman, Kennedy, and Johnson. This is the text of of a speech, which was delivered at the Americans for Democratic Action Education Fund’s Post-election Conference last month, originally appeared at new deal 2.0:


I want to raise a hard question -- a question on which Americans are divided. It seems to me, though, we will get nowhere unless we realize where we are, what has actually happened, and what the future most likely holds.

Recovery begins with realism and there is nothing to be gained by kidding ourselves. On the topics that I know most about, the administration is beyond being a disappointment. It's beyond inept, unprepared, weak, and ineffective. Four and again two years ago, the people demanded change. As a candidate, the President promised change. In foreign policy and the core economic policies, he delivered continuity instead. That was true on Afghanistan and it was and is true in economic policy, especially in respect to the banks. What we got was George W. Bush's policies without Bush's toughness, without his in-your-face refusal to compromise prematurely. Without what he himself calls his understanding that you do not negotiate with yourself.

It's a measure of where we are, I think, that at a meeting of Americans for Democratic Action, you find me comparing President Obama unfavorably to President George W. Bush.

In economic policy it was said earlier we have a lack of narrative. This afternoon, Gregory King asked why the people didn't know that the Republican Party is uniformly and massively opposed to job programs, to state and local assistance, and to every legislative measure that might aid and promote economic recovery from the worst crisis and recession in modern times. Why is that that they didn't know? Could it have anything to do with the fact that the White House didn't tell them?

And why was that?

The president deprived himself of any chance to develop a narrative from the beginning by surrounding himself with holdover appointments from the Bush and even the Clinton administrations: Secretary Geithner, Chairman Bernanke, and, since we're here at Harvard, I'll call him by his highest title, President Summers. These men have no commitment to the base, no commitment to the Democratic Party as a whole, no particular commitment to Barack Obama, and none to the broad objective of national economic recovery that can be detected from their actions.

With this team the president also chose to cover up economic crime. Not only has the greatest wave of financial fraud in our history gone largely uninvestigated and unpunished, the government and this administration with its stress tests (which were fakes), its relaxation of accounting standards, which permitted banks to hold toxic assets on their books at far higher prices than any investor would pay, with its failure to make criminal referrals where these were clearly warranted, with its continuation in office -- sometimes in acting capacities -- of some of the leading non-regulators of the earlier era, has continued an ongoing active complicity in financial fraud. And the perpetrators, of course, prospered as never before: reporting profits that they would not have been able to report under honest accounting standards and converting taxpayer support into bonuses; while at the same time cutting back savagely on loans to businesses and individuals, and ramping up foreclosures, much of that accomplished with forged documents and perjured affidavits.

Could the president and his administration have done something? Yes, they could have. Where was the Federal Deposit Insurance Corporation? Why did they choose not to implement the law -- the Prompt Corrective Action law -- which requires the federal government to take into receivership financial institutions when there is a significant risk of large taxpayer losses to the insurance fund? Where were the FBI and the Department of Justice? Did the President do anything? No. Is he doing anything now? No. Why not? The most likely answer is that he did not want to. My understanding, in fact, is that there was one meeting where this issue was raised, and the president stated that his economic team had assured him they had the situation under control.

On the larger economic policy front, the White House gave away the game from the beginning. How? First by guessing at the scale of the disaster. When leading economic advisers (I believe, in fact, it was President Summers) announced that the unemployment rate would peak at 8%, they not only guessed wrong, but gave away the right to assign responsibility to the previous administration when things got worse. This was either elementary bad politics or deliberate self-sabotage. But it gets worse. The optimistic forecast helped to justify a weak program. Useful things were done, but not nearly enough to convey the impression of a forceful policy to the broader public. Then once the banks were taken care of and the stock market took off again, it seems clear that the team at the White House didn't care anymore.

Again, could they have done differently? Of course. The president could have told the truth, which is that we faced a historic meltdown, a collapse of the core financial institutions of our economy, and that we had really no way of knowing how bad economic conditions might get or how long this would endure and that therefore the situation would require a full mobilization: all resources, all hands on deck, major departures of policy, no holding back, and the responsibility for trouble and failure falling plainly on those who would obstruct the course. None of the people he chose to advise him on economic policy was remotely capable of thinking in those terms.

We've learned from Vic Fingerhut and Mike Lux that the administration went down in public esteem when people realized it was working for the banks and not for them. Why did they think this? Why did they go from "blaming Bush and Wall Street to blaming Obama and Wall Street"? Because plainly they could see what was in front of their faces. Except in manner, President Bush never really pretended to be a President for ordinary folks; President Obama did. Bush was who he was; Obama held out, fostered, and promoted vast hopes, mobilizing the American population behind his leadership on that basis. And he disappointed those hopes -- to use a very harsh word, one could say he has betrayed those hopes. How can one therefore blame the voters for acting as they have acted?

What happens next? Let's again not kid ourselves, we have lost a great many seats in the House of Representatives and the House of Representatives isn't coming back into a Democratic majority in the near future. Simply because of the balance of exposures -- the larger numbers of Democratic Senators exposed to reelection in the next cycle, the greatest likelihood is that the Senate will also go Republican in two years time. President Obama has set his course. He has surrounded himself with the advisers of his choice and as he moves to replace President Summers we hear from the press that the priority is to "repair the rift with his investors on Wall Street." What does that tell you? It tells me that he does not have President Clinton's fighting and survival instincts. I've not heard one good reason all day to believe that we are going to see from this White House the fight that we want, that he could win in two years, or any reason we should be backing him now.

The Democratic Party has become too associated with Wall Street. This is a fact. It is a structural problem. It seems to me that we as progressives need -- this is my personal position -- we need to draw a line and decide that we would be better off with an under-funded, fighting progressive minority party than a party marked by obvious duplicity and constant losses on every policy front as a result of the reversals in our own leadership.

What is at stake in the long run? Two things, mainly, in my view. First, it seems to me that we as progressives need to make an honorable defense of the great legacies of the New Deal and Great Society -- programs and institutions that brought America out of the Great Depression and bought us through the Second World War, brought us to our period of greatest prosperity, and the greatest advances in social justice. Social Security, Medicare, housing finance -- the front-line right now is the foreclosure crisis, the crisis, I should say, of foreclosure fraud -- the progressive tax code, anti-poverty policy, public investment, public safety, and human and civil rights. We are going to lose these battles– get used to it. But we need to make an honorable fight, to state clearly what our principles are and to lay down a record which is trustworthy for the future.

Beyond this, bold proposals are what we should be advancing now; even when they lose, they have their value. We can talk about job programs; we can talk about an infrastructure bank; we can talk about Juliet Schor's idea of a four-day work week; we can talk about my idea of expanding Social Security and creating an early retirement option so that people who are older and unemployed or anxious to get out of the labor force can leave on comfortable terms, and so create job openings for younger people who, as we've heard today, are facing very long periods of extremely aggravating and frustrating unemployment; we can talk about establishing a systematic program of general revenue sharing to support state and local governments, we can talk about the financial restructuring we so desperately need and that we'll have to have if we are going to have a country which has a viable private credit system and in which large financial power is not constantly dictating the terms of every political maneuver.

We are not going to get these things, but we should have a clearly defined program so that people know what they are. And then, frankly, as was said earlier today, said most elegantly by Jeff Madrick, in the long run we need to recognize that the fate of the entire country is at stake. Its governance can't be entrusted indefinitely to incompetents, hacks, and lobbyists. Large countries can and do fail, they have done so in our own time. And the consequences are very grave: drastic declines in services, in living standards, in life expectancies, huge increases in social tension, in repression, and in violence. These are the consequences of following through with crackpot ideas such as those embodied in the Bowles-Simpson deficit commission, as Jeff Madrick again outlined, such notions as putting arbitrary limits on the scale of government, or arbitrary limits on the top tax rate affecting the wealthiest Americans.

This isn't a parlor game. The outcome isn't destined to be alright. It will not necessarily end in progress whatever happens. What we do, how we proceed, and how we effectively resist what is plainly about to happen, matters very greatly for the future of our country, of our children, and of another generation to come. We need to lose our fear, our hesitation, and our unwillingness to face the facts. If we thereby lose some of our hopes, let's remember the dictum of William of Orange that "it is not necessary to hope in order to persevere."

The president should know that, as Lincoln said to the Congress in the dark winter of 1862, he "cannot escape history." And we are heading now into a very dark time, so let's face it with eyes open. And if we must, let's seek leadership that shares our values, fights for our principles, and deserves our trust.

13 comments:

  1. Wow. I linked to the same speech yesterday. I thought it was right on point. I don't think the Democrats realize that they are faced with their own extinction. The Republicans are attacking the New Deal. If Dems don't wake up their single greatest accomplishment of hte 20th century will be unraveled and we'll return to turn-of-the-last-century robber baron policies.

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  2. I came across this speech and realized that he had said, very concisely, what I have been trying to say the last month....

    He just did it a lot better than I ever could.

    His father's books are also worth reading because he predicted the rise of corporatism in the 1950's....

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  3. There was a time when something like "a liberal paradigm" was in effect, I suppose -- during the sixties and seventies. I mean that it seemed to many as if the basic ideas of the New Deal were not much in question anymore, even if they met some resistance. I don't recall Richard Nixon, for example, going around saying that he considered it imperative to scuttle everything FDR had ever done -- that would have been considered absurd.

    I don't believe anyone would say the same about the present; it is jaw-droppingly obvious that the current crop of conservatives go far beyond even Reagan's "government is the problem" refrain and would prefer to dismantle every social program that works in the ordinary person's favor.

    The latter-day Right is like a shark moving in for the kill -- they smell blood in the water and will not be deterred, no matter what.

    Make no mistake about it: these "conservatives" won't stop until they have ushered in the authoritarian dystopia for which they so long: a repressive government that continues to take in revenue but which does NOTHING for anybody but the rich, the powerful, and the defense industry. Nothing, that is, except for telling us all how to live our lives, courtesy of the religious fanatics who are a driving force in modern conservatism.

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  4. Dino,

    ...and the the reason that the conservatives have such a stranglehold is that "the rich, the powerful, and the defense industry" also have control of the democratic party....

    Its just a mirage that the democrats represent the last bastion of defense against the "authoritarian dystopia' that you see coming from the conservatives....

    Its not the conservatives....its coming from the top down....

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  5. On the Lawrence O’Donnell Show (MSNBC) last night, there was Ralph Nader echoing sentiments similar to those of Galbraith: Obama is naïve, consorted with Wall Street criminals, caved to Republicans, gave away the store, and failed to control the message wars. Last and most brazen of all, there was Ralph Nader calling for a primary challenger to face Obama in 2012.

    Ralph Nader: STFU! Had Nader stayed away from the elections in 2000, Gore would have won an uncontested victory. Had Gore won, there would have been NO George Bush, NO war in Iraq, NO tax giveaways to the wealthy, NO giant deficits, NO economic meltdown, and NO bank bailouts.

    Primary challenge indeed! Ralph Nader is the Mother-Of-All-Political-Assassins, and now he wants an instant replay.

    Had we withheld our support for Obama in 2008, who would be our president now? JOHN McCAIN! With SARAH PALIN at his side … one breadth away from the presidency! Give me a break!

    When progressives divide against themselves, the Republicans win every time. And you wonder what is wrong with liberals? Chicken Little or headless chickens, take your pick!

    Think about it!

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  6. The reason democrats cannot control the message is because they have nothing different to offer to change the message...

    Tax cuts to create jobs...pretty much a supply side idea...

    If you read Galbraith you will realize that his biggest issue is not so much with Obama as it is with "President Summers"...

    Now, ask yourself Octy...if Obama is a progressive who is his progressive advisors? Summers? Geitner?

    The economic meltdown began during the Clinton administration with the repeal of Glass Seagall and the passage of NAFTA...you can argue that Gore might not have dragged us into Iraq and or not have given into the pressure to lower the taxes of the wealthy....but considering that Larry Summers would have been his Treasury Secretary you won't ever know.

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  7. "When progressives divide against themselves, the Republicans win every time. And you wonder what is wrong with liberals? Chicken Little or headless chickens, take your pick!

    Think about it!"

    Octy, let me ask you...

    Are we still in Iraq? Are we still in Afghanistan?

    Did we repeal DADT?

    How about the Dream Act?

    Everytime you turn around this administration is throwing one of the key liberal constituencies under the bus.....

    The Presidency, a majority in the house, a majority in the senate in basically the only constituency that the current administration has appeased is Wall Street, big business, and insurance companies...

    The rest of us are waiting for the benefits to trickle down...

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  8. TAO,

    The reason I avoid such thinking as you outline is that it's too much like the philosopher's "night in which all cows are grey." One has to make distinctions -- no, the Democrats are most certainly NOT the same as the Republicans. There aren't any Bernie Sanderses or John Wieners or other genuine liberals in the Republican Party. Is there complicity with certain unhealthy economic forces? You bet there is -- but the two parties are not the same, if you're suggesting that they are. This is an important point because I don't see any realistic prospect of a liberal third party emerging at this time. Basically, what we have to work with and within is the Democratic Party.

    The way this dino has come to think about the Republic is perhaps best captured in a Wordsworth line -- one must try to hear "the still, sad music of humanity" in the goings-on of a perhaps declining way of life. I wish they were less harsh and grating, but you can't always get what you want, I guess.... So I'm not interested in making statements that I think gesture towards the discounting of what is probably the only ground of resistance (however shaky it may be) against the ultracapitalist morons and fascist jerks who would, without batting an ugly eyelash, transform this country into something unrecognizable to any of us, and scarcely worth living in.

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  9. "Run for your life from any man who tells you that money is evil. That sentence is the leper's bell of an approaching looter."

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  10. Dino,

    The reality is that as Progressives we need to quit sitting around waiting for the system to initiate change.

    Systems, especially political systems do not change but rather they protect the status quo. Its time that we come out from behind the skirts of the democratic party and fight the forces of evil directly...

    No single progressive movement ever began from within the political system....

    Its not a third party but rather the threat of an uncontrolled citizenship that causes change to occur.

    Since the 70's all of the threats to the status quo have come from the religious right, the conservatives, and the anti social militias...

    Oh every now and then Greenspeace stages something, or PETA does...or you get the anarchists storming some world economic summit but there has been absolutely nothing from the left....

    If you don't get out in the street no one believes you exist....

    That pretty much sums up the progressives....we hide behind Moveon.org and a couple of comedians...

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  11. Listened to Chris Hedges the other night making many of the same points.

    http://www.npr.org/templates/story/story.php?storyId=131166027

    Heading to the 'middle' isn't working out so well for the Democrats. And cozying up to Wall Street is another in an endless stream of betrayals of workers and progressivism.

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  12. TAO,

    You make a good series of points, so I'll respond with a bit of thinking out loud, very rough-draftily. Sometimes that can be useful, just to put something out there without feeling too attached to it. So here goes:

    I sound rather gloomy because, unlike you, I really don't see any possibility of the kind of "uncontrolled populace" that might stand up together and demand serious, equitable change. At least not on its own intellectual power and its own dime. We're talking about people who seem to be pretty easily snowed, or at least cowed, by the far right social-issues chaps and the pure-capitalism mythology pushers. I just don't see much concentrated progressive power coming from outside the Democratic Party, or likely to come from outside it, anytime soon, even though I don't deny that there are some plenty smart individuals out there, people who know the score.

    There's also the problem that "the threat of an uncontrolled populace" might bring on "the threat of an unrestricted police state," the makings of which -- thanks to all those wonderful post 9/11 with-us-or-agin'-us measures woven into the nation's legal and political fabric -- we already have.

    Which leaves me viewing modern American politics through a gloomy filter -- I suspect that we may have arrived at a near-terminal stage in the life of our republic -- it seems to me that too many millions of the people are showing themselves too willfully ignorant and forcefully irresponsible to sustain themselves as truly free or do anything but take away the freedom of others, and that the government has grown so paralyzed and/or corrupt that there's little desire coming from that quarter to improve the situation.

    That leaves me configuring the lonely agents of amelioration and extension as the most intelligent legislators still working within the Democratic Party. I reckon they might be able to keep us going for a fair amount of time if they can outmaneuver the fiends and idiots surrounding them like zombies in a B-grade film. Hell, maybe they can commandeer an abandoned shopping mall or something, and …. (cf Day of the Dead -- or was it Dawn of the Dead? I forget which ….) But honestly, I don't know if they can do much. They sound more and more like (borrowing the phrase again from a fellow Zoner) isolated "voices of reason" in an almost limitless, old-growth-quality "wilderness of WTF." After all, the zombies are never more than a couple steps behind once the infection takes hold. Oh what the heck? I think I'll just go ride my bike. It's a nice day, in spite of it all. Maybe the zombies will be on vacation or something….

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  13. This reality, and the video by George Carlin, is truly disheartening. (BTW, Corporate interests have successfully had this video yanked a couple of times; see it before it is too late.)

    There was a time when I thought things would get so bad here that the populace would fall back on the 2nd amendment and take back the country, a la French Revolution style. But that would have equally disastrous consequences. Besides, apathy reins and we seem unable to form any sort of cohesive grassroots position of power. As long as we have entertainment TV, we will all drown in our own apathy.

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