A Presidency in Peril: An Excerpt

8/9/2019 A Presidency in Peril: An Excerpt

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EXCERPT FROM THE INTRODUCTION OF A PRESIDENCY IN PERIL BY

ROBERT KUTTNER.

The Man and the Moment

We will need to remind ourselves, despite all our differences, just

how much we share.

—Barack Obama, The Audacity of Hope

Despite his 11th

hour success in winning enactment of health reform,

Barack Obama remains at risk of being a failed president. What would failure

mean? Economically, not quite a second Great Depression, but very possibly a

great stagnation with prolonged suffering for ordinary people—an intensification

of trends that were intolerable before the crash began. Politically, it would mean

the lost promise of an age of reform anchored in a durable progressive governing

coalition. Failure would leave 2008–12 as merely a brief interregnum in a longRepublican era, with the far right more dominant and more extreme with each

election cycle.

Events were not supposed to turn out this way. As the financial crash of

2007 and 2008 deepened, Barack Obamaʼs appearance on the political scene

seemed an almost providential rendezvous of man and moment. Wall Street was

in shambles. Its excesses had brought the economy to the brink of depression.

The great collapse was also the practical failure of an ideology and the ruling elite

that embraced it. The claim that the banking system operated most efficiently

with the least government interference was suddenly ludicrous. The high priests

of that worldview were coming hat-in-hand to the same government for help.

The failure of the old order was pervasive. The public officials of both

parties who had assured us that financial deregulation would deliver broad

prosperity were shown to be catastrophically wrong. The Wall Street moguls who

insisted that their own grotesque enrichment was merely a by-product of their

vital service to capital markets were revealed as frauds. The free-market

economists who had given intellectual cover to the deregulators in government

and the scoundrels in the banks were now intellectually bankrupt.

For progressives, it was the ultimate teachable moment, and here was a

leader with unusual gifts as a teacher. As an outsider, Obama owed few debts to

the political establishment. His idealistic call for transformative change roused a

fearful electorate to vote its hopes. George W. Bush, meanwhile, was leaving

office as the most unpopular incumbent since Richard Nixonʼs resignation in

disgrace, adding to the impetus for a clean break.

The early signs were encouraging. In a powerful speech on the financial



collapse, in March 2008, Obama declared, “Instead of establishing a twenty-first-

century regulatory framework, we simply dismantled the old one, aided by a legal

but corrupt bargain in which campaign money all too often shaped policy and

watered down oversight. In doing so we encouraged a winner-take-all, anything-

goes environment that helped foster devastating dislocations in our economy.”Obama displayed a superb facility for framing boldly progressive ideals

as reassuringly patriotic. In his keynote address to the 2004 Democratic National

Convention, which instantly established him as a national contender, Obama

declared:

If thereʼs a child on the south side of Chicago who can ʼt read, that

matters to me, even if itʼs not my child. If thereʼs a senior citizen

somewhere who canʼt pay for her prescription and has to choose

between medicine and the rent, that makes my life poorer, even if itʼs

not my grandmother. If thereʼs an Arab American family beingrounded up without benefit of an attorney or due process, that

threatens my civil liberties. Itʼs that fundamental belief—I am my

brotherʼs keeper, I am my sisterʼs keeper—that makes this country

work. Itʼs what allows us to pursue our individual dreams, yet still

come together as a single American family.

If Obama heartened liberals, it was also because here was a black man

who had lived the American dream, a man whose own life experience was

exemplary as husband, father, scholar, and community leader—a genuinely

idealistic politician who once again could inspire. When the extended Obama

family was introduced at the 2008 Democratic National Convention, this was a

family of strivers far more evocative of the American dream than the McCain

family. It was an all-American family that just happened to be African American.

The possibility that the Obamas could be Americaʼs First Family suggested a

degree of racial healing that most of us thought weʼd never see in our lifetimes.

In the 2008 elections, the Democrats gained twenty-four seats in the

House and eight in the Senate. Soon their Senate margin would grow to sixty, the

largest Democratic governing majority in more than three decades. Young people

who knew John Kennedy only from history books had their first experience ofbeing deeply moved by a believable new leader. Voters casting ballots for the

first time favored Obama by an astonishing 71 percent. Obama carried states

that Democrats had long given up for lost, such as Indiana and North Carolina;

he won nearly all the important swing states, like Ohio and Florida. His campaign

strategy eventually enlisted an army of 3,000 full-time organizers and an

unprecedented 1.5 million volunteers, while more than 13 million people signed

up for his e-mail list.

Obamaʼs inspirational eloquence, his call for transforming change, and

his skill at the mechanics of retail politics suggested a president who could

mobilize citizens as a necessary counterweight to the concentrated power offinancial elites. This was not just posturing. His voting record was one of the most

liberal in the Senate. So the stage was set, seemingly, for a great ideological and

political reversal, comparable to the Roosevelt revolution of 1933. Obama was

poised to create a new majority coalition, built on the premise that rapacious



private finance had to be contained so that the rest of America could thrive.

But history has a way of playing tricks, and this hopeful scenario is not

the way Barack Obamaʼs first year unfolded. Instead of making a radical break

with Wall Street, he delivered a startling continuity with the ad hoc bank rescues

of the Bush administration. As these policies averted a second Great Depression,the economy has bifurcated. Wall Street has recovered and its executives are

once again collecting tens of billions in bonuses, but Main Street is not sharing in

the prosperity.

Indeed, the economic pain of ordinary Americans is far more serious

than it was before the crash, when economic unease was already a prime

concern. Real unemployment is stubbornly high. Mortgage foreclosures continue

to rise. Small businesses are starved for credit. State and local budgets are in

free fall. Secure health care remains a distant ideal.

By the time Republican Scott Brown won an upset victory for the

Massachusetts Senate seat once held by Ted Kennedy, on the very eve of theanniversary of Obamaʼs inauguration, the administration was already in deep

trouble. The Massachusetts debacle was an accident waiting to happen.

President Obama has been steadily losing the voters who took a chance on him

in 2008. As populist anger rises, and the real economic pain of regular Americans

contrasts with lavish Wall Street paydays, Obama and the Democrats are

becoming targets of the rage rather than instruments of its remediation.

One man who voted for Obama, a former steelworker now driving a taxi

in Pittsburgh, told me, “Heʼs taking over the auto industry, the mortgages, and

health care, and the banks. The deficit is going through the roof. And what ʼs it

doing for me?” When I appeared on a talk show the morning after theMassachusetts election, one caller told me that he had worked his heart out for

Obama in 2008, “and now Iʼm sitting on my hands.” In a Hart Research poll taken

in September 2009, 76 percent of respondents said that the government ʼs

economic policies had helped large banks, while just 24 percent felt that the

policies had helped them or their families. By a margin of 54 to 38, January polls

showed that a majority of Americans didnʼt support Obamaʼs health reform.

Pollster Peter Hart described the prevailing attitude as “total disgust” with

Washington. But “Washington” now means a Democratic administration and a

Democratic Congress.

So the stakes are immense. A rare opportunity for realignment and

reform is being missed. A loss of either house of Congress in the 2010 elections

would create legislative deadlock, making it that much more difficult for Obama to

deliver anything of substance in 2011 and 2012. Obama himself could be a one-

term president. Though conservative dominance of economic policy caused the

collapse, the Republican far right rather than the reformist left is increasingly

supplying the narrative of economic distress, and could pick up the pieces.

During the campaign of 2008, we saw glimmers of a very different

Barack Obama and a very different political future. For progressives like me,

Obama represented a chance to reclaim a tradition of enriched democracy,affirmative government, and social justice. If Obama does fail, he takes down our

hopes with him.



A Road Not Yet Taken

Dare we still hope that Obama may yet deliver change we can believe

in? The quiet desperation of millions of Americans is not being remedied by

either party. But for now, the economic unease is increasingly being defined andnarrated by the Republican right. The crucial question is whether Obama himself

has been so totally captured by the financial elite that his path is now irreversible.

It has become a cliché among pundits that the Democratic Party is

hamstrung by interest groups. Commentators usually have in mind groups that

are actually fairly weak politically—blacks, Hispanics, gays, feminists,

schoolteachers, trade unionists. Politicians who propitiate these groups are

accused of pandering. The fact that the most powerful interest group of them all,

the financial industry, seldom makes the list is testament to its quiet power.

Princeton University political scientist Larry Bartels observes, “In the New Deal

era, the Democratic Party was about as liberal as it could be without alienatingsouthern racists. In the contemporary era, the Democratic Party is about as

liberal as it can be without alienating Wall Street bankers.” That power structure

needs to be dislodged before real reform can proceed.

In principle, Obama is free to toss out his top aides and bring in a new

team. Bill Clinton repeatedly shuffled his advisers. So did Lincoln. But, as we

shall see, the threads that link Obamaʼs political aides to his Wall Street–

dominated group of top economic advisers will not be easily sundered. The

addiction of this administration to flows of Wall Streetʼs political money reinforces

the impulse to go easy on the financial industry. Obamaʼs style is to delegate and

to proceed with extreme caution. To shift course and lead a different economic

team with drastically different views and goals, Obama would have to grow

immensely in office.

There is, however, an outside chance that the Massachusetts Senate

defeat will be remembered as a salutary wake-up call, even as a turning point in

Obamaʼs presidency. In the days that followed, a stunned Obama tacked in

opposite directions. On health care, he tried to sound conciliatory. His initial

public comment, in an interview with ABC News, was that the Democrats should

not defy the verdict of the voters of Massachusetts, and that a much more

modest health reform might be salvaged with bipartisan support. “I would advisethat we try to move quickly around those elements of the package that people

agree on,” he said. But judging by the scornful Republican reaction, this was the

empty sound of one hand clapping. After a year of pummeling by a Republican

Party determined to take no prisoners, Obama, almost pitiably, was still seeking

an elusive bipartisan consensus.

Yet during that same week, he began sounding far more populist when

it came to the banks. He inserted himself for the first time directly into legislative

battles, pressing for much tougher regulation, and declaring that if the bankers

“want a fight, itʼs a fight Iʼm ready to have.” During his first year, economic

populism was treated by the Obama administration as something to be kept in aglass case, for use only in emergencies. It was more rhetorical than real. But the

Massachusetts defeat got the presidentʼs attention. It may yet dawn on Obama

and his political advisers that he needs to deliver more for Main Street, or at least

fight harder against Wall Street even if he loses some battles. And on March 3,



as this book was going to press, Obama belatedly decided to wage a partisan

battle for health reform. It remains to be seen how much collateral damage was

done by his earlier missteps.

It is, of course, too early for a definitive judgment on Barack Obama.

History reminds us that Lincoln, in mid-1862, was facing a bleak military andpolitical landscape. His peers considered him a failure. His greatness came later.

John Kennedy, judged a year and a half into his term, looked like a pretty

disappointing president, too. Often, wisdom ripens with experience—and Obama

is nothing if not a learner.

Sometimes, however, leaders fail to seize moments pregnant with

possibility. Sometimes, to invert a much loved verse of the poet Seamus Heaney,

hope and history donʼt rhyme. The British historian A. J. P. Taylor, referring to the

revolutionary year 1848, when nationalist revolutions in central Europe seeking

self-determination and liberal democracy were all aborted, memorably

characterized the events as a turning point of history on which history failed toturn. We will soon learn whether our own era is such a time.

In Obamaʼs fateful first year, there was a road not taken, a possible road

to radical financial reform, broadened prosperity, and the mobilization of an

appreciative citizenry. This book explains how the key decisions unfolded, the

stakes, and the alternatives, as we look forward to the second half of Obamaʼs

term. There is still time for him to redeem his presidency. But that time is fast

running out.



Robert Kuttner, author of the most prescient political book of 2008, Obama's

Challenge: America's Economic Crisis and the Power of a Transformative Presidency , is cofounder and coeditor of The American Prospect magazine, as

well as a Distinguished Senior Fellow of the think tank Demos. He was a

longtime columnist for BusinessWeek , and continues to write columns in the

Boston Globe .

His previous and widely praised books include The Squandering of America:

How the Failure of Our Politics Undermines Our Prosperity ; Everything for Sale:

The Virtues and Limits of Markets (about which Robert Heilbroner wrote, "I have

never seen the market system better described, more intelligently appreciated, or

more trenchantly criticized than in Everything for Sale "); The End of Laissez-

Faire: National Purpose and the Global Economy After the Cold War ; and The Economic Illusion: False Choices Between Prosperity and Social Justice .

Kuttner"s magazine writing has appeared in The New York Times Magazine

and Book Review , The Atlantic , The New Republic , The New Yorker , Dissent ,

Columbia Journalism Review , and Harvard Business Review . He has contributed

major articles to The New England Journal of Medicine as a national policy

correspondent.

Formerly an assistant to the legendary I.F. Stone, chief investigator for the

Senate Banking Committee, Washington Post staff writer, economics editor for

The New Republic , and university lecturer, Kuttner's decades-long intellectual

and political project has been to revive the politics and economics of harnessingcapitalism to serve a broad public interest.

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A Presidency in Peril: An Excerpt