It’s bad enough that what passes for the left has been kneecapped by the Obama Administration. The ambiguous campaign promise “Change you can believe in” has turned out to be a Nixon-goes-to-China series of moves to the right that would have been well nigh impossible for a Republican to execute without incurring significant costs. Remarkably, Obama has increased both the number and scope of wars, used deficit scaremongering to cut Medicare and Social Security, and passed a health care “reform” bill that made overly expensive American health care even more uneconomical by enriching Big Pharma and health care insurers. And this is only a starter list in his campaign against average Americans.
Those visible moves have been accompanied by a largely stealth operation to neuter what were once called progressive organizations (“progressive” has been rendered meaningless by being adopted by pretty much everyone to the left of Attila the Hun). Groups truly committed to a left-leaning anti-corporate platform quickly learned the cost of crossing Team Obama: in their so-called veal pen, the Administration would get big company backers to yank their funding. This process has now moved up the food chain, but with bigger groups, it is less clear whether the Administration is the driver or whether like minded operatives are acting on their own initiative. Regardless, there is increasingly a vacuum to the left of Obama, which eases his continuing move to the right, as think tanks that are perceived to be reasonably independent, like the Economic Policy Institute, mysteriously lose the backing of significant, established funders.
But what is worse are the self-inflicted wounds. What little remains of the left seems to be rallying around Elizabeth Warren, which given the dearth of prominent figures who are serious about standing up for middle class Americans, as opposed to pandering to them and then selling them out, isn’t a bad impulse per se. But they are deploying their energies in quixotic missions or worse, falling completely in line with the Administration’s plans, which has been to subject Warren to a high end version of the veal pen treatment, to box her in and render her incapable of independent operation. And in case you wonder what I am talking about, I mean the plan, concocted by the Democratic party hackocracy, for her to run for the Senate seat now occupied by Scott Brown.
To understand why this is a dreadful idea, we need to back up and look at Warren’s career. She came from a poor family and was the only one of her siblings to go to college. Even then, she was expected simply to become a teacher (which was a much more respected occupation then than now). She went to Rutgers, a not-terribly-prestigious law school, and managed to go from having a solo practice to teaching law, ultimately getting tenure at Harvard Law School. Bear in mind that this is a wildly unconventional route for getting tenure at a top-tier law faculty, and Warren had the additional disadvantage of being in the first generation of women to break into serious professional roles.
Warren’s dedication to reversing the plight of the middle class comes from having happened into studying it in depth (and having personal experiences that enabled her to make connections others would probably have missed). The account I have heard is that she was a Republican and asked by a politician from her home state of Oklahoma to look into escalating bankruptcies in his constituency. She approached it with the conventional assumption that they were due largely to overspending.
As she dug deeper, she was stunned to find that the data said otherwise, that divorce, job loss, and medical emergencies were the major culprits behind the alarming rise in financial collapse. And even more surprising was that adjusted for inflation, middle class two-earner households with children had no more discretionary income than the “man as breadwinner” family of 1970. Why? A bidding war had erupted for the increasingly scarce good (or even decent) public school districts and safe neighborhoods. And two earner families need two cars, when one often sufficed back in 1970.
But the dual income family was missing an important safety net: that of the wife being able to enter the workforce to supplement family income in the event of an emergency. Thus her finding was that middle class parents trying to assure that their children received a solid education put them at risk of financial disaster in a way that was unthinkable in 1970. This research and the related insights served as the foundation for her book, The Two Income Trap.
This book, which was a best-seller and made her a celebrity, also provided the platform for the creation of the Consumer Financial Protection Bureau. A recent Bloomberg profile described how Warren developed the idea of a consumer protection agency in 2007 and commented:
The annals of academia are stuffed with provocative proposals. Most die in the library. A little over four years after she first dreamed it up, Warren’s has become a reality.
And she achieved this outside any of the traditional centers of power. Warren had no lobbyists, think tanks, marketing experts providing Madison Avenue phrase-smithing, PR campaigns, or big donor bucks behind her idea. Her success was based on her ability to identify and prove in commanding depth a series of heretofore poorly understood, related problems that afflict ordinary Americans and provide concrete, workable solutions, along with her tenacity and considerable communication skills.
Let us look at what has happened to Warren since she took her job as an advisor to the Treasury. This was, as we have maintained, another veal pen move. Warren, outside the Administration, could have cast a harsh and effective spotlight on how Team Obama was turning the CFPB into a Potemkin agency to appease powerful financiers. Obama places high priority on neutralizing criticism from the left (notice how pissy he becomes when challenged on his bona fides; he appears to have an ego investment in his fauxgressive branding). So they made her an offer she couldn’t refuse: join the Administration in an advisory position, tasked with setting up the agency, with the carrot of being a prime candidate to run the agency on a permanent basis.
Putting her in this post seemed to be a no-lose gambit for the Administration: it served the most important objective of severely limiting her access to mass market television, which was her big source of power. Yes, her calendar is full of chats with print types, but TV is her domain, and her outings have been limited to preaching to the converted venues like Jon Stewart or her C-Span shellackings. No more talks with people in the heartlands via Dr. Phil. And for the media she was allowed to have, she would be serving as a spokesperson and promoter for the CFPB and by implication, the Administration generally. It’s a classic “get them inside the tent pissing out” move.
I’m not certain where the idea of her being given the authority to hire people and proceed with specific initiatives came from; I imagine Warren as a counter offer (“If you want me to take this role, I need to be able to do X, Y, Z”) but in the end it really does not matter. This is a considerable amount of power, and it seems to have been given to her quite casually.
Team Obama likely considerably underestimated her; indeed, there is nothing in her background to suggest that she’d be an effective organization builder. The assumption may well have been that she’d not get all that much done, or make a hash of what she did do, either outcome disqualifying her to run the agency, and better yet, tarnishing her as an ivory tower academic who had trouble making her grand-sounding ideas work. (Note there are good odds of a subtle but real disconnect between Geithner and Obama. Geithner has signaled he is looking to leave the Administration. At the same time, he would no doubt see Warren as a serious problem, since her interests and instincts are the polar opposite of his. By contrast, Obama has longer-term objectives and he is more likely to have seen Warren as a useful ornament if she can be managed. And he seems to be particularly taken by real policy wonks. So he may have been more willing to give Warren some rope, on the assumption that no matter how things played out, he would not have given her enough freedom for the exercise not to be a net plus for him under any scenario. And Warren may have misread his cold calculation, his resultant willingness to accede to some of her wishes, and his corresponding sympathetic noises as genuine interest in her agenda. Never forget that Obama needs to raise $1 billion for his presidential run and will therefore do nothing that will seriously ruffle banksters).
But that bet was a grave miscalculation. Warren if nothing else is astonishingly competent, and competence is too often undervalued. She has a career of being thrown into the deep end of the pool and pulling off things that by any common sense standard should be beyond her. Indeed, her banking industry detractors were clearly expecting to lambaste her for organizational cock-ups; instead, the only thing that came up in the Congressional hazing last week was Ann Marie Buerkle’s foot-in-mouth effort to blame Warren for hiring people using the pay scales established for the CFPB in Dodd Frank.
But that does not mean her performance was pitch perfect. She appears to have focused her effort on the main chance, which was building out the CFPB as much as possible so as to make her vision difficult to derail. She seems to have accomplished a great deal on that front. Not only, as even her detractors have been forced to admit, has she done a great job in attracting talent, but she has accomplished a task that has eluded previous bureaucratic efforts: that of simplifying mortgage forms.
Moreover, during the House Oversight Panel hearings last week, she made a couple of asides on procedures she had put in place to assure that staff got trained and shared knowledge. Those are the sort of culture-building devices that McKInsey organizational practice experts often highlight as differentiators between high performance teams and the also-rans. They are not hard to build in at the outset but very difficult to retro-fit. At one point, Warren may have let her real objective slip out: she said something like, “The director really does not have that much power.” She may have quite deliberately have sought to create an agency where influence was distributed, and less dependent on a powerful director, not simply due to uncertainty whether she’d get the post, but as the best way to improve the odds that the agency would be hard to derail.
Of course, that view is optimistic. Bad leadership can destroy a good organization in a remarkably short period of time. However, despite doing a phenomenal job on the operational level, her political performance was less astute. Yes, she made a full bore effort to reach out to critics and appears to have made decent progress. But she was blindsided by the leaks and brouhaha over the CFPB’s role in advising the 50 state attorney general mortgage settlement, and the CFPB appears to have reduced its involvement in that project substantially. Perhaps that was Geithner’s call, but it was very clear that she was sent out on a mission and had her air cover abruptly withdrawn.
The savagery of the bank-led attack on Warren and the CFPB (couched in nauseatingly transparent efforts to make it seem more reasonable than it was), was met by remarkable silence by the Administration. Not only did they apparently prevent Warren from responding directly, but they offered no support when Warren was undermined, not only by Republican attacks, but by fire from the OCC (and probably others in the Administration).
It was a tactical error to back down from being involved in the mortgage settlement talks; this is a critical battlefield for consumers and at a minimum the CFPB might have been able to box in Iowa AG Tom Miller. Warren had already been tarred and feathered for responding to a request from Miller via Geithner; since she could not escape having that role be misbranded as something nefarious, why not proceed as before? The incremental damage was limited and the potential gains were probably material.
Similarly, in the Congressional hearings, she was far more deferential to banks than she needed to be. Several Congressmen grilled her on whether she would ban any products. Her first line of response was fine, namely that the CFPB was not presently planning to ban any products and its course of action would be to make sure there were disclosures and procedures to make sure consumers understood what they were getting into. But she was pressed, and she didn’t have much to add, save she didn’t think it was appropriate to remove any of the CFPB’s tools. She could easily have taken a more forceful message within the same story line, namely that the CFPB was tasked to improve how markets worked, that included stopping predatory behavior, such as payday lenders engaging in illegal practices like getting retirees to sign over their Social Security payments. Warren has often invoked the expressions like “tricks and traps” and “cop on the beat”; it was time for her to provide some examples.
Instead, it sounded as if the bank and Congressional browbeating and the Treasury force field have had an adverse impact (Steve Waldman and I have discussed the last phenomenon; we both experienced during each of our two visits to the Treasury netherworld, and he described it as being like an acid trip). Warren seemed far too concerned about trying to make a case that what she did would not hurt bank profits, when Sheila Bair had no such compunctions. These exchanges did not come off as if Warren was playing a game to get through the Congressional gauntlet; she came off as sounding somewhat captured. Since when do profits come ahead of obeying the law? Whoops, I forgot, this is America in the 21st century.
There is no question Obama has treated Warren badly, although her effusive note about the appointment of her hire, Richard Cordray, to the job she hoped to get had more than a twinge of Stockholm syndrome in it. Consider her closing paragraph (boldface ours):
Prior to the passage of the Dodd-Frank Act, the President and I fought side by side to make the new agency possible. And, if we need to, I know we will continue to fight side by side, to keep it strong and independent and to make sure it has the tools it needs to serve the American people.
The “side by side” is astonishing. She’s not an equal of the President. And they aren’t on the same team. Obama has made an entire career of making grand promises and walking them so far back as to put him in a different country by the time the process is over. He has openly mocked the idea of honesty in politics, and has said with no apparent embarrassment that politicians lie and he is just like his peer group. As we described last year, Obama has irrevocably tied his star to that of the banks, so he must persuade, cajole, coerce or dazzle those in his sphere of influence to fall into line.
If Warren labored under any misapprehension on this point, the events of the last week should have laid them to rest. Obama treated her abysmally by announcing his nomination of Cordray on the heels of the Congressional hearing. Had Obama presented his choice sooner, she would have had to do much less prep, since the Congresscritters wouldn’t have put much energy into roughing her up. She would have been spared considerable stress and a potential public humiliation.
Obama might have hoped the Republicans would succeed in damaging her, since it would have given him more air cover for his obvious plan to ditch her (we’ve been calling that as the endgame for months). And the announcement is a clear snub. 44 Senators have made it clear they will approve no Presidential appointment, even a Republican pick. Senator Richard Shelby reiterated the opposition stance after the Cordray nomination was publicized. So naming Cordray was a diss of Warren that did nothing to advance the cause of the CFPB.
If Warren wanted to harbor any delusions regarding Obama’s intent, the response of the Democrat hackocracy provides further confirmation (there’s an amusing translation of various reactions in Politico’s Morning Money) and some revealing comments in a separate Politico piece, “Warren allies silent on CFPB choice“:
From the AFL-CIO to the Consumer Union, few liberal groups have expressed anything but the mildest of disappointment that their heroine did not get the job.
And notice this truly insulting remark:
“She is playing extremely well with others right now,” said one close observer of the process who declined to be identified by name because he continues to work with the administration and CFPB.
In other words, she appears to have been successfully indoctrinated, maybe even broken, but they aren’t sure the conditioning has taken.
The key message to Warren is that Obama and the Democratic party are decidedly not on her side, and she has deluded herself if she now believes otherwise. To wed her star to theirs is not an enhancement but a diminution. We’ve written in past posts why a Senate bid would not advance her aims. In the pay to play system, she’d not raise enough money (due to a certain dearth of heavyweight corporate contributions) to get on any interesting committees. And most important, she’d still have to back a party and a President whose vision is in large measure at odds with hers.
March Wheeler confirms our views:
What the people hailing a possible Warren run are arguing, effectively, is that the consolation prize for the banks having beat her on CFPB should be junior membership in a body that–as Dick Durbin has told us–the banks own.
Even putting aside the power of the banking lobby in the Senate, under what model would Senator Warren be effective championing progressive values, or even just “protect[ing] the agency she’s built”? Even assuming the Democrats kept the same number of seats they currently have on the Senate Banking Committee, even assuming Democratic leadership has already promised her the seat that Herb Kohl’s retirement will open up, that will still make her one of just three progressives (the other two being Jeff Merkley and Sherrod Brown) on a committee that has long been actively working against her CFPB candidacy. Even assuming Democrats keep the Senate, how amenable is Chairman Tim Johnson–a bank-owned hack–going to be to Warren’s ideas? If Richard Shelby were Chair, it’d be even worse.
And what about Warren’s effectiveness in the Senate as a whole–that body, under Democratic leadership, where good ideas go to die? Name a progressive Senator who has been able to do much to champion progressive ideas there? Sanders? Franken? Whitehouse? Sherrod Brown? I love all those guys, and like Sanders and especially Franken, Warren would presumably be able to leverage her public support to push some ideas through. But are any of them more effective at championing progressive values than Warren was before her White House gig, when she regularly appeared on the media and excoriated the banks in terms that made sense to real people?
Yet naive progressive groups continue to back failed causes. The Progressive Campaign Change Committee had proudly announced that it is pushing a Warren Senate bid and has raised $15,000, which is probably enough to buy 5 minutes of TV time. Why don’t they spend their firepower on viable ideas rather than ones that serve the craven interests of the Administration, which is to render Warren irrelevant?
We Yankees have a saying: “Fool me once, shame on thee. Fool me twice, shame on me.” Warren is too good to continue to be this Administration’s pawn. It’s high time she wakes up and smells the coffee.