By Marshall Auerback, a portfolio strategist .hedge fund manager, and Roosevelt Institute Senior Fellow
My friend, Yves Smith, has posed the question as to why there is no political outlet for the anger on the left. In other words, where are today’s Huey Longs when you need them? It’s become patently obvious to anybody with half a brain and a pulse that President Obama’s “progressivism” has more in common with Mussolini’s corporatism than anything remotely connected to a genuinely progressive agenda.
If you think I’m exaggerating, I suggest you read Denis Mack Smith’s excellent accounts of Il Duce’s tenure in Smith’s “Modern Italy: A Political History”, or his biography, “Mussolini”. Both works describe a country which, while claiming to reduce an inflated bureaucracy, needed to do precisely the opposite in order to reward personal “clients” and followers. Both books also recount that in spite of the efforts of Mussolini’s first Fascist Finance Minister De’Stefani’s efforts to curb tax evasion and limit stock exchange speculation, his efforts were constantly thwarted by other political cronies of Il Duce, as well as Mussolini himself, who soon allowed the majority of his Cabinet to discredit one of the few competent ministers, who was of above average intelligence and competence (Elizabeth Warren, watch out).
Yet today we are being confronted by the sight of a desperate President, hoping to re-engage with a thoroughly dispirited base. President Obama recently told black leaders that he wanted their support to “guard the change” he was allegedly delivering. That would be the “change” which essentially perpetuated the TARP bailouts initiated by former President Bush and former Treasury Secretary Hank Paulson? Or the health care “reform” bill which will shovel billions of dollars into the private insurance industry with little in the way of a quid pro quo for improved HEALTH CARE? Or the “change” which brought us the supposed withdrawal from Iraq even as the Pentagon conceded that “nothing will change” – a direct quote from the Army’s chief spokesman in Iraq (although cited in a Colorado Springs Gazette dispatch which probably explains the lack of national commentary). What about the “change” in a corrupt narco-state like Afghanistan, where, the Obama Administration has concluded that its war strategy is fundamentally sound and that a December review, once seen as a pivotal moment, is now unlikely to yield any major alteration in policy?
And the President wonders why there is an enthusiasm gap amongst his base? Or why there is a smoldering anger which continues to manifest itself through the rise of the Tea Party movement? At a townhall meeting last week, Obama told the audience he relishes the opportunity to get out of Washington and talk with regular people. Hmm…one wonders. As Bloomberg’s Margaret Carlson recently pointed out, Velma Hart told the President that she’s “exhausted of defending you,” “deeply disappointed with where we are right now,” and waiting for him finally “to change things in a meaningful way for the middle class.”
The President’s response, noted Carlson, was petulant in the extreme: “Now, as I said before, times are tough for everybody right now, so I understand your frustration,” he told Hart, after rather clumsily praising her as part of “the bedrock of America” and before citing new credit-card rules and student- loan procedures as evidence of progress.
“As I said” always carries with it the implied question, Weren’t you paying attention? “For everybody” telegraphs you’re one out of millions, nothing special. And “everybody” isn’t suffering, which is the truth that gets to the heart of Obama’s problem and makes his brushing off Hart as much substance as theater.
And then there was this message last week from the President at a $30,000-a-plate fundraiser at Greenwich, Connecticut home of the appropriately named fundraiser, Rich Richman, where Obama was doing his best to reinforce the “professional left” caricature initiated by his Press Secretary Robert Gibbs. Democrats, just congenitally, tend to get – to see the glass as half empty. If we get an historic health care bill passed – oh, well, the public option wasn’t there. If you get the financial reform bill passed – then, well, I don’t know about this particularly derivatives rule, I’m not sure that I’m satisfied with that. And gosh, we haven’t yet brought about world peace and -) I thought that was going to happen quicker. (Laughter.) You know who you are. (Laughter.)
At times like this, the President sounds like someone who works in a slaughterhouse, whilst seeking to preach the virtues of vegetarianism. It’s hard not to have a Howard Beale moment.
The corporate elites in this country saw Bush driving the country off a cliff, so they concocted an allegedly “post-racial” moderate Democrat to stabilize the system and obtain Democratic buy-in on issues like perpetual war, and a government as feeding trough, which has facilitated ongoing corporate predation. The same elites began to use the media to focus on distracting non-issues like Obama’s birth certificate, Muslim mosques, and the like to divert attention away from the only real issue: the political economy of the garrison/predator state, ignoring the manner in which Obama has consolidated it with bipartisan buy-in.
Likewise on domestic policy, we spent months focusing on death panels in health care, ignoring the more salient fact that the White House never wanted a public option in the health care bill, which explains why Rahm said so early last summer. Why? Because the big insurance companies did not want it, so Rahm did not want it. End of issue.
Financial reform has been similarly disappointing. Any private investor who had put as much as the government has put into faltering banks would have far more supervision (board seats, probably regular operational reports) and would also have replaced the CEO, with an understanding that he could clean house if he saw fit. Getting a new CEO in is usually standard operating procedure with distressed organizations, but the Treasury and Fed have continued to write checks and frustrated any serious attempt to make inquiries. Cover-up has been the hallmark. Why else implement a financial reform bill without at least exploring the cause of the crisis in the first place? Look at the contrast with the treatment of GM and Chrysler, which were asked plenty of tough questions and required to submit turnaround plans that could be rejected or be revised under duress.
Leaving aside the economic and political costs of the policies undertaken by President Obama, there is a much more profoundly corrosive social effect at work here. There is a pervasive sense that people who have played according to the rules are being persistently jobbed by this Administration – this has begun to perpetuate a feeling of “they’ve got theirs and now I want mine.” It’s hard to quantify the impact of this growing mentality, but it is the kind of phenomenon often manifests itself via widespread tax evasion and a corresponding loss of political legitimacy on the part of a government in other countries.
The primary reason the public accepts what we call “fiat money” is because it has tax liabilities to the government. If the tax system were removed, the government would eventually find that its fiat money would lose its ability to purchase goods and services on the market. In the words of the economist Abba Lerner:
The modern state can make anything it chooses generally acceptable as money…It is true that a simple declaration that such and such is money will not do, even if backed by the most convincing constitutional evidence of the state’s absolute sovereignty. But if the state is willing to accept the proposed money in payment of taxes and other obligations to itself the trick is done.
If that trend persists, then we do end up being like Greece. Not because of growing national insolvency, but more because our citizenry begins to view the government as a piggy bank to be exploited, rather than an instrument which mobilizes national resources for broader public purpose. Absent this political authority, everything begins to break down.
For all of his renewed vigor on the campaign trail, Mr. Obama fundamentally fails to understand this phenomenon, which is why his exhortations of the kind that he uttered last weekend to the Congressional Black Caucus no longer resonate with the broader public. His “change” message is no longer a symbol of hope, but has become a source of bitter irony and cynicism. As a result, this President risks turning off an entire generation of new voters who were once genuinely excited by the man’s promise.
Frank Rich recently suggested that “it’s time for this big dog to bite back” and urged Obama to “call out the powerful interests…whether on Wall Street or in Big Oil or any other sector where special interests are aligned against reform in the public interest.” All well and good. But consider the fact that these “powerful interests” were some of the President’s biggest campaign donors. Which leaves a more troubling question: what if this particular “Big Dog” is actually nothing more than a lap dog – guarding the very special interests that he purports to oppose?