By Matt Stoller, the former Senior Policy Advisor to Rep. Alan Grayson and a fellow at the Roosevelt Institute. You can reach him at stoller (at) gmail.com or follow him on Twitter at @matthewstoller
The fight over the future, in the form of the fight over who writes the history of the Obama years, has begun in earnest.
Ron Suskind’s book on the early years of the Obama White House is the first salvo in the question of “what went wrong”. Suskind’s book has sparked enormous controversy, thanks to its claims of gender bias and weakness on the part of the executive. Interestingly, Suskind’s underlying assumption, that the policy framework pursued by Bush and then Obama failed to deliver broad prosperity, is not disputed by anyone.
So this book, and the ensuing controversy and pushback, is entirely about blame. Is our current policy framework due to management choices or intellectual choices? Answering this question is important, because it indicts different groups of people for how the crisis has been handled.
Suskind’s most significant claim is that Geithner undermined Obama’s order to consider nationalizing Citigroup. In the passage in which Suskind makes this claim, Obama is speaking in a bit of code, using the precedent of the Swedish nationalization of their banking system when it went insolvent, versus the Japanese plan to retain their existing banking structure. Here is Suskind’s passage on how Obama, though boxed in by advisors, was leaning towards the nationalization plan.
Obama’s response to this cul-de-sac: outside readings. Rather than “first, do no harm,” by the first week in February his preferred phrase was “Sweden not Japan.”
Yet, here’s a Nightline interview of Obama from Feb 10, 2009.
So you’d think looking at it, Sweden looks like a good model. Here’s the problem; Sweden had like five banks. [LAUGHS] We’ve got thousands of banks. You know, the scale of the U.S. economy and the capital markets are so vast and the problems in terms of managing and overseeing anything of that scale, I think, would — our assessment was that it wouldn’t make sense. And we also have different traditions in this country.
These claims are tough to reconcile. Obama was publicly saying that nationalization wouldn’t work. Suskind has him privately saying “Sweden not Japan.” So either Obama was lying publicly, Obama was changing his mind, or Suskind got it wrong.
Which one is it? I don’t know, but in some sense, it doesn’t really matter. One fairly simple narrative is that Obama executes the policies he believes in. He thought the bank bailouts would work. He whipped for TARP, he hired people who believed in them, and he has presided over a government that is still putting pressure on state AGs to drop investigations of banks. He is a Third Way-style New Democrat, and Third Way-style New Democrats have certain ideas that translate into policy, and these ideas either do or do not translate into broad prosperity. He was speaking honestly in public.
Suskind takes issue with this theory. His ultimate point is that Obama’s Presidency is affected by management problems instead of ideological problems. And sure, one could make credible arguments about management. To make this claim, however, requires a concession that Barack Obama was explicitly lying in that interview. It requires believing that he was not a naif, that he was a politically cynical liberal playing 11 dimensional chess, outfoxed by an even more cynical Treasury Secretary who is somehow still employed as Treasury Secretary.
Could this be true? When combined with the consistent pro-foreclosure/anti-prosecution policy axis of the entire government under Obama, well, I find it very hard to believe. In fact, it’s very similar to making the argument that the war in Iraq was prosecuted incompetently, not that its very design was problematic. In saying that it’s not the king’s advisors, it’s letting all the media boosters and center-left validators of Obama in 2008 let themselves off the hook for mistakes. Instead, they ask, “where did our inspiring Obama go?” And again, it’s fascinating to note that no one is arguing that the policy framework worked, which is an ominous dynamic for his reelect team, considering that it’s 2011.
Those elites who indulged their political fantasies in 2008, and accept the narrative of the king’s advisors, either misread Obama or they themselves agree with his ideas but cannot accept the implications of their preferred policies actually not ending up in broad prosperity. And this cannot be reconciled with the notion that Obama believes in what he believes in and executed his policies based on the track record that was readily available.
So, Sweden not Japan? Or your lying eyes?