Bill Black: Krugman Bashes Progressives for Criticizing Obama on Grounds that He Criticizes Obama

Lambert here: It’s a shame to see Krugman kick the left (Susie Madrak has the definitive post on this). But then, when you’ve won the Nobel Prize for Obotics, that comes with the territory.

By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Originally published at New Economic Perspectives

Paul Krugman’s admirers would never list modesty as one of his characteristics. He has written a column “In Defense of Obama” that begins by explaining that his criticisms of President Obama were correct, but that unidentified others’ criticisms of Obama constitute “trash talk.”

Specifically, Obama “came perilously close to doing terrible things to the U.S. safety net in pursuit of a budget Grand Bargain.” Obama sought to produce a self-inflicted disaster by desperately trying to reach a “Grand Bargain” with Republicans that would have inflicted austerity on our Nation in 2012, “slash[ed] Social Security and [raised] the Medicare [eligibility] age.” As even Krugman admits, we were saved from this catastrophe “only by Republican greed, the GOP’s unwillingness to make even token concessions” to achieve the Grand Bargain. What Krugman omits in the tale is that it was also a revolt by Democratic progressives against the Grand Bargain that saved Obama and the Nation.


Krugman does not, in this column, explain the consequences and implications of the disaster that Obama tried so hard to inflict on us. First, it would help the reader to inform them that achieving the Grand Bargain became Obama’s top domestic priority.

It would have aided the reader for Krugman to explain that as part of the Grand Bargain Obama was also trying to inflict austerity on the U.S. in response to the Great Recession. Had Obama succeeded he would have thrown the Nation back into a second Great Recession – for the reasons that Krugman has often explained. This would have doomed his reelection chances and caused catastrophic losses to the Democratic Party in other 2012 elections.

Readers doubtless would have found it useful to know that that Obama ran for office on the promise of protecting Social Security and Medicare from the cuts he sought to inflict. They also would find it useful to know that once Obama legitimized attacking the safety net programs it would make them fair game for unilateral Republican attacks on the safety net when they took control of the White House.

Krugman blames Obama’s effort to enter into the Grand Betrayal as occurring because Obama was “naïve.” He presents no support for that claim. Contemporaneous press accounts – based on leaks from the White House – revealed that Obama was motivated by a desire for fame. The Grand Bargain was to be his legacy and the fact that the Grand Bargain betrayed his supporters was the factor that demonstrated that he was a statesman. Democratic Presidents establish that they are “serious” by publicly betraying and deriding their progressive base.

Krugman defines Obama’s critics as illegitimate. Krugman labels Obama’s critics as engaging in “Obama-bashing.” Krugman goes on to label progressive critics of Obama as “Obama-bash[ers]” by mischaracterizing the criticisms and then dismissing straw man arguments that he crafts as not requiring refutation because the criticisms are obviously not “serious.”

“There’s a different story on the left, where you now find a significant number of critics decrying Obama as, to quote Cornel West, someone who ‘’posed as a progressive and turned out to be counterfeit.’’ They’re outraged that Wall Street hasn’t been punished, that income inequality remains so high, that ‘’neoliberal’’ economic policies are still in place. All of this seems to rest on the belief that if only Obama had put his eloquence behind a radical economic agenda, he could somehow have gotten that agenda past all the political barriers that have constrained even his much more modest efforts. It’s hard to take such claims seriously.”

Krugman’s argumentation consists entirely of pejoratively labeling any progressive criticism of Obama, crafting weak straw man claims that progressive critics do not make, crafting an alternative straw man policy not advanced by progressives, labeling that alternative straw man policy pejoratively, and dismissing the straw man criticisms and policy alternatives that Krugman falsely ascribes to progressives as so un-“serious” that they require no refutation. The only progressive critique that Krugman quotes, by Cornell West, is one that Krugman states in the first paragraph – a critique that he pronounces accurate in the second paragraph. Three paragraphs later he seems to have forgotten his two introductory paragraphs and implies – but never even attempts to prove – that West is committing “Obama-bashing” in that quotation. If so, then it logically follows that Krugman engaged in “Obama-bashing” when he made the same criticism of Obama that West did. Given that Krugman pronounces his critique of Obama accurate, that necessarily means that when progressives make accurate criticisms of Obama they are engaged in “Obama-bashing.”

Krugman sometimes constructs straw man criticisms that he attributes to unidentified progressives, but sometimes the criticisms he ascribes to progressives are ones that he agrees with. The first purported progressive critique that he attacks is an example of a straw man critique. Krugman claims that progressives are “outraged that Wall Street hasn’t been punished.” As the scholar who has led the critique of the Obama administration’s failure to prosecute the elite (and not-so-elite) senior officers who led the three most destructive epidemics of accounting control fraud (appraisal fraud, liar’s loans, and fraudulent “reps and warranties” in secondary market sales) in history I can attest that Krugman could have quoted literally thousands of specific criticisms I have made about the failures to hold these senior bankers accountable. In this column I’ll address only the portion of Krugman’s arguments for which I have some expertise.

Krugman could have explained why he believed my critiques were incorrect. We could have debated our differences and moved towards agreement. I would have had considerable advantages in such a debate because I know the relevant literature and I have real world experience in holding senior bank officers accountable for their crimes and “clawing back” their fraud proceeds. I also have real world experience with the advantages that arise from holding elite white-collar criminals accountable and the disadvantages that arise when they can commit their crimes with impunity. I think that Krugman understands that this is a debate he could not win, mostly because he agrees with me. Krugman has criticized the administration’s failure to hold the elite banksters accountable. Indeed, in his column attacking “Obama-bashing” he bashes Obama by adopting my critique.

“Let’s be clear: The financial crisis should have been followed by a drastic crackdown on Wall Street abuses, and it wasn’t. No important figures have gone to jail; bad banks and other financial institutions, from Citigroup to Goldman, were bailed out with few strings attached; and there has been nothing like the wholesale restructuring and reining in of finance that took place in the 1930s. Obama bears a considerable part of the blame for this disappointing response. It was his Treasury secretary and his attorney general who chose to treat finance with kid gloves.”

I have never wanted to “punish” “Wall Street.” That would be a nonsensical goal. Corporations are not people and we do not punish geographical areas. We hold individuals accountable for their actions, particularly elite. If we fail to do so we destroy the rule of law and create crony capitalism.

The progressive critique is not that income inequality has “remained high.” The progressive critique is that both income and wealth inequality have surged under Obama with no commitment to reversing that disastrous trend. Krugman does not want to quote progressive critics on this point for the same reason I just explained – he agrees with us and he knows that any other position is indefensible under his own published views.

The third critique that Krugman crafts and ascribes to progressives is that “’neoliberal’’ economic policies are still in place.” This is so vague that it is impossible to respond to other than to say that Krugman has (correctly) made leveled that criticism of certain specific Obama policies. Indeed, while he does not use the label “neo-liberal,” Krugman makes precisely that criticism of Obama in his article condemning “Obama-bashing” when Krugman denounces Obama’s efforts to commit the Grand Betrayal. The odd takeaway is that Krugman has made – and pronounces correct in his “Obama-bashing” article each of the progressive critiques that he now labels “Obama-bashing.”

Krugman’s complaints against progressives become even more clearly straw man creations when he describes progressives’ purported alternatives to Obama’s policies. You know things are going hopelessly off the rails when he asserts that Obama’s unidentified progressive critics advance a single solution to all of Obama’s policy failures. Krugman then describes that silver bullet solution using rhetoric designed to make it sound childish and pronounces his straw man creation so unserious that no one could take it seriously and therefore progressive criticisms of Obama are not worth discussing.

“All of this seems to rest on the belief that if only Obama had put his eloquence behind a radical economic agenda, he could somehow have gotten that agenda past all the political barriers that have constrained even his much more modest efforts. It’s hard to take such claims seriously.”

Prosecuting the Banksters Required No Eloquence or Political Miracles

Krugman’s crude effort to ascribe this silver bullet solution to progressives collapses as soon as we apply the claim to the three criticisms he earlier ascribed to progressives. First, we want to prosecute the elite (and not so elite) senior bank officers that grew wealthy by leading the frauds that drove the financial crisis and the Great Recession. As Krugman agrees, this has cost our Nation over $21 trillion in lost GDP and over 10 million jobs. Why does prosecuting banksters require a “radical economic agenda?” The first President Bush’s administration prosecuted successfully the majority of the over 1,000 defendants convicted in savings and loan cases designated “major” by the Department of Justice (DOJ).   Bush wasn’t eloquent.

Obama had the power, in a field in which the Republicans had no ability to create “political barriers,” to hold the banksters accountable. He did not have to reinvent the wheel because we had proven what worked (not of it dependent on Obama’s “eloquence.” He chose not to take the proven steps, with the proven people, who would have held thousands of financial executives accountable for their crimes. Many of us explained publicly what needed to be done, raised the warning that the administration was not taking the necessary steps, and offered to help fix the problems. The Obama administration reacted with a combination of indifference and even scorn.

Krugman has no idea how several thousand prosecutions plus civil actions and enforcement actions against the elite banksters would have transformed the administration. Every prosecution produces multiple local and national stories when the bank officer is indicted, the trial begins, there is key testimony in the trial, the jury reaches a guilty verdict, and the bank officer is sentenced. Now multiply those stories by at least 5,000. There is another positive effect – each of these cases places facts in the public record that the media can quote without fear of being sued for libel or slander. This, plus the wave of convictions, leads to much harder hitting articles explaining the corrupt culture of banking.

The first thing that Obama should have done to hold the banksters accountable for their crimes was to reestablish the criminal referral process at the banking regulatory agencies. Again, we know how to do this and why it is essential to strategic success. As the number of criminal referrals grows at a ferocious rate (we, the S&L regulators, made over 30,000 criminal referrals in a vastly smaller crisis) it creates immense pressure on DOJ to prosecute. This translates to pressure on Congress to approve new hires of FBI and IRS agents and prosecutors. It becomes politically dangerous to block these vital hires.

AS DOJ achieves hundreds of elite convictions, the banking regulators bring thousands of meaningful enforcement actions against senior bank officers, and DOJ and the regulators bring thousands of civil actions against the senior officers to recover the wealth they gained through fraud the world would have transformed in a way that would have created much greater political space for meaningful reform. The hundreds of fraud actions discredit banking and bankers. Their trade associations’ efforts to block meaningful regulatory reform become toxic as members of Congress rush to disassociate themselves from the banksters.

As the regulators aggressively use their administrative enforcement powers to “remove and prohibit” thousands of officers who led or assisted the frauds the integrity of the industry improves rapidly. Prima donna bank CEOs who would otherwise lead the political attack on vital banking reforms are discredited as the evidence demonstrates to the public why it is appropriate to remove them from their positions and prohibit them from reentering the portions of the financial industry that are federally insured.

Each of these dynamics was proven during the S&L debacle. Again, the key is that we know how to succeed and Obama could have done so because the Republicans had no ability to create effective “political barriers” to prevent these prosecutorial and regulatory actions. Indeed, had the Republicans tried to do they would have committed political suicide. No magical “eloquence” required.

Income Inequality

It would have been more difficult for Obama to have pushed effectively to reduce income inequality, but there are concrete things he could have done that we urged. Note that by discrediting the banks and bankers through the actions I’ve just described above, the administration would have enormously increased the political space for real reforms on executive compensation. The single greatest source of the growth of inequality at the top is finance. Financial services compensation is grossly excessive, but it is also a leading source of the perverse incentives that drive our epidemics of accounting control fraud and are used to create “Gresham’s” dynamics in the professions and more junior officers and employees that aid and abet the financial frauds. Perverse executive compensation also provides the primary means by which controlling officers loot “their” firms in a manner that makes effective prosecution more difficult.

Obama’s financial regulators could have dramatically reduced the perverse incentives of executive compensation and materially reduced income inequality. The grounds for their action would not have been reducing income inequality, but that would have been one of the important collateral effects of the executive and professional compensation rules. The rules would have been adopted on the grounds that by reducing the perverse incentives of executive compensation the Obama administration would have enormously improved the safety and soundness of the financial industry.

These rules would not have required magic “eloquence” by Obama. They would be more subject than the accountability program I outlined above to political and judicial obstruction, but success was likely if the compensation rules’ rationales were done properly (a task I have taken the lead on in key rules we knew would be challenged in court). The huge advantage the regulators would have had in defending the rules against “arbitrary and capricious” challenges include legal precedents that emphasize the broad scope of the phrase “safety and soundness” and the agencies’ expertise in interpreting the phrase. Most importantly, a rule requiring that high levels of compensation not be paid unless they were based on extremely long-term (a decade) proven results is the kind of rule essential to produce the reality of “aligning the interests” of the CEO and the shareholders. The current compensation practices in finance almost invariably further misalign the CEO’s interests. The current compensation system is “radical” in that it violates all theories of how compensation should be structured to prevent perverse incentives.

The normal problem with cracking down on grossly excessive and perverse compensation in the financial industry is that the bank CEOs will threaten to move the bank’s operations abroad to a country with weaker rules that do not interfere with the CEO’s desire to craft perverse compensation practices. Neoclassical economists react blithely to U.S. firms moving abroad and costing blue collar workers their jobs, but they start screaming when banks do the same thing. In the circumstances of the Obama administration, however, this neo-classical hypocrisy (that is oh-so-unintentionally-revealing of their biases) would have posed minimal threat. The regulators and prosecutors simply had to treat any effort to flee U.S. jurisdiction as a basis for (1) denying the bank all U.S. privileges and (2) making any planned enforcement or civil action and any intended prosecution an urgent priority before the bank and bankers are able to escape U.S. jurisdiction. The combination of these two responses would prevent any exodus of financial firms from the U.S.

While this regulatory approach to reducing inequality through reforming executive and professional compensation would work only in financial industries regulated by the U.S. and firms such as GM bailed-out by the U.S., it would still have a material direct effect in reducing inequality because financial sector compensation represents a grotesquely disproportionate share of total executive compensation. But fixing executive and professional compensation in finance – and explaining very publicly and comprehensively (perhaps even “eloquently”) why it was essential to do so because existing executive and professional compensation systems were deeply criminogenic and further misaligned the interests of the officers and the shareholders could have powerful indirect effects in producing reforms in other industries. Executive compensation in finance also drives the horrible “ratchet effect” that provides the excuse for higher compensation in other industries.

There are other things that Obama could have done to reduce inequality. The single most effective form of fiscal stimulus is reducing or eliminating workers’ social security contributions. The Social Security tax is the most regressive major tax that the federal government collects. We can end Social Security collections within days at a trivial administrative cost. This means that the stimulus is almost immediate and goes disproportionately to less wealthy Americans with a high propensity to consume. By suspending collection of the Social Security tax paid by the workers we produce exceptionally rapid stimulus with the biggest bang for buck.

Obama initially reduced the workers’ Social Security contribution, but he decided to resume collection at a time when the suspension of the contribution was proving exceptionally effective. This was pure madness. The suspension was politically powerful, economically literate, and working brilliantly when Obama decided that he wanted to end the suspension. Suspending the full workers’ contribution would have materially reduced inequality by increasing take home pay for Americans, particularly working class Americans. No eloquence from Obama was required.

Obama could also have begun a major campaign to increase the minimum wage in his first year in office and continued the effort every year. Eloquence would be a small part of this effort. The political benefit of pushing for a very large increase in the minimum wage is that opinion polls show tremendous support for the proposal. The Republicans might block any increase in the minimum wage, but each time they did so Obama could have forced them to pay a political price.

Continued ‘Neo-Liberal’ Policies

I do not know what Krugman means by the phrase and there is no sense guessing.

Dodd-Frank: “A lot better than nothing”

Krugman’s phrasing makes it clear that he knows that Dodd-Frank is a deeply inadequate response to the financial crisis. He argues that despite its many weaknesses it has made three contributions that may reduce the harm of future crises.

“Dodd-Frank is a complicated piece of legislation, but let me single out three really important sections.

First, the law gives a special council the ability to designate ‘systemically important financial institutions’ (SIFIs) – that is, institutions that could create a crisis if they were to fail – and place such institutions under extra scrutiny and regulation of things like the amount of capital they are required to maintain to cover possible losses. This provision has been derided as ineffectual or worse….

MetLife is making an all-out effort to be kept off the SIFI list; this effort demonstrates that we’re talking about real regulation here, and that financial interests don’t like it.

Another key provision in Dodd-Frank is ‘’orderly liquidation authority,’’ which gives the government the legal right to seize complex financial institutions in a crisis. This is a bigger deal than you might think. A third piece of Dodd-Frank is the Consumer Financial Protection Bureau.”

Systemically Dangerous Institutions (SDIs)

As Camus warned, the first step in dealing with a plague is to call it by the right name. The “too big to fail” (TBTF) banks are not treated that way because they are “important” or “virtuous.” They are TBTF because they are dangerous – the regulators fear that the bank’s failure could cause cascade failures at other banks. Krugman admits this fact: the basis for classification is that they are “institutions that could create a crisis if they were to fail.” They are systemically dangerous institutions (SDIs) and they should have been broken up and shrunk to a size where they no longer endangered the global financial system. Most economists believe that the SDIs are so large that they are deeply inefficient. Because SDIs receive an implicit federal subsidy even conservative economists have stated that they make meaningful competition impossible.

Dodd-Frank does not even attempt to end SDIs or remove their implicit subsidy that makes effective compensation impossible. Obama would have found it extremely difficult to end SDIs, but he was the only President who had the chance to do so and he never he considered trying to do the right and vital thing.

Dodd-Frank is useless against SDIs and potentially dangerous because it is being sold as a real protection. Creating complacency without effective reform increases the risk of future crises. We did not need the Dodd-Frank bill to provide “extra scrutiny and regulation of things like the amount of capital they are required to maintain….” We could have done that under existing regulatory and supervisory powers over banks. Krugman continues: “This provision has been derided as ineffectual or worse….” As I have just explained, at least with regard to banks, “the provision” is simply redundant. We have had the statutory authority to impose higher capital requirements for decades and “extra [supervisory] scrutiny” since the creation of federal banking regulation in 1863.

The provision is “ineffectual” against the implicit federal subsidy of SDIs. That means it is ineffective in restoring real markets for banking services. It is dangerous because it is being pitched (falsely) as a meaningful protection, which creates regulatory complacency. A fatal problem with the “provision,” which the Financial Crisis Inquiry Commission (FCIC) emphasized, is that banking supervisors failed to supervise effectively when banks reported high profits. Accounting control fraud produces the “sure thing” for a bank of reporting exceptional (albeit fictional) income. Accounting control fraud epidemics drove our three modern financial crises. Relying on higher “capital requirements” for the SDIs when (faux) capital can be created through accounting control fraud represent an Achilles’ heel of Dodd-Frank.

The lack of an “orderly liquidation” provision for a bank holding company is, as Krugman’s column admits, simply an excuse that the Bush and Obama administrations used because they had absolutely no intention of acting against the SDIs by receiving their clear receivership powers. It is revealing that the Obama administration came up with the pejorative term “nationalization” to argue that it was un-American to use receivership powers that we used hundreds of times during the Reagan administration to deal with troubled banks and S&Ls. Again, the fact that Bush and Obama refused to use receivership powers against the SDIs – powers that the OCC has had as regulators for over a century – demonstrates that the problem was will rather than statutory authority.

Krugman notes that Obama met with him and Joe Stiglitz about “temporary nationalization.” Why was Obama meeting with Krugman and Stiglitz about receivership questions? That is a subject that is far outside their expertise, but well within the expertise of scores of us with experience. Why weren’t people like my colleagues and me with a track record of success and the relevant expertise asked by Bush and Obama how to respond to a financial crisis? A Nobel Prize in economics is a personal triumph, but no one thinks it makes the recipient competent outside his or her area of competence and it obviously cannot supply experience. Some very smart people that Obama (and Krugman) would do well to listen to figured out far better answers to the problems Obama faced and proved decades ago that their answers worked.

I agree that it was a good thing that the Consumer Financial Protection Bureau (CFPB) was created by Dodd-Frank. That was Elizabeth Warren’s idea – a progressive. Timothy Geithner, who Obama chose as his Treasury Secretary after he had been the world’s worst senior banking supervisor, sought to kill the CFPB but was thwarted by progressives. Geithner succeeded in convincing Obama not to nominate Warren to run it. Again, the Federal Reserve had the clear statutory authority since the enactment in 1994 of the Home Ownership and Equity Protection Act (HOEPA) to ban one of the three epidemics of accounting control fraud – liar’s loans. Progressives repeatedly urged the Fed to use its HOEPA authority to stop that fraud epidemic. Alan Greenspan and then Ben Bernanke refused – even after Bernanke was informed that the fraud incidence in liar’s loans was 90 percent. Indeed, Bernanke finally used that HOEPA authority in the summer of 2008 (citing the 90% fraud incidence) – and even then delayed the effective date of the rule to November 2009 – because one wouldn’t want to inconvenience a fraudulent lender. It was after this disgraceful behavior that Obama chose to reappoint Bernanke – a Republican – to run the Fed. Senate progressives led the unsuccessful fight against that scandal. The Fed had all the statutory authority it needed to prevent the financial crisis. The Fed leadership lacked the will to act. The CFPB may prove helpful. The idea of having an institution dedicated to protecting financial consumers is a sound concept developed by progressives over the opposition of senior Obama administration officials.


One group of Americans is being bashed with no honest basis. The group constitutes among Obama’s most loyal supporters at the polls with very high turnout. The group has been bashed for decades by “new Democrats.” It has been recurrently bashed by Obama. It is now being bashed by Krugman. That group is progressives. The sad part of Krugman’s column is that the progressives were correct on each of the issues I’ve written about (which include all of Krugman’s points about banksters and the economy). Instead of praising them, Krugman joins Obama in bashing progressives for taking positions that Krugman admits are correct, indeed positions that he has supported in his writings.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


  1. Lexington

    Krugman blames Obama’s effort to enter into the Grand Betrayal as occurring because Obama was “naïve.” He presents no support for that claim. Contemporaneous press accounts – based on leaks from the White House – revealed that Obama was motivated by a desire for fame. The Grand Bargain was to be his legacy and the fact that the Grand Bargain betrayed his supporters was the factor that demonstrated that he was a statesman. Democratic Presidents establish that they are “serious” by publicly betraying and deriding their progressive base.

    It’s more than that: like many prodigious overachievers Obama is at bottom motivated by a deep seated insecurity. He started as an outsider who desperately wanted validation by becoming the ultimate insider. Sure, becoming president was a good start, but for his crowning achievement he would make the mountain come to Mohamed by obtaining the elusive Grand Bargain, thus achieving the sublime state of “bipartisan consensus” so exalted by the Washington establishment, and cementing his alpha insider status at the heart of the establishment’s sanctum sanctorum.

    Obama most primeval motivation is status in the eyes of the Washington establishment, not ideology. People who fail to grasp this essential fact inevitably commit all manner of error in trying interpreting his behavior.

    1. Brindle

      Well said: “Obama most primeval motivation is status in the eyes of the Washington establishment, not ideology.”

      A president who is a war criminal or front man for Wall St. are considered plusses by the D.C. insiders.

      1. Mike666

        Criminal is a little harsh. Terrorists planning attacks on America means we’re in an undeclared war.
        Remember, if there were a Republican president, there’d be B52 bomber missions, and an invasion instead.

        And Ultimately, when the Democratic party balked Obama did not push the Grand Bargain, and left it up to Republicans to propose Social Security Cuts, and let them Pay the Cost, Politically of proposing those cuts.

        1. lyman alpha blob

          “Criminal is a little harsh”

          Is that you Paul Krugman?!?

          read the constitution and a few international treaties and get back us on whether ‘criminal’ is too harsh.

          And he let the republicans ‘Pay the Cost’?!?!? By retaking the house in 2010 and possibly the senate this year? If i were Boehner that’s a grand bargain I’d take every time.

        2. GuyFawkesLives

          Until the Democrats can admit that the “lessor of two evils” is STILL evil, we won’t fucking move forward. Jesus Christ. Wake the hell up!

          Obama is just as big a war criminal as Bush. And worse: Obama has not held any financial criminal accountable, which means Obama is in collusion with the financial criminals. That’s fucking RICO!

            1. NotTimothyGeithner

              Independent swing voters. There aren’t many, but they are genuinely stupid.

              They are the types who say such nonsense as, “put aside the politics and focus on issues.” Its usually meaningless and sounds like an Obama speech.

              1. Attitude_Check

                Certainly wouldn’t want to focus on issues when you can just focus on party affiliation. That is sooooo smart, certainly not stoooopid.

    2. wbgonne

      “Obama most primeval motivation is status in the eyes of the Washington establishment, not ideology.”

      The two are inseparable. Fealty to the plutocracy means being a committed neolibertarian/neoconservative. True that Obama the Ideologue (and he is) is just the flip side of Obama the Insecure, but that is so for most ideologues, IMO.

    3. Peppsi

      Yves’s assertion that Obama is nothing but a soulless narcissist rings so true. What is this man, Obama, why would any reasonable person do the things he’s done if not for vacuous narcissism?

      In my personal experience, most politicians are empty suits, but there tend to be some core (stupid) beliefs. Obama has nothing, he believes in nothing. He’ll stake out the furthest right position possible and act like anyone who doesn’t love it is just naive and ignorant of the deep truths that he knows.

      1. Mike666

        Mr. Obama to you, clearly is smart enough to show political leadership. Keystone XL. To go up against the Massive Koch Money. You give him too little credit.

        Is he the perfect Democrat? No. But in the real world. Mr. Obama outperforms a Republican 10x over, across All Issues.

        Could we get a better Democratic candidate? How. With the current Democracy for Sale decision by the Supreme Court. The only thing you can do Now is to Vote Today with your Money, and Vote in November with your Vote.

        1. Peppsi

          You’re right.

          How could a progressive candidate get through the fundraising and corporate dem gauntlet? They’d have to be principled enough marxists to pretend to love wall street and fracking, then pivot against them completely in office, and hope that providing the secret service with prostitutes on demand would stop them from performing a palace coup.

        2. Kurt Sperry

          Look, a hapless brainwashed O-bot stumbled in spouting the usual vacuous O-bot boilerplate apologetics. Stupid or corrupt? You make the call.

    4. Winston Smith

      I think it’s even more simple and crass. Obama has been funded by the wealthy – especially the finance industry – as a candidate, is serving the wealthy – especially the finance industry – while president, and will be handsomely rewarded by the wealthy – especially the finance industry – after his presidency. He is following the trail blazed by Hundred-Million-Bill Clinton, who showed that presidents can use revolving doors too.

      1. Peppsi

        He is following the fake populist Clinton trail, but at least it seemed like Bill Clinton was a committed neo-liberal who loved ‘free’ trade, deindustrialization, cutting social programs, and all that. Obama just seems to be doing it because his bosses tell him to. He’s a cipher, just an empty man performing his function as Wall Street selected president.

        Does that make sense?

        1. Winston Smith

          It makes sense, but it’s apt that you said

          … but at least it seemed like Bill Clinton was a committed neo-liberal who loved ‘free’ trade, …

          and not

          … but at least Bill Clinton was a committed neo-liberal who loved ‘free’ trade, …

          So Clinton is a better “seemer” than Obama. I agree completely, but I’m not sure why it’s important. In the case of both Clinton and Obama, funding and anticipated reward have determined the nature of their presidential service.

          If Clinton had the ability to believe or seem to believe whatever was advantageous for him to believe at a particular stage in his career while Obama only has the ability to say whatever is advantageous for him to say, does that mean Obama has more integrity or less? I would say integrity is moot, but Clinton’s ability is more dangerous.

    5. Brindle

      Liberals and neoliberlism, this sounds like the donor class of the Dem party:

      —People who characterized themselves as “extremely liberal” nevertheless had real problems with the redistribution of wealth. And someone pointed out, I think he teaches at Stanford, that that’s the wrong way to think of this, because yes it’s true that especially as people get more wealthy they tend to become less committed to the redistribution of wealth but there are lots of ways in which they become “more liberal”—with respect to gay rights, antiracism, with respect to all the so-called “social issues,” as long as these social issues are defined in such a way that they have nothing to do with decreasing the increased inequalities brought about by capitalism, which is to say, taking away rich liberals’ money.—

      1. Nathanael

        This is actually false consciousness on the part of so-called “wealthy” liberals.

        Let me be clear here: I’m rich by any normal standards. I’m in the 1%. I’m actually independently wealthy at this point, so I don’t need to work.

        But to the billionaires, I am the dirt under their feet, because I’m not raking in a million dollars every year. The amount of money I have *total* is less than they amount they steal every *year*.

        I have more in common, in my political/economic situation, with the homeless guy than I do with the billionaire plutocrats (the malefactors of great wealth, as Teddy Roosevelt called them).

        But a lot of the so-called “wealthy” liberals have false consciousness and so they don’t understand this.

        Many poor people have false consciousness and identify with the malefactors of great wealth, believing that they’ll be rich some day.

        But also, many “ordinary” rich people have false consciousness and imagine that the malefactors of great wealth are like them. But they aren’t. The malefactors of great wealth eat the ordinary rich for breakfast.

    6. Nathanael

      “Obama most primeval motivation is status in the eyes of the Washington establishment”

      You have pinpointed Obama’s fundamental character flaw. Good work.

      Herbert Hoover was more principled. (Sigh.)

  2. bmeisen

    american culture is decisive in this debate. fact is that millions of americans are outraged by the notion that they could be forced to participate in a healthcare plan, millions of american college students and their families are going into debt for dubious educational services, millions of poor americans are happy shopping at walmart. does it make sense to swim against this flood of ignorance and passivity?

  3. ErnstThalmann

    People ascribe to Krugman an importance he simply does not have. He is either leaving or has left Princeton so those that wish to fritter away their time with his “thought” will no longer be regaled with TV moderators introduction of him as “Princeton professor, Paul Krugman”. The man is just the worst sort of ambitious weasel, almost an archetype of the kind of ambitious weasel one sees in Barack Obama. We’re safe to turn the page here, the fine analysis of Bill Black not withstanding.

    1. 1 Kings

      But nailing this Bill B’s piece next to any portrait of Obama anywhere in the world would help.

    2. Yves Smith

      I disagree. He defines the outer edge of acceptable discourse on what passes for the left in America. He has a lot of influence with econojournalists, and therefore over what gets said and not said.

      1. Kurt Sperry

        These putatively left authorities are critical to protecting the powerful and corrupt status quo by acting as censors for it, never allowing ideas that might actually threaten the status quo into the “serious” political debate. I like the term Judas goat, which someone used here recently.

      2. Nathanael

        Krugman’s actually a decent guy and he’s been really pushing the Overton window leftward when it comes to a lot of important things. Obama is, unfortunately, not one of those things.

        But Obama is yesterday’s news; he’s gone in two years, and he made himself a lame duck early through inappropriate lickspittle behavior towards Republicans.

  4. V. Arnold

    Krugman and Obama; both Nobel Prize winners, hmm.
    Again, why is the Nobel prize considered to have prestige? Anyone?

    1. voxhumana

      Because it’s named after (and funded by the vast wealth of) the great humanist who invented dynamite?

  5. John

    Where you don’t succeed, try somewhere else. So it is with Obama. Obama, under the radar, managed to decimate the federal workforce. He pulled off salary freezes for many years & therefore social security payments, upped contributions TSP (401K equivalent) from new highers, tried slashing COLA for military retirees but failed, froze hiring, and instituted Fear Management akin to what was found in Communist China under Mao. Federal workers must now report on other colleagues if they appear to be looking iffy. Failure to report could lead to your own demise. Obama got his Grand Bargain on a captive audience where there would not be much political fuss and quite frankly, was easy to do.

    BTW, Krugman’s credibility is shot.

  6. trish

    Krugman can’t take those like Cornell West seriously for stating Obama ‘’posed as a progressive and turned out to be counterfeit.’’

    Perhaps this is hitting a bit too close to home? krugman feeling a wee bit uncomfortable with the notion of “progressive revealed as counterfeit?”

    And he goes at all those ridiculously unrealistic foolish whining pouting foot-stamping crybabies believing that “if only Obama had put his eloquence behind a radical economic agenda…”

    radical. The shift to the right so complete that our resident NYT “progressive” labels entirely reasonable stuff that could have flown – like public dollars spent on single-payer rather than channeled right into corporate coffers, which krugman admits “would have covered more people at lower cost – in fact, I would” (is that his only fact in his column?), and like actually prosecuting criminals, etc….. as “radical.”
    So what’s left for the very farthest right-wing to call it?

    One more fact Krugman indeed got right, re obamacare: a “big improvement in American society is almost surely here to stay.”

    Yes, here to stay. Obama has firmly entrenched the insurance industry looters. That’s indeed what will be “hard to undo.”

    1. Peppsi

      Very good point. It’s worth nothing that the documentary “Our Brand is Crisis” covers Democratic consultants bringing a neoliberal fake progressive to the presidency in Ecuador (beating Evo Morales) in 2002, with the exact same Hope/Change campaign they used for Obama. It was all a fucking sham. We were played, I fell for it.

      1. Nathanael

        Morales won in 2006, so that story turned out quite well.

        Our problem here in the US is that we don’t *have* an Evo Morales visible.

  7. Washunate

    Agree that Krugman has been having trouble with reality.

    But this notion about austerity isn’t reality-based, either. The Bush Obama years have seen the greatest expanse of both qualitative federal power and quantitative net deficit spending in the history of the Republic. Austerity is a useless word to describe US public policy. This is one of the core challenges confronting those advocating aggregate demand. If the aggregates were what mattered, the past couple decades shouldn’t have been so bad for so many Americans.

      1. wbgonne

        Indeed. The economy is one way in which we order power relationships in this country. When the democratic republic functions properly, electoral politics provides an alternate and competing mechanism for distributing power. When the two power networks merge you get what we have now.

  8. Carolinian

    For some of us it was obvious even back in 2008 that Obama was little more than a marketing concept designed to return the White House to Team D. The truth is that the left was not so much deceived as participated in a kind of willing self-deception because they too want to be “on the team.” A Washington Post story the other day said the biggest motivator for voter turnout is hatred for the other party. And so our elections become a kind of cultural proxy fight rather than a meaningful decision making process on policy. Needless to say the one percent think this is just jim dandy.

    In a sense it is unfair to blame Obama for merely doing his job as Presidential spokesmodel–the job he was hired by his high-roller backers to perform. He’s obviously a deeply superficial person but does give nice speeches. The blame should probably go to those who accept such a person as their potential leader. The Dems know that they can treat progressives with contempt because there is no price to be paid. The real question is when is this going to change.

    1. Nathanael

      “A Washington Post story the other day said the biggest motivator for voter turnout is hatred for the other party.”

      So with a growing number of voters hating both parties?….

      Situation seems ripe for a third party to erupt into the limelight the way Lincoln’s Republicans did in 1860.

  9. DakotabornKansan

    Thomas Frank, who still holds Obama (really???) in high esteem, on Krugman’s peculiar article:

    In contrast, Bill Black’s fine analysis mercilessly cuts to the chase.

    A lot of Paul Krugman’s followers find him the leading hope for opposing even worse Republican politics. But what can be worse than “Rubinomics,” the Democratic Party’s black hole, which he supports? He never challenges the structure of the elites of which he is so much a part. Krugman praises Obama, whose primary loyalty is to the elites who are looting the rest of us.

    Hugh, a frequent commenter at Naked Capitalism, has said this about Krugman:

    “His allegiance is and remains to the very class which has granted him his fame and privileges, and which loots us. We should never make the mistake of thinking just because Krugman makes sporadic, half-hearted criticisms of certain aspects of the system that he is on our side. He is not. Much like the astroturfed Tea partiers on the right, his function is to distract and steer the discontent of one part of the 99% into politically safe dead ends, to make sure that no real opposition to his class ever forms.”

    Krugman as Obama’s chaplain:

    “The chaplain had mastered, in a moment of divine intuition, the handy technique of protective rationalization, and he was exhilarated by his discovery. It was miraculous. It was almost no trick at all, he saw, to turn vice into virtue and slander into truth, impotence into abstinence, arrogance into humility, plunder into philanthropy, thievery into honor, blasphemy into wisdom, brutality into patriotism, and sadism into justice. Anybody could do it; it required no brains at all. It merely required no character.” – Joseph Heller, Catch-22

    1. Sandwichman

      “…vice into virtue and slander into truth, impotence into abstinence, arrogance into humility, plunder into philanthropy…”

      …usury into cost-benefit analysis.

    2. Nathanael

      You’re being completely ridiculous, and Hugh is being even more ridiculous.

      Read what Krugman actually writes sometime. He is intellectually honest (a rare virtue), although he’s not always that bright. Are you going to attack Piketty the same way?

  10. Code Name D

    “Neo-liberal policies” is more of a term used outside US and Canada as usually refers to free trade agreements, trade packs, WTO policies, the elimination of trade tariffs, privatization of state run enterprises, and making “structural changes” regarding labor unions, public pensions, and changes in automatic stabilizers such as unemployment insurance; it not their out right illumination.

    1. globus Pallidus XI

      Technically I think you have a point, but I still think that the use of the term “Neoliberal” as a more general catch-all is appropriate. Reduced to the essentials, the Neoliberals believe that the rich should have total control over all aspects of society. They believe that they should have the right to choose to own slaves, and then talk about how they are all for freedom. That they should be directly subsidized by taxing the middle class and working poor, and then whine that they are themselves being taxed to death. They believe that they should control the population the same as they control the money supply, jamming in more people to lower wages as if we were nothing more than battery hens…. and then lie about it.

      The thing is that Neoliberals are chameleons who have no honor or integrity and will claim to be whatever sounds good at the moment, while doing the opposite. It is always a mistake to use the terminology of the enemy. Therefore the use of the term “Neoliberal” to broadly describe bloated parasitic hypocritical rentiers seems appropriate.

  11. Xelcho

    Thanks again to Bill for such a clear and coherent demolition of the garbage heap known as Krugman. Though, one has to wonder why he restricts his criminogenic analysis only to the financial sector and leaves the politically criminogenic environment undisturbed. While it may not fit entirely within his wheelhouse, I have yet to see a “political scientist” call it out in a meaningful manner such as Bill has done to the financial sector.

  12. wbgonne

    Bill Black is correct that Krugman’s Obama-ode is nauseating tripe. I expect no less from Krugman who, at heart, is nothing but a Democratic Party hack. My one quibble with Black is that he misses the ultimate straw man Krugman constucts, that of the Implacable GOP boogeyman. In 2007, Obama shellacked McCain and the Democrats stormed into power on a Progressive wave generated by revulsion at the horrid failure of Conservatism. Convervatives were terrified, confused and (seemingly) mortally weakened. There was no real opposition and Obama could have done anything he wanted for 6 months. Anything. And what Obama wanted, in turned out, was someone to prevent him from doing the Progressive things he promised to do. So we got Joe Lieberman and the Democratic Blue Dogs as tbe ummovable foe, which succeeded as an excuse for Obama not acting as a Progressive, but also undermined the Democratic Party which, in turn, led to the GOP retaking the House. At that point, there was indeed real opposition. But it was opposition Obama welcomed and had in fact created. Obama’s miscalculation was tbe rise of Tea Party, whose legitimate foundation was populist fury at Obama’s Wall Street coddling. The Tea Party could not be controlled, however, and sunk Obama’s Grand Bargain.

    1. Banger

      People often cite the 2008 election as a real turning point–we were, on the whole, ready for real change after the frauds on many levels that existed during the Bush years. The Obama campaign and Congressional Dems mined it for all it was worth. The only problem as most of us here know is that they were lying to us and running a con and many “progressives” still support the con even when it has been thoroughly exposed. Krugman and others fall for the good cop/bad cop routine that is the PR method that never fails. Obama and the DP had no intention of changing anything they were then as they are now for the status quo 100% with a couple of exceptions.

      The tragedy is not that Obama and Krugman are pulling the wool over our eyes–we are doing just fine doing it ourselves.

      1. wbgonne

        So many people still believe in the two-party system, IMO, because it isn’t easy to recognize, nevermind accept, that our political system has been hijacked and no one is on our side. That is a hard truth.

        1. Nathanael

          Yeah, I don’t know why so many people support the two-party system at this point. Duverger’s law isn’t enough excuse; that explains why we have two parties, but there’s no reason for them to be THESE two parties.

          An unknown no-name Green Party candidate got 16% in a Congressional election not long ago. In Syracuse, NY. That’s enough that the major party candidates have to start worrying. Wait a few years and the numbers will be larger.

    2. Washunate

      Well said. And one of the ironies on the bank bailout anger is that Obama was a key advocate even before he was President, back when the Democrats merely controlled the House and Senate.

      1. wbgonne

        Then “moderation” is the problem. Can it be fixed? Perhaps it is my imagination but it seems especially quirky when a new comment is posted before the time to edit a prior comment expires.

        1. Lambert Strether Post author

          Yes and no. Yes, if we fundraise for half-as-much again and have 24/7 real-time moderation by a human, which is the “fix” you seem to want. Of course, this “fix” leaves open the question of whether that should be the priority or, say, reporting. No, since, like taxes, moderation is “the price you pay for civilization.” No moderation is not an option, if only because the entire comment section would be instantly over-run by spammers, followed shortly by trolls. Like so much in life, “the problem” is very much a matter of definition.For further information, see here.

          1. Ben Johannson

            This is one of the few blogs wirh significant traffic where trolls don’t rule the roost, though one or two will try each week. You do good work.

          2. wbgonne

            I acknowledge the need for moderation and I also recognize the staffing limitations. The problem is that so many non-controversial comments are going into moderation. Can’t the filter (or whatever it is) be adjusted to be more tolerant? That’s all I am suggesting.

            1. Lambert Strether Post author

              Except “so many” from the perspective of the moderators really is a constant. And the filters are tweaked as new forms of spammage and trollery appear. But if you will reread your comments from the standpoint of our tech guy, or indeed from a moderator’s standpoint, you will see that there is literally nothing actionable.

              The Internet is a hostile computing environment. For whatever reason, things seem to have gotten a little choppy where you are. The chop will dissipate and go elsewhere, as it does.

              1. Washunate

                wbgonne, choppy here too. Apparently commenting on somebody’s comment thread in moderation puts yours in moderation :)

                But really you just gotta let it be. Or let it go. Or whatever the kids say these days.

        2. different clue

          Colonel Lang over at Sic Semper Tyrannis has the toughest moderation policy I have ever seen in action. No comment prints until/unless he okays it. If it isn’t good enough, it doesn’t print. If it is bad in a “teachable moment” way, he will let it print and then say what is wrong with it.
          If a comment offends or annoys him in just the right way; he will run it, reprint the most egregious part of it, and then say ” ., . . . and so-and-so is now BANNED from this blog”. And they are, too.

  13. alan

    I’ve no argument with the gist of this piece. That Glass Steagall is still gone is not defensible, and the disconnect between the public interest and the administration is absolutely astonishing.

    However… on the issue I follow (student loans), but I really have to put ALOT of the blame on the “progressive” beltway thinktanks. Not sure if this is a one off thing, or whether what I saw is more broad than my issue.

    On the student loan problem, Obama came in, listened to the “experts” (ie the beltway groups like the New America Foundation, the Center for American Progress, and others), and then did some impressive stuff based on their advice. However, this was impressive to everyone but the students and their families, who are still faced with spiraling debt burdens, a uniquely and astonishing predatory loan instrument, and a loan industry where shark tanks can be found, literally, in the headquarters of these predators.

    Both Congress and the President were given hugely slanted advice from the “progressive” beltway crowd, but those that I have looked at really can’t say they are progressive with a straight face, and this is demonstrated with their increasingly mealy mouthed advice on this problem. here is one example:

    I can’t speak to other issues, but I see alot of things in the beltway that are beyond disturbing wrt progressives. The fact that the Center for American Progress takes money from The Blackstone Group, Walmart, and Goldman Sachs (among many, many other corporate interests), that PBS has sold it’s programming to CNBC, and the New America Foundation and the Cato Institute are essentially sharing writers on the student loan issue are collectively, enough to worry me greatly. With fakery like that surrounding our electeds, this problem will not get better.

    The real progressive liberals really need to take stock,and clean the fakes out of DC on the student loan issue. Perhaps for other issue too…there is still alot of time for Obama to drain the swamp and crack some skulls, and assuming he really did mean what he said about fighting for the people on these economic issues, I think he’s earned the right to do exactly that without being wet blanketed.


    1. Yves Smith

      A big problem is that all of the names for what passes for the left have bee adopted by Vichy Leftists and stripped of their meaning. The fact that a Blue Dog Democrat organization like the CAP can be called in some circles “progressive” demonstrates that “progressive” has become debased.

      That’s why I wrote the Skunk Party Manifesto. The hacks would not adopt skunks very readily.

  14. dcb

    Well, I spend the majority of my time on the ny times web site refuting the bad economic 1/2 truths, simplistic positions, omissions, and distortions Krugman writes every week. It’s a great deal of work, and I send folks to naked capitialism, and the institute for new economic thinking to give them a more balanced view. That the debate isn’t simply inflation and left vs right. That the view is much much more complex. He’s very deceptive, for example you can’t be liberal and dislike the federal reserve. he never addresses instability, regulatory capture, margin debt and many other things. he’s born and bred of an older school of economic thought that no rational pundit can accept. He’s a dinosaur, and can’t accept that many of the positions he has devoted his life on are in fact wrong, central bankers models are wrong. , etc. Often my posts don’t get past the censor, and I did say his friday post (this week) was one of the most distorted I have ever seen
    I challenge his ideas of reforming the structure of the economic system instead of endless monetary support.
    That you need the structure of the system to be altered to deliver the stimulus where needed. They didn’t not allow my post that compared stiglitz to krugman. Stiglitz says: “An economic system that fails to deliver gains for most of its citizens, and in which a rising share of the population faces increasing insecurity, is, in a fundamental sense, a failed economic system”.
    and I challenge krugman why he doesn’t see the need for radical reform like stiglitz. including economic education. They also do not allow the post that shows yellen (considered the biggest dove) to be the overwhelming all street favorite, when krugman says those with money want higher interest rates. If wall street doesn’t represent money who does? It’s sad the a noble winner and educator can’t be more balanced, or come up with some decent proposals. It’s even more sad that so many on the lift like him when just about the only thing he says are the correct words. In that sense he’s like obama, saying the words, doing the opposite if you really know.
    The system we have is essentially an offshoot of his ideas about economics, to advocate radical reforms he’d have to admit he was wrong. He’s not about to admit that a great deal of his life was wasted. Plus if you know anything about academia…….
    I’m happy to see that it seems more and more realize what a joke he has become.

    1. Brooklin Bridge

      I’m happy to see that it seems more and more realize what a joke he has become.

      I’m curious. Where do you get that impression from? The comment section of the NYT? NC? general observations? It seems hard to imagine there wouldn’t be more general awareness, but I see precious little proof of it day to day in a partially rural suburb of MA. Indeed, I sometimes wonder if people aren’t hanging on to the Krugman fallacy harder than ever.

  15. Justin Bieber sux

    Krugman’s real value to the regime is to get people arguing about the president, when the poor cowed chump is beset with CIA death threats to keep him in line: party crashers, security breaches, lone nuts shooting holes in the white house, jumping fences and running around with knives, armed felons acting weird in his elevator. You might as well blame Vanna White. She has more discretion in her workplace. Krugman’s provocative ass-kissing is a doomed attempt to make people take electoral ritual seriously in a kleptocracy that’s out of control.

  16. Brooklin Bridge

    This is an exceptional piece by Bill Black. His ability to deconstruct Krugman’s self negating arguments in such a way as to be understandable by all is simply remarkable. But I can’t quite accept that Obama’s treachery was only for the glory. Obama has not just been a passive player; he has aggressively gone to the mat time and again for the elite. If he was simply a vacuous actor with no internal compass, he could have just as easily made his fame by doing what he had promised in his campaign. And it would have been far greater and longer lasting – along the lines of FDR – than any fame he might have envisioned by being a traitor. Yet he chose that course and stuck with it through every failure. I don’t think even the profit motive combined with a tenuous claim to fame can fully explain that dedication.

    1. Carolinian

      To do the right thing would certainly not have been “easy.” Krugman is right about that. If he had put Jamie Dimon in the dock the financial press would have gone apeshit (pardon my French).

      Obama has said–in 2008 even–that the President he admires is Ronald Reagan for Reagan’s ability to use communication skills to change the debate. So the short answer is that Obama’s ambition was to be Reagan. I’d call that incredibly superficial. But it’s an ambition that many in Obama’s chosen social class would applaud.

      1. Brooklin Bridge

        I don’t know about doing the right thing, but Obama could have gone in the direction he campaigned on easy or no. Moreover, If it was fame he was looking for, doing so would have guaranteed it, win loose or draw.

        As Wbgonne said above,
        In 2007, Obama shellacked McCain and the Democrats stormed into power on a Progressive wave generated by revulsion at the horrid failure of Conservatism. Convervatives were terrified, confused and (seemingly) mortally weakened. There was no real opposition and Obama could have done anything he wanted for 6 months. Anything.

        Whether or not Obama is shallow like his model Regan, he is not an empty suit. The argument is strong that he is not a vacuous technocrat following orders, but rather a determined ruthless mobster like individual that is calculated and persistent. I suppose neoliberal idologue fits, but it doesn’t quite do justice to his brand of treachery. It also doesn’t explain his vainglorious affair with extra-constitutional Presidential powers or his reckless unary Executive wars policy.

        1. Carolinian

          Of course I have no idea what Obama is really like but there is a current of gossip on the web– from political sites and people like Pat Lang–that says he is disengaged, more interested in the perks of the job than actual policy, diddles with his Blackberry during meetings etc. By all accounts he spends a lot of time playing golf. Karl Rove said after he met Obama that he was like the smart kid in high school who thinks he never has to do his homework. While Obama has filled his staff with Clinton era retreads nobody ever calls him a “wonk.” This is someone who refers to his financial advisers as “propeller heads” and whose motto is “don’t do stupid sh*t.”

          So my impression is that Obama would be perfectly ok being described as spokeman (perhaps not spokesmodel) for policies made by the people he appointed or was told to appoint.

          On the other hand it could be like you say and the sinister quality of his administration comes straight from him. The only way to really know would be as that fly on the wall. Or perhaps Bob Woodward’s next book….

          1. Nathanael

            I don’t think there’s a difference. I’ve met a few golf-playing elitist “I don’t have to do my homework” types. They’re very insecure. If you push them they tend towards brutal violence. So yeah, Obama would be fine being called “spokesman”. If you called him “spokesmodel” to his face, he might ask the CIA to look into drone-murdering you. The sinister nature of the administration is closely connected to this insecure, status-seeking mentality.

    2. wbgonne

      Obama is a neoliberal ideologue. Almost every decision he has made is consistent with neoliberalism. Same with his appointments. Obama’s neoliberalism, since it is the prevailing orthodoxy, also serves to ingratiate him with the elites whose approval he clearly craves. But Obama is also treacherous. He knows that neoliberalism, no matter how popular among the elites, is decidely unpopular with the population. And even more unpopular within the rank-and-file of the party he leads. So Obama lies.

  17. Banger

    In defense of Krugman who I don’t support nor do I support the DP. But, people who are progressive want civilization to continue and see the RP as a seriously destructive and nihilistic lot. They see the right as modern-day barbarians that want to eliminate all the changes made since the Progressive era over a century ago–and they are, largely, right. The RP wants to quickly create a feudal society ruled by decree by powerful forces nationally, internationally, and locally. They want to substitute the naked use of power for the ideal of rule-of-law. Not all really want that but the logic of their policies want us to move in that direction. All this, btw, has nothing whatever to do with “libertarianism” as many on the left believe but authoritarianism.

    My own stance is that there is no leg for progressives to stand on because the government that was supposed to counter the influence of the corporations is itself now almost completely compromised. Yet, what is Krugman et. al. going to do? Move towards the sort of anarchism that people like me favor? What about Ebola–how are we going to handle that? We aren’t yet in an open-sources world with ubiquitous distributed networks that self-organize around our needs–culturally we can’t handle that yet–one day maybe. In the meantime Krugman has to hold on to what he sees as the last chance for civilization–which is still, Obama.

    If you go out in the hinterlands, all RP candidates (it seems) have one campaign issue–Obama–not his policies but a black man as President–as far as I can see that is the main issue in most of these races. Policies are pretty much ignored. To put it another way–we are descending once again into a re-ignition of racism on the part of the vast majority of white males and I sympathize with progressives for wanting to support Obama in the face of that–despite his 2008 con-game of a campaign and that Obama is not progressive but a conservative status-quo center-right politician.

    1. voxhumana

      except for the fact that he’s not black, he just plays the part on TV….

      seriously… what does “black” mean? Is Tiger Woods black? Ask his mom… Calvin Peete was black, so too Jim Dent. And what about Vijay Singh? I realize that using pro-golfers to illustrate the point is sadly ironic, given the historic racism of the sport’s major venues (just don’t tell that to Obama bin Golfin’). But still…

      what does “black” mean?

      1. Banger

        I think “black” means “them” for large numbers of Americans in certain parts of the country. It’s a stand in for everything they don’t like about post-modernism and cultural relativism. They, white males, want to return to an older more tribal way of life where the values they grew up with are honored.

    2. Jackrabbit

      Oh, they only have the best of intentions!?/snark

      I don’t sense that racists have gained as much as trust in government and our political system has suffered. Fear-mongering about the Republican bogeyman is part and parcel of the scam.

      It has been pointed out many times, here at NC and elsewhere, that Obama did what he set out to do: deliver government into the hands of his crony neolibcon backers in return for a handsome payout in the end. To do so, he sold us a bill of goods. But this has backfired as reality becomes more clear.

      Some have tried to paint the failure of the Obama administration as a failure of Progressivism. Black does a good job in clearing the air but the fact that Obama & gang are NOT Progressives needs to be understood by a wider audience.

      H O P

      1. Nathanael

        I don’t think it’s fair to say that Obama was supposed to *deliver* government into their hands. Under Bush, government was *already* in their hands. Obama was supposed to *keep* the government in their hands. (In case McCain or Romney lost.)

        It’s the standard corporate political thing: buy BOTH parties.

        There’s a reason most corporate execs donate to both sides of campaigns. :-(

  18. Jackrabbit

    As pointed out by others above, Krugman is a neolibcon Democratic Party hack. It is unfortunate that he is afforded the respect that he is. People like Krugman and Obama capture the public debate and those who know better too often play along. I guess that is an example of why they say that economics advances one dead economist at a time.

    I wish that Black has also mentioned Krugman’s support for bubbles and his failure to push for progressive reforms like elimination of the carried interest tax deduction (an Obama campaign promise that was promptly dropped after he won office).

    Many kudos and thanks to Bill Black but he gets a few things wrong:

    > Elizabeth Warren is not a progressive. She didn’t push for the founding of Consumer Financial Protection Bureau (CFPB) based on progressive ideals – she pushed for it based on conservative values. This is a good thing that should be shouted from the hilltops. The battle here is people of principle vs. people whose principles are lax (at best).

    > Dodd Frank DID fix the financial system – as in the ‘fix’ is in. It created a mechanism for bail-ins where customers are a resource for systemically important institutions. From Wikipedia: “The FSOC has the authority to set aside certain financial regulations published by the Consumer Financial Protection Bureau if those rules would threaten financial stability.” So customers are used as a cushion. But as we know, when these institutions get into major trouble, they all get into trouble together. So the customer base that would pay for bail-ins is essentially the same as the taxpayers that would pay for a bail-out. What this slight-of-hand does is simply remove the need for a politically damaging bailout.


    I have made these same points many times.

    H O P

    1. TedWa

      Despite Obama’s campaign promise that no lobbyists would be writing legislation, the Dodd/Frank bill was written by bank lobbyists. Of course that was part of the “fix is in”. It’s so ponderous a document that by the time anything would be done either the statues of limitations would run out or there’d be plenty of time to water down any real regulation. Glass-Stegal was what, 50 some pages?

  19. William

    “The sad part of Krugman’s column is that the progressives were correct on each of the issues I’ve written about. . .”

    Like the song goes, “and the m__f__ing hippies? WERE RIGHT.”

  20. PopeRatzo

    I’m surprised there are so many of you who seem to believe anyone who is not a tool of the oligarchy could ever get anywhere near the presidency. That’s pretty naive.

    There will never be another progressive president. The best we can hope for is that a Republican never again is allowed to fill a Supreme Court vacancy.

    When it comes to displacing the oligarchs, electoral politics and the two political parties just ain’t gonna get you there.

    1. juliania

      Well, as recently as when Bill Black was involved in the Savings and Loan takedown, it did get us there, and that is why I thank him for this reminder, and Lambert and Yves for posting this article. This part made me cry:

      “…AS DOJ achieves hundreds of elite convictions, the banking regulators bring thousands of meaningful enforcement actions against senior bank officers, and DOJ and the regulators bring thousands of civil actions against the senior officers to recover the wealth they gained through fraud the world would have transformed in a way that would have created much greater political space for meaningful reform. The hundreds of fraud actions discredit banking and bankers. Their trade associations’ efforts to block meaningful regulatory reform become toxic as members of Congress rush to disassociate themselves from the banksters…”

      The world would have transformed. Obama had the power. We gave it to him, not the wealthy ‘supporters’ of his campaign. He betrayed us. That’s his legacy.

    2. Nathanael

      “I’m surprised there are so many of you who seem to believe anyone who is not a tool of the oligarchy could ever get anywhere near the presidency. That’s pretty naive.”

      No, it’s realistic. Two have jumped the White House fence recently, for goodness sake!

      How do you think Abraham Lincoln got elected? Popular insurgencies are powerful and can blow away oligarchies at startling speed.

  21. kevinearick

    Archimedes Screw

    Capitalism, socialism, communism, fascism, and all the other isms, are phases of humanism, chasing its own tail, in boom and bust. The consensus builders didn’t invent the internal combustion engine, but they did commandeer it. Energy is only finite relative to empire. Whether you connect the circuit from and to nature is a choice.

    1700 years and a dark age later, Galileo repeated the obvious aloud, that civil law, allowing the status quo of feudalism to determine the course of science, is stupid, and like Archimedes and his predecessors, Galileo was expunged for enabling economic development away from Rome. Archimedes not only proved that the earth was round, but also that gravity, like empire, was arbitrary, no astronomy required.

    America has grown old and stupid, like every other government in History, which the others were only too happy to follow, printing into a demographic bust, with a convenient scapegoat when stupid repeated. The cleanest dirty shirt in a global economy spinning into fascism isn’t much of a goal.

    If you think, there is no capital, to hoard, control, or redistribute, without labor; there is only dead inventory. And recycling dead inventory, faster and faster, with growing inflation at the entry margin and deflation at the FILO bankruptcy core, in a positive feedback loop of supply-side monetary and fiscal policy, can only result in fascism.

    The fire in a crowded theatre analogy doesn’t work because the isms all crowd the theatre and compete to print supply-side debt, with artificial emergencies, by starting the fire, and grow increasingly anxious as the increasingly preempted response capability nears the inevitable real emergency.

    CEOs/CAOs aren’t waiting to be exposed as frauds, by a fraudulent system, as the scapegoat, by accident, and they are not magically recycled by accident. Nothing was accomplished in the S&L crisis, except to grow the stupidity. That’s why the ‘banksters’ aren’t being prosecuted, and why they are all printing again, to no avail.

    The governor has an elevator right across the road that has cost millions and still doesn’t work, by design. Until CA can’t float a bond, which will not happen under global QE, there is no exit, but Acts of Stupidity. The first thing you want to learn when you go skiing is how to brake. That bubble is a double-sided mirror, and you want to know which side you are on.

    The critters are still choking themselves with RE inflation and the resulting income inequality. Until they get tired of doing so, you have much better things to concern yourself with than corporate outcomes. Communism doesn’t work in CA/China any better than it did in the USSR, and if the critters could exit by throwing a scapegoat on the barbeque, they would not hesitate to do so.

    Whether the herd skates clockwise or counter is arbitrary. Identifying the artificial complexity maintaining the status quo is useful, but worth no more than 10% of your time. The bankers are just better at creating artificial emergencies than the monkeys they employ for the purpose. Applying, adjusting and releasing the brake is all you really care about, in the empire, a damsel always in distress that wants you to solve its problem, feeding it, until the day you die.

    Take a look at the distribution of run-time compliance code and you will see the problemsolution. The critters create an emergency and offer you a loan, against your children’s future, as the solution, and The City is running out of fools to feed it.

    Every moron wants to be your boss, and thinks that the leverage of majority rule is going to make that happen. Because your ancestors entered a contract made to be broken does not oblige you to do the same. Let the sharks eat each other.

    The empire is an island. Whether you complete the economic mobility circuit is a choice, always up to you. Morons telling morons how to do stupid always ends badly, and you don’t want your name associated with the product. The clothing makes the ape. There are times when you are going to play the ape or the monkey, in a chain of the same; just don’t make a habit of it.

    That pendulum exists in more than one dimension. Choose an exit/entry.

  22. Jill

    Black is taking the best approach in countering the cries of “Obamabashing”. Reality is reality. It isn’t dependent on either “liking” or “bashing” Obama. Black simply lays out what happened, what the remedies are and how various criminal actions and disastrous economic policies were not remediated. If laying out the facts is “bashing” someone, I would say this slander is propaganda. These slanders are meant to silence an important voice, the voice of actual left wing people who understand what is happening and have some really good ideas about what needs to be done to make things better.

    All along the left has been attacked and slandered. Keeping Democrats in fear of Republicans (especially the Tea Party) is not completely successful in suppression all doubts. Additionally, it has been necessary to excoriate the left. In part, the left has struck me as very confused about Obama (a feature, not a bug). People were afraid to speak up because Obama had been hyped as a savior. He was a community organizer, the first black president, adopted by the Crow Indians, given the peace prize, said he was going to bring the kingdom of God here on earth-is there really anything the man cannot do? As brand of the year 2008, people, even many leftists, believed in this man. It was confusing when his actions did not run along the same line as his branding.

    Those on the left who understood from the beginning what was happening were attacked, viciously and relentlessly. These attacks were designed to keep an actual left wing analysis from reaching the public. These attacks continue and have been a great loss to us all. We have very little left wing social and economic analysis in the public domain. Krugman is doing his part to make certain that remains the case.

    I do not agree with Black that Warren is a progressive. I believe she is being branded as one, not that she is one. This is a worrisome statement from Black. It says to me that left wing people are still being effectively targeted by propaganda and branding. We must stop falling for this branding by doing exactly what Black has done with Obama. When we are told someone is a progressive, we need to lay out the facts and see if that is true. Then we need to support or withdraw support from that person according to their actions alone.

    The left must speak plainly, strongly and without the confusion of the past.

  23. TedWa

    Nicely laid out and comprehensible to any reader Mr Black. I’ve always loved your work. It’s astounding to me the people Obama chooses to be his “experts” when they aren’t experts at all in the problems he says he’s trying to address. I mean, wtf. All of Czars (creepy name) don’t fit the roles he’s assigned to them. To me, he’s unbalanced and in no small way. At least he sees that the environment is worth saving…

  24. ifthethunderdontgetya™³²®©

    Prosecuting the Banksters Required No Eloquence or Political Miracles

    Krugman’s crude effort to ascribe this silver bullet solution to progressives collapses as soon as we apply the claim to the three criticisms he earlier ascribed to progressives. First, we want to prosecute the elite (and not so elite) senior bank officers that grew wealthy by leading the frauds that drove the financial crisis and the Great Recession. As Krugman agrees, this has cost our Nation over $21 trillion in lost GDP and over 10 million jobs. Why does prosecuting banksters require a “radical economic agenda?” The first President Bush’s administration prosecuted successfully the majority of the over 1,000 defendants convicted in savings and loan cases designated “major” by the Department of Justice (DOJ). Bush wasn’t eloquent.

    Thank you!

  25. Jay M

    Krugman bashing will only get you so far. There are few brands available in the economic marketplace and the Krugman brand is about as far left as you are going to go if you want an iffy Nobel Prize. Face it, economics is like Ford, Chrysler and GM. Hudson didn’t have a chance. Forget the Terraplane.
    We must move on and imagine virtual NYT columnists and Princeton Profs that wear GI jackets and say FU to the man.
    Must be a flashback, sorry.

  26. Jackrabbit

    Baloney. Krugman, Obama, etc. are already damaged ‘brands’ as evidenced by discussion here and elsewhere.

    More TINA! and Markets! bullsh!t.

    1. NotTimothyGeithner

      Exactly. If Krugman found Jebus and started speaking truth to power, he would lose his Obot audience, but anyone interested in the kind of sentiment found in these here parts has already moved on from the NYT and has no intention of going back because alternatives have been found.

      1. John Jones

        May I ask besides places like Naked Capitalism what other alternatives do you read?
        Would like to know of others.

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