Thomas Frank: Obama Chose Wall Street Over Main Street

Jerri-Lynn here. Happy New Year! This Real News Network interview with Thomas Frank, author of “What’s the Matter with Kansas” and “Listen, Liberal”, reminds us that Trump isn’t trodding an original path in choosing Wall Street over Main Street. Frank says the Democratic Party must acknowledge that in 2008 the crash and the discrediting of Bush, created conditions for much more progressive policies – but Obama chose not to pursue such a course. And following from that failure, we now have Trump.

You may wonder on this first day of 2018, why I‘m posting something that looks back rather than forward– and that however eloquently, lays out points with which regular readers are no doubt well familiar.

Well, while compiling today’s links, I stumbled on an article from The Hill making the case for the “Democrats’ superstar”:

Former Democratic National Committee (DNC) Chairman Ed Rendell says if former Vice President Joe Biden runs against President Trump in 2020 he would “win overwhelmingly.”

In an interview with New York’s AM 970 radio host John Catsimatidis, Rendell said Biden is the Democrats’ “superstar” and has a real chance of winning in 2020.

Ahem. Joe Biden? Superstar?

Frank understands why that’s anything but a winning idea.

This is part 8 of a 9 part series, the first part of which I posted in September here. This segment is self-contained and there’s no need to watch them all to follow the discussion. For those who are interested, the full index to the series can be found here and transcripts are available for each.

PAUL JAY: Welcome back to Reality Asserts Itself on The Real News Network. I’m Paul Jay, and we’re continuing our discussion with Tom Frank. Thanks for joining us again.

THOMAS FRANK: It’s my pleasure, Paul.

PAUL JAY: One more time: Tom’s a historian, a political analyst, and he’s the author of ‘What’s the Matter with Kansas?’, ‘Listen, Liberal,’ and lots of other books. Before we get started, I just want to frame something for our viewers. I don’t think either of us think that somehow Bill Clinton is a demon or Barack Obama is a demon. For that matter, I wouldn’t think George Bush or even Mr. Trump, President Trump is a demon. We’re at a stage of the development of this social economic system, capitalism, where ownership is extremely concentrated and finance is extremely powerful, and the control most of the politics. And these political personalities, they come up at certain times, and if you want to be a successful president, you’ve only got certain choices. If Obama hadn’t been a Wall Street loyal person, he never would’ve been president. That’s a choice he made. So it’s not like this is all about the individuals and their policies.

THOMAS FRANK: I don’t know about that. We probably don’t want to keep going over and over and over this, but the mood of the country in 2008, I think you could’ve elected someone who was way to the left, who really did get tough with the banks. By the way, you mentioned something very important about financialization of the economy. We had the perfect chance in 2009, when Barack Obama came in, to disrupt that cycle and get back to being an economy that actually produces things rather than an economy that shuffles financial instruments back and forth. And we didn’t do it. We thought we did, we thought we were voting for that, but our leadership chose not to go in that direction.

PAUL JAY: And I think an expression of the power of finance, they selected a guy who could feint left, and when he comes to power, appoint Wall Street as his financial team.

THOMAS FRANK: Yeah. Well, that was the big disappointment for me, is watching Barack Obama deal with the financial crisis, and basically right off the bat, it was apparent that he –I mean, not apparent to me, of course, I was very hopeful, as the phrase went at the time — that he was going to take the steps that needed to be taken. And by that, I mean that he was going to do what Franklin Roosevelt did to the banks back in the early 1930s.

PAUL JAY: And had control of Congress and could’ve done it.

THOMAS FRANK: And then he had the bailout mechanism. He had seats on their boards. He had everything at his disposal, including prosecuting these people for fraud. They were dealing in something called “liar’s loans.” They were packaging them up and selling them to retirees in Germany. This is so bad in so many ways. And as we all know, they were designing financial instruments to blow up in people’s faces, the people who bought it. They were doing all this deliberately. We know this is true. It would’ve been hard to prosecute them because they have good lawyers, but you still have to do it. You’re the president.

PAUL JAY: And not a single prosecution at a senior level.

THOMAS FRANK: Not a single one. That’s right. He didn’t even fire them. This is the other thing. Barack Obama had every authority over these guys. If you go back and look at what Roosevelt did in the ’30s, his bailout agency constantly was firing bankers from their positions because the government basically owned the banks because it had bailed them out. By virtue of bailing them out, they had power over them, and he could remove, and he did remove bankers from leadership positions all the time from management. Obama never even did that. Now, he did fire the CEO of General Motors, which they also bailed out. But no, he didn’t lift a finger with the banks.

PAUL JAY: In terms of the banks and the way that-

THOMAS FRANK: Well, they did around to regulating them later, the Dodd-Frank measure, which we’ll come to.

PAUL JAY: But in terms of the banks and who gets bailed out and the inequality of it is why they lose control of Congress.

THOMAS FRANK: When Barack Obama was running for president, he said, and he actually did say this, this is not just hopeful thinking by a sappy liberal from Kansas, but he said that we were not just going to bail out Wall Street, we were going to do something for homeowners as well. They never did it. They just never did it. And they never even did anything for small banks. Small banks all over America went out of business in those days. There was this huge die-off of small banks.

And they never got crammed down … You remember this? This is one of the early fights. There were a whole series of things, of battles in the early Obama years where he was required to choose sides between Wall Street and Main Street, and he persistently chose to side with Wall Street on basically every issue that came up.

Or take another issue like, one of the other things that people like me were saying at the time, we’re saying it still, you want to do something about inequality in this country, make it easier for workers to form unions. It’s almost impossible to form a labor union in America today. I mean, that’s one of the reasons workers don’t have any power.

PAUL JAY: His number one promise to the unions.

THOMAS FRANK: To organize labor.

PAUL JAY: The Employee Free Choice Act.

THOMAS FRANK: Correct. Also known as “card check.” And labor, they worked real hard to get him elected, as they always do for Democrats, but a little bit harder in 2008. It was a great year. They come to him, “This is our one request. This is our one piece of legislation that we really want to get passed.” No, not interested. Not interested. Let it die.

PAUL JAY: Never gets put forth in Congress.

THOMAS FRANK: Right. Now, Obama had supported it as a senator, had voted for it as a senator. But as president, no, he didn’t lift a finger for it. You can go down the list. There are so many things like that. And you can say, “Well, look, the man had only been in the Senate for two years. He didn’t really know what the job would entail.” And that’s true, but he did have Rahm Emanuel at his side, one of the toughest, meanest political fighters in this country. Rahm Emanuel could’ve gotten anything through Congress he wanted. The Democrats had a majority, the economy is flat on its back, they’re looking to Barack Obama as a hero figure. He could’ve had whatever he wanted.

PAUL JAY: Well, stronger unions was not something Wall Street wanted.

THOMAS FRANK: Of course not.

PAUL JAY: It’s clear where their fidelity was.

THOMAS FRANK: You go down the list of Obama’s achievements, and he had some big ones. Of course, the stimulus, Obamacare, Dodd-Frank, and all three of them had wonderful things about them. They were all good things overall, but they all were half-measures. They only went so far and no farther because to go any farther would be to start stepping on the toes of his allies.

For example, Obamacare. There was all of this debate at the time, whether it was right for president to stop focusing on the economy and start moving to healthcare. I didn’t really have a problem with that. Healthcare is the great sort of … You’re from Canada. You know this. This is the great unfinished sort of aspect of the American welfare state. We got Medicare but no more, and so many Democrats have tried to get some form of national health insurance, and they’ve always failed. Well, here comes Obama, and he’s going to try.

I was very happy with that. What made me unhappy was that the solution that they settled upon, Obamacare, this massively complicated thing, and the reason it’s massively complicated is because it’s all about making sure that private, for-profit health insurance companies stay viable and continue to make profits. They get written into it.

PAUL JAY: And don’t touch pharma.

THOMAS FRANK: Yes, that’s right.

PAUL JAY: Leave pharma alone, which is-

THOMAS FRANK: You’re going to have a national system where these guys continue to make these exorbitant profits all the time. How is that going to work?

PAUL JAY: And you don’t even allow single-payer Medicare for-

THOMAS FRANK: Right. Not even an option.

PAUL JAY: It can’t even be discussed.

THOMAS FRANK: Right. The public option, which Obama said he was for and then changed his mind and let it go. Yeah. This is the great missed opportunity. And again, the Republicans played him. Like I said, the Republicans are very, very, very good at the game, but how they managed to win that one is … it still boggles the mind. They delayed, and they dragged their feet. Do you remember this? Chuck Grassley. Obama, of course, wanted a Republican vote. “Just one. Just get me one Republican vote.”

By the way, this is one of his … Democrats’ persistent failings is that they believe in bipartisanship, even when all the evidence of the senses tells you to not believe in it anymore, that it’s a dead end and it just opens you up for … The Republicans are going to bust some game theory on you. You reach out, and they’re going to retract. It’s very easy if someone’s looking for your agreement to keep withholding it. So if you’re the guy that’s looking for bipartisanship, you’re going to get played every single time. How Barack Obama didn’t know this …

PAUL JAY: Well, maybe it’s the restraints of where your campaign money comes from.

THOMAS FRANK: Yeah. But the long story short, so the Republicans did play him. Then while they’re playing him, Ted Kennedy died, which is like, wow, that’s terrible. You remember what happened. So then-

PAUL JAY: Scott Brown.

THOMAS FRANK: Scott Brown got in, and they had to just pass whatever they had. Thus, Obamacare with its million moving parts. It’s extremely complicated.

PAUL JAY: It all happens because in the first two years of Obama’s administration, when they controlled Congress, nothing significant happens that makes people’s lives better.

THOMAS FRANK: Exactly. And this is what’s always forgotten. People think, well, there’s always a backlash in the off-term elections. Not necessarily, and not necessarily one that completely overturns your control of the House of Representatives and ushers in this enormous Republican majority, which is what happened in 2010. That didn’t need to happen at all. Barack Obama could have still been in 2010 this enormously popular figure, as he was in 2008. All it would’ve taken was getting tough with the Wall Street banks and showing the people that he was on their side in this uniquely awful economic situation that we were in.

PAUL JAY: You’ve done a lot of writing, and you’ve gone to places that vote for Trump, both in Kansas and other places and Missouri-

THOMAS FRANK: And places that voted for Obama and then switched.

PAUL JAY: And switched. And it’s not just about Trump gets elected after the Obama years, but something, what is it, over 1,000 seats that were Democratic flipped in state legislatures across the country to, flipped to Republican.

THOMAS FRANK: Yes, yes. That’s correct, yeah. The Obama years have been, I mean, aside from the presidency, were a disaster for the Democratic Party. I mean, they’re wiped out at the state and local level all over America. You just look at the electoral maps. These trends were already underway. I wrote about in ‘What’s the Matter with Kansas?’ This was already happening. But you look at a state like, let’s say, Missouri. Missouri was once profoundly Democratic. Harry Truman, Stuart Symington, Eagleton, Gephardt, these were all people from Missouri. It starts to shift. By the time Obama comes in, it’s a battleground state. They had basically a tie there between Obama and McCain. And today, Trump takes it by an enormous percentage. There are rural counties in Missouri that Trump got 80%.


THOMAS FRANK: This is happening all over America. Everywhere you go outside of the two coasts and Chicago and a handful of Midwest cities.

PAUL JAY: Outside of big cities.

THOMAS FRANK: Yeah. This is happening. So you look at a map of Missouri, Hillary got St. Louis, Kansas City, Missouri, and the college town in the middle. And that’s it. Every other county … Well, this is the great story that you and I have now been talking about for, what, seven episodes of how the Democrats basically lost their touch with ordinary, average Americans, specifically white Americans.

PAUL JAY: We’re talking about how the Democratic Liberal League, the corporate Democrats are beholden to Wall Street and so on-

THOMAS FRANK: Yeah, well, that’s obviously the answer. I mean, these two things are related, you understand, Paul.

PAUL JAY: But the Republicans are even more so.

THOMAS FRANK: Oh, I know. I know. It drives you crazy this whole thing. Trump is out there … By the way, to get back to Trump, every conversation leads to Trump these days, Trump actually was banging Hillary over the head with Goldman Sachs, was actually using that against her, and now look who’s the Secretary of the Treasury. It’s unbelievable that they’re able to get away with it, but they are. How do they do that? Now, that’s a really good question. How does a party like the Republicans come off pretending to be on the side of the ordinary people? Well, they do. They do it again and again and again. This is one of their themes, is populism. It’s fake populism, but they’re very good at it.

PAUL JAY: Now, you’ve been to these places recently.

THOMAS FRANK: Yes, but the answer to our question is the Tea Party movement in 2009, 2010. This fascinated me when it happened. I was a columnist for the Wall Street Journal at the time, so I was on top of the news cycle, not like anymore. Now I don’t care, but back then I was very clued in. It was basically, we were in a smaller scale version of the Great Depression, so I let all my friends know I want to go to some protests. I want to see economic protests in action like you had in the 1930s. We know it’s going to happen. I want to see it with my own eyes.

The first time I heard about it, someone called me up, was like, “Yeah, there’s a protest happening tomorrow down in front of the White House.” And I go to it. It’s the Tea Party movement. This is their first rally. It was all of these lobbyists, all these guys that work for Grover Norquist, all these guys that work for Newt Gingrich. They’re all out there. CPAC was in town, the big conservative get-together, so all these guys came over from CPAC. And they held this rally, and they were wearing ties. Some protest, right? It was so obviously a put up.

I wrote about it. I made fun of it in the newspaper the next day. It’s like, look at this silly, made-up protest, the Tea Party movement. I’ll be damned, it caught on. I’m sorry, I keep blabbing. It was a genius move in this sense, they made up a fake protest movement for hard times, and I mean they made it up. They said, “Well, hard times. You got to have a protest movement. Let’s get out there and make one. Let’s do it.” And they did, and they managed to change the subject from getting tough with Wall Street to deregulating Wall Street.

PAUL JAY: When I talk to people that voted for Trump, and I try to talk to them, there’s a pretty clear fact base that what Trump is doing is not good for ordinary working people, but they can’t even hear it until I start to do a critique of the Obama years. Because they just think you’re so partisan because their experience with the Obama years … I just don’t see how any Democratic candidate’s going to be able to do any better in these areas of the working class and rural America if they’re just-

THOMAS FRANK: If they’re just reiterating. Well, they’re-

PAUL JAY: Obama’s too sacred to touch.

THOMAS FRANK: Okay, so let’s talk about that. I want to forget the Tea Party movement. This is a huge problem for Democrats, or it was in 2016, is that they love Barack Obama, they admire … I admire Barack Obama, by the way. I should say I’ve soured on him to some degree from where I was in 2008, but I saw him at the Democratic Convention in 2016, and that man has a gift. He has a way of speaking that is … He’s a spell-binder. I mean, I listened to him, and I was like, all of my cynicism drained away, and I was like, “Let’s run this guy for president. This is who you want out there. This guy is great.” He was superb.

But the problem is that inequality got worse and worse and worse while he was president. This is the consequences of not dealing with Wall Street. When you have the golden opportunity, and you drop it, this is the consequences. Inequality gets worse. What they call the labor share of the gross domestic product fell to its lowest point since we started measuring it, which means World War II or the ’30s. The lowest point ever for labor share of gross domestic product. That means what labor is taking, workers are taking as opposed to-

PAUL JAY: Share of the pie, yeah.

THOMAS FRANK: Right. As opposed to what owners, shareholders are taking. And it stayed there, and that’s Barack Obama that happened. You go around to these towns that we’ve been describing, these Trump voting areas, and you talk to people, you talk to working-class people, and they are furious with what is happening to their lives. And maybe it’s happening to them personally or maybe it’s not. Maybe they got a pension, maybe they’re retired, maybe they’ve got a secure job, but they can see it coming for their kids, that there are no good jobs anymore. Everybody knows it, and everybody is so angry about it.

So look at the Democrats. Here’s the party that should traditionally be in touch with that anger and speaking … They used to be the party of organized labor. They should know about this. Instead, they’re out there campaigning and saying, remember what Hillary was saying, America is already great. This is poison, this is toxic to be putting out that message in a year like 2016.

PAUL JAY: I was saying to you earlier, the night before the election, everyone thought Hillary was going to win, so did I. But the night, they did a final rally in Philadelphia, and Barack Obama was on stage next to Hillary and spoke, and it was all about the great achievements of the administration.

THOMAS FRANK: Yeah. This is the dilemma. Because they loved that man. They love Barack Obama, and they can’t acknowledge that the economy got worse under his watch.

PAUL JAY: Not for everybody.

THOMAS FRANK: Yeah. There’s a famous quote from Hillary. Actually, it’s not famous because it’s in … Where is it? I think it’s in Donna Brazile’s book. It’s in one of the campaign books. Hillary says, “But how can I say those things without people thinking I’m criticizing Barack Obama?” She just couldn’t do it.

PAUL JAY: Even Bernie held back.

THOMAS FRANK: She couldn’t bring herself to do it. So I was at the Democratic Convention, and someone did give a very fiery speech, and it was Elizabeth Warren, and she did talk about, everything I’ve said, she talked about. The problem is she’s railing against these things, and here’s the President of the United States sitting up there in the box, the box seat up there. She never mentioned him of course. She can’t. She’s in the same party. So they have this terrible problem that they love Obama, but they’re very upset. They can see the pain out there in the country, but they can’t criticize it.

PAUL JAY: It goes even further.

THOMAS FRANK: So Trump is no dummy. Trump can see this, and so Trump just parks out of the garage. Trump drives at home.

PAUL JAY: And Obama is actively now fighting against the Sanders forces in the party. He is not hands-off. When they had the fight over the DNC chair with Tom Perez, Obama’s working the phones to stop Keith Ellison.

THOMAS FRANK: Barack Obama himself, some presidents, you know this, they care very deeply about their legacy. So it’s going to be very hard for him to acknowledge, it would be for any president to acknowledge that there could’ve been something, that there were shortcomings during his presidency. By the way, one of the stories that I’m proud of that I wrote a while ago is where I visited a bunch of presidential libraries. I went to the two George Bush libraries, and I went to the Bill Clinton library. They’re all very evasive. They all try to get their principal out of trouble for various things.

But the one that really blows your mind is the George Bush, Jr. library because this is a president — everything went wrong. The Iraq War, Hurricane Katrina, the things we were listing before, and of course, financial crisis and economic disaster. This guy is just one disaster after another. And, of course, 9/11. How do you make a presidential library for something like that? It really poses quite a challenge to the historian to try to get him off the hook for all of these things. I haven’t been to the Nixon library, but I imagine it’s the same kind of deal.

But presidents are very zealous about guarding their legacy, so I’m sure that’s where … Barack Obama is [crosstalk 00:21:06]…

PAUL JAY: Partly legacy and partly, maybe we don’t agree on this, I think he has very much taken up the mantle of representing Wall Street interests, and that continues in terms that, who’s going to control the Democratic Party? Because I think the last thing on earth Wall Street wants is a Sanders or a Sanders-esque and maybe Elizabeth Warren.


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