As Barack Obama took charge of an economy in free fall, progressives urged the new administration to undertake the largest investment-led stimulus in our history. Third Way Democrats worked to make it smaller and weaker. Despite that, the recovery act did stop the fall and begin to pull the country out of recession. With unemployment still nearly at 10%, progressives continue to push for more job creation and aid to the states to forestall brutal cuts in teachers and police and other vital services.
Looking towards the new economy that we must build out of the ruins of the old, the president has it right. We can’t go back to the old bubble-bust economy built on debt and speculation. We need to build on a new foundation. That includes public investment in areas vital to our future: education and training, a 21st century infrastructure, research and development, new energy. It includes a new global strategy and industrial policy to insure that we make things in America once more. And it should include an extension of our basic social contract, insuring retirement security, affordable health care and education, a living wage and safe working conditions, first rate public education to all Americans. On that foundation, we can build an economy – as we did after World War II – that works for working people, and revives America’s broad middle class.
But the phrase about "the president has it right" sounds more than a little strange in this context, since Obama himself proposed a "pre-compromised" version of the 2009 stimulus that most liberal economist said (correctly) was not nearly large enough, then rolled over easily as Blue Dog Dems insisted on rolling back the job-creation aspects of it even more. As necessary as a stimulus package was, Obama's approach was heavily oriented toward the neoliberal model of deregulation and government non-interference with markets - despite the howls of "socialism" from the Republicans. It focused on bailing out the large financial institutions that precipitated the crisis while imposing relatively lenient conditions on them. Job creation has always taken a distinctly lower priority for this administration.
The administration's rejection of the Republican demand that General Motors just be allowed to go under was an important rejection of a neoliberal approach. The Republicans were single-mindedly focused on destroying the Auto Workers Union. Neither the jobs impact of their approach, nor its effect on national economic competitiveness, nor even the national security implications of further radically shrinking the US auto manufacturing capability was going to deter the Republicans.
Hickey is Co-Director of the Campaign for America's Future organization, which is very closely aligned with the administration.
Robert Reich appeals to the administration to reject the neoliberal/deregulation dogma on financial reform in Three reforms the White House shouldn't oppose Salon 05/10/10. He describes the second of the three reforms he discusses this way:
Require big banks to spin off their derivative businesses. Derivatives got us into the mess and Wall Street’s biggest banks are still wielding them like giant poker games. That's because they’re enormously lucrative for the banks. But they're also dangerous to the economy because bad bets can lead to meltdowns, especially if they're backed only by flimsy promises to pay up rather than real capital. The credit default swap business continues to be out of control. To this date, no one knows how big it is, where it is, and who has promised what.
Senator Blanche Lincoln, Democrat of Arkansas, has pushed an amendment that would force big banks to spin off most of their derivative businesses — bringing derivatives into the open and insulating them from the kind of proprietary trading that can cause so much havoc. But the Administration thinks Lincoln is going too far and has instructed its allies in the Senate not to go along. Lincoln should stick to her guns.
He doesn't stress the point, but there's a valuable lesson in the fact that Blanche Lincoln, normally a Blue Dog Dem, is pressing Obama for more aggressive regulation of derivatives. Blanche Lincoln was one of the Blue Dog that pushed for a less aggressive stimulus in 2009 and opposed the public option in health care reform.
But because of Blue Dog stances, Democratic progressives successfully encouraged a primary challenge to her in Arkansas this year. Bill Halter is mounting a strong challenge to her for the Democratic Senate nomination. And that has pushed her to take a stance on financial reform that is more aggressive than her Blue Dog record in order to secure the nomination.
Polls were showing her in a poor position for the fall election. But her position on this bill shows that the challenge was meaningful. Even if she fails to be re-elected, she's pushing for a better financial reform right now on the derivatives issue. Following the conventional Democratic consultants' approach, without the primary challenge she would have likely been trying hard to compete against the Republicans by trying to sound as Republican as possible. Now that she's being forced to act more like a Democrat, even she gets the nomination she may be in a better position to win in November. Not only will she look more like she willing to stand up against Wall Street banks, but the Democratic base will likely be more motivated to come out and vote for her. And, if she loses, well, that was probably going to happen anyway.
At the moment, I'm inclined to think that primary challenges to Blue Dog Democrats offers maximum leverage for Democratic progressives. Because Democratic office holders should all be thinking that keeping their public offices as Democrats depends absolutely on defending Social Security and Medicare from the deficit hawks, inside the Democratic Party and elsewhere.
The Progressive Caucus in the House, it seems to me, was largely defanged for this session of Congress (2009-10) by health care reform. A handful of Blue Dogs, and Joe Lieberman on his own in the Senate, were able to sink the public option, which the Progressive Caucus had set as the "red line" they would never agree to cross. The lesson that the Obama administration and the Blue Dogs surely learned from that experience is that the administration needs to accommodate Blue Dogs because they are willing to sink legislation that Obama wants over their issues. The progressives are not willing to do that, and they can be expected to fall meekly into line after the Blue Dogs get their way.
I'm hoping for the best for the health care reform that actually passed. But I do think it would have been worth trying for the House Progressives to vote done the Obama-Lieberman version that did not contain a robust public option. We likely would have gotten a better reform. And the Congressional progressives would have gained new clout.