Wednesday, February 16, 2011

Obama, the Democratic base and the dilemma of Democratic progressives

Dean Baker succinctly summarizes the essential dilemma of base activists in the Democratic Party today - "base activists" being more-or-less synonymous with progressive activists - in The President as Storyteller-in-Chief Huffington Post 02/14/2011:

At the time of his election, many progressives hoped that President Obama could play the same transformational role in this crisis as President Roosevelt did during the Great Depression. The more limited hope was that he could be an inspirational leader to his base in the same way as Ronald Reagan was for the right. At this point, the best hope is that he doesn't open the door to unwinding 75 years of economic and social progress. [my emphasis]
Baker joins Robert Reich, Paul Krugman and others who recognize that Obama's just-announced budget fits in with his rhetoric and politics since the 2010 election of reinforcing the Republicans' gubment-is-the-problem narrative. Economists like those three are particularly distressed that when the country is facing years of the current Great Recession that Obama is pursuing policies that are as certain as anything can be in economics to impede the strength of what is technically an economic recovery and may well contribute to slamming the economy into another formal recession. When the informal one is already bad enough!

As Steve M puts it, "Keynesian is now discredited in America, across the political spectrum, for the foreseeable future." (Obama lacks the forehead birthmark, but ... No More Mister Nice Blog 02/15/2011)

The Obama Administration has declared a kind of postpartisan harmony into existence. As that anonymous Administration official told the New York Times about their budget strategy, "We both agree we should cut. The question is how we cut and what we cut."

The "both", of course, being the Obama Administration and the Republicans.

But, as Robert Reich put is so well in December, "Rarely before in American history has there been more disconnect between Washington and the rest of the nation. Washington is obsessing about the projected federal budget deficit. Everyone else in America is worried about jobs." (The Truth About the Federal Budget Deficit That Noone [sic] Is Willing to Tell 12/02/2010)

But even more telling is the gaping chasm between the public in general, for whom Social Security is a bedrock feature of American life and government, and our political and media elites, for whom it has become almost a truism that Social Security has to be phased out. (Yes, "phased out" is my translation of the weasel words about "entitlement reform" and it's an accurate translation.)

Sam Stein reports on how Democratic activists are relieved and happy to see signals that the Democratic President still supports Social Security - for the moment (Plouffe: Obama Won't "Slash" Or "Reduce" Social Security Benefits Huffington Post 02/14/2011):

"Until now, Sen. Harry Reid was the top Democratic leader on the record saying that cuts to Social Security benefits were off the table in any form -- big or small, slash or tweak," said Adam Green, co-founder of the Progressive Change Campaign Committee [PCCC]. "If Mr. Plouffe's words are true -- that the White House opposes all reductions in benefits for current beneficiaries and future ones alike -- it's huge news. Such a position is overwhelmingly popular with Democratic, Independent, and Republican voters alike, and is the kind of boldness Democrats will need to show to win big in 2012."

Even before the rare PCCC applause for an Obama administration motive, other progressive groups expressed encouragement over how the president approached Social Security in his budget. The Strengthen Social Security Campaign, a coalition of predominantly Democratic-oriented groups, put out a statement Monday night applauding the president both for "refraining from proposing" cuts and proposing an increase in Social Security Administration expenditures, which could be used to help with the backlog in disability determinations. [my emphasis]
Our star pundits assume that voters function along a strict left-to-right spectrum. Most of them revere a "centrism" that includes doing away with Social Security, which to most people sounds like drastic damage to their lives.

But politics doesn't work that way. The Republicans will be happy to push Obama into supporting Social Security Phaseout and then turn around in 2012 and campaign as the defenders of Social Security. Republicans promote policies that substantively benefit billionaires and damage the interests of the majority of people. The only way they can pull this off consistently is by a combination of scams and using a deluge of advertisements, propaganda, demagoguery and media disinformation to represent themselves as the Party of jus' reg'lur folks.

Unless the Democrats can effectively challenge the Republicans' anti-government, pro-deregulation, anti-union narrative with a more constructive one built on a sound basis of policy, they aren't going to be able to effectively combat the Republican appeals for very long. It took two lengthy wars, a hurricane that devastated New Orleans and the worst financial collapse since the Great Depression coinciding with a cyclical business downturn to put the Democrats back in control of the Presidency and both Houses of Congress in the 2008 elections.

The Administration and the Democratic Party establish grumble about the "professional left". But their weakness is not among the "professional left". Their weakness is among their base voters, most of whom are not political junkies who obsess over the nuances of the wording of White House statements on Social Security. Between the ones who decide to stay at home on Election Day, the ones who are so disgusted at the state of the economy or the Administration's attitude toward Social Security that they vote for some third party out of protest, and the persuadables among Democrats and the small portion of actual independents, the risks are great in pursuing Republican policies on spending and the economy to capture that largely-mythical "center" our Pod Pundits love so much.

But the Administration's current strategy actually seems to welcome criticism from the Democratic base, not to create wider support for Democratic policies but to allow Obama to posture as a good Centrist. Digby quotes a good example from Richard Wolffe, who she calls a "White House stenographer". (Budget Triangle Hullabaloo 02/14/2011) Talking about criticism of Obama's budget plan from unions, Wolffe explained to Chris Matthews, "But actually that kind of criticism is going to help this president."

In order to play the "moderation" game with our star pundits, the White House needs to be able to point to criticism "from the left and the right." And, politics being politics, that's a standard part of the game all the time on individual issues.

The danger is that the Obama Administration seems to be pursuing a "triangulation" strategy based on how they perceive that Bill Clinton's triangulation strategy between Democrats and Republicans worked in the 1990s. But, as many have pointed out, we are looking at a very different economic situation in 2011 than in 1995. Here's Reich's explanation from The Obama Budget: And Why the Coming Debate Over Spending Cuts Has Nothing to Do With Reviving the Economy 02/13/2011.

To official Washington it seems like 1995 all over again, when Bill Clinton and Newt Gingrich played a game of chicken over cutting the budget deficit, the hawks warned about the perils of giant deficits, and the 1996 general election loomed over all. Washington politicians and the media know this playbook by heart, so it’s natural for them to take on the same roles, make the same arguments, and build up to the same showdown over a government shutdown and a climactic presidential election.

But the 1995 playbook is irrelevant. In 1995 the economy was roaring back to life. The recession of 1991 had been caused (as are most recessions) by the Fed raising interest rates too high to ward off inflation. So reversing course was relatively simple. Alan Greenspan and the Fed cut interest rates.

In 2011 most Americans are still in the throes of the Great Recession, which was caused by the bursting of a giant debt bubble. The Fed can’t reverse course by cutting interest rates; rates have been near zero for two years. [my emphasis]
It's always possible that a new financial bubble not now on the radar screen will pop up to change things soon. Or that the Confidence Fairy will soon make magic happen. But "the bursting of a giant debt bubble" means we're still in a period of deleveraging, i.e., people reducing their debt burdens. Falling housing prices, massive foreclosures which put even more downward pressure on housing prices, and heavy credit card debt don't leave a lot of slack right now for American consumers to go on a near-term spending binge. And while China and some other developing countries have resumed strong growth, the US exports to those countries aren't going to produce any immediate boom.

The Obama Administration is gambling an awful lot on super-optimistic economic expectations and a political strategy that essentially needs a rapidly-growing economy to be viable.

The other potentially misleading part of the Clinton 1995-6 analogy is that Bill Clinton was willing to fight the Republicans, and it took that fighting to make the triangulation strategy work to the extent that it did. As Joe Conason explained just after the 2010 election in Obama should push back -- like Bill Clinton Salon 11/04/2010, "compromising with the Republicans isn't exactly what Clinton did -- or not at first, anyway. Before he could do anything else, he had to push back."

Obama, on the other hand, is inclined to the sort of preemptive surrender that his budget proposal on Monday appears to represent, once again.

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