iOS app Android app More

Featuring fresh takes and real-time analysis from HuffPost's signature lineup of contributors
Miles Mogulescu

Miles Mogulescu

Posted: December 24, 2010 03:23 PM

It's good to end 2010 with some progressive victories to cheer about. As a card-carrying "professional liberal" who worked to elect Barack Obama and cheered his victory, I've written increasingly critically of President Obama's generally corporatist economic policies, his cave-in on a Reaganite tax cut bill, his weak financial reforms, his back-room deals to trade away a public option. The repeal of DADT, and the passage of the START treaty and the 9/11 healthcare bill haven't changed those views. But progressives have had far too few things to celebrate over the past several decades. And it's good for Democrats to come off like winners and let the Republicans be the whiners. So I'm happy to join the victory parade over these genuine accomplishments in the last week of the lame duck Congress.

But, while I don't want to be the Grinch who stole Christmas, I also have to admit that there's a certain ambivalence in my joy at these wins which were purchased at a high price -- a victory for "starve the beast" Republicans and a cave-in by the Obama administration on tax cuts that will increase the deficit by nearly $900 billion and will likely increase the suffering of tens of millions of Americans who, as a result, will soon see their benefits cut and even Social Security and Medicare reduced.

As Robert Reich so eloquently wrote in these pages:

"The new tax deal embodies the essence of Reaganomics.

It will not stimulate the economy.

A disproportionate share of the $858 billion deal will go to people in the top 1 percent who spend only a fraction of what they earn and save the rest. Their savings are sent around the world to wherever they will earn the highest return.

The only practical effect of adding $858 billion to the deficit will be to put more pressure on Democrats to reduce non-defense spending of all sorts, including Social Security and Medicare, as well as education and infrastructure.

It is nothing short of Ronald Reagan's (and David Stockman's) notorious 'starve the beast' strategy."

As important as the repeal of DADT and passage of the 9/11 healthcare bill are, these are still second tier issues that will directly impact only a relatively small number of Americans. In the end the biggest issue -- the one that will impact the future of all Americans -- is still the economy, stupid. And when it comes to the economy, President Obama's policies remain largely corporatist.

Looking back on Obama's "cave in" on tax cuts for the rich, it may not have been a cave-in at all, but the result Obama may have wanted. With the economy stuck in neutral and unemployment at over 9.5%, it may well have been a conscious attempt to use Reaganite tax cuts for their minor stimulative effect, in the hope of improving his reelection prospects.

President Obama has learned what a generation of Republican politicians from Reagan to Bush already knew -- if you give tax cuts to (almost) all Americans and ask nothing in return, most of them approve, at least for the moment. It's like a teacher giving a roomful of school kids free candy and ice cream. Never mind, of course, in the long run it will make them fat and rot their teeth and they'll come to expect it every day or start to misbehave.

The Democratic legacy of FDR's New Deal and LBJ's Great Society was government regulation of the economy to mitigate economic crises caused by unregulated markets (e.g. Glass Steagall) and a social safety net (e.g. Social Security and Medicare) and progressive taxation to guarantee a minimal level of economic security. "New Democratic" presidents like Clinton and Obama have given political cover for undermining this legacy. Clinton helped undo the regulatory regime by repealing Glass Steagall and banning the government from regulating derivatives, which helped lead directly to the Great Recession.

Obama has now adopted a policy of Reaganite tax cuts that will only lead to increasingly strident calls to weaken the social safety net. It's increasingly likely that Obama will make a "grand bargain" with conservatives to undermine Social Security and Medicare in the name of dealing with the deficit caused largely by the Great Recession, unaffordable tax cuts, and two wars.

So yes, let's celebrate some wins this holiday season. But let's not let it blind us to the transcendent issues of our time -- how to stop the stagnation of middle class incomes, stimulate demand to grow the economy, and prevent Too Big To Fail banks (which have only grown larger since Obama's weak financial reforms) from blowing up the economy again. On DADT, 9/11 healthcare, and the START treaty, I'm glad that Barack Obama and not John McCain is president. But when it comes to broader economic issues, Barack Obama's policies may not be what we need to guarantee a secure future for the broad middle class.