08/13/2010 03:45 pm ET | Updated May 25, 2011

It's Wall Street Corporate Liberals Who Are Undermining Democrats' Election Prospects

In the past few days, in response to Robert Gibbs' hostile comments about the "professional left," a number of commentators have focused on whether the "left" has given President Obama enough credit for his accomplishments or been too critical of his failings. But I don't want to focus on the left. The truth is that whatever role the "left," such as it is, may have played in helping Obama win the Democratic nomination and the presidency, since then the left -- professional, amateur, or otherwise -- has had virtually no impact on the policies and strategies of the Obama administration.

What I want to focus on, instead, is a group that has had a great deal on impact on the Obama administration's policies and strategies, namely Wall Street corporate "liberals." If President Obama and the Democratic Party are in trouble with many voters who cast their ballot for them in 2008, it is because of the influence of this group, not the "professional left."

As E.J. Dionne cautioned last January:

"If you held a contest to pick the worst thing a politician could be called at this moment, my nominee would be Wall Street Liberal...About the only more unpopular combination I can think of is high-cholesterol broccoli."

Or as I warned in these pages last December:

"As it increasingly appears that Obama is the President of Wall Street, and not the President of Main Street, he is losing not only the left but the center. It's a myth that the path to winning the popular center in American politics is moving to the corporate center. If the only political choice given to American voters is using their taxes to help big government subsidize wealthy corporations, or the Republican message of shrinking the size of government and cutting their taxes, many who voted for Obama will return to the fold of the seemingly brain-dead Republican Party. Obama will likely face an even more conservative Congress after the 2010 election and even, like Jimmy Carter, could end up as a one-term President."

Unfortunately, as Democrats passed a health reform bill filled with special interest deals with drug companies and for-profit hospitals, a financial reform bill that didn't cut Too Big To Fail Banks down to size, and failed to enact policies to stem the tide of long-term unemployment, the perception that Democrats buckle under to corporate big money interests over the interests of the middle class majority has begun to take root in many who voted for Obama. Republicans -- whose only policy prescription other than "No" is trickle down tax cuts for the wealthy -- only need to sit on the sidelines to reap the benefits.

"Liberalism" is usually used to describe a progressive movement of the less privileged in society -- working and middle class people, minorities, etc. -- to use the power of government to create greater social and economic equality, provide a social safety, and regulate the vagaries of the "free" market which otherwise leads to cycles of boom and bust and the increasing concentration of economic and political power in a handful of "to big to fail" corporations and their billionaire managers.

But beginning in the 1960's some commentators began to identify a different strain of liberalism which they termed "Corporate Liberalism." It was (and remains) an effort by the most powerful corporate and financial interests in America to use the power of the state to rationalize the corporate economic system for its own benefits. Since then, this brand of corporate liberalism has overwhelmed progressive liberalism to become the dominant strain in the Washington-based Democratic Party, including Bill and Hillary Clinton, Robert Rubin, Larry Summers, Tim Geithner, Rahm Emanuel, Max Baucus, Chris Dodd,most of the Congressional Democratic leadership, and it increasingly appears Barack Obama himself. These are the people who will be responsible if Democrats lose big in November

As David Brooks observed:

"Democrats learned never to go to war against the combined forces of corporate America. Today, whether it is on the stimulus, on health care, or any other issue, the Obama administration and the Congressional leadership go out of their way to court corporate interests, to win corporate support and to at least divide corporate opposition."

As it turns out, Corporate Liberalism, or Wall Street Liberalism, despite claims of pragmatism, leads to both bad policy and bad political strategy. As policy, the Democrats' health care bill fails to contain rising costs while forcing uninsured Americans to buy unaffordable policies from private insurers or be fined by the IRS. The financial reform bill does nothing to limit the size Too Big to Fail financial institutions which is likely to insure another round of bubbles, bursts, and bailouts. The stimulus package was too small, and too weighted to tax cuts, to make a sufficient impact on long-term unemployment. As political strategy, corporate liberalism makes it appear that Democrats favor powerful corporate interests over the middle class and disillusions voters.

If the only choice voters are offered is between corporate Democrats whom they perceive as using their taxes to subsidize corporations and banks, and not primarilly to benefit and strengthen the working and middle class, and right-wing Repubicans who promise to cut their taxes, many voters who supported Obama and the Democrats in 2008 will go back to the Republicans or stay home.

Despite this, most of the "professional left" whom Gibbs attacked, are likely to remain the Democrats' best foot soldiers come election time in the fall, loyally knocking on doors, making calls, and sending contributions. If, as now seems likely, Democrats face a big defeat in November, perhaps even losing their majority in the House or even the Senate, it won't be because of the "professional left." It will be because of voters' perceptions, largely correct, that Washington Democrats are dominated by Wall Street liberals.

As Kevin Baker wrote in Harpers Magazine at the beginning of Obama's presidency:

"Obama internalized what might be called Clinton's 'business liberalism' as an alternative to useless battles from another time...Clinton's business liberalism, however, is a chimera...a capitulation to powerful and selfish interest. ..a 'pragmatism that is not really pragmatism at all, just surrender to the usual corporate interests...

Franklin Roosevelt also took office imagining that he could bring all classes of Americans together in some big, mushy, cooperative scheme. Quickly disabused of this notion, he threw himself into the bumptious give-and-take of practical politics; lying, deceiving, manipulating, arraying one group after another on his side -- a transit encapsulated by how, at the end of his first term, his outraged opponents were calling him a 'traitor to his class' and he was gleefully inveighing against 'economic royalists' and announcing, 'They are unanimous in their hatred for me -- and I welcome their hatred.'

Obama should not deceive himself into thinking that such interest-group politics can be banished any more than can the cycles of Walls Street. It is not too late for him to change direction and seize the radical moment at hand. But for the moment... Barack Obama is moving prudently, carefully, reasonably toward disaster."