It was the best of Obama, it was the worst of Obama.
I was pleasantly surprised to be invited to the White House jobs summit last Thursday, where I got to watch President Obama engage with about 130 people off the cuff. And I was reminded, first hand, what drew so many of us to the promise of this remarkable outsider -- the decency, the intellect, the idealism, and the evidently progressive impulses. I came away even more bewildered and dismayed at the reality that this president, who could have been such an insurgent at a moment demanding insurgency, has been so utterly captured by the Wall Street elite, the health insurance industry elite, and the military elite.
As a friend said, "I so wanted to be supportive of a great progressive president this time instead of being back in opposition."
At the jobs session, Obama began with a ceremonial introduction, then sent the summiteers into six working groups for about two hours. He circulated among them, and concluded with an extended on-the-record plenary session leading a discussion of the jobs challenge. He was absolutely masterful, with a fine grasp of detail, and values that one could only applaud. What a contrast with George W. Bush!
All afternoon, people put forward thoughtful ideas for getting unemployment down. The elephant in the room, however, was the question of whether to increase the deficit, especially with the White House under pressure to back the scheme for a deficit-reduction commission.
So, when my turn came to ask a question, I pressed President Obama on the issue, and he did not disappoint me.
Robert Kuttner: You know, most of the things that have been proposed today cost money. And there is this concern about the federal deficit. I hope that your administration will recognize, as I know you will, that it's possible, first of all, to reduce the deficit over time and sometimes in the short run realize that you need to increase the deficit. I hope the concern about the deficit in the long run doesn't crowd out the need for additional spending in the short run.
And I also think that some of these programs that increase jobs and increase GDP are probably the fastest way to get the economy back on a track that will reduce the deficit over time. It's certainly a better way to reduce the deficit than putting ourselves into a debtor's prison, and assume we can deflate our way to recovery.President Obama: Well, I think this is an important point. We have been talking a lot about specific initiatives. There is a macroeconomic element to this whole thing, and so let me just amplify what was just said. We have a structural deficit that is real and growing, apart from the financial crisis. We inherited it. We're spending about 23 percent of GDP and we take in 18 percent of GDP, and that gap is growing, because health care costs -- Medicare and Medicaid in particular -- are growing, and we've got to do something about that.
You then layer on top of that the huge loss of tax revenue as a consequence of the financial crisis, and the greater demands for unemployment insurance and so forth. That's another layer. Probably the smallest layer is actually what we did in terms of the Recovery Act. I think there is a misperception out there that somehow the Recovery Act caused these deficits. No. I mean, we had -- we've got a 9-point-something trillion-dollar deficit. Maybe a trillion dollars of it can be attributed to both the Recovery Act as well as the cleanup work that we had to do in terms of the banks.
It turns out, actually, TARP, as wildly unpopular as it has been, has been much cheaper than any of us anticipated. So that's not what's contributing to the deficit. We've got a long-term structural deficit that is primarily being driven by health care costs and our long-term entitlement programs. All right, so that's the base line.
Now, if we can't grow our economy, then it is going to be that much harder for us to reduce the deficit. The single most important thing we could do right now for deficit reduction is to spark strong economic growth, which means that people who've got jobs are paying taxes, and businesses that are making profits have taxes, are paying taxes. That's the most important thing we can do. We understand that in this administration. That's not always the dialogue that's going on out there in public, and we're going to have to do a better job of educating the public on that.
The last thing we would want to do in the midst of a -- what is a weak recovery, is us to essentially take more money out of the system either by raising taxes or by drastically slashing spending. And frankly, because state and local governments generally don't have the capacity to engage in deficit spending, some of that obligation falls on the federal government.
Having said that, what is also true is that unless businesses and global capital markets have some sense that we've got a plan, medium and long term, to get the deficit down, it's hard for us to be credible, and that also could be counterproductive.
So we've got about as difficult a economic play as is possible, which is to press the accelerator, in terms of job growth, but then know when to apply the brakes in the out-years, and do that credibly. And we are trying to strike that balance, but we're going to need help from all of you who oftentimes are more credible than politicians in delivering that message, because we want to leverage whatever public dollars are spent, and we are under no illusion that somehow the federal government can spend its way out of this recession. But it is absolutely true that any of the ideas that have been mentioned here are still going to require some public dollars, and those are actually good investments to make right now.
It was the same week that Obama decided to buckle to the pressure from his generals on Afghanistan. For several weeks, Gen. Stanley McChrystal has been taking his case for escalation public. You wonder why Obama didn't say to McChrystal, "General, you work for me and I expect your advice to be confidential. If you want to go public, you are free to resign." President Harry Truman, when the war hero Gen. Douglas MacArthur went public with his campaign during the Korean conflict for war with China, simply fired the popular general.
It was also this week that key House Democrats caved in to Goldman Sachs on the issue of derivatives regulation, and Treasury Secretary Tim Geithner backed the industry's efforts to weaken the measure rather than urging Congress to hang tough. Late in the week, Barney Frank, chairman of the House Financial Services Committee, reached agreement with Collin Peterson, the conservative Democrat who chairs the Committee on Agriculture on the key details. In their draft, Wall Street won all of the key points -- big loopholes for derivatives involving foreign exchange, and even bigger ones for derivatives involving non-financial "end users." Bottom line: the industry's lucrative and high-risk practices of creating and trading most derivatives outside regulated exchanges will likely continue.
For the back story, see Michael Hirsh's terrific piece in the current Newsweek,in which he reports:
"This is an orchestrated, well-funded effort by the banks to manipulate our legislation and leave no fingerprints," says a congressional staffer involved in drafting the legislation. The staffer, who would speak only on condition of anonymity, passed on to Newsweek nine pages of proposed changes in the legislation intended to protect trading from open scrutiny -- all of it on paper without a letterhead -- that she says came from Goldman Sachs.
Where was Obama in all of this infighting? The kindest interpretation is that he was distracted by the health insurance bill, and by Afghanistan, and simply letting Geithner run the show.
Many of us in the progressive committee play a little game with ourselves called, "If the Czar only knew ..." We don't want to believe that this attractive leader is fully aware of some of the things being done in his name. If only President Obama knew, he would set things right.
Well, the Czar knows. He certainly knew who he was appointing, even if he lacks the time to parse every provision of a complex bill on financial derivatives.
Time for a pop quiz.
President Obama has turned out to be disappointingly centrist because:
During the campaign, he spoke of FDR and how he connected with the people. After the election he was even compared to him. But there is no comparison in my opinion. FDR was a hands-on president with tremendous determination and energy. He inspired confidence with his fireside chats. President Obama is very laid back and prefers to accept any decision he delegates out. And he appears to be unwilling to ruffle any feathers on either side of the table.
Health care reform has been weaving all over the place with no one behind the wheel. We were promised affordable health care for all. But he doesn't seem to have helped much to make that happen. I just have the feeling he is not willing to fight too hard.
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We are going to end up like Dubii, spending on AFGHANISTAN land like there is no tomorrow, nation building, so over priced they ought to of saved up the money and if they had to we wouldn't be there, just like when it comes to Obamas priorities, Money is no object they pull it out of thin air, don't hold your breath if you are looking for job, and him hopping for his wall street buddies to hire the riff raff. Winter is here in most of the country, he needs to do something NOW, or we will be in the Tank come SPRING! I hate to say it, is he trying to start a Revolution in this country of WE the PEOPLE??
If America was a big ol' oil tanker, he has just slowed it down enough (on its lemming-like trek) to be able to actually turn the ship. For every president this has always been the primary challenge; to act early and change the direction of the ship of state.
And why should the fourth year be lost in campaigning? I have never seen President Obama stop campaigning while he's actually getting this done.
I just wonder if Hillary will be the new VP running beside him... that's what I'm wondering.
Love ya Joe, but we need more leaders in the Senate.
be like Lyndon -- one term and take the party down with him. From the dust may arise a truly progressive coalition -- but I am not hopeful.
But the scary fact that the president is asleep at the derivatives regulation switch is not half as terrifying as the realization that he left his wake-up call to be made by Tim Geithner. Imagine what's going to happen when the false bottom drops out of the financial markets and we hit a real depression, thanks to Goldman Sachs and others playing their ultra-risky games completely unwatched. We can hear it now...[Geithner whispering] "Uh, Mr. President? Didn't mean to wake you, sir, but we have a little problem...."
I voted for the guy, and unless he comes back to realizing that we commoners are entitled to decent treatment I hope the dems. can get some one who thinks of us so that I can vote for that person.
And how is it that there is always money for war, but not enough for a decent health insurance plan?
And why are the people who are providing all the tax money to pay for everything always last on the list to get anything out of it? If we even get on the list at all.
There is something horribly wrong here. And we need some answers.
People are suffering enough as it is.
Obama made the best choice, out of a possible range of options that included NO good options.
And as far as there being no money for HRC - how about waiting and seeing what gets passed before prejudging.
And what do you mean we WERE in a recession? We have a 10.2% unemployment rate at the moment.
And as far as the Health Care Bill, didn't I hear President Obama say over and over during his campaign that if elected president everyone in this country would be able to get the same kind of insurance that he does? After he got elected, I never heard him say it again.
I don't have to wait for the outcome to know that we're NOT going to get what we were lead to believe we'd get.
It is hard to believe you are a Democrat when you write such comments.
Blank checks from the treasury, allowing Goldman to become a bank holding company, it goes on and on and on.....
Your argument that it HAD to be done the way it was done is a sad commentary on the level of fundamental financial/economic that exists among Americans.
I suggest you get and read the following book:
A colossal failure of common sense : the inside story of the collapse of Lehman Brothers / Lawrence G. McDonald with Patrick Robinson.
....other very worthwhile reads:
----Plunder and blunder : the rise and fall of the bubble economy / Dean Baker ; foreword by Thomas Frank.
----The predator state : how conservatives abandoned the free market and why liberals should too / James K. Galbraith.
----Freakonomics : a rogue economist explores the hidden side of everything / Steven D. Levitt and Stephen J. Dubner.
and last but certainly not least:
----Pigs at the trough : how corporate greed and political corruption are undermining America / Arianna Huffington.
(of which I am a part)
Mr. Kuttner, please!
Obama was plucked from relative obscurity in 2004 when the powers that be in the Democratic Party chose him to give the prime time keynote address at their national convention. How can his position now possibly be construed as that of "Outsider?"
Such an unreasonable characterization by someone whose work I normally admire is indicative of the mass delusion I've witnessed on the Left since long before Obama was even elected: that is, the delusion that in his heart of hearts, on every issue, Obama agrees with you. In the blogoshphere and on left wing radio, the dominant narrative is "Obama means well, but he listens too much to bad advice," "Obama really wants to do more, but he's just being crafty," "if only Lefties wrote him more letters, he'd be empowered to do the things he knows are right ," etc. The problem with this viewpoint is that OBAMA HAS NEVER SAID ANYTHING TO INDICATE HE SUPPORTS A LEFT/PROGRESSIVE AGENDA.
Unfortunately, people were inspired by Obama's looks and his rhetoric (vagaries), and they ignored or were ignorant of his policy views and proposals (specifics). They simply projected their own views on him instead. Alas, the left wing punditocracy has proven to be just as shallow and the left wing voting public has proven to be just as easily fooled as those of any political stripe.
But most importantly, Osama binLaden WAS NOT out to kill Americans. His goal on 9/11 and after was to BANKRUPT us so that we’d have to withdraw from Muslim World. Of course he failed. But had he not died of peritonitis, he would really be laughing now at how our Wall Street brokers did more damage than he would have ever dared hope to do. The question now is: ARE WE GOING TO FINISH THE JOB OF KILLING AMERICA BY WASTING OUR VOLUNTEER MOMS AND DAD SOLDIERS AND ANOTHER $33 BILLION A YEAR ON ESCALTION IN AFGHANISTAN? FOR WHAT?
By the time we leave nothing will have changed except that next time we decide to go to war we'll have to again ask China for permission because it owns our Treasury. So, Mr. Kuttner, did you ask Obama when we'll get to use the $33billion for economic stimulus rather than to bring mom and dad soldiers home in aluminum boxes?
Campaigned as a moderate progressive who would shake things up.
Governs as a moderate Republican -a la O Snowe = tinkering around the edges while we all await a further slide toward the abyss....