THE BLOG
08/20/2009 05:12 am ET Updated May 25, 2011

Obama Needs to Show Less Paucity of Audacity

Barack Obama promised an "Audacity of Hope." I worked for him, blogged for him, contributed to him, and cried for joy when he was elected, even as I reminded people in these pages that that his success in bringing transformative change would depend as much on organized popular movements as it would on one man. I remain glad that this brilliant and charismatic man of mixed race is President and wish with all my heart for his success.

So far, however, at least when it comes to the most important domestic issues facing the country-- the stimulus package, the bank bailout, health care, climate change--President Obama has shown a Paucity of Audacity. He has compromised key principles in advance, threatening to render his most vital reform proposals ineffective and to undermine the success of his administration.

Obama, to his credit, is trying to address a broad range of vital domestic issues. But unfortunately, he outsourced reform of the financial system to Wall Street insiders like Summers, Geithner and Bernanke who are by nature, if not by self-interest, unwilling to take on the robber barons at the likes of Goldman Sachs and JP Morgan Chase. He has outsourced the stimulus package, global warming/energy policy, and health care reform to Congressional barons who survive on hundreds of millions of dollars in lobbyist money. Most critical of all, he has allowed the boundaries of acceptable reform to set by what is acceptable to powerful corporate interests. As David Brooks wrote in the NY Times,

"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."

The result is a series of half-baked and quarter-baked reform proposals that--because Obama and Congressional Democrats refuse to challenge the power of entrenched corporate interests--do not adequately solve the problems they are meant to address, and in some cases, may even make them worse.

* In the vain hope of winning Republican support, Obama allowed Congress to put forth a stimulus bill too laden with minimally stimulative tax cuts and without enough fast-out-of-the-door spending. He then let Susan Collins and Arlen Specter water it down more, cutting tens of billions of dollars of aid to the States that's now leading to thousands of teacher, cops and other civil servants losing their jobs. With too small a stimulus, unemployment has quickly reached 9.5% and is almost certain to be in double digits within a couple of months and stay there through the 2010 mid-term elections. As Nobel laureate Joseph Stiglitz has written, "A poorly designed and insufficient stimulus means that the downturn will last longer, the recovery will be slower and there will be more innocent victims." Or as Nobel laureate Paul Krugman has written, "There's an overwhelming economic case for more stimulus. But as a political matter it's going to be harder, not easier, to get that extra stimulus now than it would have been to get the plan right in the first place...You might think that half a loaf is always better than none--but it isn't if the failure of half-measures ends up discrediting your whole policy approach."

* Obama showed little leadership on climate change and then had to twist arms to get enough votes in the House to barely pass 1200 page Rube Goldberg of a bill so weighed down by energy industry amendments that it may be little better than nothing. President Obama promised in his Inaugural Address to "restore science to its rightful place." But the Inconvenient Truth is that the climate change bill largely ignores science.

* While the scientific consensus is that the US and other industrialized nations must cut their emissions by 25%-40% below 1990 levels by 2020, the bill targets only a 4% reduction by 2020 and then further undermines this target with energy industry offsets. It gives away (instead of selling) 85% of greenhouse gas permits to polluters and creates a speculative market for pollution permits that may further enrich energy companies and Wall Street traders like Goldman Sachs. It undermines the Clean Air Act by removing the EPA's existing authority, recently affirmed by the Supreme Court, to regulated greenhouse gases. Still, Obama praised the bill as "an extraordinary first step." As Josh Nelson wrote in Huffpo, "President Obama is well on his way to squandering the best political environment we have ever had, without using an ounce of political capital to improve the legislation." Or as Joe Klein wrote in Time, "the Waxman-Markey energy bill passed by the House is an excellent candidate for euthanasia. It is a demonstration of all that's wrong with the legislative process in latter-day America...It is Potemkin legislation designed to give only the appearance of dealing with a problem." And the problem is that this that global climate change isn't just any kind of problem that can wait for a better solution. As NASA scientist Dr. James Hansen wrote, if we fail to promptly take adequate measures to slow the growth of greenhouse gases, we "will set our Earth irreversibly onto a course toward an ice-free state, a course that will initiate a chain reaction of irreversible and catastrophic climate change". There's still time for Obama to show Presidential leadership in taking on the energy lobby and its Congressional servants in both parties to reshape a meaningful climate change bill. But so far, he's showed no inclination to do so.

* When it comes to health care reform, Obama finally has begun a full court press, making it it clear that he's staking the first year of his Presidency on signing a health care bill, but without laying out any specifics on what constitutes an acceptable bill. Therein lies the problem. He has backed himself into a political corner where he needs a health care bill, any bill, whether it's a good bill or not. As I've written in these pages in my article "OBAMACARE", there's a serious question whether the outcome will be affordable universal health care or a government bailout for the insurance companies. Obama started the process by taking single payer health care off the table from day one, even though a form of single payer is a proven success in most democratic capitalist countries: it's the only plan that can seriously reduce costs and realign incentives towards better care (rather than just more care) by negotiating with providers and drastically reducing the 30% of health care dollars that now go to doctor's and insurance company's administrative costs and insurance company's marketing costs, profits, and multi-million dollar executive salaries. This approach is what George Lakoff termed "surrender in advance." But the insurance and drug companies are fighting meaningful regulation and a voluntary public option as hard as they would have fought against single payer. In response, Obama has refused to lay down any markers as to what minimum provisions must be in a health care bill before he will sign it.

Indeed Rahm Emanuel told the NY Times that "everything is negotiable" and Obama himself said "We have not drawn any lines in the sand." Meanwhile, Republicans have met Obama's willingness to compromise with their own line in the sand, with the Senate Finance Committee's ranking member Charles Grassley telling MSNBC that health care reform will get no Republican votes if it includes a public option. Even the best version of health care reform still on the table--the bill being voted out of Committee by the house--is seriously compromised: It solves the problem of the uninsured by mandating that everyone must buy insurance or be fined by the IRS. But the subsidies for low and middle income people are likely to cut off at a point where even high-deductible high co-pay plans put a big dent in the pockets of middle class families. Even with a public option, a multi-payer system will likely be unable to adequately control costs. As Dr. Don McCanne, who writes a daily blog on health reform, states, "the option to purchase a public plan within a market of private health insurance plans would merely provide one more player in our inefficient, dysfunctional, fragmented, multi-player system of financing health care, that is if the public option even survives the political process. "

For all its compromises, a health reform bill that doesn't water down the House Committee bill much further is probably better than nothing, but without strong leadership from Obama, it's likely to be watered down on the House floor and in negotiations between the House and Senate where corporate Democrats like Baucus, Nelson, Bayh, Lieberman and Landrieu seem determined to further neuter the public option and block paying for the bill by taxing the wealthiest Americans. Obama may be able to chalk up even a highly compromised bill as a short-term political "win". But if the resulting outcome is largely a failure that doesn't adequately control costs or solve the health care problems of most Americans, it could come back to bite the Democrats. As Howard Dean has said, "the bottom line on healthcare reform is that it is not worth doing if it is not done right."

* Tim Geithner's and Larry Summer's much-touted plan to subsidize hedge funds to buy banks' toxic assets is all but dead in the water. Meanwhile, insolvent big banks like Citibank keep teetering along like dead men walking, and Goldman Sachs and JP Morgan use their government-protected "too big to fail" status to further enrich themselves and pay out record bonuses for short-term trading success while keeping tens of billions of dollars in taxpayer money from the AIG bailout and various Federal Reserve guarantees and subsidies. At the same time, unemployment and foreclosures soar. It seems that little has changed in the way Wall Street does business, except that the biggest financial firms have walked away with trillions of dollars in taxpayer backed guarantees.

As Kevin Baker wrote in a brilliant article in July's Harper's Magazine entitled "Barack Hoover Obama: The Best and the Brightest Blow it Again",

"The common thread running through all of Obama's major proposals right now is that they are labyrinthine solutions designed mainly to avoid conflict. The bank bailout, cap-and-trade on carbon emissions, health-care pools--all of these ideas are, like Hillary Clinton's ill-fated 1993 health plan, simultaneously too complicated to draw a constituency and too threatening for Congress to shape and pass as Obama would like. They bear the seeds of their own defeat."

As New York Times business columnist Joe Nocera (hardly a raving liberal) recently wrote about Obama's regulatory reform proposals, "If Mr. Obama hopes to create a regulatory environment that stands for another six decades, he is going to have to do what Roosevelt did once upon a time. He is going to have to make some bankers mad." I would add that if he's going to bring affordable universal health care, he's going to have to make some insurance and pharmaceutical executives mad, and if he's going to take adequate steps to prevent global warming, he's going to have to make some energy executives mad. Moreover, he's going to have to challenge some senior Democratic Senators who take massive campaign contributions from banks, insurance companies and energy companies and who stand in the way of meaningful reform.

Unfortunately, so far the only people Obama seems willing to make mad are the activist base of the Democratic party who helped him defeat Hillary Clinton in the primaries and defeat John McCain in the general election. In fact, Obama is even trying to shut down his activist base, telling them to lay off criticizing corporate Democratic Senators who stand in the way of meaningful healthcare reform, instead of telling the insurance and pharmaceutical industries (along with banks and other financial institutions) to stop spending hundreds of millions of dollars lobbying those very same Senators.

Kevin Baker's Harper's Magazine article summarizes the conundrum:

"Barack Obama has proven to be every bit as charismatic and intelligent as his most ardent supporters could have hoped. At home or abroad, he invariably appears to be the only adult in the room, the first American president in at least forty years to convey any gravitas. ..

It is impossible not to wish desperately for his success as he tries to grapple with all that confronts him...Obama's failure would be unthinkable. And yet the best indications now are that he will fail, because he will be unable--indeed he will refuse--to seize the radical moment at hand.

Every instinct the president has honed, every voice he hears in Washington, every inclination of our political culture urges incrementalism, urges deliberation, if any significant change is to be brought about. The trouble is that we are at one of those rare moments in history when the radical becomes pragmatic, when deliberation and compromise foster disaster. The question is not what can be done but what must be done...

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."

As Bill Maher, a "mere" comic who has become one of our most courageous social commentators put it,

"Obama needs to start putting it on the line in fights against the banks, the energy companies and the healthcare industry. I never thought I'd say this, but he needs to be more like George W. Bush. Bush was all about, 'You're with us or against us.'

Bush had horrible ideas, like torture and deregulation and preemptive war and tax cuts for the rich, but he pushed them through, in their full measure, never mind Congress or the Constitution or the Geneva Convention or the Magna Carta or the Code of Hammurabi."

There is still time for Obama to change course, to challenge the economic royalists, to make clear to Congress that he will only sign legislation that contains meaningful and not fake reform, to use the powers of the executive to take on the powers of Wall Street. To do so, he will need help from a mobilized popular movement which, which as FDR urged of the popular movements of his own time, will "make him do it". But if Obama stays the course of tepid reform which doesn't challenge the short-term interests of big corporations and financial institutions, his Presidency is likely to be a failure and the country is likely to face a long-period of economic difficulty.

Will Obama do it? There's little indication so far that he will, although during the Presidential campaign he showed an extraordinary ability to change course as needed. Still, my now slightly tattered "Obama '08" bumper sticker proudly remains on my car. The Audacity of Hope springs eternal.