A Presidency in Peril

The Inside Story of Obama's Promise, Wall Street's Power, and the Struggle to Control our Economic Future

by Robert Kuttner

Associated Articles

A Presidency in Peril named one of the 17 Best Social and Political Awareness Books of 2010
By Anis Shivani
Huffington Post
November 6, 2010

In a season of political discontent—trivialities and distractions, renewed culture wars and the rebirth of regressive impulses—these books remind us what is really at stake in political participation and democratic tension. It's easy to get depressed, or lose sight of social justice goals, in the midst of electoral theater, and convenient to look away from the real causes of income inequality or human rights violations. We're engaged in a losing counterinsurgency war in Afghanistan, and an escalating one in Pakistan, continuations of the Long War; we've never really paused to understand why the law was so cavalierly abused in the last ten years—let alone hold the offenders accountable; we've tried to move past the financial collapse with at best superficial remedies, without addressing the motivating economic causes; and we still root for the American Dream (the one that John Boehner has finally, tearfully chased down) without inquiring into the quality of life the dream actually embodies. We can improve our quality of life, we can take inspiration from active citizens inside our borders and from nations dedicated to social welfare; we can even look back at shining moments in our own history to retrieve democratic virtues. These were some of the best books of the year that made just such a case for social uplift, based on reason, analysis, and judgment.

The peril that Kuttner foresaw earlier in the year has come true. Kuttner wrote then: "In the spring of his second year in the White House, Barack Obama is at risk of being a failed president. What would failure mean? Economically, not quite a second Great Depression, but very possibly a great stagnation with prolonged suffering for ordinary people.... Politically, it would mean the lost promise of an age of reform anchored in a durable progressive governing coalition." What happened to Obama's audacity, and why did he fail to seize the "Roosevelt moment?" Kuttner wondered in the spring if "there...[is] still time for him to recoup" and "to redeem his promise?" The question is vastly more complicated after the midterm elections, but the premises of Kuttner's analysis remain just as valid. "The hegemony of finance" has proven to be unshakeable despite the great financial collapse; and "social movements that were so prevalent during other eras of crisis and great presidential leadership are largely absent today." Obama's personal failings matter too: "In ordinary times, a post-ideological 'visionary minimalist' might be sufficient to coax new areas of common good." However, "Obama has turned out to be the epitome of a transactional leader and a fairly hands-off one at that." Kuttner charts how Obama chose continuity over radical insurgency in his treatment of the financial crisis, and how the rendezvous with reform was mostly missed, but more optimistically, he also shows how progressives can think big again and displace the financial elites from their present hegemony.

Read the original article here...

Monetary and Moral

Advisor Perspectives

By Michael Lewitt

July 13, 2010

A far more trenchant critique of Obama’s first year can be found in a recently published book by progressive political commentator Robert Kuttner, A Presidency in Peril.  In 2009, the same Mr. Kuttner wrote what can only be described as a hagiographic account of Obama’s possibilities as a transformational president: Obama’s Challenge: America’s Economic Crisis and the Power of a Transformative Presidency (2009).  While it likely would have been impossible for Mr. Obama or any president to live up to Mr. Kuttner’s hopes, Mr. Kuttner makes a persuasive case in his new book that Mr. Obama did little to break with the policies of the past.  Mr. Kuttner harshly criticizes the president’s performance during his first year in office and takes particular aim at Larry Summers, who became the Chairman of the National Economic Council when, according to Mr. Kuttner, it was determined that the confirmation process might be difficult if not impossible for Mr. Summers to survive in view of his troubled tenure as President of Harvard University, where he managed to offend virtually every political constituency possible.  According to Mr. Kuttner, Mr. Summers is an equal opportunity offender hiding behind the cloak of intellectual superiority.

The gist of Mr. Kuttner’s argument is that rather than break with the failed policies of the Bush administration, Mr. Obama enlisted advisors who were responsible for those policies (primarily followers of Robert Rubin such as Mr. Summers, Timothy Geithner, and others) and extended the regime of socializing losses and privatizing gains that has been operative in this country for the last two decades.  Mr. Kuttner writes that, “[g]iven the abject failure of the financial deregulation that Rubin championed as Clinton’s top economic adviser, followed by the collapse of the business model that he promoted as a senior executive at Citigroup, it is remarkable that a consummate political outsider like Barack Obama did not view Rubin (or his protégé Summers) as fatally damaged goods.  On the contrary, Obama felt he needed men like Rubin and Summers for tutelage, access, and validation.  That itself speaks volumes about where power reposes in America."5

And indeed, as the pending financial reform bill demonstrates, the Obama administration has been unable or unwilling to foment genuine regulatory change on Wall Street or meaningful economic reform or recovery, particularly in the all-important housing market.  In every case, it has favored the interests of the rich and powerful over those of the disenfranchised, and the formation of another government agency that will ostensibly protect the interests of consumers will do little to change that if history is any guide (the efforts of the wonderfully outspoken Elizabeth Warren notwithstanding).  Investors should be prepared for more of the booms and busts that they have experienced over the past two decades and treat their capital accordingly.

Read the whole article here.

FDL Book Salon Welcomes Robert Kuttner, A Presidency in Peril: The Inside Story of Obama's Promise, Wall Street's Power, and the Struggle to Control our Economic Future

Firedoglake

Host: Mark Thoma

July 10, 2010

Welcome author Robert Kuttner, and host, Mark Thoma.

[As a courtesy to our guests, please keep comments to the book.  Please take other conversations to a previous thread. - bev]

A Presidency in Peril: The Inside Story of Obama’s Promise, Wall Street’s Power, and the Struggle to Control our Economic Future

It’s possible to give two very different interpretations of the Obama presidency so far. The first is a relatively positive interpretation. Proponents of this view argue that even though Obama has faced a united GOP willing and able to use filibusters to thwart initiatives, and even though he has had opposition within his own party to progressive initiatives, he has still managed to rack up an impressive list of achievements. Take health care as an example. The health care legislation wasn’t all that progressives wanted, not by a long shot. But the legislation is an impressive start and, importantly, it leaves the door open to further change. Though people forget, programs such as Social Security or Medicare weren’t perfect at first, but were improved substantially over time.

Proponents of this view also argue that a more aggressive posture would not have done any good, and it may have even been harmful. Taking the Republicans to task publicly and forcefully would have hardened the opposition and caused the few Republicans that have been cooperative to vote with their GOP colleagues rather than cross the line. Centrist Democrats who share many of the Republican concerns and worry about how support of such policies will affect their reelection chances might have been alienated as well.

Obama doesn’t have FDR’s filibuster proof majority, and he faces both a united GOP determined to thwart his success for political purposes and concerned centrists who are reluctant to support the progressive agenda. To make things worse, the narrative from the press has not been helpful. If a much more aggressive posture toward Republicans would get more votes, it might be worthwhile, but this type of leadership is not the change people were looking for when they voted for Obama.

The positive view asserts that despite all of this, Obama has been one of the most effective presidents ever in his first year and a half in office, and he has passed the most important progressive legislation since Johnson in the 1960s. A lesser president would have wilted, and it’s time to start giving him the credit he deserves.

The negative view, and this is the view taken in Robert Kuttner’s book, sees the last year and half very differently. An outline of the case is presented in the introduction to the book:

    Obama’s inspirational eloquence, his call for transforming change, and his skill at the mechanics of retail politics suggested a president who could mobilize citizens as a necessary counterweight to the concentrated power of financial elites. … So the stage was set, seemingly, for a great ideological and political reversal, comparable to the Roosevelt revolution of 1933. Obama was poised to create a new majority coalition…

    But … this hopeful scenario is not the way Barack Obama’s first year unfolded. Instead of making a radical break with Wall Street, he delivered a startling continuity with the ad hoc bank rescues of the Bush administration. … As populist anger rises, and the real economic pain of regular Americans contrasts with lavish Wall Street paydays, Obama and the Democrats are becoming targets of the rage rather than instruments of its remediation. …

    So the stakes are immense. A rare opportunity for realignment and reform is being missed. … For progressives like me, Obama represented a chance to reclaim a tradition of enriched democracy, affirmative government, and social justice. If Obama does fail, he takes down our hopes with him.

    This book is an exploration of why Obama did not rise to seize a Roosevelt moment. What happened to the audacity? What stunted the promise of sweeping reform? The book also asks: Was the path that Obama chose the only politically possible one? And what would it take for Obama to redeem his promise? Is there still time for him to recoup? The chapters that follow offer not just reportage, analysis, and criticism but some strategic ideas and a basis for hope. …

I agree with this interpretation, at least for the most part, and have often wondered where the leadership has been on issues such as financial reform. It’s been frustrating to watch the administration cave in every time there’s dissent from the right, but stand tough against dissent from the left. There doesn’t seem to be an urge to fight toe to toe and to take the case directly to the public in Reaganesque style as a means of putting pressure on legislators to support the administration’s policy initiatives. Instead, we get backroom deals that compromise away core principles. And all of this in the search of bipartisanship that turns out, in the end, to be nothing but Lucy and the football.

But the book is not all pessimism, it offers many prescriptive steps the administration could take to enact a more populist, progressive agenda. And perhaps the administration is listening. Today, Obama began taking Republicans to task and accentuating the differences between the parties in a way we haven’t seen since the campaign trail, just as the book calls for. Here’s a sample of quotes:

Obama Sharpens Attacks on GOP, CBS News: President Obama hit Republicans hard … in … fundraisers he’s appearing at today for Senate candidates.

    “The other party spent a decade driving the economy into the ditch..now they want the car keys back. They can’t have them back. They don’t know how to drive,” the president told a crowd…

    “They don’t think in terms of representing ordinary folks. That’s not their orientation. So that’s the choice that we face in this election”…

    “They are peddling that same snake oil that they’ve been peddling for years and somehow they think you will have forgotten that it didn’t work”…

We’ll see if this is a trend for the future, or just a brief poke in another direction before returning to the centrist path the administration has preferred up until now. And even if it is a new trend, it may be too late to reverse the emerging view that Obama has been too cozy with banks, health insurance companies, BP and so on and has not done enough for working class households and other traditional Democratic constituencies. But it is an encouraging sign.

Excuses, Excuses

The New Republic

By Jonothan Chait

July 6, 2010

Jonathan Cohn, a.k.a Citizen Cohn, a.k.a. Mahmoud Abdul-Rauf, has a reply to our old American Prospect editor Bob Kuttner's Huffington Post column taking the Obama administration to ask for its moderate ways. I'd like to make a reply to one particular part of Kuttner's argument, where he asserts that Democratic electoral losses in November will be due to Obama's lack of ideological resolve rather than to structural factors:

Come November, as Republicans break out champagne, the usual commentators will offer the usual alibis and silver linings.

The party of the newly elected president always loses Congressional seats. Not always: viz. Roosevelt, 1934, or Bush II, 2002. The two men shared nothing, except resolve in a crisis. That should tell you something. Where's Obama's resolve?

Read the whole article here.

What Do Liberals Want From Obama?

The New Republic

By Jonathan Cohn

July 5, 2010

Not surprisingly, conservatives are unhappy with President Obama. Somewhat surprisingly, liberals are too--or, at least, a lot of liberal commentators.

On July 4, Robert Kuttner spoke for many of them when he wrote, on the Huffington Post, that “we voted our hopes that events could compel Obama to govern as a progressive. We are still waiting.” Bob was primarily upset about Obama’s failure to push through a new stimulus package. But he also criticized Obama over health care (for not getting passionate about it until the last minute) and the Gulf oil disaster (for not taking a harder line on British Petroleum).

Bob is my old boss and mentor, not to mention a good friend. I share his frustrations over the policies that have (and haven't) come out of Washington lately. But to suggest that Obama hasn’t governed as a progressive seems pretty wrong to me.

Look at the record: Obama has made a pair of liberal appointments to the Supreme Court, the second of whom appears to be on track to easy confirmation. He’s populated the National Labor Relations Board with officials who actually believe in labor law. He’s rescued the auto industry, and the region of the country that depends upon it, from economic oblivion. He’ll likely get the chance to sign a major Wall Street reform package, just as he did an overhaul of the student lending program. And, of course, he led and won the fight for comprehensive health care reform.

Bob isn’t that impressed and, I know, neither are many other liberals. Among other things, they think Obama made too many compromises. The recovery act was too small. Financial reform won’t break up the big banks. Health care reform has no public option. Etc etc.

Read the whole article here.

My Private Robert Kuttner

Daily Kos

By citizen k

July 6, 2010

Leigh Donaldson: Jobs are more important to Americans than a balanced budget

The Portland Press Herald

Expressed concerns about deficit spending ignore Keynesian economics and misrepresent the people's views.

July 5, 2010

Whatever got accomplished at the recent Toronto G-8 summit remains to be seen, but one thing is clear -- austerity measures designed to address this country's anemic economy aren't going to work.

President Obama's team of experts urged other countries not to abandon economic stimulus programs, while at home he was still having one heck of a time getting the U.S. Senate to approve even modest sums to extend the expiring unemployment insurance for millions of workers, as well as his $23 billion request for emergency aid to states to circumvent a potential 300,000 teacher layoffs.

The British, Germans and Canadians are focusing on major budget cuts, while smaller European nations are initiating even more severe cuts in exchange for guarantees of their government debt. Countless nations are cutting back, but won't this all hurt the possibility of economic recovery in the long run?

In his article, "Americans Care About Jobs, Not Deficits -- When Will Obama Listen," published on the Huffington Post blogsite, Robert Kuttner writes: "In part, this general outbreak of austerity is the price that Obama is paying for giving too much attention to deficit reduction at home, and not enough to jobs."

Kuttner further contends that this administration's freeze on domestic spending after this fiscal year, as well as Obama's fiscal commission "gives ammunition to Senate Republicans and Democratic deficit hawks who refuse to appropriate another dime for jobs measures that are not paid for by tax increases or other spending cuts.

"Yes, you can poll respondents to say that the deficit is a serious concern, but it's a far less salient one than worries about losing your job, your health insurance, your pension, or the value of your home," writes Kuttner, author of "A Presidency in Peril: The Inside Story of Obama's Promise, Wall Street Power, and the Struggle to Control our Economic Future."

What this administration faces is largely unprecedented; a dramatically underperforming economy in which almost 10 percent of the workforce is without jobs and income.

Businesses are simply not going out of their way to hire new employers or reinstate old ones. How is a society supposed to thrive when people's very livelihood is increasingly doubtful or nonexistent?

In the face of this perilous dilemma, our current administration and a Democratic Congress are so terrified by large federal deficits that they are literally immobilized to take action that was even part of Keynesian economics 101, such as pumping up federal spending to force-feed a stronger economic recovery.

The biggest losers from this political inertia are the millions of struggling families that we read and hear about on a daily basis.

"This represents a failure in politics, not of Keynesian logic," writes William Greider, in a recent article appearing in The Nation. "But the distinction hardly matters to ordinary folk The losses will last longer and multiply more so long as Washington declines to act more forcibly Politicians are failing Keynes on downside -- declining to force-feed the injured economy when it desperately needs government help."

Greider, along with many other economic analysts, that the current administration and Congress will be the scapegoat if this recession is allowed to persist for more years, thereby forfeiting potential production as well as jobs and incomes.

Many believe that deficits are indeed a cure, not a disease, and that no political party has ever lost a national election based on the deficit issue.

According to a recent America Speaks poll, conducted with a grant from the conservative Peter G. Peterson Foundation, 85 percent of Americans wanted to raise the cap earnings subject to Social Security taxes, far more than the percent that wanted to reduce benefits or raise the retirement age. Also, 85 percent wanted to cut military spending, 64 percent wanted a carbon tax, 61 percent welcomed a financial transactions tax and 58 percent favored a new higher tax bracket for millionaires.

President Obama, his administration, Congress and, most importantly, the American people cannot afford to have it both ways. We can't have sporadic economic stimulus packages that fall short of what is needed, and then jump over to the other side of the fence with the deficit hawks, bemoaning red ink and considering cutting Social Security.

Sending out mixed messages won't work. Cozing up with Blue Dog Democrats and right-wing Republicans at the expense of generating income for hard-working citizens does not make for clear economic strategy and legislation that will save our ailing economy.

In his book, "A President in Peril," Kuttner writes about how, in the summer and fall of 1948, when Republicans controlled Congress. President Harry Truman, widely considered a goner, sent housing and jobs legislation to "the do-nothing 80th Congress" knowing they would defeat the bills, in order to demonstrate the stark differences between his programs and the Republicans'.

He went on to win re-election in November.

The Obama Presidency: Possibility or Peril?

The Nation
By Ari Berman
June 14, 2010

Kuttner identifies four main reasons for why BHO is thus far no FDR. "One is his own character as a conciliatory consensus builder," he writes. "A second is that economics was never Obama's strong suit. A third is the residual power of Wall Street; without a president personally committed to Roosevelt-scale change, even a national financial collapse has not been able to shake the hegemony of finance. And a fourth is that the social movements that were so prevalent during the other eras of crisis and great presidential leadership are largely absent today." Such an outcome was by no means inevitable or preordained, Kuttner believes, despite the awful hand the new president was dealt. "In Obama's fateful first year, there was a road not taken, a possible road to radical reform, broadened prosperity, and the mobilization of an appreciative citizenry," he writes. Kuttner faults Obama for this, but is far more critical of the president's top advisers, who he believes led an inexperienced leader astray. "In many respects, the path Obama chose was determined by the people he appointed," Kuttner asserts.

Read the whole article here.

Kuttner shares views on state of the nation

Barrington Courier-Review

By TONY A. SOLANO tsolano@pioneerlocal.com
April 22, 2010

Journalist and best-selling author Robert Kuttner discussed the state of the economy and assessed the recovery efforts being implemented by federal lawmakers during a speech to the Barrington Breakfast Rotary Club at Makray Memorial Golf Course April 15.

At the beginning of his presentation, Kuttner surveyed the crowd of Rotarians and guests, asking if they are disappointed in the job President Barack Obama has done to this point. He asked the audience its opinion whether the country's continued economic struggles are due to the president doing a "less than spectacular job" or due to "the mess he inherited."

"I'm in both camps," Kuttner said. "I think he inherited a terrible mess, but I was not a fan of at least some of the choices that he made."

Kuttner, of Boston, is the author of nine books, the co-editor of The American Prospect magazine, a columnist for the Boston Globe and a former long-time BusinessWeek magazine columnist.

Kuttner said he believes the economic crisis stems partially from abuses in the financial industry, which negatively impacted the economy. He said Democratic and Republican leaders both added to the financial industry's problems in the past 20 years due to extremes in regulation and deregulation.

Once the economy began trending downward, Kuttner said he was critical of former President George W. Bush's administration and the first year of the Obama administration because too much federal funding went to large financial institutions.

"Instead of helping the Main Street economy recover, (federal funds) propped up the Wall Street economy," he said.

Read the whole article here.