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

Interviews

OLBERMANN:  Good evening from New York.  This is Tuesday, January 4^th, 672 days until the 2012 presidential election.

If the former CEO of Citigroup has just said of Wall Street regulation that we continue to listen to the same people whose errors in judgment were central to the problem, it might be a bad day for the president to hire as his new chief of staff an executive with JPMorgan Chase who opposed the new consumer protection agency.  Unless that is—as it is in our fifth story the president might be trying to counter the Wall Street/GOP false narrative that his administration has been estranged from business.           

First, further confirmation that President Obama is seriously considering William Daley as his new chief of staff.  Unnamed Democratic sources are telling “The Washington Post” that the president has met with Daley at least once in person.  Mr. Daley was commerce secretary under President Clinton, and he is currently the Midwest chairman of JPMorgan Chase.

Daley was notably against creating a new consumer protection agency when then-Chief of Staff Rahm Emanuel called him for his support—that according to “The Wall Street Journal.”  And Daley was recently critical of the administration‘s health care reform law, suggesting it was left, instead of center-left.  Center-left, which Mr. Daley thought the country would have supported.

Yes, progressives are crowing about how they put one over on the center left.  And if progressives might have been willing to give the Obama administration the benefit of the doubt on some of its Wall Street-friendly staffing two years ago, not anymore—particularly when the door is still revolving.  Vice President Joe Biden‘s chief of staff, Ron Klain, is resigning to become the president of Case Holdings.  Case Holdings has a philanthropic arm and an investment firm body.

Wall Street‘s ties to the Obama administration are precisely what helped to dilute real reform, that‘s according to a devastating piece from “Bloomberg News.”  In it, former chief—co-chief executive officer of Citigroup John Reed saying, quote, “We continue to listen to the same people whose errors in judgment were central to the problem.” Adding, “I‘m astounded because we essentially dropped the world‘s biggest economy because of an error in bank management.”  And he estimated that only 25 percent of the necessary financial reforms have been enacted.

Meantime, Citigroup, Bank of America, JPMorgan Chase, Goldman Sachs, and Morgan Stanley had their best two years ever these last two years, according to data compiled by “Bloomberg News.”  Time after time, Wall Street‘s lobbyists‘ insider influence resulted in the delusion of the most sweeping and necessary reforms, which at various points were actually part of financial regulatory reform packages.

From a former chief economist with the International Monetary Fund, quote, “It was very clear by February 2009 that the banks were going to get a free pass.”

Thanks for your time tonight.

ROBERT KUTTNER, AMERICAN PROSPECT:  Thank you, Keith.

OLBERMANN:  The president may be looking for a CEO type as his next chief of staff.  But, especially under these circumstances, could he—could he not find a CEO of a company that actually makes stuff instead of getting somebody else another one from finance?

KUTTNER:  Well, you know, the funny thing is that you‘ve got the guy Daley who was directly involved with Wall Street.  Then you got the other candidate, Gene Sperling, who got almost $900,000 for a part-time job.  Not a bad gig with Goldman.  So, the entire field is limited to Wall Street cronies.

OLBERMANN:  If American business made record profits last year, why is this mean that Obama is anti-business sticking?  And more importantly, why is the White House seemed to be believing it and playing to it, as the candidacies of these two men would suggest?

KUTTNER:  Well, these guys want zero regulation.  And any regulation is too much.  I think the more puzzling question is: why Obama doesn‘t stand up and behave more like a leader?

You know, Roosevelt famously, in 1936, said, “They hate me, and I welcome their hatred.”  The single worst statistic out of the 2010 midterm elections was the fact that voters who tended to blame Wall Street for the collapse, and Wall Street richly deserved that blame, were more likely to vote for Republicans.  That‘s how closely this administration has gotten itself allied with Wall Street.

So, this would be a very good time for Obama to stand up and put some distance between himself and Wall Street and say, if they think I‘m anti-business, if they think I‘m regulating to much, I‘ve only begun to fight because we need to protect the rest of the American economy from the predations of Wall Street.  But we‘ve yet to see him do that.

Read the entire transcript.

Tax Deal May Hurt Obama's Reelectability

NPR's Talk of the Nation - December 8, 2010

NPR's political editor Ken Rudin recaps the week, including President Obama's press conference Tuesday, in which he defended his compromise with Republicans on tax cuts. American Prospect co-editor Robert Kuttner discusses the tax deal, which he views as Obama's abandonment of liberals.

Listen to the interview here.

COUNTERSPIN Radio: Robert Kuttner on the deficit obsession; David Swanson on 'War is a Lie.'

November 26, 2010

Listen: [mp3]

This week on CounterSpin: Elites including within the corporate media insist, against the evidence, that voters are highly concerned about the deficit. This is one of the reasons the draconian plan put forth by Erskine Bowles and Alan Simpson, co-chairs of the president's deficit commission, got such a friendly reception in the media. We'll talk to economist Robert Kuttner about coverage of the Bowles Simpson plan and about a media that obsesses over future deficits in the midst of economic hard times.

Also on CounterSpin today: War is a lie. That's the title of activist and writer David Swanson's new book, which takes a sweeping look at the lies we're told—and we tell ourselves—about American wars. And of course many of those lies are transmitted by a corporate media eager to support war. David Swanson will join us to tell us more.

Listen to the interview on WarIsACrime.org.

Discussion of World Finance with Economist Robert Kuttner

The Marc Steiner Show - November 16, 2010

At the top of the second hour of the show, we discuss finance with journalist, writer, and economist Robert Kuttner. Mr. Kuttner is the co-founder and co-editor of the liberal public policy magazine, The American Prospect. We discuss international finance policy and the big ticket economic issue - Unemployment.

Listen to the podcast on the Steiner Show Website.

Obama and A Presidency In Peril

Press TV
Susan Modaress
August 9, 2010

The following is the transcription of an episode of Autograph program in which Press TV's Susan Modaress speaks with Robert Kuttner about his latest book  A Presidency in Peril .

A Presidency in Peril is the inside story of Obama's promise, Wall Street's power, and the struggle to control US economic Future. It tells how the Obama administration not only missed its moment to turn the American economy around, but deepened Wall Street's risky grip on America's future. Carefully constructing a one-year history of the problem, the players, and the outcome, Kuttner gives readers an unparalleled account of the US president's first year.

Susan Modaress: Here we are in the second year of Barak Obama's presidency and despite initial high hopes, you write that this president is at risk of becoming a "failed president."

Kuttner: I think one of the problems is all of the obstacles he confronted: the economic mess that he inherited, the power of Wall Street.

The difficulty of getting out of this mess, combined with the sheer obstructionism of the Republican Party -- the use of a filibuster, the fact that it is very difficult to govern even if you have a majority of Democrats in the Congress.

So, you have all of that, you could call that structural forces, and then there is this rendezvous with his temperament, with his personality. This is a man who spent his entire life looking for common ground; he spent his entire life trying to bridge difference. It is not surprising, given his personal odyssey --he is the son of a white woman form of Kansas and a black man from Kenya, so if you read his two books, they are all about his search for who he is, what the islands of common grounds in America are.

He comes to this presidency with this deep belief that you can achieve consensus and finds that Wall Street is not going to budge unless it is pushed, the Republicans are not going to budge unless you really lead public opinion to a different place and he turns out not to be Franklin Roosevelt. He doesn't seize the Roosevelt moment, he is not as radical as the moment required, so it remains to be seen -- since he is very smart, he is capable of being very inspirational, he is capable of being of a fighter when his back is to the wall-it remains to be seen whether he'll pull this out.

It's quite a drama, if this were an episode of West Wing, it would be great theater but unfortunately it's our lives.

Susan Modaress: So, here is a president who stepped into the White House after inheriting so much from the previous administration, and everyone agrees that his stakes were extremely high. However, you write, "So were Roosevelt's." He (Roosevelt) inherited World War II, the Great Depression. Obama didn't seem to seize the moment, despite the fact that he was “man of the moment.”

Kuttner: I think part of the reason he didn't seize the moment is temperamental, who he is, what his philosophy is, and part of it is this is really difficult and the fact that it's is difficult requires a president like this to be transformative; to lead public opinion to a very different place, not to split the difference between the Right and the Left, but to define a new center, the way all great presidents have done.

The way you transcend political blockage in Congress is you take public opinion to a new place where the public sees you as being their champion; sees you as taking their country to where the country needs to be taken.

Now the surprising thing about Obama is that if you saw him in the campaign, there was no doubt about his capacity to inspire, but he did rather better as an inspirational leader in the campaign than he has done as president. You would have said, "He is going to have some difficulties getting his arms around the government, he is going to have his difficulties being a manager," he's actually been pretty good as a manager.

What he has been disappointing at is [he could be] someone who inspires the public to believe that he is going to take us to a new place that we need to be taken to.

Now, it's early, he hasn't failed yet, but if he doesn't do better, the Democrats will lose substantial number of seats in Congress, and then it will be even harder for him to pursue the agenda the country needs.

Susan Modaress: As you just mentioned, we have upcoming congressional elections in November. You write in your book that, "Obama could become a one-term president." What else? What is at stake?

Kuttner: Let's review the stakes. You have the economic stakes, there is a risk of a whole lost generation of young people, as in the 1930s, whose hopes are stunted, who are not going to be able to get the jobs that they hope they would get, are not going to be able to have a middle class standard of living.

You have the ideological stakes. This was the moment to reverse the whole Ragen Revolution -- the idea that markets were self-governing, and didn't need to be regulated by the government.

You could reverse the premise that government is not there to do great things. There was an opportunity for a political realignment as there was in the 1930s and 1960s. People who come of age, realize that the government can do great things, and see a progressive Democratic Party as the steward of that social compact.

You have narrow partisan risk that the Republicans who are more Right wing than ever, more captive to the far Right, the Tea Party than ever are going to seize the opportunity, they are going to articulate the narrative republic frustration so the stakes could not be higher. It's the future direction of our country and even though he is not as progressive as I might be or some of his supporters might be, if he fails, we fail.

Susan Modaress: It seems that the public, many on the Left and obviously on the Right, are growing very impatient with very low tolerance levels. But, Bill Clinton, when he stepped into the office, as US president, had a very tough first year as well, but no one was saying that his presidency was at stake, that's so to say. But that's not the case with Barack Obama. Why are we seeing such a low tolerance level when it comes to dealing with this president, at this point in time.

Kuttner: I think a lot of Americans had their hopes raised sky-high by the idealism and inspirational qualities of Barack Obama as a candidate. 71 percent of the first time voters voted for Barack Obama. Young people were motivated and mobilized in a way that they hadn't been since John Kennedy, the saw hope in politics, they saw hope in Obama's leadership.

Now a year later, the unemployment rate is still rising, so people who are not particularly ideologically motivated, who just felt that this guy could deliver or could get the economy out of this ditch that it is in; a year later, the economy is still in a ditch, and government is flailing around, we are still finding about the health reform back in January of 2010 and so Scott Brown wins the seat that had been held by Ted Kennedy. There was a 48-point swing in voters who had not graduated from college, which is to say, lower middle class, working class voters. 48-point swing from voters who voted for Barack Obama in November of 2008 turned around and voted for the Republican Scott Brown in January 2010.

So I don't think this is so much ideological disaffection. There aren't that many people who are kind of out-front progressives. It's ordinary people who had invested their hopes in the proposition that this guy could deliver; who are waiting for him to deliver. And I think the difference with Clinton is that in the middle 1990s the economy was prosperous, unemployment was relatively low.

So, the Republicans took back to Congress, but Clinton could still recover something of his presidency, he got lucky in the presidential election of 1996 because he drew in a fairly weak opponent, Robert Dole, but Clinton saved his presidency, I would argue, at the expense of progressivism of the Democratic Party. He governed in coalition with the Republicans. I hope Barack Obama is not reduced to doing that. So I think the direct answer to your question is people are impatient because they are suffering. 2.7 million people lost their homes last year, we are on track to have 6 million foreclosures this year.

Unemployment went down a little bit in May, mainly because the government hired almost half a billion temporary workers on the census. The private sector created only about 25,000 jobs and we are not recovering in a fast enough pace. Also, I think that if you compare Obama with Roosevelt, Roosevelt was selected in 1932. By 1934, the unemployment rate was still 18 percent but people feel that he is on their side; people feel that help is on the way. ordinary voters aren't quite so sure that Barack Obama is going to deliver what they need.

In "A Presidency in Peril," the author takes his readers back to 2008 and 2009 to demonstrate what path was laid out. Kuttner writes that part of the reason that Obama surrounded himself with advisors that were close to Wall Street was, in fact, Wall Street's generosity and contributions during his campaign. These contributions played an essential role of his rise to the top of the Democratic field in the presidential primaries. This guaranteed that Obama would pursue a cautious business-friendly path.

Susan Modaress: Let us talk about Barack Obama's economic team, the team that he picked when he became president. These individuals, as you write in your book, are very sympathetic to Wall Street.

Kuttner: You know, I have written two books about Barack Obama. I wrote the first one which was called “Obama's Challenge”. I started it writing in 2007 because I felt that even though he was a little bit more conservative actually than the other two Democratic frontrunners, Hilary Clinton or John Edwards, that he had the makings of a great president and often you find that a crisis creates a great president, a president like Lincoln who started out hoping to hold together the union and ends up freeing slaves, a president like Lyndon Johnson who was a broker between the racist south and the liberal north, and succeeds John F. Kennedy who believes that his legacy is going to be that of a great civil rights activist. This is before Johnson blew it all in Vietnam.

So watching Obama and looking at his life history, I sort of was willing to wager that as this crisis got more severe, he could rise to the moment. So, I wrote this book Obama's Challenge, I took a bit of a risk myself and got it published before the election. My publisher and I said, well, we are going to have the best sellers or have a bonfire. And then in 2009, when I saw who he had appointed, my heart just sank because he appointed the old team. It was almost as if Roosevelt had appointed Hoover's economic advisors. He [Obama] appointed Larry Summers who had been the guy who was the architect of de-regulation under Clinton, he appointed Tim Guidner who had worked with Ben Bernanke and before him Alan Greenspan at the New York Fed. These were bridges to the old regime.

These did not represent a change you could believe in. And so, given the team that he appointed, it became much much harder for him to take the country at the direction that it needed to be taken. And at that point I said, well, I had better write another book because if it doesn't pick up his game, he doesn't deliver more jobs, more mortgage relief, and more hope, he is going to be at risk of being a one-term president; and the country is going to be at risk of not getting the radical change we need.

Susan Modaress: Another interesting point that we read in your book is the fact that Barack Obama was very popular in Wall Street during his campaign. He had a lot of self-interest donors. They supported him increasingly. Why did Wall Street fall in love with Obama during his campaign and how did Wall Street support Barack Obama in one way or the other, because despite public belief, that was the case?

Kuttner: You go back to January, February and March of 2007 when he enters the race, so Hilary Clinton, at that point, is the certain winner. She is the frontrunner, her strategy is to scare everybody else out of the race by raising so much money, they call it "shock and awe" and Obama goes to Wall Street and he just charms a number of Wall Street's top players to the point where in the first quarter of 2007, he raises more money on Wall Street than Hilary does. And you say why is that? You think about the politics of the typical Wall Street Democrat. So the typical Wall Street Democrat is kind of liberal on social issues, and liberal on foreign policy, but doesn't want the government mocking up his or her ability to run the whole economy like a casino. And I think also a lot of people on Wall Street, younger people on Wall Street, were kind of tired of the Clintons. They didn't think that Hilary could win, they were tired of this soap opera of Bill and Hilary, and Obama was the next new thing. He had charisma, the fact that he was African-American added his allure, and he was fairly reassuring to Wall Street that he was not going to do anything really radical to disrupt their game.

So I think people who felt that Obama came in as a real progressive were deceiving themselves, and people like me felt that the moment would force him to move in a more progressive direction, the same way that the Great Depression did with Roosevelt, the same way that civil rights movements did with Lyndon Johnson, we were wrong.

Susan Modaress: How different and how similar are current US President Barack Obama and his predecessor George W. Bush?

Kuttner: If you compare Obama with Bush, Obama is much more intelligent. I think he is much more principled. I think he is running the government. Dick Cheney was running the government under Bush. I think he has a somewhat more realistic role of the United States in the world. But I think people who supported Obama with great enthusiasm have reason to be somewhat disappointed that the differences between Obama and Bush aren't greater than they are. For example, if you look at some of the constitutional issues in the name of anti-terrorism, the Obama Justice Department is continuing a lot of the policies of the Bush Justice Department, not all of them but some of them. I think some of the semi-legal surveillance of American citizens is continuing. I think on the financial front, there is much too much continuity, there should have been more of a radical break. Foreign policy is not really a subject I treat in my book, but even though the atmosphere is better, even though there is more respect for the United States in the world, there is not a real fundamental break with the policy in the Middle East.

So I think these guys are more confident, they are less crazy, they are less messianic, but there hasn't been a kind of fundamental change that there was between Hoover and Roosevelt. There has been the beginning of change and there needs to be a lot more change and I want to be clear about this that I'm not ready yet to pronounce this president ''a failure." I think people like me and progressives who voted for Obama with enthusiasm need to practice a kind of tough love where we need to keep the pressure on him to be the great president we all hoped he could be.

Susan Modaress: And also the lack of social movement, as you point out in your book, to basically practice that tough love that you just mentioned and to give a push to the government to continue with the changes that it was promoting during its campaign, how does that concern you that there is an emptiness or there is a void in a movement like that?

Kuttner: The labor movement which has been beaten bloody by big business is acting heroically to try to push Obama to do better on job creation. It is really pushing Obama to do better on financial reform. You've seen some great demonstrations on immigrants' rights. You've seen mobilizations on mortgage relief. But it is fairly fragmented and now of course you have the ultimate teachable moment on the environment with the Gulf oil blow-out where if ever there were a moment to demonstrate that you can't trust the energy industry with energy, anymore than you can trust the banking industry with finance, these people have to be regulated in the public interest, they have to be harnessed, we have to get off of our dependency on fossil fuels.

I give Obama a B minus, I mean he, finally belatedly after several weeks; is sounding more like a leader. There was an exchange in the White House press room the other day where a reporter said to Robert Gibbs, the president's press secretary, "Is he angry? Is he showing any anger about this? “and Gibbs said, "Yes, I saw him getting angry", and the reporter persisted that, "What did he do?' and Gibbs said, "Well, he clenched his teeth", and the reporter said, "Well, I haven't seen him get angry." And it's funny, this is a president who really doesn't do anger. He is a very low-key kind of person and there are times when the American public needs to see indignation, anger, and outrage expressed on its behalf and this is not something that comes easily to Barack Obama.

But before we throw in the towel and accept that fundamental changes are not possible, Kuttner reminds his readers that this story is not over yet. He shows how Barack Obama and the research and progressive movement may yet redeem this president's promise and pave the path for sweeping reforms that Americans voted for.

Susan Modaress: And finally, almost two years has passed. What needs to be done and what will save this presidency in peril?

Kuttner: I think the speech that he gave needs to give should go something like this: "A lot of people are advising me that cutting the deficit is more important than delivering an economic recovery and I am rejecting their advice. I am sending Congress a second stimulus package to put more people back to work, to save people from being foreclosed out of their homes, to prevent 300,000 teachers from being laid off, to prevent services from being shot down, to rebuild the infrastructure of this country and when we get a recovery going and we put people back to work, then more revenues will come in and we'll get the budget back under control."

If he gave that kind of speech, the Republicans could either say well we are going to oppose this because we don't think if it matters to put people back to work. We think the deficit is more important. That would be terrible politics. Or, he might get a version of it through Congress.

So I think he has to stand up for the American people, realize how much the American people are hurting, be their champion and then maybe he won't suffer a blow-out in November, and he'll be even a stronger president in the second half of his first term and maybe he can even be re-elected.

Susan Modaress: That is all the time we have for this edition of 'the Autograph' here on Press TV. Thank you for staying with us. Remember you can always send us your e-mails to the autograph@presstv.com.

Read the whole article here.

Tavis Smiley Interview

Airdate May 26, 2010

Tavis: You said a number of things I want to go back and pick up, if I can. In no particular order, number one, I've been in a thousand debates, as I suspect you have, Robert, over the last year and a half about whether or not this president as a candidate raised hopes really high. The point you made a moment ago, whether or not Barack Obama was essentially a green screen and we cast our own hopes and aspirations on him and set him up for something that he could never be.

The guy does not walk on water, but some of us, I think, thought he was Jesus for a few weeks during the campaign.

Kuttner: Well, I felt going in in 2007 that he was the most center-right of the three Democratic contenders, but I also felt that he was the one candidate who had the potential for being a great president because of his odyssey, because of his writings, because of his prior speeches.

You felt that this was a man who could seize a moment, rise to greatness. This was a teachable moment; this was a man who had gifts as a teacher. So yeah, it was a gamble. Roosevelt was not all that liberal. Lyndon Johnson, who would have thought that he would be a great civil rights president? Lincoln took office trying to save the union. He didn't think he was going to free the slaves.

So this was a calculated gamble that Barack Obama would rise to greatness, but it was a very steep challenge and the problem is if he falls short, he's either Hoover or he's Roosevelt.

I think the jury's out. I'm not saying it's a presidency that's already failed; I'm saying it's a presidency at risk. So I don't think we simply projected our hopes onto him. I think we would agree that he's a very unusual man and it remains to be seen whether he's a great president or a president who somehow tragically missed the moment.

Read the whole transcript and watch a video clip here.