National Economic Council Director Larry Summers, Treasury Secretary Timothy Geithner, and Office of Management and Budget Director Peter Orszag meet with President Barack Obama at the White House, March 24, 2009.
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Obama's Original Sin

A new insider account reveals how the Obama administration’s botched bailout deal reinforced neoliberal Clintonism.
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For the better part of a half century, the Democratic Party has been in this multigenerational crisis over its past. Campaigning against Ronald Reagan in 1980, Jimmy Carter disowned the New Deal’s effort to put Wall Street in harness to Washington, declaring “we believe that we ought to get the Government’s nose out of the private enterprise of this country. We’ve deregulated . . . to make sure that we have a free enterprise system that’s competitive.” Bill Clinton fully assimilated Reaganism in 1996, saying “the era of big government is over.” And now some progressive presidential candidates—together with a base of millennial Democrats—are decrying Obama’s presidency as the last emanation of the Carter-Reagan-Clinton synthesis, a retread of neoliberalism whose weak program for recovery from the economic crisis of 2008 ensured nearly a decade of employment doldrums that aided the rise of Donald Trump.

Reed Hundt, once Clinton’s chair of the Federal Communications Commission and a member of Obama’s transition team, has made the progressives’ argument effectively in his new book A Crisis Wasted. Obama, Hundt believes, made decisions while still a United States senator and then as president-elect that determined the course of his presidency. In the post-election, pre-inauguration winter of 2008–2009, the ordinarily maddeningly self-assured titans of finance—the same ones who, earlier in the year, counseled government inaction in the interest of letting the market discipline its own—were suddenly, and convincingly, prophesying doom unless Washington did something dramatic to avert economic catastrophe. While many voters hoped Obama’s policies might represent a dramatic change along the lines of the New Deal, instead Obama acquiesced to emergency considerations and ideological blandishments aimed at tempering expectations and a return to “normalcy.”

Obama swiftly switched from FDR redux to Clinton reborn because, Hundt points out, he sought experienced advisors to staff his administration-in-waiting, and the Democrats most accustomed to the White House were those who had served Bill Clinton. Obama named Clinton’s chief of staff, John Podesta, to head his transition team, and Podesta brought with him other Clinton appointees who thought their job now was one of restoration. As Hundt writes, “People are policy,” and the incoming Obama team wanted to bring back the policies of the 1990s and with them, the prosperity of that era. The Clinton personnel shared a more Reaganesque than Rooseveltian view, believing their success in the late twentieth century resulted from “a reduction in the size, capacity, and purpose of the public sector.” The Clinton people, following Carter, believed the New Deal had led ultimately to over-regulation and inhibition of capitalism’s great energies, and that the long boom of the 1990s owed to their getting government out of the way of business and banking, while still retaining state programs necessary to promote opportunity for the majority of Americans.

Yet, whatever one may think of the Clinton policies’ effects in the 1990s, the early twenty-first century and its economic calamities called for a profoundly different approach. The embryonic Obama administration’s adoption of Clintonesque neoliberalism was not only an inadequate response to the economic crisis. It also constituted, Hundt argues, a failure of the new president to fulfill his campaign promises.
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