As anyone who has paid attention to mainstream US media coverage of the 2010 midterm elections can tell you, the primary narrative portrays an electorate growing uncomfortable with government intervention in the economy and health insurance, anxious to rein in deficit spending in Washington, and moving sharply towards the right in all but some cultural issues. The consequences, as the story goes, must follow the script Alexis de Tocqueville laid out 170 years ago in his 1840 classic Democracy in America: in a two-party state, the parties—and especially the loser in an election–must gravitate to the current center point of the population’s political mood if they want to compete. Hence, as the narrative continues, the Obama administration is all too justified in stepping back from key regulatory reforms and preparing broad tax and budget cuts, including weighing up options to whittle down the primary pillar of America’s flimsy security net, Social Security.
Naturally this story serves as convenient cover for politicians of both parties to serve their corporate paymasters with aggressive shifts of policy to the right. Basic facts regarding the midterm elections cast deep doubts on its validity, however. Thus, consider that only 75 million people bothered to cast a vote for a congressional candidate this November, down from 120 million in 2008. And of those who did vote, less than 53 percent chose a Republican candidate-hardly an overwhelming endorsement (53 percent voted for Democrats two years ago). (1) The faint voter turnout confirms disinterest and disillusionment among masses of Americans who rallied to the inspirational messages of Obama’s campaign in 2008, not any shift to the right. Those people declined to vote this year, having noticed that Obama’s “Change you can believe in” has meant more or less no change that George W. Bush wouldn’t believe in. (2)
“The White House needs to beat back the Bean idea, otherwise they’ll look like fools. This is the craziest thing I’ve ever seen. She’s a tool of the financial industries.” (3)
– A Democratic strategist , referring to the mooted appointment of Melissa Bean to head the new Consumer Financial Products Board
Predictably enough, however, the Obama administration is willfully surrendering to the dubious notion of a right-tilted nation. The underlying reason is not mysterious: it is greed. Defending the interests of the mass of the population might be good economics and popular politics, yes, but it doesn’t pay so well. Elected and appointed officials all understand that big rewards await them after leaving office in the embrace of large corporations, just so long as they serve those corporations’ interests now. And so the administration is currently doing about as much as it possibly can to join hands with Republican leaders while still maintaining a shadow of Democratic Party identity. It is, to give just a few examples, preparing to extend the extraordinarily low tax rates Bush awarded the extraordinarily rich upper layer of Americans; it is not pressing to extend unemployment benefits; it is pumping hundreds of billions of dollars into a program designed largely to pump up the value of stocks, which amounts to an upward wealth transfer (4); it is appointing a banking lobbyist to defang the Consumer Financial Products Board (5); it is proposing to freeze all federal employees’ salaries for two years (an obvious blow to labor, and a gratuitous concession to Republicans(6)); and it is encouraging its special “Deficit Commission” to suggest cuts in Social Security benefits. (7)
Economists of almost all stripes have pointed out the idiocy of tax breaks for the wealthy and austerity for the unemployed. Extension of the income tax cuts Bush enacted in 2001 and 2003 is the worst of eleven proposed methods to create jobs, and extension to the wealthiest Americans is weaker still, declared the non-partisan Congressional Budget Office. (8) Even a Goldman Sachs analyst estimates a half percentage point drop in 2011 GDP if Washington fails to extend long-term unemployment benefits. (9) Bad economics can sometimes make for popular politics, it is true (think tariffs), but many key White House policy positions do not even enjoy the virtue of popularity. Obama and co. are not courting “independent” (non-party-aligned) voters. (10) They are prioritizing the interests of the wealthy at the expense of everyone else.
Moreover, there are plenty of reasons to believe the White House’s current line was premeditated, not the fruit of panic or contrition on the heels of the midterm elections. As Robert Kuttner insists, Obama effectively surrendered swathes of Democratic seats in Congress by declining to guarantee that the Democrats would protect Social Security against Republican schemes to restrict or privatize it. Having already entrusted leadership of his Deficit Commission to sworn enemies of Social Security, he kept silent. (11) Nor could he speak out strongly on most other issues, given how unwilling he is to challenge the status quo and pursue needed reforms. Paul Krugman captured the impression this made during the midterm election campaign quite well: “Even given the economy’s troubles… the administration’s efforts to limit the political damage were amazingly weak. There were no catchy slogans, no clear statements of principle; the administration’s political messaging was not so much ineffective as invisible.” (12)
Domestic Politics and International Affairs in the Clarified Landscape
The White House’s handling of the economy, of tax policy, of international environmental negotiations, of CIA torture, and many other issues are sellouts of the American people, of humane values, of human rights, and of America’s standing in the world. As such they continue a dismal pattern characterizing the entire Obama Presidency. Whatever hope remained for the Obama administration recapturing some of the spirit of 2008 is now gone, in light of its behavior after the midterm defeat. Europe and the American Left will have to plan their next two years accordingly.
If the character of the Obama administration is all but settled, then so too, it seems, is the impotence of electoral mechanisms to shift the course of American capitalism on fundamental issues that affect the whole world. The US governing class will not have missed this message, and stands to become ever more beholden to corporate elites in the near and mid-term, especially in the wake of the Supreme Court’s infamous “Citizens United v. Federal Election Commission” ruling in January of this year, which lifted limits on corporate donations to political campaigns. We can safely credit this decision for jolting House and Senate 2010 campaign advertising by 20 percent and 79 percent, respectively, from the levels previous midterm elections, in 2006. (13) Corporations (and not only US ones) funneled hundreds of millions of dollars into midterm campaigns. (14) This money expects returns in the form of pro-business, anti-labor measures on all fronts. Now that the impotence of reform efforts over the last two years has drained much of the Left’s will to resist, and now that the crisis atmosphere of 2008-09 has abated, the returns could be magnified. We shall return to this topic soon in a separate piece.
In these circumstances, the US government will not be willing to take the lead on the international stage in controlling global warming, limiting social inequality, bringing the financial sector to heel, or restraining its (since renamed) Global War on Terror. It will in fact try to obstruct healthy initiatives on all these critical issues. Happily, many countries are showing more spine to the US than they have in the past. Thus South Korea rebuffed US trade pact proposals earlier this month. (15) And China has not only continued to ignore US pressure regarding the valuation of its currency, but has agreed to a floating currency exchange rate with Russia’s Ruble, unmistakably a step in the dilution of the US Dollar’s status as the world’s reserve currency. (16) Consider as well President Sarkozy of France’s announcement that he will push to institute an international financial speculation tax when he hosts next year’s G-20 summit. (17) Resistance to US financial and commercial dominion is welcome, of course. Enlightened leadership from the US would be much more welcome.
(1) Figures from Hendrik Hertzberg, “Electoral Dissonance”, The New Yorker, November 15th, 2010.
(2) A recent and very poignant rendering is “Bush’s Friend Barack” by Ralph Nader, CommonDreams.org, November 22nd, 2010.
(3) David Corn and Andy Kroll, “Could Wall Street's Favorite Dem Head Obama's Consumer Bureau?”, Mother Jones, November 8th, 2010.
(4) This is the QE2 (“quantitative easing”) program, on the import of which see, e.g. Les Leopold, “Another Taxpayer-Funded Thanksgiving Feast for Wall Street”, Huffington Post, November 24th, 2010.
(5) Corn and Kroll, op. cit.
(6) See, e.g., Sam Stein, “Unions, Progressives Blast Administration for Pay Freeze Proposal”, Huffington Post, November 29th, 2010.
(7) For a survey of economists’ critiques of initial proposals from the Deficit Commission’s leaders, see “Charlie Rose’s Deficit Non-Debate”, FAIR.org, November 16th, 2010.
(8) See, e.g., Jacob S. Hacker and Paul Pierson , “For the Good of Democracy, Tax Cuts for the Rich Must Expire”, Los Angeles Times, September 23rd, 2010.
(9) Robert Reich, “Why the Lame Duck Congress Must Extend Jobless Benefits for Hard-Hit Families but not Tax Cuts for the Rich”, Talking Points Memo, November 17th, 2010.
(10) Especially clear on this point are comments of Jane Hamsher, founder of FireDogLake.com, quoted in Sam Youngman, “Angry Left to Obama: Stop Caving on Agenda”, The Hill, November 16th, 2010.
(11) Robert Kuttner, “Saving Progressivism from Obama”, Huffington Post, November 22nd, 2010. The mass defection of senior voters from the Democrats over the perception of Obama’s health insurance reform eventually limiting outlays for Medicare is another useful perspective on the midterm results (see, e.g., James Surowiecki, “Greedy Geezers”, The New Yorker, November 22nd, 2010).
(12) Paul Krugman, “The World as He Finds It”, New York Times, November 14th, 2010.
(13) Bill Berry, “Citizens United Rule is Threat to Democracy”, The Capital Times (Wisconsin), November 12th, 2010.
(14) Precise figures can be elusive, both because of lax regulations on disclosure, and because a great deal of money supports advertising and agitation independently, without going through candidates’ ledgers. For some useful information, see OpenSecrtes.org. Public Citizen Foundation provides the most complete database on corporations’ anonymous political campaign contributions: http://www.citizen.org/stealthpacs.
(15) At the moment the key stumbling block to ratification of the long-germinating US-South Korea Free Trade Agreement is South Korea’s resistance to lowering fuel consumption and exhaust emission standards for automobiles the US wishes to export there (see, e.g. “US, South Korea Stall on Free Trade Agreement Affecting Autos, Beef”, AP, November 11th, 2010). The trade agreement has many other complexities, to be sure.
(16) Hao Li, “China-Russia Currency Agreement Further Threatens US Dollar”, International Business Times, November 24th, 2010.
(17) Sarah Anderson, “Fighting Finance from Below”, Foreign Policy in Focus, November 23rd, 2010. Sarkozy will have plenty of allies, including perhaps the IMF, which recommended implementation of such a tax in a formal report to the G-20 earlier this year (http://www.imf.org/external/np/g20/pdf/062710b.pdf).