In US history, second presidential terms have had a pronounced tendency to disappoint. The causes have ranged widely, from political scandal (think Nixon and Watergate) to personal scandal (think Clinton and Lewinsky) to a loss of credibility (think George W. Bush). But the upshot has been quite similar in all cases: an inefficacious second term of office. What would efficacy for President Barack Obama's second term mean, and how likely is he to accomplish it? Inevitably, the standard on which Obama will be judged is the ethos that raised him to the office, namely the progressive vision that he embraced and harnessed during the first half of his 2008 presidential campaign. No matter that he deftly distanced himself from progressive ideals late in the 2008 campaign, and then clumsily betrayed them in so many ways once in office. The progressive vision is what carried him to the Democratic Party nomination in 2008. Had voters been content with establishment Democratic Party politics, they need only have accepted the presumptive heir to the throne, Senator Hillary Clinton, who began that campaign with an overwhelming advantage in money and recognition. Obama cannot escape judgment from a progressive viewpoint, and so the success of his second term will indeed depend on generating substantive achievements along progressive lines.
Expectations for Obama's second term among progressive observers are muted, given the underwhelming record of his first term. But there are some grounds to anticipate less conciliation of the Right from the second Obama administration than we saw from the first. The fact that Obama need no longer worry about re-election (and so can more bravely confront the Right) is perhaps relevant here. But we suspect Obama will remain on guard vis-a-vis the Right, for fear of compromising Democratic Party fund raising with business interests. More significant for the character of the second term, at least at first, is the relatively lighter obligations Obama now carries with him from Wall St. and other corporate giants. The financial sector reversed its allegiance in 2012, abandoning Obama for Mitt Romney. The supine obedience to the big banks that the world saw from the President in his first term may therefore give way to meaningful pressure in the direction of reform, and – perhaps – even prosecution for the wholesale criminal wrongdoing of the recent past. One signal in this direction is the imminent appointment of newly elected Senator Elizabeth Warren to the Senate Banking Committee. Warren is one of the leading authorities on finance sector malfeasance, a specialty that accounts for her election victory in November. By all indications, she is also incorruptible.
Another signal of Obama's readiness to stand up for the country during his second term instead of corporations has come in the shape of intransigence regarding Republican attempts to preserve the Bush-era's historically low tax rates on the top two percent of wage earners. Economist Robert Kuttner, for one, praises Obama's new-found vehemence in resisting the Republicans' minimal gestures of compromise, and notes that the President is also pushing to allocate $50 billion to fund much-needed infrastructure projects, in the spirit of economic stimulus the GOP (and seemingly the entire Washington and Wall Street establishments) so readily dismiss. These are good signs indeed, and the arrival in Congress of newly elected Democratic Senators and Representatives in January will reinforce the momentum for progressive reforms on all fronts.
Alas, momentum and achievement are two different things. As we shall see, information emerging regarding Obama's preparations for new cabinet appointments points to further betrayal of progressive principles. Beyond that, structural hurdles in the financial markets, the media, and the Senate are raising tall hurdles in the path of reforms.
Secretary of Tar Sands?
«If Obama keeps Walter on or appoints Khuzami or Ketchum, we would be better off blowing up the SEC and starting over».
– William D. Cohan, on the various Wall Street loyalists who might head the SEC (1)
Departure of cabinet members before the beginning of a president's second term are more than norm than the exception in US practice, and discussion of candidates for a new Secretary of State and Secretary of the Treasury is well underway in the mass media. However, the media has ignored recently uncovered evidence that ties presumptive Secretary of State nominee Susan Rice to Canadian energy interests that would benefit handsomely from approval of the Keystone XL pipeline to bring oil from Canadian tar sands to refineries in Texas. As we have explained before in this forum, exploitation of the tar sands would come with a horrific environmental cost—by itself, this resource would raise the earth's temperature by an estimated 0.59 degrees Celsius. Beyond that, the danger of spills from the pipeline that would penetrate the Ogallala acquifer on which Great Plains agriculture depends is so great that the Governor of Nebraska (a Republican) asked the Obama administration last year to reject the pipeline. (2) Because Keystone XL crosses the US border, the State Department is in charge of the environmental impact assessment due in early 2013. This assessment would be one of Susan Rice's first and most momentous assignments. Interestingly enough, her personal portfolio is overloaded with the relevant Canadian energy firms, to the tune of at least a couple of million dollars. (3) This is a glaring conflict of interest, on a matter that is vital to the whole world. In this light, Obama's championing of Rice looks very disturbing indeed.
Obama's selection of bank-friendly Elisse Walter to replace Mary Schapiro as head of the SEC is also alarming. After reminding readers that the SEC has done nothing to hold Wall Street accountable for any aspect of the financial crisis, and managed somehow not to find any criminal wrongdoing in the most recent scandal, the implosion of MF Global (4), William D. Cohan concludes simply that «We need an SEC head who can inspire a new generation of investors to believe the capital markets are no longer rigged and that Wall Street cannot just capture every one of its Washington regulators».(5)
Accumulating Structural Hurdles
Want to know a dirty little secret? Our stock markets no longer work.
– Amy Butte (6)
Even if Obama were to find the spine to reverse regulatory capture at the SEC or the Treasury Department (and we see no evidence that he will do so), the credibility of the US financial architecture is looking ever more shaky these days. With no resistance from financial sector regulators, the largest banks have introduced untold levels of complexity into securities markets, have fragmented these markets so that no one can really oversee them, and have facilitated the rise of high-frequency computerized trading platforms to the point that these purely speculative operations now account for well over half of trading activity. The net effect has been to dilute the trust of all investors, from sophisticated to simple, in the credibility of the prices of securities. (7) US markets do not allocate capital for companies or for investors as efficiently as they used to. Instead, the financial sector is extracting ever more capital from the rest of the economy, to the tune of an unfathomable $635 billion per year now, according to a new estimate. (8)
As market players come to distrust the soundness of securities pricing and absorb the insufferable rapaciousness of Wall Street, the credibility of the US markets and financial system erodes. This is now becoming apparent in a variety of ways. For instance, US consumers are registering ever deeper doubts about the trustworthiness of large banks' mortgage services, and are becoming more cautious about purchasing homes (9); and the UK Parliament is turning up the pressure on American multinational corporations' tax avoidance schemes in Europe. (10) Populist movements have caught the same scent. As awareness spreads of the worldwide ravages of the offshore financial system (in which America plays a key role, as we have explained in other pieces for this forum), it has become the focus of the world's first progressive movement coordinated through social media on an international scale, «The Rules».(11) Similarly, concerted efforts to pressure universities and pension funds to boycott investment in petroleum companies are now taking shape in the US, and could eventually bring significant pressure to bear on Washington to discuss decisive measures against global warming. (12)
Whether populist movements retain the reins of the progressive movement or whether President Obama grabs the reins himself, building momentum to redress the country's grotesque inequalities, forestall global warming, restore the credibility of the financial system, or pursue many other needed reforms will require revival of leftist media. And here we find another structural hurdle. As Glenn Greenwald recently explained, the saturation of the airwaves with political news and analysis has now become so continuous that American political life is in continuous election mode. Fearing that the Right's media machine will capitalize on any fissures in the Democratic camp to court voters, progressive-leaning commentators and outlets have foresworn criticism of the Obama administration from the Left. (13) Thus, the only mainstream outlet that could claim progressive credentials, MSNBC, became almost embarrassingly one-dimensional through the 2012 Presidential campaign. It shelved even veiled critiques of Obama, effectively turning itself into a media platform of the Democratic Party. Unless the progressively-inclined somehow regains a voice independent of the Democratic Party, serious discussion of America's problems and options for reform will not take shape.
A Stillborn Senate
«…tedious delays; continual negotiation and intrigue; contemptible compromises of the public good».
– Alexander Hamilton, predicting what would become of the Senate should its rules require a supermajority (60 out of 100 votes) to overcome the resistance («filibuster») of one (or more) obstinate Senators to any proposed Senate business. (14)
Finally, the viability of the entire federal legislative system is looking all the more doubtful nowadays, after the last four years of Republicans' exploiting a procedural rule (the «filibuster») allowing even one dissenting Senator to block consideration of any bill unless a supermajority of 60 Senators overrides him or her. The GOP invoked the filibuster 348 times in 2009-10 alone, a ten-fold increase over the frequency of the tactic in previous decades. (15) Alexander Hamilton's fears, cited above, have certainly come to pass, and Republicans are more than willing to obstruct any reform that in any way impinges on the interests of the large banks and corporations that sponsor them. The public has taken notice of the Senate's institutional dysfunction: a paltry 10 percent now say they trust Congress (of all occupations, only used car salesmen register a lower mark). (16)
Some leading Democrats, including Senate Majority Leader Harry Reid, lament the filibuster rule and are talking about making slight adjustments to it. Notice, however, that the Obama administration is not throwing its full weight into this battle, and is seemingly prepared to recline on the throne and preside over a soporific Congress. And so the only plausible route to abolishing the filibuster, shaking Congress from its business-as-usual torpor, and commencing debate about genuine reforms is through the courts. A non-profit government watchdog group called Common Cause has asked a federal court to declare the filibuster rule unconstitutional. (17) There is some chance they will obtain this verdict. In the meantime, unfortunately, the US and the world should not expect much leadership to come out of Washington.