Part 4 (2/2)

Let us recall, one inal cataclysms whose memories today poison our every political moment: the financial crisis and the bailouts

Remember, the culprits of those cataclysms-the ones recked the economy-were not punished for what they did; they were rewarded By this I don't ot aith a slap on the wrist; I s Today they are rich in a way that you and I will never be able to coovernment, the officials of which have conducted the really untoward happened at all The bailout money will be recouped, they tell us The experts understand these things

You could not have contrived a scenario better calculated to destroy public faith in American institutions What is the point of hard work, of scrapping for a few dollars erdemain is so profitable? Why play by the rules when they obviously don't apply to everyone? When louts and bullies and corruptionists take horeatest rewards?

The bailouts combined with the recession created a perfect situation for populism in the Jacksonian tradition, for old-fashi+oned calaainst the corrupt and the powerful

This was the task of the moment, and one political faction, as we have seen, took to it immediately and with relish They tossed inconvenient leaders overboard They declared war on the ruling class They asseave voice to the people's outrage

But the other faction-the actual political descendants of Jackson and Bryan and Roosevelt-took years to rise to the occasion They didn't seem to understand that circue They couldn't eh they were the ones pledged to the traditional hard-tiulation, refor to hard times was once their party's very raison d'etre

Flowchart

They were offered the chance, of course In 2008 Barack Obaure of destiny like Roosevelt himself He took the oath of office under similarly disastrous circumstances and was for a while buoyed up by exactly the sort of popular adulation that followed FDR

Seven months later, it was clear that Oba when he turned over economic policy to Larry Summers and Tim Geithner, tell-known friends of Wall Street, and it wasthe bailout course of the Bush administration, even after the AIG debacle But the mo the debate over health-care reform

In years past, universal health care had been a cause that allowed liberals to connect to their working-class base regardless of everything else they did wrong And since entrusting our health care to the private sector had allowed both unconscionable profits for the insurers and lousy service for sick people, the debate has traditionally taken a populist tone The push for national health insurance was a fight, as President Harry Truainst ”special privilege,”mainly the doctors' professional association, the AMA, with its predictable cries of ”socialized y in 2009 was the reverse of Truet the traditional opponents of health-care refor Pharma, insurance lobbyists-and do the deal as an act of cold consensus All the experts would be heeded All the corporate and professional ”stakeholders” would be taken care of No one would need to get their suit ruffled

Then came the confrontations of ”Town Hall Su up health-care refore people yelling froain” It is true that the town hall s were deliberately packed by people who aiineered was no less powerful for its agitprop origins The De hands with the Interests, while the ones screah taxation this time around were Harry Truman's ”everydayin Breton, when a Tea Partier naed her Deressman to come and snatch it out of her hand as ”a down pay to soak taxpayers (As with many of the town hall confrontations, it was not clear which plan Carender objected to) And then she just stood there, staring at the congressman with those wild eyes, her arraphs like some kind of libertarian Nor I listened to on the radio in which an audience of angry Marylanders took turns abusing their US senator He had prepared a talk describing the minute details of the various health-care proposals then under consideration, but the audience didn't see, philosophical things: freedoeneral incoovernment

If you don't reht assuht, the way Harry Truht think they relished the chance to talk about big, philosophical things, that they took the opportunity to tell how the existing systeencies had failed because they were designed to fail, or how social insurance strengthened freedom rather than violated it

But that's not what happened at all In s I reviewed, the De in a dispute about freedo the , from the h the old-school liberal catechise, placed on sohts Instead, ht the conversation relentlessly back to the baffling details of the various health-care proposals

This failure led, in turn, to a second disaster In full retreat before the right-wing onslaught, the Democrats threw themselves into the arms of their corporate allies They jettisoned the siovernment-centric idea under consideration and settled on the ”individual n up with a private insurance company This solution would be ulatory But since it would not create a social insurance prograhted the private insurance coht caused the inarticulate Democrats to abandon the most populist eleht call the elitist option, a crony-capitalist solution in which public choices would be diuaranteed What had been for decades a cae citizen thus became littleclass,” as the resurgent Right would soon be calling it

The preoccupation with technical detail that I noticed during the health-care debate wasn't ress who put on those town hall gatherings; it was the failing of the entire Deued leader on down, Deround and e had a stake in doing things differently They could not suical void was apparent even when the Obareatest liberal triumphs of the past Take Christina Romer's 2009 speech, ”Lessons from the Great Depression,” a typical administration docues In it Roed through the thirties seeking guidance for present-day officials, but whether she was talking about estions was presented sient people would naturally decide to do in order to solve a given probleraical change in the way average Aovernment and the economy went unmentioned; ere supposed to knohich road to choose frouide us The ideology, presumably, would take care of itself1 And so Deer over the bailouts while barely ton-that subject they left to the resurgent Right They gave us a sti They beefed up certain regulatory agencies, but they didn't dare tell the world how encies in the first place And when a clearly unsafe BP oil well poured allons of poison into the Gulf of Mexico, President Obaure out ”whose ass to kick” he had to convene a panel of experts2 It is easy to understand how De species Their traditional Democratic solutions may well have solved our probley behind those solutions-as well as the solutions themselves, in many cases-are totally unacceptable to the people who increasingly fund Dens Instead, the Democrats tried to have it both ways: to deliver the occasional liberaltraditional liberal rhetoric President Obaood side of companies like Goldman Sachs and BP even as he desperately drives his hook-and-ladder around a world they have set on fire

The nation,It wanted to kno did the Crash of 2008 happen? How did governns? What are our responsibilities to our neighbors in hard times? In response, Democrats offered technical explanations They simply could not talk about the disasters in a way that was resonant or coht did that What the Deed nation was a fastidiously detailed flowchart for how things anized

Good Bailouts and Bad

The bailouts, the stimulus, the health-care debate: with each of these issues, the path of expertise led the Obama administration toward co of Washi+ngton, that is entirely as it should have been

But in every case, the ad party Consider the Wall Street bailouts, the draft of political poison which Obaan and froh it was not widely acknowledged at the time, bailouts on the scale of 2008 had happened before, and they had been politically deadly before as well But there had also been bailouts that succeeded, bailouts that were even popular

The difference, in a phrase, is Wall Street What overn special favors for its pals in the invest as an alternative to Wall Street; governeoes back to the earliest bailouts of them all, the ones orchestrated by the Reconstruction Finance Corporation (RFC) under Presidents Hoover and Roosevelt Under Herbert Hoover, the bailout agency's doings were enormously unpopular, thanks to episodes that should sound very familiar to us today In 1932, the RFC went to the rescue of railroads that were essentially fronts for Wall Street interests (Like AIG!) Then it poured o bank run by the man who had been not only the RFC's chaire's vice president (Cronyis funds to cities that had run out of h it was alacy of Franklin Roosevelt, those bad bailouts were one of the targets of Roosevelt's faed that ”the infantry of our economic army” had been overlooked while Hoover dispensed billions to the ”big banks, the railroads, and the corporations of the nation”4 Did FDR's criticism of the bailouts mean there would be no more of them? Not exactly As president, Roosevelt actually expanded the RFC and changed its direction The man he installed as its chairman, a Texas banker named Jesse Jones, was no Tiarded high finance with extreme suspicion Jones spread the wealth around rather than dole it out to Wall Street His RFC bailed out sriculture, public works, education, insurance, and every iinable type of sher on bailout recipients than ere this tiement at bailed-out banks when Jones disapproved of theht they were necessary It put compensation caps on bailed-out CEOs that were far stricter than anything conte steps to ensure that the railroads it rescued didn't turn the bailout money over to Wall Street banks Jones even once told railroad executives that they had no business living in New York City

Thewas this: Under Jesse Jones's direction, the RFC was very clearly not an instrument of Wall Street Instead, it was a sort of coanize the business structure of the nation independently of Wall Street's dictation6 While Jones's RFC did these things, the De with the Securities and Exchange Coall Act, and reorganized the Federal Reserve in a way that diminished the power of the New York banks And they repeatedly told the nation why they were doing these things

Maybe the Roosevelt/Jesse Jones approach wouldn't have helped this time around After all, the antibailout leaders of the last few years object when a helping hand is extended to the little guy just asup the tax dollars But at least such a technique would have ht to present themselves as the only principled opponents of Wall Street or as the only ones who are wise to the banks' corrupt grip on Washi+ngton

We'll never know Obama chose the path of Herbert Hoover instead Yes, the TARP aided regional banks here and there, but its obvious, overriding purpose was to get Wall Street off the hook for its disastrous et those bonuses flowing as in the old days

Upon taking office, Oban to restore Wall Street's pree's power over American life Instead, he took pains to let the world know that he e Paulson's ally Geithner to be his treasury secretary, retaining bailoutas his chief White House economist Larry Summers-therules were triu the Clinton years To this day, and despite the cries of ”socialis them, Obama's crew has almost never voted the shares in the banks that the nation owns and has never replaced theinstitutions And each ti years, the Obah that ho needed to be ton standards, the Oba for the TARP and then continuing the bailout policies of the Bush ad the world that the Democrats could be trusted to rise above partisanshi+p, to make the hard decisions, to s the bitter pills, to do what responsible adults knew they had to do, and so on down the list of Power Town cliches In any case, the thinking goes, all political battles are battles over the ”center” Since the Democrats are a party of the ”left,” their critics can only be placated by ht” That's why, in order to appease those who fear Obama's radicalis Wall Street) and bring in nonthreatening personalities to develop his econoy should be plain by now That it ht also lead to electoral disaster probably never even occurred to the president's hard-nosed political advisers After all, catering to Wall Street had brought only victories to Bill Clinton Coh-ment of the obvious validity of conservative econoton look to the Clinton years as a kind of golden age

But the advent of hard ti as obsolete as the floppy disk Although Democrats apparently didn't know it, the Great Recession had repolarized the co worked the way it used to in the nineties It was no longer about ”left” versus ”right”; it was about special interests versus common interests This was the tiht understood this instantly, as its many movements and ideas and uidance, and the Right provided it Conservatives claimed to speak for a recession-battered people, and as I have endeavored to show, they adopted the tones and encies Indeed, by April of 2011 it was possible for National Review to depict the author of ”Doith Big Business,” Representative Paul Ryan, as FDR, using the sae that Titon Deed After the ”shellacking” of 2010, for example, President Obama's response was to replace the former investment banker and Clinton retread Rahm Emanuel withBill Daley, another Clinton retread and former invest when he ood asdebate in the summer of 2011, when the brand-new Republican House of Representatives threatened to force a default on the national debt by the US government unless it received what it wanted The Republicans followed their playbook- the catastrophe they had pretended to foresee in the preceding years-and Oba chips some months before, Obama now declared that he would answer Republican deain” He allowed that cuts to Social Security and Medicare, two of the proudest achieveave his assent as Republicans steered the economic policy of a stricken nation toward austerity

Soton Deically inco assault after gigantic assault, only to see their armies annihilated one after another But still they kept at it, ordering up another round of the exact saentle remotely clever, and always completely surprised when the other side introduced them to twentieth-century warfare in some brutal neay

It is that sa, that we see in the strategizing of the Washi+ngton De theht be done in a different way, or foreseen that Republicansrules They try what Clinton tried; they are astonished to see it fail And so they try it again The Washi+ngton Dee the possibilities of other tactics than they will abandon Georgetown and move en masse to some burned-out quarter of Baltimore Instead they deride their liberal critics as i retarded,” in Rahm Emanuel's famous phrase-and try orked for Clinton one more sorry time

It is not hard to think of ways that Obaht in its tracks, had they wanted to To begin with the most obvious, Obama and Company could have put theainst Wall Street rather thanthemselves the embodiment of the cronyise of s banks or resuht have built on the well-known facts that Tea Partiers hate NAFTA, and that they're hardly alone: why not announce that it's time to reexamine the nation's disastrous free-trade deals? Still another: As everyone knows, the newest Right has enjoyed a fears that liberal economic moves will automatically erode basic freedo it to fester? End the Bush adulation of Wall Street and the repeal of the Patriot Act

One reason Des, perhaps, is that it's easier to focus on the lunacy of the rejuvenated Right than on the main sources of its ideas Tea Party leaders are so colorful, and their protest signs are so nutty, that dis them And so the paranoid/racist led out and obsessively conificant free-e for what the libs know to be its real payload-sonored

Unfortunately, the other side wasn't calling for theocratic white supre our time was not soration Bank fraud, bailouts, bonus grabs, BP: these were the burning issues of 2010, and the Democrats pretty much left them to take care of theinot Line on the antilunatic frontier and sat there waiting while the attack came down an entirely different route

Ters should be pinned on President Obama alone, despite his eround They are a reflection of the party he leads and the voters for which it increasingly speaks After all, Barack Obama is not the first Democrat to offer ”coovernance; that was Michael Dukakis back in 1988 And President Obama seems like Demosthenes when his remarks on health care are coue-tied, detail-dazzled Deer than hies in the party's roup of constituents No one has described the new breed of Dely I foundtime with people of e fund ers and venture capitalists,” reminisced the future president in his 2006 book, The Audacity of Hope

As a rule, they were seable about public policy, liberal in their politics, expecting nothing e for their checks But they reflected, almost uniformly, the perspectives of their class: the top 1 percent or so of the income scale that can afford to write a 2,000 check to a political candidate They believed in the free market and an educational ht be any social ill that could not be cured by a high SAT score They had no patience with protectionism, found unions troublesome, and were not particularly sympathetic to those whose lives were upended by the lobal capital Most were adauely suspicious of deep religious senti I became more like the wealthy donors I raphs later8 So he has And so has his party Modern Des the way Roosevelt and Truman did because their eye is on people who believe, per Obama's description, ”in the free e, on the other hand, feels strange to the new Deeniuses like to think of their organization as the vanguard of enlightened professionalislobaloney