Robert Reich Has Some Good Ideas For Obama... But, Alas, That Ship Has Sailed

When Massachusetts Gov. Paul Cellucci (R) was appointed Ambassador to Canada by Bush in 2001, Jane Swift (R) became Massachusett's first woman governor (technically, acting governor). She was unpopular and declined to run in the GOP primary in 2002, leaving the nomination open for Utah resident Mitt Romney. The five-way Democratic primary was brutal, pitting former Clinton Labor Secretary Robert Reich against State Treasurer Shannon O'Brien, State Senate President Thomas Birmingham, AIPAC chair Steven Grossman and an unsuccessful nominee for lieutenant governor, Warren Tolman. Clinton, angered by Reich's book Locked in the Cabinet, endorsed Grossman, who wasn't a viable candidate and eventually dropped out. But the fact that Clinton had pointedly not endorsed Reich killed his candidacy. He came in second, with 25%, losing to O'Brien (33%). Romney won the general election with 49.77% of the vote.

Had Clinton gotten behind Reich in the primary and general, there's every reason to believe Reich would have won both and Romney would have been tucked away where he belongs, as governor-- or bishop or whatever they call the Big Cheese there-- in Utah. Perhaps Reich would be in the Senate now instead of Scott Brown. Who knows? But one thing I do know is that whenever I'm lucky enough to catch him on NPR, I hear one of the clearest, sharpest voices advocating a progressive vision anywhere. Why should Clinton, like Obama a conservative, have endorsed Reich? No reason, none at all, except for the good of the Democratic Party, the state of Massachusetts and the citizens of the United States. But when did any of that matter to career politicians?

Wednesday Reich's blog addressed head-on the thorny question of why Obama isn't telling the big economic story. He starts by contrasting the answers to the two competing stories Americans are telling one another about what is responsible for the lousy economy most Americans continue to wallow in. Some say it's "A. Big government, bureaucrats, and the cultural and intellectual elites who back them." And other say it's "B. Big business, Wall Street, and the powerful and privileged who represent them."

In reality, the lousy economy is due to insufficient demand-– the result of the nation’s almost unprecedented concentration of income at the top. The very rich don’t spend as much of their income as the middle. And since the housing bubble burst, the middle class hasn’t had the buying power to keep the economy going. That concentration of income, in turn, is due to globalization and technological change-- along with unprecedented campaign contributions and lobbying designed to make the rich even richer and do nothing to help average Americans, insider trading, and political bribery.

So B is closer to the truth.

But A is the story Republicans and right-wingers tell. It’s a dangerous story because it deflects attention from the real problem and makes it harder for America to focus on the real solution-- which is more widely shared prosperity. (I get into how we might do this in my new book, Aftershock.)

A is also the story President Obama is telling, indirectly, through his deficit commission, his freeze on federal pay, his freeze on discretionary spending, and his waivering on extending the Bush tax cuts for the rich.

Most other Washington Democrats are falling into the same trap.

If Obama and the Democrats were serious about story B they’d at least mention it. They’d tell the nation that income and wealth haven’t been this concentrated at the top since 1928, the year before the Great Crash. They’d be indignant about the secret money funneled into midterm campaigns. They’d demand Congress pass the Disclose Act so the public would know where the money comes from.

They’d introduce legislation to curb Wall Street bonuses-- exactly what European leaders are doing with their financial firms. They’d demand that the big banks, now profitable after taxpayer bailouts, reorganize the mortgage debt of distressed homeowners. They’d call for a new WPA to put the unemployed back to work, and pay for it with a tax surcharge on incomes over $1 million.

They’d insist on extended unemployment benefits for long-term jobless who are now exhausting their benefits. And they’d hang tough on the Bush tax cuts for the wealthy-- daring Republicans to vote against extending the cuts for everyone else.

But Obama is doing none of this. Instead, he’s telling story A.

Making a big deal out of the deficit-– appointing a deficit commission and letting them grandstand with a plan to cut $4 trillion out of the projected deficit over the next ten years-- $3 of government spending for every $1 of tax increase-- is telling story A. 

What the public hears is that our economic problems stem from too much government and that if we reduce government spending we’ll be fine.

Announcing a two-year freeze on federal salaries-- explaining that “I did not reach this decision easily… these are people’s lives”-- is also telling story A.

What the public hears is government bureaucrats are being paid too much, and that if we get the federal payroll under control we’ll all be better off.

Proposing a freeze on discretionary (non-defense) spending is telling story A. So is signaling a willingness to extend the Bush tax cuts to the top. So is appointing his top economic advisor from Wall Street (as apparently he’s about to do).

In fact, the unwillingness of the President and Washinton Democrats to tell story B itself promotes story A, because in the absence of an alternative narrative the Republican story is the only one the public hears.

Obama’s advisors explain the President’s moves are designed to “preempt” the resurgent Republicans-- just like Bill Clinton preempted the Gingrich crowd by announcing “the era of big government is over” and then tacking right.

They’re wrong. By telling story A and burying story B, the President legitimizes everything the right has been saying. He doesn’t preempt them; he fuels them. He gives them more grounds for voting against raising the debt ceiling in a few weeks. He strengthens their argument against additional spending for extended unemployment benefits. He legitimizes their argument against additional stimulus spending.

Bill Clinton had a rapidly expanding economy to fall back on, so his appeasement of Republicans didn’t legitimize the Republican world view. Obama doesn’t have that luxury. The American public is still hurting and they want to know why.

Unless the President and Democrats explain why the economy still stinks for most Americans and offer a plan to fix it, the Republican explanation and solution-- it’s big government’s fault, and all we need do is shrink it-- will prevail.

That will mean more hardship for tens of millions of Americans. It will make it harder to remedy the bad economy. And it will set Republicans up for bigger wins in the future.

I bet if Reich choses to run for something again, this time neither Clinton nor Obama will back him. Of course, that could be a positive these days. It sure would be with me! I doubt Obama has the intestinal fortitude to watch Keith Olbermann. I bet he would have turned this one, with Reich as Olbermann's guest, right off: