Obama's Wrong Choices Of Advisers Predicted The Tragic Failure Of His Administration

On a tangent during his scathing indictment of his own political party, Republican operative Mike Lofgren made an interesting comment about the pathetic state of conflicted Democratic Party officeholders who have allowed the GOP to run so wild that our democracy itself is now at risk. The corporate whores and careerists the media give shelter to by dubbing them "moderates" and "centrists" are as guilty as Republicans for the great pillaging of America.

Democratic Leadership Council-style "centrist" Democrats were among the biggest promoters of disastrous trade deals in the 1990s that outsourced jobs abroad: NAFTA, World Trade Organization, permanent most-favored-nation status for China. At the same time, the identity politics/lifestyle wing of the Democratic Party was seen as a too illegal immigrant-friendly by downscaled and outsourced whites.

I illustrated his point with a fine portrait of two of the worst of the worst: Rahm Emanuel and Max Baucus. My friend Karoli, one of the most dogged and unflinching Obama defenders I know, pointed out another of these bad-as-a-Republican type Democrats, the President's chief of staff, Bill Daley-- and wrote that it's past time for him to step down.

If messaging is a part of the Chief of Staff's duties, and I believe it's one of the central parts, then Daley clearly fails on all counts. Every single issue is framed inside right-wing themes, from the decision to suspend new EPA standards to the debt-ceiling debate. There is no progressive message, not even a small bone offered up to progressives who might be able to swallow a short delay in implementation if there is some small sensible reason. Yet, time after time, Daley offers up those nuggets to the Chamber of Commerce, the Republican Party, and conservatives, presumably in the hope that some will be reasonable. There's a term for that. In some circles, some might call it insanity. I call it a failure to serve a wider constituency.

...[I]t's time for him to replace Daley with someone who is capable of crafting a stronger message and dealing with the right-wing idiots in Congress with a stronger hand. There was absolutely no reason for us to give up the advantage on Medicare that we had after Paul Ryan managed to lead Republicans right down the rabbit hole of destruction. The right wing was on the verge of self-destruction and instead of capitalizing on it, Daley's message seemed to affirm it. It would have been a good time for President Obama to have drawn a line. But as Chait notes:

And then, this summer, Obama let the G.O.P. hold the debt-ceiling vote hostage to extract spending cuts. I think he should have called the Republicans’ bluff and let them accept the risk of a financial meltdown. But the reason Obama chose to cut a deal is that calling their bluff might have resulted in catastrophe. And Obama made a point of back-loading the G.O.P.’s budget cuts so as not to contract the economy. He may have chosen wrongly, but he chose exactly the priorities liberals now insist he ignored-- favoring economic recovery over long-term goals.

Maybe. But do we hear this message? No. Where is Daley out there on the Sunday shows, pushing back on the idea that in hostage situations, the reasonable guy in the room will try to save the hostage? He's nowhere? Instead, week after week is filled with Republican messages and right-wing memes.

With friends like Daley, who needs enemies? It's time for President Obama to admit that his strategy of trying to co-opt the right-wing with a pro-business Republican type like Daley was a mistake, ask for his resignation, and put someone in there who will at least manage to get some liberal messaging out of the White House. We don't have time to wait. The election may well hang on what Bill Daley's next failure is.

Karoli never asks whose side Daley is really on (let alone Obama). Daley has never been and will never be on any side I'm on. He's a "Democrat" because it's part of the family business-- and his family has been an unending catastrophe for Democrats going back over 5 decades of reactionary, authoritarian and always, always, always unbelievably corrupt horror. If Obama thought he could find a worse chief of staff than Rahm Emanuel, he actually wins!

Yesterday's NY Times delved into the environmental debate that Obama has used to alienate his environmental allies.

Do environmental regulations kill jobs?

Republicans and business groups say yes, arguing that environmental protection is simply too expensive for a battered economy. They were quick to claim victory Friday after the Obama administration abandoned stricter ozone pollution standards.

Many economists agree that regulation comes with undeniable costs that can affect workers. Factories may close because of the high cost of cleanup, or owners may relocate to countries with weaker regulations.

But many experts say that the effects should be assessed through a nuanced tally of costs and benefits that takes into account both economic and societal factors. Some argue that the costs can be offset as companies develop cheaper ways to clean up pollutants, and others say that regulation is often blamed for job losses that occur for different reasons, like a stagnant economy. As companies develop new technologies to cope with regulatory requirements, some new jobs are created.

What’s more, some economists say, previous regulations, like the various amendments to the Clean Air Act, have resulted in far lower costs and job losses than industrial executives initially feared.

For example, when the Environmental Protection Agency first proposed amendments to the Clean Air Act aimed at reducing acid rain caused by power plant emissions, the electric utility industry warned that they would cost $7.5 billion and tens of thousands of jobs. But the cost of the program has been closer to $1 billion, said Dallas Burtraw, an economist at Resources for the Future, a nonprofit research group on the environment. And the E.P.A., in a paper published this year, cited studies showing that the law had been a modest net creator of jobs through industry spending on technology to comply with it.

...In issuing new regulations, the administration says it weighs job creation and economic growth as carefully as it does health, safety and environmental impacts, a commitment enshrined in an executive order signed by the president earlier this year.

House Republicans say the administration is engaged in a spasm of rule-making that is retarding the nation’s economy and exacerbating persistently high unemployment. They have announced plans to review and repeal a catalog of environmental, labor and health care rules beginning this week.

Finding a middle ground is difficult, especially in the midst of heated political wrangling over how to cope with the sputtering economy. Businesses are focusing almost entirely on the costs. Environmental groups, meanwhile, tally up the benefits without paying much heed to the costs.

“My view is that the Republican claim that ‘job-killing regulation’ is a redundancy is as ridiculous as the left-wing view that ‘job-killing regulation’ is an oxymoron,” said Cass Sunstein, head of the White House Office of Information and Regulatory Affairs. “Both are silly political claims that have no place in a serious discussion.”

You think Sunstein cleared that remark with Daley? Maybe Daley wrote it for him. Those are the kinds of people Obama has chosen to surround himself with. Remember, he's the senator who picked Joe Lieberman as his mentor right after being elected. At one time he tried for a little balance and actually picked a few progressives here and there. Almost all of them are long gone from his disappointing administration.

Like former Clinton Labor Secretary Robert Reich, who was an early adviser, one who was obviously ignored. Sunday Reich posted (and published in the NY Times) a very different kind of analysis about what ails America, which corporate shill and former bankster Bill Daley would never be able to comprehend.

The 5 percent of Americans with the highest incomes now account for 37 percent of all consumer purchases, according to the latest research from Moody’s Analytics. That should come as no surprise. Our society has become more and more unequal.

When so much income goes to the top, the middle class doesn’t have enough purchasing power to keep the economy going without sinking ever more deeply into debt-- which, as we’ve seen, ends badly. An economy so dependent on the spending of a few is also prone to great booms and busts. The rich splurge and speculate when their savings are doing well. But when the values of their assets tumble, they pull back. That can lead to wild gyrations. Sound familiar?

The economy won’t really bounce back until America’s surge toward inequality is reversed. Even if by some miracle President Obama gets support for a second big stimulus while Ben S. Bernanke’s Fed keeps interest rates near zero, neither will do the trick without a middle class capable of spending. Pump-priming works only when a well contains enough water.

Look back over the last hundred years and you’ll see the pattern. During periods when the very rich took home a much smaller proportion of total income-- as in the Great Prosperity between 1947 and 1977-- the nation as a whole grew faster and median wages surged. We created a virtuous cycle in which an ever growing middle class had the ability to consume more goods and services, which created more and better jobs, thereby stoking demand. The rising tide did in fact lift all boats.

During periods when the very rich took home a larger proportion-- as between 1918 and 1933, and in the Great Regression from 1981 to the present day-- growth slowed, median wages stagnated and we suffered giant downturns. It’s no mere coincidence that over the last century the top earners’ share of the nation’s total income peaked in 1928 and 2007-- the two years just preceding the biggest downturns.

Starting in the late 1970s, the middle class began to weaken. Although productivity continued to grow and the economy continued to expand, wages began flattening in the 1970s because new technologies-- container ships, satellite communications, eventually computers and the Internet-- started to undermine any American job that could be automated or done more cheaply abroad. The same technologies bestowed ever larger rewards on people who could use them to innovate and solve problems. Some were product entrepreneurs; a growing number were financial entrepreneurs. The pay of graduates of prestigious colleges and M.B.A. programs-- the “talent” who reached the pinnacles of power in executive suites and on Wall Street-- soared.

The middle class nonetheless continued to spend, at first enabled by the flow of women into the work force. (In the 1960s only 12 percent of married women with young children were working for pay; by the late 1990s, 55 percent were.) When that way of life stopped generating enough income, Americans went deeper into debt. From the late 1990s to 2007, the typical household debt grew by a third. As long as housing values continued to rise it seemed a painless way to get additional money.

Eventually, of course, the bubble burst. That ended the middle class’s remarkable ability to keep spending in the face of near stagnant wages. The puzzle is why so little has been done in the last 40 years to help deal with the subversion of the economic power of the middle class. With the continued gains from economic growth, the nation could have enabled more people to become problem solvers and innovators — through early childhood education, better public schools, expanded access to higher education and more efficient public transportation.

We might have enlarged safety nets-- by having unemployment insurance cover part-time work, by giving transition assistance to move to new jobs in new locations, by creating insurance for communities that lost a major employer. And we could have made Medicare available to anyone.
Big companies could have been required to pay severance to American workers they let go and train them for new jobs. The minimum wage could have been pegged at half the median wage, and we could have insisted that the foreign nations we trade with do the same, so that all citizens could share in gains from trade.

We could have raised taxes on the rich and cut them for poorer Americans.

But starting in the late 1970s, and with increasing fervor over the next three decades, government did just the opposite. It deregulated and privatized. It cut spending on infrastructure as a percentage of the national economy and shifted more of the costs of public higher education to families. It shredded safety nets. (Only 27 percent of the unemployed are covered by unemployment insurance.) And it allowed companies to bust unions and threaten employees who tried to organize. Fewer than 8 percent of private-sector workers are unionized.

More generally, it stood by as big American companies became global companies with no more loyalty to the United States than a GPS satellite. Meanwhile, the top income tax rate was halved to 35 percent and many of the nation’s richest were allowed to treat their income as capital gains subject to no more than 15 percent tax. Inheritance taxes that affected only the topmost 1.5 percent of earners were sliced. Yet at the same time sales and payroll taxes-- both taking a bigger chunk out of modest paychecks-- were increased.

Most telling of all, Washington deregulated Wall Street while insuring it against major losses. In so doing, it allowed finance-- which until then had been the servant of American industry-- to become its master, demanding short-term profits over long-term growth and raking in an ever larger portion of the nation’s profits. By 2007, financial companies accounted for over 40 percent of American corporate profits and almost as great a percentage of pay, up from 10 percent during the Great Prosperity.

Some say the regressive lurch occurred because Americans lost confidence in government. But this argument has cause and effect backward. The tax revolts that thundered across America starting in the late 1970s were not so much ideological revolts against government-- Americans still wanted all the government services they had before, and then some-- as against paying more taxes on incomes that had stagnated. Inevitably, government services deteriorated and government deficits exploded, confirming the public’s growing cynicism about government’s doing anything right.

...The real reason for America’s Great Regression was political. As income and wealth became more concentrated in fewer hands, American politics reverted to what Marriner S. Eccles, a former chairman of the Federal Reserve, described in the 1920s, when people “with great economic power had an undue influence in making the rules of the economic game.” With hefty campaign contributions and platoons of lobbyists and public relations spinners, America’s executive class has gained lower tax rates while resisting reforms that would spread the gains from growth.

Yet the rich are now being bitten by their own success. Those at the top would be better off with a smaller share of a rapidly growing economy than a large share of one that’s almost dead in the water.

The economy cannot possibly get out of its current doldrums without a strategy to revive the purchasing power of America’s vast middle class. The spending of the richest 5 percent alone will not lead to a virtuous cycle of more jobs and higher living standards. Nor can we rely on exports to fill the gap. It is impossible for every large economy, including the United States, to become a net exporter.

Reviving the middle class requires that we reverse the nation’s decades-long trend toward widening inequality. This is possible notwithstanding the political power of the executive class. So many people are now being hit by job losses, sagging incomes and declining home values that Americans could be mobilized.

The candidates Blue America is endorsing for Congress are people we believe will work to mobilize Americans in just the way Reich is suggesting. We hope you'll help them win election. The ultimate alternative is clear: fascism.