Newsweek: Why President Obama is no FDR - and the economy is still in the doldrums

[Better Believe It]

(edited for copyright purposes-proud patriot Moderator Democratic Underground)



Obama’s Old Deal
Why the 44th president is no FDR—and the economy is still in the doldrums.
by Michael Hirsh
August 29, 2010

He had arrived in office perceived by some as the second coming of Franklin Delano Roosevelt. Yet Obama hadn’t acted much like FDR in the ensuing months. Instead he had faithfully channeled Summers and Geithner and their conservative approach to stimulus and reform. Early on, Obama’s two key economic officials had argued down Christina Romer, the new chairwoman of the Council of Economic Advisers, when she suggested a massive $1.2 trillion stimulus to make up for the collapse of private demand. They opted for slightly less than $800 billion. “We believe that this is a properly sized approach to move the economy forward,” said Summers, who didn’t want to expand the federal deficit or worry the bond market. With the recession still darkening their outlook, Summers and Geithner also didn’t want to tamper too much with what they still saw as the economy’s engine room: Wall Street. Partly on their advice, the president “explicitly decided not to break up all big financial institutions,” said another top economic adviser, Austan Goolsbee.

After his first year, Obama felt he had done well overall on the economy. Helped by Fed chairman Bernanke, his administration had brought the financial system back from the abyss—from another Great Depression, in effect—by shoring up the banks with hundreds of billions in new bailouts. The administration also pushed for a broad array of reforms. The giant bill Obama signed early in the summer of 2010 brought trillions of dollars in “dark” trading in over-the-counter derivatives into the open. It created new, tough watchdogs for credit-card and mortgage companies, as well as banks. It gave the government new powers to liquidate failing financial firms rather than bail them out.

The president proudly called the new law “the toughest financial reform since the one we created in the aftermath of the Great Depression.” What Obama left unsaid was that his administration had argued against many of the toughest amendments in the bill. And Wall Street, in the end, didn’t complain about it all that much. The biggest firms knew that much of what their powerful lobbyists had failed to block or water down in the bill could be taken care of later on. They’d still be able to influence the vast set of rules on capital, leverage, and other financial issues that would be written by regulators. Led by Summers and Geithner, Obama’s economic team resisted almost every structural change to Wall Street—in particular, Volcker’s plan (initially) and Arkansas Sen. Blanche Lincoln’s idea to bar banks from swaps trading. The administration’s program for getting underwater mortgage holders out of trouble was also criticized as too modest. Obama’s team accepted “too many givens,” says a former senior career Fed official who asked to remain anonymous so as not to offend his former colleagues. Obama’s effort “certainly wasn’t like FDR’s because reform wasn’t driven by the White House,” says Michael Greenberger, a former senior regulator who did much to shape derivatives legislation behind the scenes. “If anything, during most of the journey the White House was a problem and Treasury was a problem.”

The worst economic downturn since the Great Depression hadn’t occurred just because of a simple crash. An entire era had overreached—the markets-are-always-good, government-is-always-bad zeitgeist that defined the post–Cold War period. The very idea of government regulation and oversight had become heresy during this epoch. Washington policymakers came to ignore the key differences between financial and other markets, differences that economists had known about for hundreds of years.

Please read the full article at:

http://www.newsweek.com/2010/08/29/how-obama-got-rolled-by-wall-street.html

[Ramulux]

1. Nailed it

Wow, Newsweek actually acknowledging the most obvious thing in the world. Glad at least someone in the mainstream press understands this.

[Better Believe It]

2. Right. The writer didn't claim Obama is some sort of left-leaning progressive or socialist!

Not if he wants any credibility.

:)

[Drale]

3. to be truthful

There will never be another president like FDR, he was one of a kind man and a one of a kind president.

[Better Believe It]

5. Obama has/had the opportunity to be a great and more effective history making President.

One that would turn this nation around.

One that future Presidents would be compared to.

[craigmatic]

4. Sounds bad. Wall Street won agan. The thing that pisses me off about this

is that the administration didn't have to do wall street's bidding or take their campaign donations they were good without that. It looks like Obama's cautious nature has hurt his and the party's chances in the long term.

[glitch]

7. Who knows.

They didn't have to if this were a democracy and they could rely on the people, their votes accurately counted.

With corporate-run elections we can no longer assume that.

[Poboy]

8. Nevermind 'him' or 'the party', he fucked us (the people) over big time.

...and something tells me he'll be just fine...just fine. I'm thinking maybe he'll join Tony Blair in the Carlyle Group after all this.

[TheMuse]

6. This has been my biggest disappointment

The moment when Candidate Obama transformed into the Corporatist President Obama. It may or may not be who he really is, but he has surrounded himself with those types of people. If only he had listened to Volker instead, who knows what we would be looking at in the midterms and beyond.

Sigh.

[Better Believe It]

9. President Obama's comments today on creating millions of jobs.

President Obama said in his speech today:

"Our most urgent task is to restore our economy, and put the millions of Americans who have lost their jobs back to work. To strengthen our middle class, we must give all our children the education they deserve, and all our workers the skills that they need to compete in a global economy. We must jumpstart industries that create jobs, and end our dependence on foreign oil. We must unleash the innovation that allows new products to roll off our assembly lines, and nurture the ideas that spring from our entrepreneurs. This will be difficult. But in the days to come, it must be our central mission as a people, and my central responsibility as President."

And exactly how do you propose to do that Mr. President?

What's the plan and how do you intend to mobilize the public behind your plan, if you have one?

[nashville_brook]

11. "end our dependence on foreign oil" is code for "more US drilling"

[Better Believe It]

12. Most of the oil extracted from Alaska is sold in Asia.

[nashville_brook]

13. eggsactly! the whole meme is a lie.

rachel did such a good job of unpacking this when the BP disaster first hit. i need to find a link to the piece she did.

[Barack2theFuture]

10. On the economy, he's not even *Teddy* Roosevelt.

Opportunity knocked . . .