Lessons of the Obama Debacle
By Walden Bello, October 10, 2010
Foreign Policy In Focus
"....Obama’s first mistake was to take responsibility for the economic crisis. In his quixotic quest for a bipartisan solution, he made George W. Bush’s problem his own. Margaret Thatcher and Ronald Reagan never made this mistake. They took no responsibility for the economic problems of the 1970s, heaping the blame entirely on their liberal predecessors and eschewing any bipartisan alliance with those they considered their ideological enemies. Roosevelt, too, slammed – and slammed hard –his ideological foes, those he termed “economic royalists.”….Insofar as Obama and his lieutenants identified villains, this was Wall Street. Yet saying the financial elite brought on the crisis, while bailing out key Wall Street financial institutions such as Citigroup and AIG on the grounds that they were “to big to fail,” involved Obama in a terrible contradiction. The least that he could have done was to remove the existing boards and top managers of these organizations as a condition for government funds. Instead, unlike the case of General Motors, the top dogs stayed on board and continued to collect sky-high bonuses to boot. The strong sense of disconnect between word and deed was exacerbated rather than alleviated by the Democrats’ financial reform. The measure did not have the minimum conditions for a reform with real teeth: the banning of derivatives, a Glass-Steagall provision preventing commercial banks from doubling as investment banks; the imposition of a financial transactions tax or Tobin tax; and a strong lid on executive pay, bonuses, and stock options….Third, Obama had a tremendous opportunity to educate and mobilize people against the neoliberal or market fundamentalist approach that deregulated the financial sector and caused the crisis. Although Obama did allude to unregulated financial markets as the key problem during the campaign, he refrained from demonizing neoliberalism after he took office, thus presenting an ideological vacuum that the resurgent neoliberals did not hesitate to fill. No doubt he failed to launch a full-scale ideological offensive because his key lieutenants for economic policy, National Economic Council head Larry Summers and Treasury Secretary Tim Geithner, had not broken with neoliberal thinking….Fourth, the stimulus package of $787 billion was simply too small to bring down or hold the line on unemployment. Here, Obama cannot say he lacked good advice. Paul Krugman, the Nobel laureate, and a whole host of Keynesian economists were telling him this from the very start.…"
http://www.fpif.org/articles/lessons_of_the_obama_debacle
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