Politics 101, Economics Edition

(warning: lengthy, Socratic-ish discourse ahead):

photo of Michael Douglas from 'Wall Street'
Damn It Feels Good To Be A Banker

Over at POLITICO, we learn that Wall Street intends to turn the full wrath of it’s newly-increased, post-Citizens United and SuperPAC strength, against President Obama this year. Expect a veritable blizzard of deceptive, negative advertising.

The usual suspects will, no doubt, tout this as proof positive that claims of Obama being friendly to Wall Street are – and always were – simply wrong at best, and more likely the malicious fabrications of angry liberals (yeah, I know, but this is what these folks really think) who, in Robert Gibbs’ notorious phrasing, would’ve preferred a President Kucinich (but wouldn’t even have been satisfied with that). But the reality is far simpler.

It isn’t that the POLITICO piece is wrong – because I doubt it is. The Center for Responsive Politics does excellent work, and there’s no reason nor evidence to suspect they’re wrong when they say that Wall Street’s number one priority this election cycle will be to defeat President Obama (followed closely by various vulnerable Democratic legislators the bankers perceive as openly hostile to their interests). The fact, outlined in the article, that “Obama has raised just $5.1 million from the finance, insurance and real estate sectors so far this cycle compared with $12.4 million for Mitt Romney’s campaign” ought to be enough to convince anyone where Wall Street’s sympathies lie this time out.

Instead, what’s incorrect is the facile assumption that because Wall Street is backing Mitt Romney over Obama, it must be due to the fact that Obama has been in practice some kind of crusading Occupy Wall Street 99%er. Even a casual glance at the record of evidence amassed over the past three-plus years disproves this notion easily. What such a glance reveals is an administration at least as concerned with reducing the deficit immediately as it is in putting Americans back to work or reducing their suffering on the mortgage/housing bubble front. Such a glance shows an administration whose actions – if not always their words – reveals their belief that a healthy finance sector equals (or at least will lead to) an equally healthy America for the rest of us. Such a glance shows an administration all-too-willing to hold-over Bush-era appointees in key financial positions, and to refuse to use the power of the executive to appoint desperately needed, pro-consumer/citizen heads of its own to departments and other key positions (DeMarco, at FHFA, is perhaps the most-visible of these).

These are not the actions of an administration which is hostile to Wall Street, despite early, occasional rhetoric about “fat cat” bankers (which nonetheless generated an immediate, intense and sustained pout-storm from the Wall Street crowd). They’re the actions of an administration which turned out in practice to be considerably more conservative, financially, than not just the Kucinich-for-Prez DFHs suspected (or are comfortable with), but than most of those same ‘usual suspects’ who are now so eager to defend the President from perceived liberal attacks are really comfortable with, too.

That’s why perhaps the most-ubiquitous fallback attempt to explain the puzzling disconnect between Obama’s campaign-trail rhetoric (especially in ’08, but also beginning to ramp up again now) and the reality of many of the seemingly-inexplicable real-world actions and choices by the administration, is what wags have dubbed the “eleventy-dimensional chess” explanation. I don’t remember who on the Obama-fan side coined the term, but it was originally put that while his opponents (both the GOP and within the Democratic party) were playing checkers, Obama was playing 3-D chess. Essentially, Obama fans assert that when a given set of actions by the President or administration appears to a relatively rigorous critical analysis that the President is falling significantly short, not just of being a liberal lion, but even of behaving like a standard-issue Democrat, their explanation for it is that he’s “smarter” than his critics, the press, the GOP and virtually everyone (except, they insinuate, themselves…since, after all, THEY are the one pointing it out). They claim we (read: everyone else) simply cannot SEE the multi-dimensional brilliance upon which Obama’s actions are always based, and which can only be appreciated fully as they truly are when viewed through this same lens.

It’s quite convenient, I must say: whenever the Obama team racks up a victory, Obama fans can nod their heads and chuckle sagely, as if to say “see, we told you so…we knew it all along.” And when the President does something like summon Wall Street executives and tell them “I’m the only thing standing between you and the pitchforks,” Obama fans can simply shrug it off as “maneuvering” in the never-ending game of eleventy-dimensional chess (which, of course, the President will ultimately win).

To be fair to both President Obama and the most, ah, zealous of his fans, it’s undeniable, especially lately, that President Obama has not given Wall Street or the bankers everything on their wish list. The recent recess-appointment of Richard Cordray to head the CFPB was an unambiguously pro-consumer, even populist, move. It was the right thing to do, and Obama did it (though not before passing over Elizabeth Warren who could have been recess-appointed just as easily to head the bureau she conceived and created). Beginning with the “Osawatomie Speech,” Obama’s handler’s have also ramped up the populist rhetoric, as well, which I’m sure pleases the bankers not one jot. But is this cause…or is it effect? In other words: do the bankers not like Obama because he’s acting in a pro-consumer way to limit their power and make them accountable in some areas? Or is Obama doing these things because he and his team have finally, within the last year or so, truly grasped the concept of how impossible “bipartisanship” is with this GOP, and how obstructionist and inflexible both they and the financial community are? And what are we to make of this new POLITICO article which details how Wall Street has become disenchanted with President Obama and is now backing Mitt Romney?

Not much, I would say. Certainly, it such news doesn’t “prove” the case of the most-fervent Obama fans, that the President is not now and has never been friendly to the banks, Wall Street, or the financial industry in general. When investigating crimes, the police tend to operate under the working assumption that the correct explanation for something is usually the readily apparent one: if you see a given crime scene, and a casual glance at the facts and the scene lends itself to the hunch that the woman’s husband killed her, you’re going to discover you’re right. Far, FAR less often will it be a case where the husband was framed because there was a secret inheritance no one knew about which was vested in the wife AND her long-lost half-brother who’d secretly been in love with her all these years….you get the point. It’s important not to substitute one’s assumptions for fact, but the reason conspiracy theorists and the most fervently religious can come off sounding both kooky and rabid is because they violate the “what’s most likely” approach to solving problems too systematically in pursuit of what they just KNOW to be true. In this regard, the similarities to the “Obama’s smarter than you,” eleventy-dimensional chess explanations of the most-zealous of Obama fans are unmistakable.

Wall Street and the bankers got a good deal of what they wanted – but not everything – out of Obama. They got no serious investigation of financial fraud (culminating in the just-released, fishy-as-hell mortgage settlement) during the housing bubble, they got no cramdown provisions in any of the legislation proposed or pushed by the administration. In short: they got their money’s worth for having backed Obama handsomely in the 2008 electoral cycle. I’m not suggesting there was any quid-pro-quo involved. Rather, I think it was simply a matter of recognizing in Obama a man with a temperament and disposition towards their industry which was fundamentally in support, someone with whom they believed could do business, just as they had with Rahm Emanuel and a host of other corporate-friendly, “new” Democrats. Perhaps they believed such a thing because of the administration’s willingness to gather to itself those same people – like Emanual – and keep on board others who had their roots in the bubble-causing Bush years.

What changed, in the intervening few years? Two things. The first thing, which many people not on the team Obama assembled for the first term could have predicted (and DID predict), was that contrary to what it appears Team Obama believed, making the banks healthy again didn’t lift all boats. They didn’t start lending again. Businesses didn’t start hiring. The unemployment crisis dragged on much longer and more-severely than the administration figured (their early-on predictions of lowered unemployment is famously trotted out to this day by right-wingers who use it unironically as evidence of Obama’s disconnect with reality, or his incompetence, or whatever). Thus, when having said the “green shoots” rhetoric a little too early came back to bite the administration in the butt as the economy remained mired for most Americans not in the financial sector, the Obama team began to make noises like the aforementioned “fat cats” speech, in December 2009. This showed Wall Street that perhaps the man they’d counted on might not be as simpatico with their interests – or as reliable – as they previously thought.

The Obama administration spent most of the next eighteen months – until sometime last fall – in a sort of uncomfortable internal and external triangulation between a genuine desire to help the public, a growing realization that a re-election campaign (as opposed to an insurgent one) must run at least in part on its record of accomplishments (if it chooses not to, the opposition will force it to), and the still-present belief that bipartisanship and compromise (both with the banks and with the GOP) was possible and desirable (see: Bargain, Grand). The result was a kind of push-me-pull-you incoherence which saw the administration lurching from declaring the bankers “fat cats” one day to furtive, closed-door meetings with those same high-profile, high-dollar bankers the next, to assure them the administration would not “demonize” them – meetings the like of which continue to this day, by the way.

But then the second thing happened: Occupy Wall Street happened. In retrospect, the moment had been ripe for such a thing for literally a couple of years. Ever since the gut-wrenching crash of 2008 and the evaporation of trillions of dollars worth of homeowners’ equity brought about by the predatory lending and dubious accounting of the bankers, in fact. Things are often a lot easier to see in hindsight, of course, than they are in real time; movements and events seem self-evident in retrospect that nonetheless came as something of a shock at the time. But even understanding that dynamic, it seems clear now that something like Occupy Wall Street HAD to happen. The country simply wasn’t going to be able to pick up and move on from the worst financial crisis since the Great Depression without having the kind of landscape-changing conversations and initiatives which that crash brought about in the American way of doing business and thinking about such things.

Since the Occupy movement, one other thing has happened, too (though this one was already on everyone’s calendar): “The Re-Elect,” (as Obama insiders have been calling it for almost a year now privately) began in earnest. Although most of the oxygen in the room, for now, is still being taken up by the gaudy (and undeniably carnival-like) atmosphere of the GOP primary season, that will begin to change, as early as spring. Make no mistake, the campaign has been well and truly engaged for the President’s team, too. They are, and have been for some time, laying the groundwork for the inevitable clash of candidates, values and goals that’s to come with whomever the eventual Republican nominee is. And the rise of these preparations for this fall’s election began seriously – coincidentally – just as the Occupy movement was first making itself felt.

What would this past fall and winter, to say nothing of the upcoming campaign, have looked like without the rise of the Occupy movement? It’s impossible to say with certainty now, because the Occupy movement has forced the “players” to discuss ITS issues – like income and wealth inequality – in a way that it’s clear the GOP never would have bothered doing had it not been for Occupy. In the absence of the Occupy movement, the GOP would likely have done what they’ve done so consistently – and to such great effect – in recent years: they’d have ex-communicated the specific players who were responsible for the past mess (George W. Bush, you’ll have noticed, is NEVER mentioned in GOP Presidential circles today), then they’d have turned right around doubled-down on failed policies employed by those now-ex-communicated figures, and then dared the Democrats (including the President) to do or say anything about it. It’s worked in the past, even in the wake of the 2008 crash. An onlooker might easily have come to the conclusion that there’s no way the banker/trickle-down/GOP ideology could have withstood the crushing blows dealt to it, not by its opposition, but by reality itself in the form of the cataclysmic failure of those ideas in practice during the crash. In a well-functioning political and media system, they’d be right: the 2008 crash should have permanently discredited much of the GOP’s fiscal and monetary ideology. We don’t live in such a system, unfortunately. Even so, had the GOP and/or the bankers any shame or were at all they willing to put people above party (in the GOP’s case) or profits (in the bankers’ case), such a guess would’ve been right.

But it’s been clear for some time now that Wall Street ALWAYS wants more, period. We need no longer even ask; it’s simply always true. If they can get more, they will take it, no matter what damage they do in the process. When a guy like Lloyd Blankfein, CEO of the most powerful investment bank in the country, says with a straight face  in October 2009, a bare year since his industry crashed the US economy, that he believes he’s “doing God’s work,” a reasonable reader has to at least allow for the possibility that he really means it. Blankfein is too smart a businessman to say something intentionally provocative if there’s no business upside to it, something said simply as a tweak to perceived opponents/enemies. No, these guys really do embody and believe in the Gordon Gekko “greed is good” ethos.

As for the GOP, they’ve learned that simply bald-facing it tends to work on most of today’s Democrats. After forty years of concentrated party, infrastructure and message-building by the GOP, they’ve produced a unified message machine which is so consistent and relentless that it’s had Democrats running scared since the middle of the Reagan years. Like a beaten puppy, Republicans in Washington have only to raise the rolled-up newspaper of “tax-and-spend-liberal,” and the average DLC-weaned Democrat of today slinks off and drops whatever (s)he was holding, be it workers’ rights, maintenance of the social safety net, whatever. Just please don’t hit me again, Mr. Republican; please let me keep my seat. I’ll be good. No more of that “equality” talk; we’ll play by your rules.

In the face of that kind of opposition, it’s quite easy to see there’s no downside for the GOP in simply continuing the all-out, obstructionist attack and advancement of their agenda, no matter how severe the blows are which reality deals it. Why bother admitting fault? Just refuse to speak of it and the opposition will be both too timid and too well-bred to do anything so gauche as to actually CALL you on it, or anything. From a purely tactical perspective, the unwavering GOP approach makes sense. It’s WORKING, for crying out loud (more or less): why mess with it?

Occupy changed all that. It put both parties back on their heels a bit; the Republicans because they weren’t used to people standing up for their rights in quite so unified a fashion, and the Democrats because, well, they weren’t either. To be fair, some of the fault for modern Democrats’ instinctual timidity and tepidness can be laid at the feet of the liberal rank and file: we haven’t been as good at organizing and acting in concert as have our counterparts on the right. I’d argue that’s largely due to our comparative lack of a natural affinity for the authoritarian, “fall-in-line” mindset which the GOP employ to such great effect every election, but that’s a story for another post. What’s important is that, for the first time in most people’s political memory, this was something new on the left. The ideas themselves may not have been fresh out of the cabbage patch (indeed, many of the basic motivations, like equality, fairness, and compassion are as old as the hills), but what WAS new – at least on the modern US left – was the singularity of determination, as well as some of the tactics. This was for real. The conversation this country SHOULD have had in 2008 after the crash, after the election of Barack Obama, we were robbed of due to (I would argue) inexperience, a reflexive desire for compromise (or at least relative harmony) and a lingering belief in Coolidge’s dictum that the business of America is business; that saving the financial sector meant, if not immediately and directly, at least eventually, saving the rest of the country. Occupy, on its own, forced us all to begin having that conversation in earnest.

That’s last fall, right around the time “The Re-Elect” begins. And what is the result? The Obama administration, buffeted by two years of complete intransigence from the GOP and whining from the finance sector (despite having gotten much though not all of what they wanted), starts putting forward items like the American Jobs Act. The President starts very consciously and conspicuously channeling Teddy Roosevelt and taking a harder line against both the bankers AND the GOP. Operating under the still-mostly-valid assumption that the eventual GOP nominee this year is likely to be Mitt “Thurston Howell III” Romney, the literal living embodiment of the o.1%, the Obama team – as they shifted back into campaign mode – remembered that it was a wave of sentiment about things having to change which propelled them to their current position the first time around. They know this wave, this sentiment – they rode it quite effectively back in 2007 and 2008. And now, after a frustrating two and a half years, that same wave seems to be rising from the ocean floor of public discontent again, just at the right time. And, overnight, the public-facing rhetoric and actions become much less Rodney King (“can’t we all just get along”) and much more FDR (“they are unanimous in their hatred of me, and I welcome their hatred!”).

Let’s be clear here: Obama is never going to be FDR – his temperament and political instincts simply do not allow for that possibility – and he was never really Rodney King, either, taking his lumps and then just blandly hoping the whole thing would go away and somehow inexplicably end in world peace. The reality is somewhere in the middle, as it almost always is. But it’s important to recognize that pre-election Obama was much more FDR (“fundamental transformation”), post-election Obama was much more Rodney King, and now, with another election looming and the reality of a genuine people-powered movement on the left emerging to force items onto the agenda, pre-election Obama sounds (as he did in 07-08) much more like FDR again.

Good. I’ll take it…without for a moment assuming that any given proclamation is a reflection of what Obama’s true intentions are. One thing everyone will agree on is that Obama is a relatively skilled politician; he’s no ranting ideologue. And we’ve had a look at the specific gap in Obama’s case between campaign rhetoric and governing persuasion, so we go into this season understanding that it would be foolish to assume any of the seemingly-newfound (or at least not seen since late 2008) populist rhetoric from the Obama campaign/administration means what it would mean if any of us said it. But, just as FDR once famously told a group of activists “you’ve convinced me. I want to do it. Now go out and MAKE me do it,” I have hope that the Occupy movement will function as exactly that for Obama over not only the course of this election cycle (forcing him to the populist left on issues), but also into his next term (making sure he follows through).

To bring it full circle, back to our “friends” over on Wall Street, what I’ve just described – Obama realizing that moving to embrace many of the populist themes of Occupy Wall Street is his best chance for re-election – is obviously a big part of the reason why they’ve moved away from Obama recently. But it’s not even the biggest piece. The bottom line, this election cycle, is this: in Mitt Romney, the financial industry recognizes one of their own, literally. Romney, as everyone already knows, headed Bain Capital, a private-equity group which is exactly the kind of firm at the center of the Occupy movement’s critique of what’s wrong in America. For Obama, that leaves him very few places to go: he can  either continue on his sort of “split-the-difference” attempt to woo both powerful Wall Street figures while also trying to re-tread the “hope and change” theme of the campaign last time (which is likely to correctly be seen as insincere and therefore ultimately probably not successful), or he can embrace at least partially the genuine spirit of Occupy. With the recent appointment of Cordray, the Kansas speech and a few other moves, it’s clear the Obama team knows which side of their ballot is buttered. But for Wall Street, even without such moves by the Obama team towards the themes of Occupy, the choices is, if anything, even more clear. They literally have a chance to elect one of their own, a man Rachel Maddow pointed out recently is worth more than twice the net worth of the last eight presidents combined. Keeping that fact in mind, the fact that Wall Street is, in droves, shifting their contributions into the Romney coffers and away from Obama is very easy indeed to understand. It’s a function of simple self-interest, of return on investment, and not a reflection – despite what you may (no, will) hear from the quarters of the Obama fans – a function of Obama’s triumphant brilliance in advocating for the people over the interests of the bankers over the last three-plus years. Obama’s made some good moves in that time, as well as a few genuine clinkers, and even the occasional truly awful decision/cave/illiberal choice. About like many Democratic Presidents had, by the closing of their first term.

If the GOP and Wall Street represent largely the interests of private wealth and privilege, and the Democratic party (at least on principle) represents progress and the interests of the people (the 99%, anyway), Obama’s actual record has not been squarely in the latter camp to the exclusion of the former. But the Occupy movement is pushing him more in that direction, and whether they’re pushing him more towards what he has wanted to do all along but felt constrained by an obstructionist opposition and weak congressional support from his own party from doing, or whether they’re merely using leverage to get him to do something he’d otherwise not be inclined to do on his own, is mostly immaterial. Whatever the case, it’s clear that’s what’s happening. And whether that seemingly-newfound populist tone subsides in practice after his re-election will also be up to us – to the Occupy movement. What isn’t true and never has been true is the caricatures of Obama which the entrenched have tried to foist upon the public understanding of him. The GOP, in their ongoing primary races against him, are running against an Obama that simply doesn’t exist: a Kenyan-born, tax-raising, gun-hating Keynesian experimenting Marx-disciple. I wouldn’t vote for THAT guy, either, frankly – he sounds dangerous. Fortunately, he also doesn’t exist. But neither does the Obama exist who his fans consistently describe: the Obama who’s always three steps ahead of everyone else (save for the Obama fans themselves), a guy who never SAID he was a progressive, never promised you a rose garden during 2008, but who is nonetheless the craftiest and most effective progressive of the last eighty years – maybe ever…a guy who who consistently achieves everything on the progressive agenda that’s realistically possible to achieve, and who only fails to achieve that which was either a) unachievable by anyone, or b) a ridiculous fantasy that no sensible person (let alone a President) should strive for anyway.

Both those fantasy-strawmen versions of Obama do not exist and never have. For us here on the left, it’s easy to recognize the strawman-caricature of the right wing version – and, to be fair, that version IS far more cartoonishly-drawn. But just as nonexistent is the version of Obama confected by those in his camp of fans who believe, in Nixonian fashion, that if THIS President does it, it is NOT wrong, and, indeed, is the best of all possible outcomes. The more nimble-minded of these will pepper their public apologia with disclaimers like “of course Obama isn’t perfect,” and “I have my share of disagreements with Obama, too,” but their leanings as true believers are revealed when one notices how rarely – if ever – their words ever contain any actual, real-world instances where they’ve disagreed substantively or found flaw with Obama.

For the rest of that vast bulk of us here on the left – and even in the independent camp – who are neither rabid Republicans or 0.1%ers nor “my President, wrong or right” die-hard Obama fans, the goal is simple, and it remains what it always has been: just keep watching what the reality of the actions add up to be, actions by the bankers, the GOP AND President Obama and congressional Democrats. If we insist first upon an accurate picture of the players and the playing field, and further insist upon a political class which takes the needs of the people seriously to heart, we will begin to see results increasingly often. Obama isn’t the enemy…but he isn’t our best friend or our boyfriend, either (depending). He’s a politician, and like all politicians, he needs to be pushed and prodded to stay on the straight and narrow and remember who his real allies are. Occupy came along at precisely the right moment to begin to do that as we head into campaign season. Let’s keep up the pressure on all fronts, and we will see progress. Let up, and who knows what we will see.