IN 2008, Barack Obama ran as the candidate of “hope” and “change.” Today, he’s fighting to keep his job against the openly plutocratic Republican ticket of Mitt Romney and Paul Ryan. In excerpts from the revised and updated edition of his book The Democrats: A Critical History (Haymarket Books, June 2012), ISR editorial board member LANCE SELFA explains how Obama and the Democrats dashed the hopes of millions and set the stage for the Right’s political comeback.

ON THE eve of President Barack Obama’s inauguration in January 2009, his popularity reached 80 percent. Large numbers of Americans had high expectations for his administration. A USA Today/Gallup poll found “stratospheric expectations for the incoming president that his own supporters acknowledge may be unrealistic. A majority of those surveyed say Obama will be able to achieve every one of ten major campaign promises, from doubling the production of alternative energy to ensuring that all children have health insurance coverage.”¹ The poll showed that seven in ten people believed the country would be better off after Obama’s first term. After two straight national elections in which the Republicans took a beating, the largest Democratic majority since the 1970s looked set to shift American mainstream politics away from three decades of conservative domination. The American Right looked small, irrelevant to the concerns of most Americans, and appeared ready to spend years in the political “wilderness.”

Two years later, the formerly discredited and out-of-touch Republican Party scored a historic landslide in the 2010 midterm election. In the largest congressional midterm shift since 1938, the Republicans captured sixty-three seats, ending the four-year Democratic majority in the House of Representatives. As expected, the GOP failed to gain the US Senate. But that was the only consolation for the Democrats. The Republican sweep was so broad that the GOP took control of twenty-nine governorships, nineteen state legislatures outright, and the largest percentage of state legislative seats since 1928.² Ironically as a result of the worst recession since the Great Depression, the Republicans emerged from the 2010 election with more power at the state level than they had held since before the Black Friday crash of 1929.

As the 2012 election season got underway, national polls gave Obama at best an even-money chance of winning reelection. But even if he did manage to best the GOP, he was likely to end up with a Republican Congress dedicated to thwarting his policies. In sum, Barack Obama—the first African American president, elected in 2008 with the largest Democratic vote since 1964—faced the real prospect of joining Jimmy Carter, George H.W. Bush, and Herbert Hoover in the ranks of one-term failed presidents. This chapter aims to explain how Obama fell from the heights of 2008—when many liberals envisioned him leading an FDR-style reorientation of government—to become an incumbent fighting to keep his job.

The Obama era arrives
The election of Barack Obama in a November 2008 Democratic Party sweep was, to many, the main indication of the arrival of a new era in American politics. Obama’s election set off jubilant multiracial celebrations in cities across the country, as millions looked forward to seeing Obama and the Democrats’ promises to reverse George W. Bush’s disastrous reign fulfilled. The Obama-Biden ticket defeated the Republican McCain-Palin ticket by more than seven percentage points (52.9 percent to 45.6 percent) and by nearly ten million votes (69.5 million for Obama, 59.9 million for McCain). Obama became the first Democrat since Jimmy Carter, and only the second since Franklin Roosevelt, to win an outright majority (i.e., more than 50 percent of the electorate). The Democrats won states like Indiana, North Carolina, and Virginia that had been solidly GOP states for most of the last generation. At the same time, Obama arrived in Washington with the largest Democratic majority in the House of Representatives since 1992 and the largest Democratic majority in the Senate since 1977.

The Democrats’ win seemed to put an end to the type of politics that had dominated mainstream US elections for a generation. The Republicans’ emergence from the late 1960s as the main presidential party hinged on the “Southern strategy” of coded racist appeals that served to make the post–civil rights movement South the GOP’s base. This political appeal to opponents of the social change of the 1960s and 1970s merged with a revived free-market ideology that became the reigning orthodoxy of the last four decades. Perhaps there can be no greater repudiation of “Southern strategy” politics than the election of the first African American president. Although exit polls showed that McCain still won the majority of white voters, Obama did better among whites than any Democrat since Carter. As public opinion expert Andrew Kohut explained:

Obama did better among [whites] than Kerry by a modest three percentage points. However, when you unpack the white vote, you find that Obama made large gains among young whites, well-educated whites and affluent whites. . . . [W]hen we unpack the data further, we do find that the very least tolerant groups—older white working class voters and older white Southerners—gave McCain somewhat more support than they gave Bush 4 years ago.

In sum, race was certainly a factor in the vote, but on balance more of a positive than a negative for Obama. Black turnout (13% of the electorate) was considerably higher than it was in 2004 (11%). That 20% increase in black turnout is attributable to first-time voters. Overall, 19% of African American voters were first time voters compared with 8% of white voters who went to the polls for the first time. The increased turnout combined with the near universal support for Obama among black voters alone was responsible for adding a couple of percentage points to his overall popular vote take.³

Obama’s election coincided with the near-collapse of the neoliberal economic system, a fact that served to dislodge entrenched attitudes on a whole range of questions. For millions who were losing their jobs, their homes, and their retirement savings, the economic system had already undermined the mantras of deregulation, tax cuts, free trade, and marketization of everything that accompanied the neoliberalism of the last generation. What’s more, the fact that the conservative Bush administration took a number of what formerly would have been considered unthinkable actions—nationalizing the world’s largest insurance company, spending billions to buy stock in major banks, intervening to guarantee the security of money market accounts and the commercial paper market—put paid to the right wing’s knee-jerk praise of the free market and denigration of government intervention.

At the same time, the idea that “big government” is the problem, rather than part of a solution to the economic crisis, fell by the wayside. The exit polls showed that 51 percent of the voters said they wanted government “to do more” rather than less, and 76 percent of that group voted for Obama. In contrast, 43 percent thought that government was doing “too much,” and 71 percent of them voted for McCain. A Democracy Corps poll conducted after the 2008 election found that voters most consistently chose the more progressive of the two choices when they were given a “liberal” and a “conservative” description of a problem and solution on issues like trade, health care, and Social Security. When asked to list in order of priority, voters put ones like “repealing the Bush tax cuts” for the rich, providing affordable health care, and ending the war in Iraq at the top of their lists.

Despite the fact that the two parties of American business can be ideologically flexible, the contest between McCain and Obama also took on some ideological tones. Obama was fond of saying that his election would be the “final verdict” on a failed conservative philosophy. In his 2008 Democratic convention acceptance speech, Obama mocked the Republicans’ “ownership society” idea as a cover for telling working people that “you’re on your own.” On the other side, McCain tried to rally his base by warning against Obama’s “redistributionist” ideas—even calling Obama’s proposals “socialist.” McCain’s attacks on Obama, which were based on grotesque exaggerations and fabrications, still didn’t do him any good. When the votes were tallied—even in supposed “red” states like Indiana and North Carolina—it appeared that the public had chosen the “socialist” Obama over the tax-cutting, anti-redistributionist McCain.

On the eve of the inauguration, Obama’s popularity approached 80 percent, far outstripping equivalent numbers for the last two presidents. In addition to the backing of the majority of the public, Obama also had significant support from within the US ruling class to enact a program to stave off the economic crisis. The Wall Street Journal’s Gerald F. Seib observed:

One thing is certain: Traditional thinking about relations between a Democratic administration and the business community needs to be thrown out. This is a new era.

For starters, in many ways the government now is the business community, or at least a part of it. When the government is a direct stakeholder in the nation’s auto and financial industries, and is becoming the life-support system for the housing industry, it seems almost anachronistic to talk about a divide between government and business.⁴

American business largely supported Obama’s proposed $800 billion stimulus package, and significant players in the financial industry support Obama’s calls for reregulation of financial markets.⁵

Within a year, the impulse for “change” seemed to be spent, and the public appeared to be turning against the administration. Almost a year to the day of Obama’s inauguration, a formerly unknown Republican state senator, Scott Brown, won a special election to replace the late Ted Kennedy in the US Senate—in one-party Democratic Massachusetts. Brown had pledged to be the “forty-first vote” to defeat Obama’s plan for health insurance reform. Polls showed that Brown captured about one of five Obama voters from 2008, while taking advantage of widespread demoralization among Obama supporters.⁶ In and of itself, Brown’s election didn’t much change the political dynamic in Washington. But it set off alarm bells among liberals. The liberal pundit E.J. Dionne put it in stark terms February 18: “If you want to be honest, face these facts: At this moment, President Obama is losing, Democrats are losing and liberals are losing. Who’s winning? Republicans, conservatives, the practitioners of obstruction, and the Tea Party.”⁷ Given the confluence of forces in early 2009, how could the administration and the Democratic majority have squandered their momentum so completely in less than a year?

It’s tempting to answer that question with a reference to all of the standard Washington explanations: the bad economy, an uncooperative Congress, a fickle public, weak advisers and strategies, and all of the rest. While each of these plays a part, these explanations avoid a more fundamental point that lies at the heart of this book’s case about the nature and role of the Democratic Party—especially in a time of systemic crisis as the United States faced in 2008. Political scientist Sheldon Wolin noted that inflection points in American history produce elite calls for “change” that could be “mitigative” or “paradigmatic.” Whereas the former opts to trim around the edges to restore a fundamentally sound system, the latter attempts to recast political and economic relationships in more fundamental ways.⁸ In many ways, the Obama administration’s failures could be tied to this distinction. Millions voted for Obama hoping for a decisive (or, using Wolin’s term, a “paradigmatic”) shift in Washington politics and policy. But Obama and his elite backers were more interested in restoring the capital to pre-2008 “business as usual.” The gap between expectation and reality sapped Obama of mass support.

The challenge for the elites who had benefited so much from the neoliberal era was to support a change in US politics that would address the parts of these crises that impinged on their ability to reap profit and power, while containing popular demands for reforms to health care, workplace rights, or military spending that would challenge them. That is where the Democratic Party proves its usefulness to the people who run the United States. The Bush-era Republican Party—saddled with responsibility for unpopular policies, mired in corruption, and having demonstrated its incompetence in managing the affairs of state—had run its course as a vehicle for carrying out, and winning support for, big business’s agenda. In the language of Madison Avenue, the Republican “brand” was damaged. And business knows when it’s time to pull a bad brand from the shelf.⁹ Business’s alternative was Advertising Age’s 2008 “Brand of the Year”: Barack Obama, Inc.

From capitalist crisis to business as usual
The September 2008 financial meltdown that seized the world economy when the investment bank Lehman Brothers went bankrupt arguably clinched the election for Obama that November. By the time of Obama’s election, the US economy had already been in recession for almost a year, and on Inauguration Day, employers were laying off workers at a rate of eight hundred thousand a month. As a result, the “Great Recession,” which most acknowledged stemmed from the bursting of a Wall Street–engineered credit bubble, dominated every aspect of politics and popular consciousness through most of Obama’s term. The administration would rise or fall on how it dealt with the economic crisis.

Obama’s first response to the crisis was the promotion and passage, in February 2009, of the American Recovery and Reinvestment Act. The giant stimulus bill, which clocked in at $787 billion, reflected the administration’s view that the economy needed a jolt of temporary stimulus to break the free fall. The administration assumed, against much evidence from previous credit bubble–induced recessions, that increased government spending would push the economy back onto its pre-recession path, after which the administration could tackle the country’s long-term deficit.

Desiring to signal fiscal rectitude, Obama and his administration kept their request for an economic stimulus bill to less than $800 billion. Then the administration trimmed it further, to attract more conservative votes. At that time, independent economists—and even some of the administration’s own economists—were calling for a stimulus measure in excess of $1 trillion focused primarily on creating jobs. Instead, to win more bipartisan support, the administration limited the amount of money allocated to job creation and explicitly ruled out direct government jobs programs modeled on the 1930s-era Works Progress Administration. It dedicated far too much of the stimulus, upwards of 40 percent of the total, to a variety of tax cuts and credits to individuals and business that were useless in creating jobs. These concessions won the votes of three Republican senators and no House Republicans, but they further limited the bill’s impact.

When the administration pushed for the stimulus bill, it released studies claiming that it would push the unemployment rate down to 7 percent by 2010. In reality, the unemployment rate increased to more than 10 percent. When it was clear that a greater and more job-focused stimulus was needed, Obama himself ruled it out on two grounds: one, the need to show “fiscal responsibility,” and two, because he couldn’t (or wouldn’t) push Congress, with its overwhelming Democratic majorities, to enact one.¹⁰ The Obama administration was left with the worst of possible worlds. The stimulus bill may have helped avert a plunge into depression, but it failed to reduce unemployment in any noticeable way. Nevertheless, as the Washington Post’s Ezra Klein described,

The administration insisted on optimism. There was talk of “green shoots” and the “recovery summer.” Events in Greece and in oil markets were chalked up to bad luck rather than the predictable aftershocks of a financial crisis. The promised recovery was always just around the corner, but it never quite came. Eventually, the American people stopped listening. A September poll showed that 50 percent of Americans thought Obama’s policies had hurt the economy.¹¹

Perhaps all of this wasn’t surprising, given that Obama appointed an economic team staffed almost completely with Clinton retreads. Almost all of them were acolytes of Clinton Treasury secretary Robert Rubin, who championed balanced budgets, deregulation of financial markets, free trade, and the rest of the “New Democrat” neoliberal economic playbook. Sitting in the most prominent position was Obama’s Treasury secretary, Timothy Geithner, who, as president of the New York Fed during the Bush administration, helped to engineer many of the government-funded bailouts and forced mergers of banks into “too big to fail” behemoths. Geithner was also implicated in the scandalous 2008 multibillion-dollar payoff of AIG debts that made AIG’s creditors (most prominently Goldman Sachs and Deutsche Bank) whole, while still preserving AIG executives’ bonuses.

One might have thought that the near-meltdown of the world economy would have caused some of the Clintonites who Obama hired to reconsider their 1990s-era pro-business agenda. Instead, the crisis provided them with the opportunity to spend a vast amount of money—more than Clinton ever did—without really changing their neoliberal policy assumptions. In a sort of “Keynesian neoliberalism,” the administration put trillions of taxpayer dollars at the disposal of private business, trying to “incentivize” it to carry out social policy. It didn’t work—either in the bailout of the banks or in several failed Treasury attempts to stem the mortgage and housing crisis.¹² The banks and big corporations were happy to take the money, but they didn’t commit to lending money, saving homes, or hiring workers. By 2010, Corporate America had piled up a surplus of cash approaching $2 trillion.

Typical of the administration’s kid-gloves approach to Wall Street was a March 2009 meeting at the White House between Obama, Geithner, and the CEOs of the largest thirteen banks in the United States. News reports quoted Obama lecturing the CEOs that “my administration is the only thing between you and pitchforks.”¹³ But the main result of the meeting was the administration’s reassurance to the bankers that it had no intention of forcing a change in the way Wall Street does business. Journalist Ron Suskind quoted one of the CEOs who attended:

The sense of everyone after the big meeting was relief. . . . The president had us at a moment of real vulnerability. At that point, he could have ordered us to do just about anything, and we would have rolled over. But he didn’t—he mostly wanted to help us out, to quell the mob. And the guy we figured we had to thank for that was [Geithner]. He was our man in Washington.¹⁴

No wonder more and more Americans came to see the Obama administration as a bankers’ administration—in the same way that they viewed the Bush-Cheney regime as an “oil and gas” administration. A September 2009 Economic Policy Institute poll asked a national sample of registered voters to say who they thought had “been helped a lot or some” by the policies that the administration had enacted. The result: 13 percent said the “average working person,” 64 percent identified “large banks,” and 54 percent fingered “Wall Street investment companies.”¹⁵

By 2010, the financial sector, kept alive with taxpayers’ money, was in open revolt against the administration’s initiatives for financial regulatory reform. Prominent Wall Streeters were expressing their disappointment with Obama and pledging to support Republicans in the 2010 midterms. Meanwhile, a virtual army of financial-sector lobbyists was doing its utmost to neuter Obama’s regulatory proposals, including the creation of a new financial consumer protection agency. It wasn’t that any of the reforms themselves were truly onerous to the banks. In fact, experts noted that the administration-supported Dodd-Frank financial reform bill failed to address many of the issues that led to the crash, while at the same time, “the very regulators who dropped the ball in the current crisis have garnered more, not less, authority.”¹⁶ On the contrary, the banks moved to gut financial reform because they could. As Suskind wryly noted, “The princes of New York had sized [Obama] up. He’d already been shorted by the Street.”¹⁷

The contrast between the administration’s handling of Wall Street and the auto industry—both industries operating under effective government ownership—was striking. While the banks were allowed to pay back their bailout funds quickly and to resume business as usual, the government used its leverage to restructure Chrysler and General Motors, pushing through mass layoffs and gutting wages and benefits won over generations of struggle. In Michigan, the state hardest hit by the auto industry’s collapse—and whose union households voted for Obama two to one over the Republican McCain—the disparate treatment was a slap in the face. Brian Fredline, president of UAW Local 602 near Lansing, Michigan, noted:

It’s the age-old Wall Street vs. Main Street smackdown again. You have all kinds of funding available to banks that are apparently too big to fail, but they’re also too big to be responsible. . . . But when it comes to auto manufacturing and middle-class jobs and people that don’t matter on Wall Street, there are certainly different standards that we have to meet—higher standards—than the financials. That is a double standard that exists, and it’s unfair.¹⁸

The double standard was clear to see. Yet it would seem to contradict the notion, traditionally held in civics textbooks and popular lore, that the Democrats represent “the people” while the Republicans represent big business. With unionized workers being an important group in the Democratic “base,” it would seem that Democrats were acting against their own best interests. This conception assumes that the Democrats simply reflect the interests and aspirations of the people who vote for them. But this is actually the wrong way to look at the Democratic Party, which is one of the two corporate parties that manage the American state. One of the long-term goals of the US corporate elite is to rebuild the nation’s industrial base as a low-wage competitor to “emerging markets” like China, as the Obama-appointed President’s Council on Jobs and Competitiveness envisions.¹⁹

As Obama’s support fell, the political media filled with analyses purporting to explain this. It was said that Obama was “too far to the left” of the country, or that he was too “high-minded” to play hardball politics, or that the dysfunctional Senate was impeding the administration. All of these shallow explanations missed the most obvious point. As radical journalist Arun Gupta put it: “Far from failures or mistakes, these episodes illustrate how Team Obama, which surfed a tsunami of corporate money and savvy branding to victory, is doing exactly what it was elected to do: redistribute money upwards.”²⁰ The Obama administration was, as a Hillary Clinton administration would have been, a “center-right” regime that tended first and foremost to the interests of capital, with a heavy emphasis on catering to finance capital.²¹ Obama told Senate Democrats:

We’ve got to be the party of business, small business and large business, because they produce jobs. We’ve got to be in favor of competition and exports and trade. We’ve got to be non-ideological about our approach to these things. We’ve got to make sure that our party understands that, like it or not, we have to have a financial system that is healthy and functioning, so we can’t be demonizing every bank out there.²²

Obama’s attitude pervaded the entire Democratic leadership in Congress.²³

Embracing austerity
The historic defeat that Democrats sustained in November 2010 launched the Obama administration on a new, even more disastrous course. In the lead-up to the election, the Obama administration, from the president on down, sent out two contradictory messages. On the one hand, Obama and White House spokesman Robert Gibbs attacked the Democrats’ core supporters for, essentially, expecting too much from 2008’s Mr. Hope-and-Change. At the same time, Obama made nice with the Republicans, urging them yet again to reach across the aisle to find bipartisan solutions.

Obama the “centrist” was setting the stage for his own planned shift to the right to embrace the politics of austerity after the election. He was positioning himself—as Bill Clinton did in 1995 and 1996—as the sensible actor, working in a bipartisan fashion to enact policy over the objections of the Tea Party crazies and the “Far Left,” as the media regularly describe the liberal wing of the Democratic Party. Obama did nothing to dispel this expectation with his post-election press conference, where he proclaimed himself “humbled” and willing to listen to Republican proposals on a range of topics.

The politics of austerity was the conservative and big business answer to the economic crisis. The massive transfer of wealth from taxpayers to the financial sector left a huge debt overhang. The recession also dampened tax receipts to their lowest level as a percentage of GDP in sixty years, while government spending on programs like unemployment insurance ticked upward. Added to the unbudgeted cost of the 2001 and 2003 Bush tax cuts and two major wars, the government’s budget deficits of more than a trillion dollars threatened the United States’s economic stability. Facing this budget gap, the US ruling class, along with its global partners, “effectively declared that working class people and the poor will pay the cost of the global bank bailout.”²⁴

As if to underscore that austerity wouldn’t proceed from the assumption of “shared sacrifice,” Obama accepted the congressional Republican minority’s demand to extend the deficit-swelling Bush-era tax cuts for an additional two years. This about-face from an early campaign promise to end the Bush tax cuts for the rich followed the Democrats’ failure even to put the tax cuts to a vote when the party held massive congressional majorities. The administration then “pivoted” to an austerity agenda based, initially, on the 2010 report of the president’s National Commission on Fiscal Responsibility and Reform. The commission, appointed jointly by Obama and the leaders of both parties in Congress, issued recommendations for $4 trillion in cutbacks to social entitlement programs like Medicare and Social Security.²⁵

The commission’s proposals helped to set the stage for a debate on federal spending that dominated the first year of the 112th Congress, where a Republican House majority cohabited with a bare Democratic majority in the Senate. Obama repeatedly said that “everything must be on the table,” indicating that no program, including Social Security, would be considered safe from cutbacks. In embracing austerity, Obama and the Democrats ceded so much ideological ground that any sort of Clintonite triangulation amounted to meeting the Republicans halfway on how much to cut safety net programs, not whether to cut in the first place.

The disastrous move toward austerity hit its nadir in the August 2011 GOP-engineered confrontation over the federal debt ceiling. In exchange for providing a normally pro forma vote for raising the federal government’s borrowing limit, the Tea Party–infused congressional Republican caucuses forced an unprecedented series of cuts in federal spending, scheduling them to begin in 2013. But putting the blame for the debt ceiling disaster on the ultra-conservative Tea Partiers, as liberals and the White House did, obscured the reality that Washington’s commitment to austerity politics was thoroughly bipartisan. The Tea Party hostage-takers got what they wanted because Obama wanted to ransom the hostage.

 In their negotiations with the White House, Republican House Speaker John Boehner and Senate Minority Leader Mitch McConnell both publicly stated that they wouldn’t allow a US government default. In other words, they signaled that, rhetoric aside, they weren’t willing to push the government to the brink. But rather than press them to stop the posturing, Obama upped the ante by putting a “grand bargain” of $4 trillion in cuts on the table—including cuts in “entitlement” spending—not once, but twice. Obama may have been an inept negotiator, but he is also part of a political establishment that has wanted to cut entitlement programs like Social Security for decades. In fact, even while assembling the early 2009 fiscal stimulus program, Obama administration officials spoke of a “grand bargain” involving increased taxes and cuts in entitlement programs as their long-term “bipartisan” strategy to fix the US government budget.²⁶

In the end, Obama’s attempt to project himself as the “adult in the room,” navigating between the far right Tea Partiers and the Democratic base, left him politically wounded. Even the AFL-CIO, the Democrats’ chief institutional mechanism for get-out-the-vote operations, threatened to withhold support for Obama in 2012. Yet only a few weeks later, in September 2011, Obama used an address to a joint session of Congress to introduce an “American Jobs Act,” a legislative package that had almost no chance of passing an austerity-addled Congress. Polls showed that Obama’s jobs package and proposed increased taxes on the rich were far more popular than any austerity measures.²⁷ But while Obama’s plans may have been popular, they were also too little and too late.

Where was all the concern about jobs and ending tax breaks for the rich back during the first two years of the Obama administration, when Democrats held large majorities in Congress and, presumably, could have passed real legislation to create jobs? Even after the administration realized that the 2009 stimulus measure wouldn’t bring down unemployment to the extent it had hoped, it never seriously considered a 1930s-style jobs program. Even if the White House underestimated the depths of the jobs crisis, that couldn’t excuse its jettisoning a central promise of its 2008 campaign: ending the Bush tax cuts for the wealthy. Nor could it provide an alibi for the gutlessness of Democrats in Congress, who refused to even consider raising taxes on the rich despite its overwhelming popularity. In the wake of the debt ceiling fiasco, public esteem of Congress, both major parties, and the president sunk to new lows.

FDR or Hoover?
Throughout most of the period of unified Democratic control of the government, Obama baffled and demoralized his main supporters, including the millions who were moved to political action during his campaign, by the fact that most of his problems appeared to be self-inflicted. Clinton’s “triangulation” appeared to be a defensive adaptation to an unfavorable environment. Clinton never won the votes of more than 50 percent of the electorate, and for most of his term he coexisted with a hostile Republican Congress that even tried to throw him out of office. But armed with a strong public mandate and a large Democratic majority, Obama continued on the “centrist” path that Clinton charted. The question is why.

The explanation has everything to do with the profile of the Democratic Party in the neoliberal era. While the Democrats have always been a big-business party, they are more openly so today than in heyday of the “labor–liberal–civil rights” era of the 1940s through the 1960s. Commenting on the seeming inability of the Democratic congressional majority to push through fundamental reforms, Harvard University social policy expert Theda Skocpol explained: “Even in the majority, Democrats still have many ties to business interests and quietly look for excuses to avoid doing things that offend them. Not being able to act without 60 votes is a ready excuse.”²⁸

What about Obama? Obama failed to “lead” in the direction of a liberal future because he is committed to what writer Kevin Baker, in a very astute Harper’s article, called “business liberalism”—President Bill Clinton’s formula. In the article, Baker compared Obama not to FDR but to the man FDR routed in 1932, Republican president Herbert Hoover. The New Democrats’ “business liberalism” is

a chimera, every bit as much a capitulation to powerful and selfish interests as was Hoover’s 1920s progressivism. . . . [It] espous[es] a “pragmatism” that is not really pragmatism at all, just surrender to the usual corporate interests.

The common thread running through all of Obama’s major proposals right now is that they are labyrinthine solutions designed mainly to avoid conflict. The bank bailout, cap-and-trade on carbon emissions, health-care pools—all of these ideas are, like Hillary Clinton’s ill-fated 1993 health plan, simultaneously too complicated to draw a constituency and too threatening for Congress to shape and pass as Obama would like. They bear the seeds of their own defeat.

Moreover, much like Hoover, “Barack Obama is a man attempting to realize a stirring new vision of his society without cutting himself free from the dogmas of the past—without accepting the inevitable conflict. Like Hoover, he is bound to fail.” Obama’s penchant to reach for compromise and “bipartisanship” was exactly the opposite of what the dire situation he inherited required—and what the American populace was ready for. Obama’s first term, Baker wrote, offered “one of those rare moments in history when the radical becomes pragmatic, when deliberation and compromise foster disaster.” ²⁹ In the wake of the 2011 debt ceiling debacle, how can one conclude otherwise?

Assuming power as the economic crisis hit with full ferocity, the Democrats were destined to face a difficult situation. Since Democrats “owned” Washington, they were certain to be first in line to receive blame from voters looking for help in dealing with rising unemployment, poverty, and foreclosures. The voters perceived that “the government” wasn’t doing enough, and “the government” was run by Democrats. So the Democrats paid the political price. But if they were perceived as trying to help ordinary people while the Republicans stonewalled any relief, wouldn’t the public at least give the Democrats credit for trying? If they launched a bold jobs program or proposed a genuine national health program, they would have at least provided an answer to critics who charged them with ignoring the public’s needs. But this would have presupposed a Democratic Party that was willing to use its governmental power to reorder the status quo of the last generation, rather than just giving the status quo a new lease on life.

Using the evidence of the Democrats’ failure to confront economic power, the radical sociologist Stanley Aronowitz characterized today’s Democratic Party as “the party of finance capital”:

That mantle once belonged to the Republicans—the fabled party of the rich and wealthy. But the GOP has sunk into a right-wing party of opposition and no longer pretends to be a party of government. Its cast, begun as far back as the Goldwater takeover in 1964, is anti-internationalist, narrowly ideological and administratively incompetent. Meanwhile, the Democrats live a glaring contradiction: on the one hand, they rely on labor and the new social movements of feminism, ecology and black freedom both for votes and for a large portion of their political cadres. On the other, they need hundreds of millions of dollars to oil the party apparatus and run 535 national election campaigns. Aside from the unions, most of this money comes from corporate sponsors and wealthy individuals. . . . Obama is the perfect manifestation of the contradiction that rips across the Democratic Party bow.³⁰

Obama tried to straddle this contradiction with a stance that appealed to “bipartisanship” and a reasonable approach to national problems. While this may soothe elements of the Washington establishment, it’s exactly the opposite of what the climate of economic and political polarization demanded. The attempt to hew to a “centrist” course in the midst of a crisis that demanded radical solutions ended up pleasing no one.

In September 2011, a protest of a few hundred people in New York ignited the “Occupy” movement that spread across the country. For the first time since the recession took hold, a mass movement had erupted that targeted the banks and corporations and placed the issue of income inequality on the national agenda. In a few short weeks, the class politics of solidarity—of standing with the “99%” working majority—replaced the plutocratic politics of austerity in national consciousness. As he prepared to run for reelection in 2012, Obama grasped this. Obama and the Democrats sensed that their only hope to survive a tough reelection fight was to activate working people, youth, African Americans, and others whom the Occupy movement had engaged. So it was no surprise when Obama, in his December 2011 speech in Osawatomie, Kansas, spoke of overcoming income inequality as “the defining issue of our time” and gave rhetorical nods to the “people who have been occupying the streets of New York and other cities” and “99% values.” Obama’s shameless attempt to co-opt Occupy’s themes covered for a reality in which dozens of Democratic mayors, in a campaign that Obama’s federal Homeland Security forces coordinated, launched military-style raids to rout Occupy encampments.³¹

So who was the real Barack Obama? The one who wanted to seek bipartisan and “reasonable” cuts in the social safety net during the debt ceiling fiasco of July and August 2011, or the “fighter for the middle class” who emerged in the fall of that year as he geared up for reelection? It would be facile to say that Obama is both things. Four years of experience suggested that the real Obama is the Obama of the “grand bargain”—while “fighter for the middle class” is a costume he dons when elections roll around.

Rolling Stone’s Matt Taibbi confessed he couldn’t bear to listen to Obama’s speeches anymore:

Hearing Obama talk about jobs and shared prosperity . . . reminded me that we are back in campaign mode, and Barack Obama has started doing again what he does best—play the part of a progressive. He’s good at it. It sounds like he has a natural affinity for union workers and ordinary people when he makes these speeches. But his policies are crafted by representatives of corporate/financial America, who happen to entirely make up his inner circle.³²

Obama was reaching for the 2008 playbook—trying to appeal to ordinary Americans’ grievances and presenting himself as a vehicle for their aspirations. As the election year  of 2012 dawned, it remained to be seen whether President Obama—with a record of disappointment for his most ardent 2008 supporters—could succeed. Nevertheless, it was clear that if the Republicans managed to nominate a candidate who wasn’t up to beating Obama in 2012, Corporate America would know that it would have little to fear—and probably much to look forward to—in a second Obama term.

1. Susan Page and Mimi Hall, “Poll: Americans Believe Obama Will Deliver Despite Down Times,” USA Today, January 15, 2009, at http://www.usatoday.com/news/washington/....
2. Keith Johnson, “State-Level Wins Augur More GOP Safe Seats,” Wall Street Journal, November 4, 2010.
3. Andrew Kohut, “Post-Election Perspectives,” Remarks at the Pew Research Center 2nd Annual Warren J. Mitofsky Award Dinner, Washington DC, November 13, 2008, at http://pewresearch.org/pubs/1039/post-el....
4. Gerald F. Seib, “Business Warms to Obama, but Frictions Loom on Climate,” January 8, 2009, at http://online.wsj.com/article/SB12314655....
5. See Alistair Barr, “Industry Giants Support More Regulation,” MarketWatch.com, November 13, 2008, at http://www.marketwatch.com/story/industr....
6. Public Policy Polling, “Takeaways from Massachusetts,” January 19, 2010, at http://publicpolicypolling.blogspot.com/....
7. E. J. Dionne, “Dems Are Losing the Message War,” Real Clear Politics, February 18, 2010, at http://www.realclearpolitics.com/article....
8. See Sheldon S. Wolin, “Preface to the Paperback Edition,” Democracy Incorporated (Princeton, NJ: Princeton University Press, 2009).
9. Even Republican leaders acknowledged this. Rep. Tom Davis, head of the Republican Congressional Campaign Committee before he decided to retire in 2008, wrote in a memo to his colleagues, “if we were a dog food, they would take us off the shelf.” Quoted in Tom Hamburger and Peter Wallsten, “GOP Torn by Change It Can Believe In,” Los Angeles Times, May 18, 2008.
10. Ron Susskind, Confidence Men: Wall Street, Washington and the Education of a President (New York: HarperCollins, 2011), 353.
11. Ezra Klein, “Could This Time Have Been Different?” Washington Post, October 8, 2011.
12. See the criticism of the Treasury’s housing policies at Yves Smith’s nakedcapitalism.com blog, e.g., “Quelle Surprise! Treasury Mortgage Mod Program Produces Zero Permanent Mods,” November 29, 2009, at http://www.nakedcapitalism.com/2009/11/q....
13. Quoted in Susskind, Confidence Men, 234.
14. Suskind, Confidence Men, 242.
15. Andrea Orr, “Tracking the Recovery: Big Banks Seen as Big Beneficiaries of Government Economic Policies,” Economic Policy Institute, October 6, 2009, at http://www.epi.org/publication/big_banks..., accessed on December 24, 2011.
16. Viral Acharya, Matthew Richardson, and Richard Sylla, “A Critical Assessment of the Wall Street Reform and Consumer Protection Act,” www.nakedcapitalism.com, October 21, 2010, accessed on December 24, 2011.
17. Suskind, Confidence Men, 390.
18. Jeff Karoub, “Workers Say Obama Treated Autos Worse than Wall St,” Associated Press, March 31, 2009.
19. Obama appointed the Council in 2011 under the chairmanship of General Electric CEO Jeffrey Imhelt. See http://www.whitehouse.gov/administration....
20. Arun Gupta, “Hope Has Left the Building,” Indypendent, January 8, 2010, at http://www.indypendent.org/2010/01/07/ho....
21. I am not using the term “center-right” for effect. It’s an accurate assessment of the Obama administration’s economic policies. No less an authority than Lawrence Fink, the billionaire CEO of BlackRock, the multinational investment firm, said after meeting Obama: “The president is much more of a centrist . . . in some ways he might even be called right of what used to be called center.” See Suskind, Confidence Men, 455.
22. Obama quoted in Gerald F. Seib, “Obama, Business Leaders Inch toward Rapprochement,” Wall Street Journal, February 5, 2010.
23. To see how pervasive the influence of corporate money is, see the account of the “conscience of Congress,” the Congressional Black Caucus, in Eric Lipton and Eric Lichtblau, “In Black Caucus, a Fundraising Powerhouse,” New York Times, February 10, 2010, at http://www.nytimes.com/2010/02/14/us/pol....
24. David McNally, Global Slump (Oakland, CA: PM Press, 2011), 4.
25. A preview of the commission’s report—which takes aim at Social Security, Medicaid, and the federal workforce—came with the November 10, 2010, release of the wish list of commission co-chairs Erskine Bowles and Alan Simpson. See Megan Carpentier, “Fiscal Commission Co-Chairs Simpson and Bowles Release Eye-Popping Recommendations,” Talking Points Memo, November 10, 2010, at http://tpmdc.talkingpointsmemo.com/2010/....
26. Gerald Seib, “Obama Targets a ‘Grand Bargain’ to Fix Budget Mess,” Wall Street Journal, January16, 2009, at http://blogs.wsj.com/capitaljournal/2009....
27. Frank Newport, “Americans Favor Jobs Plan Proposals, Including Taxing Rich,” Gallup Poll, September 20, 2011, at http://www.gallup.com/poll/149567/Americ....
28. Theda Skocpol, “The Democrats’ Learned Timidity,” New York Times, January 20, 2010, at http://roomfordebate.blogs.nytimes.com/2....
29. All quotes from Kevin Baker, “Barack Hoover Obama: The Best and the Brightest Blow It Again,” Harper’s, July 2009, at http://www.harpers.org/archive/2009/07/0....
30. Stanley Aronowitz, “Let’s Break from the Party of War and Wall Street,” Indypendent, January 8, 2010 at http://www.indypendent.org/2010/01/07/br.... While campaign finance data show that Democrats have been increasingly successful in winning Wall Street and hedge fund money since the Clinton years, it’s too easy to label it a “party of finance capital.” Wall Street still plays both sides of the aisle and has recently shifted contributions to the GOP to pressure congressional Democrats to water down financial reform legislation. See Brody Mullins and Neil King Jr., “GOP Chases Wall Street Donors,” Wall Street Journal, February 4, 2010.
31. Rick Ellis, “Updated: ‘Occupy’ Crackdowns Coordinated with Federal Law Enforcement Officials,” Minneapolis Top News Examiner, November 15, 2011, at http://www.examiner.com/top-news-in-minn....
32. Matt Taibbi, “Obama and Jobs: Why I Don’t Believe Him Anymore,” reprinted at CommonDreams.org, September 6, 2011, at http://www.commondreams.org/view/2011/09....