Appeasing the GOP: How to Save Progressive Fiscal and Monetary Policy from Obama

What’s the worst case, and the best case, that we can imagine for the next two years? Let’s look at the economics first.

By Robert Kuttner, co-editor of The American Prospect and a senior fellow at Demos and author of  “A Presidency in Peril”

Republicans and the White House both seem determined to make the recession worse by reducing the budget deficit long before the economy is in recovery. The deficit commission’s two co-chairs have proposed that the cuts begin in October 2011, when unemployment is still expected to be at least nine percent. The economy needs a massive fiscal jolt, and instead is likely to get austerity.

Meanwhile, the Federal Reserve’s experiment with buying Treasury bonds in order to keep interest rates low is not working very well. Mainly, the policy seems to be annoying America’s allies. Cheap money by itself won’t fix the prolonged slump.

Obama’s ill-fated Asia trip was intended to bring home a foreign policy victory to divert attention from the domestic economic and political carnage. But Obama failed to get the Koreans to agree to a (badly conceived) trade deal, and failed to get the G-20 leaders to agree to new strategy to pressure nations with big export surpluses to do more of their part to help the global recovery. An economically weakened America with a politically weakened president has less weight to swing around.

So as President Obama gears up for a re-election battle in 2012, the economy is unlikely to be much different than the one that sank the Democrats in 2010. The question is whether Obama and the Democrats can change the national understanding of what caused the economic collapse and who is blocking the recovery.

In this enterprise, I don’t have high expectations for Obama. I cannot recall a president who generated so much excitement as a candidate but who turned out to be such a political dud as chief executive. Nor do his actions since the election inspire confidence that he will be reborn as a fighter.

The president’s defenders offer an assortment of alibis for the epic defeat. The in-party always loses seats in the first mid-term (but not this many). The recession was far more protracted than anticipated (Obama’s own chief economic adviser, Christy Romer knew how bad things were pressed for a much larger stimulus than Obama was willing to embrace.) The Republicans blocked him at every turn (yes, and he kept trying to conciliate rather than fight.)

Consider that the Democrats got particularly shellacked, as Obama put it, among the elderly. When you remember that the Republicans hope to gut Social Security, this is quite remarkable. When you add the fact that Democrats have been far more committed to defending Medicare than Republicans who want to turn it into a voucher, the sheer political malpractice of this election loss among seniors is just stupefying.

Because of the poor design of the Obama health plan, and the ineptitude of explaining or marketing it, older voters came away convinced that the scheme would come at the expense of their Medicare. Even today, as a fiscal commission appointed by Obama tries to take more money out of Medicare and Social Security, our president and his budget wonk advisers cannot bring themselves to draw a simple line in the sand and declare that the Democrats will never cut Social Security benefits. Had Obama done so before the election and dared the Republicans to match the pledge, dozens of Democratic House seats might have been saved.

And had Obama made clear that the real obstacle to comprehensive health reform and cost savings is the private insurance industry, not our one island of socialized medicine–Medicare–he might have clarified who is really on the side of America’s seniors.

The New Yorker‘s Hendrik Hertzberg, who has tended to give Obama the benefit of the doubt, attributed the electorate’s punishment of the Democrats to “a kind of political cognitive dissonance.”

Frightened by joblessness, the American people rewarded the party that not only opposed the stimulus but also blocked the extension of unemployment benefits. Alarmed by a ballooning national debt, they rewarded the party that not only transformed budget surpluses into budget deficits but also proposes to inflate the debt by hundreds of billions with a permanent tax cut for the least needy two per cent. Frustrated by what they see as inaction, they rewarded the party that not only fought every effort to mitigate the crisis but also forced the watering down of whatever it couldn’t block.

Hertzberg goes on to tick off a litany of misperceptions on the part of the electorate, adding with his characteristic gentle understatement, “But why don’t the American people know these things. Could it be that the President and his party did not try, or try hard enough to tell them?

Danny Goldberg made a similar point in The Nation:

Almost half of the public is either misinformed or subject to unanswered right wing narratives. If I believed that there was a chance of Sharia law being imposed in the United States I too would be gravely concerned. If I believed that most Europeans and Canadians had inferior health care to that of average Americans, I too would be against health care reform. If I believed that man-made global warning did not exist or that there were nothing we could do about it and that environmental efforts were responsible for unemployment I’d be against cap and trade. If I believed that prisoner abuse would make my family significantly less likely to be killed by terrorists, my thinking about torture would be different. And if I believed that the problems with the economy had been caused by too much government instead of too little, that my personal freedom was threatened by the government instead of large corporations, I’d probably be in a tea party supporter and a Republican.

Goldberg calls for less reliance on polling and focus groups and more reliance on “inspired intuition” to restore progressivism.

The real question is how we do this without the active collaboration of a Democratic president who is fast becoming more albatross than ally.

I am not one of those who believes that Republican missteps will save us — that the Republicans will be disabled by divisions between the far right that now controls the party and the very far right represented by newly elected Tea Party militants. Let’s get real: The Republican Party and the Tea Party are essentially the same party. There will be skirmishes, but the Republican leadership will keep its eye on the ball–of destroying Obama.

Nor am I especially hopeful that Obama will metamorphose into Harry Truman any time soon.

If politics continues on its present course, about the best one might expect for 2012 is that the Republicans will nominate such a nut-case that Obama will stagger to re-election. But unless he is re-elected with a mandate to carry out drastically different policies, we can anticipate continued economic pain and continuing drift of the electorate to the right.

So what is the alternative?

My audacious hope is that progressives can move from disillusion to action and offer the kind of political movement and counter-narrative that the President should have been leading.

I doubt that it makes sense to run a left candidate against Obama in 2012. The history of these efforts is one of failure that only weakened the Democratic nominee, whether we recall Ted Kennedy’s doomed primary challenge to incumbent Jimmy Carter in 1980, or Ralph Nader’s run in 2000.

The closest that the progressive movement came to realizing this strategy was of course in 1968, when Lyndon Johnson decided to abdicate in the face of mass protest. But in that tumultuous year, we had a surfeit of anti-war candidates and a real movement. Even so, we ended up with Richard Nixon. This year, it is hard to think of a plausible candidate (Howard Dean? Russ Feingold?) who could unseat Obama without further weakening the Democrats in the general election.

So our task is to step into the leadership vacuum that Obama has left, and fashion a compelling narrative about who and what are destroying America. Our movement needs the passion and single mindedness of the Tea Party movement, and it helps that we have reality on our side. If we do our jobs, we can move public opinion, discredit the right, and elect progressives to office. Even Barack Obama might embrace us, if only as a last resort.

Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos. His latest book is “A Presidency in Peril”.