The South African Civil Society Information Service

Lessons of the Obama Debacle

By Walden Bello · 12 Oct 2010

The problem with us progressives as this time of crisis is not that we lack an alternative paradigm to pit against the discredited neoliberal paradigm. No, the elements of the alternative based on the values of democracy, justice, equality, and environmental sustainability are there and have been there for sometime, the product of collective intellectual and activist work over the last few decades.

The key problem is the failure of progressives to translate their vision and values into a program that is convincing and connects with the people trapped in the terrible existential conditions created by the global financial crisis. This fluid process is preeminently political. It requires translating a strategic perspective into a tactical program that takes advantage of the opportunities, ambiguities, and contradictions of the present moment to construct a critical mass for progressive change from diverse class and social forces.

We must look at the political experience of the global progressive movement in order to understand why our side has been derailed and how we can fight back to political relevance. The experience of the Obama presidency is rich in this regard.   In the U.S. political context, Obama is a social democrat, and the broad left supported his candidacy. Although he was no anti-capitalist, still we expected that he would initiate a program of recovery and reform similar in ambition to Roosevelt’s New Deal. The electoral base that brought him to power, which cut across class, color, gender, and generational lines -- was full of potential. Obama’s ability to bring this base together on a message of change achieved what was then thought impossible—the election of an Afro-American as president of the United States—and showed how smart political leadership can shape social and political structures.

Two years after his spectacular electoral victory, President Obama and the Democrats face a rout in the U.S. polls in early November. Indeed, Obama and his party are like a rabbit on the railroad track that is hypnotized by the light of an oncoming train. Whereas Obama seemed to do all the right things in his quest for the presidency, he seemed to make all the wrong moves as chief executive.

His prioritizing of health care reform, a massively complex task, has been identified as a key blunder.  This decision certainly contributed to the debacle. But other important factors related mainly to his handling of the economic crisis, a primary concern of the electorate, were perhaps more critical. 

Six Reasons behind the Debacle

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 “too 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.  For comparison, the Chinese stimulus package of $580 billion was much bigger relative to the size of the economy than the Obama package.  For the White House now to say that the employment situation would now be worse had it not been for the stimulus is, to say the least, politically naïve.  People operate not with wishful counterfactual scenarios but with the facts on the ground, and the facts have been rising unemployment with no relief in sight.

Politics in a time of crisis is not for the fainthearted. The middle-of-the road approach represented by the size of the stimulus was the wrong response to a crisis that called for a political gamble: the deployment of the massive fiscal firepower of the government against the predictable howls of anger from the right.

Fifth, Obama and Federal Reserve Board Chairman Ben Bernanke deployed mainly Keynesian technocratic tools—deficit spending and monetary easing—to deal with the consequences of the massive failure of market fundamentalism. During a normal downturn these countercyclical tools may suffice to reverse the downturn. But standard Keynesianism could address such a serious collapse only in a very limited way. Besides, people were looking not only for relief in the short term but for a new direction that would enable them to master their fears and insecurities and give them reason to hope.

In other words, Obama failed to locate his Keynesian technocratic initiatives within a larger political and economic agenda that could have fired up a fairly large section of American society.  Such a larger agenda could have had three pillars: the democratization of economic decision-making, from the enterprise level to the heights of macro-policymaking; an income and asset redistribution strategy that went beyond increasing taxes on the top two percent of the population; and the promotion of a more cooperative rather than competitive approach to production, distribution, and the management of resources. This agenda of social transformation, which was not too left, could have been accommodated within a classical social democratic framework.  People were simply looking for an alternative to the Brave New Dog-Eat-Dog World that neo-liberalism had bequeathed them. Instead, Obama offered a bloodless technocratic approach to cure a political and ideological debacle.

Related to this absence of a program of transformation was the sixth reason for the Obama debacle: his failure to mobilize the grassroots base that brought him to power. This base was diverse in terms of class, generation, and ethnicity. But it was united by palpable enthusiasm, which was so evident in Washington, DC, and the rest of the country on Inauguration Day in 2009. With his preference for a technocratic approach and a bipartisan solution to the crisis, Obama allowed this base to wither away instead of exploiting the explosive momentum it possessed in the aftermath of the elections.   

At the eleventh hour, Obama and the Democrats are talking about firing up and resurrecting this base. But the dispirited and skeptical troops that have long been disbanded and left by the wayside rightfully ask: around what?

The Right Makes the Right Moves

In contrast to Obama, the right wing understood the demands and dynamics of politics at a time of crisis, as opposed to politics in normal times. While Obama persisted in his quest for bipartisanship, the Republicans adopted a posture of hard-line opposition to practically all of his initiatives.

Unlike Obama and the Democrats, the right posed the conflict in stark political and ideological terms: between left and right, between “socialism” and “freedom,” between the oppressive state and the liberating market. The Republican opposition used all the catchwords and mantras they could dredge up from bourgeois U.S. ideology.

Finally, in contrast to Obama’s neglect of the Democratic base, the right eschewed Republican interest-group politics. Fox News, Sarah Palin, and the tea party movement stirred up the right-wing base to challenge the Republican Party elite and drive a no-compromise, take-no-prisoners politics. To understand what has happened to the Republican Party in the last few weeks with the string of tea party successes in the primaries, historian Arno Mayer’s distinction among conservatives, reactionaries, and counterrevolutionaries is useful. In Mayer’s terms, the counterrevolutionaries, with their populist, anti-insider, and grassroots-driven politics are displacing the conservative elites that have long held sway in the Republican Party.

With their anti-spending platform, the Republicans and tea partiers that might capture the House and the Senate in November will probably bring about a worse situation than today. As such, Obama and the Democrats might repeat Bill Clinton’s political trajectory when he scored a victory at the polls in 1996 because the Republicans led by Newt Gingrich overreached politically after their triumph in the midterm elections of 1994. But this is a desperate illusion. The current counterrevolutionaries and their backers are skilled in the politics of blame, and they will likely be successful in painting the worsening situation as a result of Obama’s “socialist policies,” not of drastic cuts in government spending.

Lessons for the Left

The problem lies not so much in our lack of a strategic alternative as in our failure to translate our strategic vision or paradigm into a credible and viable political program. Politics in a period of crisis is different from politics in a period of normality, being more fluid and marked by the volatility of class, political, and intellectual attachments. We should remember that politics is the art of creating and sustaining a political movement from diverse class and social forces through a flexible but principled political program that can adapt to changing circumstances.

Finally, there is no such thing as an objectively determined situation. The art of politics is using the contradictions, spaces, and ambiguities of the current moment to shape structures and institutions and create a critical mass for change. Class, economic, and political structures may condition political outcomes; they do not determine them. Who will ultimately emerge the victor from this period of prolonged capitalist crisis will depend on smart and skilled political leadership.

Bello is a member of the House of Representatives of the Philippines and a senior analyst at the Bangkok-based research and advocacy institute Focus on the Global South. He can be reached at [email protected]

This article was originally published by Foreign Policy in Focus.

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