My enthusiasm for Candidate Obama derived from one principal consideration. I figured that this young upstart would have a hard time with the lions of the Congress, but that he would then invoke his experience as a community organizer, mobilize the vast community that was so enthralled and excited by his candidacy, and have them bring the appropriate pressure to bear on Congress.
I was wrong on several counts. I underestimated the aura of the job: From the moment of his election, he was no longer a “young upstart;” he was POTUS, the President of the United States. Mr. President. And even the Republican frantics, with a few noxious exceptions, briefly accorded him the deference traditionally owed the office.
Nor is it a secret that community organizing has, unaccountably, been left to the side. Perhaps that’s because of Rahm Emanuel, whose political instincts run in a very different direction. Or perhaps it’s because the nature of the problems we face tends to depend on fine details, just about the hardest thing to organize around.
Unless, of course, the president himself chooses to spell out his preferences and intentions — as this president has mostly been loath to do. And even so: Take reform of our financial system. There are not a dozen members of Congress who have sufficiently intricate understanding of the elements of that system to make thoughtful contributions to the needed debate. We, the voters, the community waiting to be organized? Yeah, sure.
Does “too big to fail” mean, simply, too big? What, exactly, is a hedge fund? Do hedge funds have any economic value? And what about credit-default swaps? Do you realize that some derivatives have non-linear payoff diagrams due to embedded optionality? Do you have any idea at all what that means? I do not.
Still, I’ve been trying as best I can to think about the economy, and what interests me most are the anomalies of our free enterprise system. Take, for example, the now radically reformed matter of college loans. Until the game-changing legislation of last month, student loans were issued and managed by banks. Such loans were both subsidized by the federal government — which paid part of the interest on the loans so that students could be charged below-market rates — and guaranteed by the government. So for the banks, the enterprise was risk-free. Imagine that: Not “virtually” risk-free; actually risk-free. Why, then, was a subsidy needed at all?
Now, you may ask why taxpayer dollars should be used to subsidize private lenders. The only plausible answer is that when, years back, the system was born, the fix was in. Lobbyists for the banks were more coherent and more muscular than the parents of college students. Now that the private-lender subsidy has been eliminated, replaced by direct loans from the government to eligible students, it is estimated that the savings over the next 10 years will come to $61 billion — most of which ($36 billion) will be used to expand the number of students who are helped and to raise the maximum amount they can receive.
Yet at the same time, we are asked to applaud a health-care reform that requires of all of us that we pay insurance premiums that are then delivered to private and mostly for-profit insurance companies. Thirty-six million Americans, it’s estimated, who currently have no health insurance, will be covered by the new programs. We taxpayers will pay for most of that. But, absent a public option, or Medicare for all, our dollars will not only cover the costs of health care; they will also cover the salaries and bonuses of the health insurance industry — an industry that provides what are essentially clerical services, an industry that makes no contribution whatever to our health.
Now we are promised new financial regulations. But the captains of finance and their hirelings in Congress are on guard, and so far, it appears that the reforms will be mainly cosmetic, will lack the enforcement provisions that would give them heft. Goldman Sachs and JP Morgan Chase have nothing to fear. Their bloated compensation will survive, their greed will be rewarded.
But if greed’s the underlying issue, then tightened regulations are only a piece of the answer. We need, somehow, a transformative cultural shift. Which brings me back to President Obama. He has lately done battle with the health insurance industry. Bravo, even though determined support for a public option would have been a more significant intervention, a real challenge to the misbegotten notion that health care should be organized as a for-profit sector. So: Can this president remember what he once knew so well? Does he really prefer following Geithner, Summers and Bernanke to leading a more populist America? Did he not persuade us that “we are the change we have been waiting for?” Is he not the champion and agent of that change?
But that, alas, is the narrative the president has essentially abandoned. In its place, a politics of incrementalism, no narrative at all. It’s not that we were deceived; it’s that he has been seduced. One hopes his fling will be short-lived, that he will soon come back.