Obama's Challenge

America's Economic Crisis and the Power of a Transformative Presidency

by Robert Kuttner

Obama's Challenge

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Book Summary

Discusses what Obama would have to do as president to restore America's economic future, arguing that transformative leadership is needed to rescue the country from its current financial crisis.

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Excerpt: Obama's Challenge

Obama's Challenge

OBAMA'S CHALLENGE

America's Economic Crisis and the Power of a Transformative Presidency


Chelsea Green Publishing

Copyright © 2008 Robert Kuttner
All right reserved.

ISBN: 978-1-60358-079-3

Contents

one  A Great President or a Failed One......................1two  How Transformative Presidents Lead.....................35three  Audacity Versus Undertow.............................74four  Repairing a Damaged Economy...........................121five  A Work in Progress....................................179Afterword and Acknowledgments...............................201Endnotes....................................................204Index.......................................................210About the Author............................................215

Chapter One

A Great President or a Failed One

There is a tide in the affairs of men. Which, taken at the flood, leads on to fortune; Omitted, all the voyage of their life Is bound in shallows and in miseries. -Shakespeare, Julius Caesar

Barack Obama could be the first chief executive since Lyndon Johnson with the potential to be a transformative progressive president. By that I mean a president who profoundly alters American politics and the role of government in American life-one who uses his office to appeal to our best selves to change our economy, society, and democracy for the better. That achievement requires a rendezvous of a critical national moment with rare skills of leadership. There have been perhaps three such presidents since Lincoln.

Obama unmistakably possesses unusual gifts of character and leadership. Because of the deepening economic crisis, he will have to move imaginatively and decisively. He will need all of his inspirational and political skills, as well as ones he is still learning.

On January 20, the recession that he inherits from George W. Bush will become his. He will need to act quickly to prevent further deterioration in what is already the worst financial collapse since the Great Depression. The American economy could return to a path of recovery and shared prosperity-or rapidly spiral downward.

Voters will expect concrete improvements as well as loftier national aspirations. As a simple matter of politics, if the crisis deepens in 2009 and he fails to deliver relief, his support could well erode and he could lose a working legislative majority midway through his first term in the 2010 elections. Then the country would face economic crisis coupled with political stalemate.

Obama will be challenged both by hard economic realities and by the constraints of conventional wisdom. In principle, two core premises about the economy, which have governed the economic thinking of both major parties for three decades, have been demolished by the deepening crisis. The first is that markets can accurately price complex financial inventions, with no need for government involvement. The second is that private outlays are invariably superior to public ones.

Economic recovery will require the drastic revision of these premises, just as in 1933. The Federal Reserve and the Bush Administration have already engaged in massive bailouts of private financial institutions, seemingly blowing away the idea that markets don't need government. Yet we have a national case of cognitive dissonance, for the same outmoded ideological assumptions linger on. The administration now accepts emergency interventions countermanding the free market-but only in practice, not in theory.

Despite the severe economic situation, there is an undertow of stale thinking that discourages transformative policies. Even with increased Democratic majorities in both houses of Congress and a great deal of goodwill, progress will be far from automatic. The new president will need to inspire the American people to demand enactment of bolder measures than either the Congress or Obama himself currently thinks necessary or possible.

As Doris Kearns Goodwin, to whom this book is dedicated, observes, all of the great presidents used their leadership first to transform the public understanding of national challenges and then to break through impasses made up of congressional blockage, interest-group power, voter cynicism or passivity, and conventional wisdom. In different ways, Abraham Lincoln, Franklin Roosevelt, and Lyndon Johnson found allies, respectively, in the abolitionist movement, the labor movement, and the civil rights movement, as well as the press and the general public. Each president grew immensely in office. Each changed the national mood, then the direction of national policy.

They did not do so by being "post-partisan," or centrist, but by taking huge political risks on behalf of principles that the people came to deeply respect. Often they enlisted some members of the opposition party in their cause, thereby splitting the opposition-but not by splitting the difference. Yet they also functioned as great unifiers.

By appealing to what was most noble in the American spirit, these presidents energized movements for change, and thereby put pressure on themselves and on the Congress to move far beyond what was deemed conceivable. They generated accelerating momentum for drastic reform that proved politically irresistible. The abolition of slavery seemed beyond possibility in 1860, as did the vastly expanded federal role in the economy in 1932, and the full redemption of civil rights in 1963.

As Goodwin notes,

History suggests that unless a progressive president is able to mobilize widespread support for significant change in the country at large, it's not enough to have a congressional majority. For example, Bill Clinton had a Democratic majority when he failed to get health reform. When you look at the periods of social change, in each instance the president used leadership not only to get the public involved in understanding what the problems were, but to create a fervent desire to address those problems in a meaningful way.

To the list of transformational presidents we must add one conservative, Ronald Reagan. The achievements of Reagan did not make our economy or society a more attractive habitat for most people, but they nonetheless represented profound change. Americans who were often dubious about what Reagan was selling found themselves liking the man. He had a sunny optimism. After the depressing years of the 1970s, people were ready for "morning in America." Reagan was admired for his willingness to take risks on behalf of principles, however flawed the principles themselves. He had the gift of leadership, and behind Reagan were armies of strategists able to turn a personal triumph into a systematic ideological reversal. Reagan succeeded in transforming public assumptions from the general premise that government should help to the idea that government was likely to make matters worse. Thanks to very effective Republican campaign machinery, ideological zeal, and party unity, that presumption held for another two decades-until it was ultimately discredited by events.

Now it is time for the wheel to turn again. Barack Obama has both the national moment and the raw material to be a transformative president. A forty-six-year-old freshman senator, an African American no less, does not decide to pursue his party's nomination against an all-but-certain presumed nominee unless he has an unerring sense of timing, confidence, and a feel for the bold stroke. Obama has exceptional skill at appealing to our better angels and a fine capacity to be president-as-teacher. He inspires, as only a few presidents have done.

But Obama will need to be a more radical president than he was a presidential candidate. Radical does not mean outside the mainstream. It means perceiving, as a leader, that radical change is necessary, discerning tacit aspirations and unmet needs in the people, and then making that radical change the mainstream view for which the people clamor.

Obama, in his books and speeches, has been almost obsessed with the idea that people are sick of partisan bickering. Yet he also has claimed the identity of a resolute progressive. Can he be both? History suggests that it is possible both to govern as a radical reformer and to be a unifier, and thereby move the political center to the left. But that achievement requires wisdom, resolve, and leadership. The easier course is to split the difference, as our last two Democratic presidents have done, and just move to the center generally. This is also what our last two losing Democratic nominees did. Their strategy failed to either inspire liberals, co-opt conservatives, or move enough swing voters. It signaled: Just another politician.

Presidential candidates, as they assemble legions of pollsters and campaign consultants, are at grave risk of being turned into risk-averse mush. As this book will explain, this seems to be more of a recent Democratic malady than a Republican one. Lincoln, Roosevelt, and the Lyndon Johnson of the civil rights era needed no polls. They were exquisitely tuned to public opinion, a talent that helped them to be superb tacticians; but each was anchored by a strong inner compass as well. To the extent that Obama relies more on his handlers than on his own core convictions, he weakens his unique self.

Three disclaimers: The alert reader will have noticed that I am making the heroic assumption that Barack Obama will be our next president. It is more than a little presumptuous to publish a book on the eve of an election on the premise that a particular candidate will win. I certainly don't have a crystal ball. But this slightly cheeky exercise enables both writer and reader to raise important questions about the obstacles that Obama will face, the choices he needs to make, and the stuff he is made of.

Second, those who become excited about a particular candidate are at grave risk of getting their hearts broken. There were times when even Roosevelt did things that appalled his most fervent admirers. As a veteran of forty years of close observation of politics, I am not a soft touch. Nor am I working as an adviser or consultant to the Obama campaign, except to the extent that this book can be read as a citizen's open letter. I believe, based on the evidence, that Obama has the capacity to be both a unifier and a transformational progressive. However, I am writing this book not as a cheerleader but as a sober counterweight to a lot of bad advice that he will receive to simply govern as a post-partisan, pragmatic centrist.

And third, in coming months there will be dozens of detailed policy proposals from think tanks and advocacy groups on all the things President Obama needs to do. For the most part, this book is not a manifesto. It is rather an examination of the dynamics of presidential leadership and its capacity to transform public assumptions and expectations, drawing on the achievements of great presidents. While there are some policy proposals herein, one lesson from history is clear. Fine programmatic ideas often fail unless a president succeeds in capturing the public imagination.

Transformational presidents, when they succeed, also transform political alignments. The two emblematic cases of the past century were of course Franklin Roosevelt and Ronald Reagan. The Roosevelt coalition, notwithstanding the Eisenhower interlude, lasted for thirty-six years, from 1932 until 1968. The Reagan coalition, despite Clinton's presidency, lasted for twenty-eight, from 1980 to 2008. Lyndon Johnson was on the way to renewing a durable progressive majority coalition, but his Vietnam debacle short-circuited his domestic achievements and invited a very different realignment. Lincoln could well have produced a constructive realignment, had he lived to serve out a second term, "with malice toward none and charity for all." But in the event, the Republicans who succeeded him began by brutally punishing the white South, then proceeded to abort Reconstruction in 1877, and mainly allied themselves with big business.

A crisis is an opportunity, but it hardly guarantees a successful presidency. For every Franklin Roosevelt, there is a Herbert Hoover. For every Lyndon Johnson turning the civil rights impasse into a moment of national greatness, there is a Jimmy Carter fumbling the energy crisis-or Johnson himself blundering into Vietnam. And on the conservative side, for every Ronald Reagan bringing working-class voters into the Republican coalition and successfully associating national optimism with far-right policies, there is a George W. Bush.

So either Barack Obama will be a transformative president, or the bad economic circumstances that he inherits will sink his promise and America's, and the moment will have been lost. He will be a great president-or a failed one, his presidency grounded "in shallows and in miseries."

The Hope of Audacity

Who, really, is Barack Obama? The moment may cry out for dramatic national change, but why should we think he will be that rare transformational leader? Giving him some benefit of the doubt, there are two basic reasons. First, his personal odyssey, writings, and speeches suggest a capacity to truly move people and shift perceptions as well as bridge differences. Second, they suggest more a principled idealist than a cynic. Anyone who thinks Obama is more weather vane than compass has not carefully read his books, followed his history, or watched him in action. His first book, Dreams from My Father, conveyed a depth and self-reflective life journey breathtaking for one still in his early thirties. It suggested Obama's character, and something else absurdly improbable in a thirty-three-year-old-wisdom.

James MacGregor Burns writes, "At the highest stage of moral development, persons are guided by near-universal ethical principles of justice such as human rights and respect for individual dignity. This stage sets the opportunity for rare and creative leadership." Only a handful of American presidents have possessed this gift. Given the desert of inspired political leadership in recent years, people today are thirsty for such a leader.

Obama's supporters believe they discern this potential. Newton Minow, the Chicago liberal warhorse who served in the Kennedy administration, told Obama, "I saw John Kennedy and now I've seen you-and I haven't seen anything quite like it in between." Progressives who backed Obama rather than John Edwards or Hillary Clinton for the Democratic nomination gave Obama a pass on some of the issues. At that stage of the campaign, many positions of Edwards and Clinton were actually a shade more progressive. But the Obama backers saw in him the raw material of transforming leadership, even of greatness.

Obama's second book, The Audacity of Hope, written in anticipation of his presidential run, combined a desire to unify and heal with a willingness to take principled risks as a progressive. The book was the opposite of the usual campaign volume written by ghostwriters and carefully scrubbed to send coded messages to the base while blandly reassuring a broader public.

Here is Obama, supposedly packaged as the post-racial African American, the Tiger Woods of American politics, casually sharing a reverie about race, expressing the audacious hope that far more unites Americans than divides them-but doing so with nerve and a refreshing absence of platitudes:

I imagine the white southerner who growing up heard his dad talk about niggers this and niggers that but who has struck up a friendship with the black guys at the office and is trying to teach his own son different, who thinks discrimination is wrong but doesn't see why the son of a black doctor should be admitted to law school ahead of his own son. Or the former Black Panther who decided to go into real estate, bought a few buildings in the neighborhood, and is just as tired of the drug dealers in front of those buildings as he is of the bankers who won't give him a loan to expand his business.

Deconstruct those two sentences: Yes, there is plenty of ugliness in America's racial history-niggers this, niggers that. There are decent whites trying to transcend it, but affirmative action sometimes isn't fair to whites, either. Though the black experience is more brutal, blacks and whites alike have legitimate anxieties about race. Many of the concerns are really about who gets ahead economically. Most blacks don't have any more tolerance for crime than most whites. Redemption is always possible-the white southerner, his black office mates, and his son; the former Black Panther as small businessman. All of this is deeply personal as well as subtle, complicated, and elegant; it's about the struggles of decent people that shouldn't be reduced to slogans and stereotypes.

This is a narrative that speaks to American life as it is lived. It conveys genuine empathy. It is intuitive Obama. No pollster or speechwriter could have composed that passage. The fervent desire to transcend difference is sincere-and hardly surprising in the son of a white Kansan and a black Kenyan. Likewise the wish to reach across the partisan aisle, which reflects Obama's own experience in the Illinois legislature, sometimes moving Republicans to embrace surprisingly progressive policies.

(Continues...)




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