The purpose of Rubinism -- that strain of neoliberalism that emerged in the nineties under President Clinton and still dominates the Party under President Obama -- is to protect the corporate-imperial state by making it kinder and gentler. Doctrinaire right-wing policy is simply too harsh, too draconian in its creation of inequality, to be sustainable. It's doomed, destined to destroy itself. But Rubinism -- or Wall Street "liberalism," if you like oxymorons -- keeps the populace placated by offering it just enough goodies.
Or it was supposed to.
Rubinites are committed to helping preserve the profits and power of Big Business; at the same time, they seek to lessen the pain inflicted by corporation-dominated capitalism. Rubinites may still believe, in the face of overwhelmingly evidence to the contrary, that they can both preserve the power of Big Business and keep economic inequality at an acceptable level. But they're fully aware that rising inequality is a threat to the power of Big Business, and they want to impose minor restrictions on Big Business for the purpose of protecting it. President Obama made this explicit during a meeting with banks executives.
"My administration is the only thing between you and the pitchforks," the president told them.
The corporate media predictably described this as "tough talk." Baloney. At best, it was tough love, but love it still was. Oh, to have political leaders willing to pick up their own pitchforks. Instead, we have a Democratic president imploring banks to curb their excesses, just a little, in order to keep the masses subdued.
Rubinities believe their policies to be thing protecting the powerful from the pitchforks, and for a while, in the nineties, they seemed to be. Under Clinton, the economy grew. Even as the underlying, inequality-causing forces -- the financialization of the economy, globalization, deregulation, 1 %-friendly taxation -- deepened, the plight of many Americans improved. The gains were not illusory. The economy gained an average of more than 200,000 jobs a month. At the end of Clinton's presidency, unemployment among blacks stood at an all-time low. The super-rich flourished in the nineties, as did corporations, but Americans were fat enough and happy enough to remain sedate and sedated. It was possible even for many liberals to believe or pretend that a rising tide really did lift all boats, not just yachts.
But Rubinism had little to do with the economic growth under Clinton, which was attributable primarily to tech boom-driven consumption. The one Clinton policy that helped to spur growth in the short term, Rubin's over-valued dollar, hurt Americans in the medium-term in the form of depressed wages and a ballooning trade deficit. At the same time, Clinton's Rubinite policies --"free" trade, deregulation, austerity -- exacerbated inequality.
It's clear that President Obama intended more or less to mimic the Clinton years. He even packed his administration with former Clinton aides and Rubin proteges. Because Obama entered office during a recession, a recession caused by the big banks, he had no choice but to offer a somewhat more activist program than Clinton's, but his presidency has been defined, and neutralized, by a deference to Wall Street and corporate power.
The President has governed like a committed Rubinite. His disastrous bank-friendly approach to the housing crisis and his push for corporate trade deals speak for themselves. Sometimes people cite the stimulus package as a sign of his liberalism, but tax cuts limited its effectiveness, as did a misplaced neoliberal concern about deficits. A storyline has taken hold according to which it was GOP intransigence alone that limited the size of stimulus; in fact, President Obama stated quite clearly he was worried about deficits.
Like the stimulus package, President's Obama Wall Street reform effort was a "liberal" kind of bill in that its ostensible purpose was to regulate Wall Street. But it was weak stuff, and the Obama administration wanted it to be weak. Geithner's Treasury Department worked to kill all the tough measures, like the strong proposal to regulate derivatives and Bernie Sanders's approach to auditing the Fed. Or consider the effort to break up the big banks. The Obama administration made sure the monster banks stayed intact.
How about President Obama's much-lamented push for a Grand Bargain that would cut Social Security and Medicare? He pledged to pursue just such a "Grand Bargain" during his very first days in office. Which made sense because neoliberals in the Democratic Party have been pushing for a "Grand Bargain" since the nineties.
Trying to produce just results with corporate means is like trying to build a house with cardboard. Consider his health care reform package. Its ostensible goal, to provide more Americans with health insurance, is admirable and progressive, but it was weakened and all but undermined by its strengthening of the corporate insurance regime. For all I know, President Obama sincerely wants to alleviate the suffering of the American people, but he wants to do so on Rubinite terms, and that's a circle that can't be squared. Wall Street "liberalism" offers no solutions to our fundamental economic problems.
The result of President Obama's Rubinite policies has been, as Mike Konzcal says, horrible.
Lost years for the economy have major consequences. Beyond the human misery that results, they put the entire project of liberal governance at risk. Choices made early by this administration resulted in no advancement on three fronts that could bolster the struggling economy: fiscal policy (increasing the deficit through spending on investment and temporary tax cuts), monetary policy (increasing the money supply to stimulate growth), and dealing with the problems in the housing market.
Starting in late 2009, the Obama administration started framing our economic crisis as a “dual deficit problem.” In other words, the administration wouldn’t push for a larger short-term deficit—spending more money to stimulate the weak economy, a key tenet of Keynesian economics—without also cutting the long-term deficit. Treasury officials told a reporter at The New Republic that the administration needed to show “some signal to US bondholders that it takes the deficit seriously” and that “spending more money now [on stimulus] could actually raise long-term [government] rates, thereby offsetting its stimulative effect.”
The good news is that President Obama seems to have shaken off his austerity fixation. Now, needing to win reelection, he's begun again to use nice populist rhetoric. But it's just rhetoric at this point. He's shown little sign of being willing to -- and offered no policies that would -- seriously challenge the power of corporations and Wall Street. No call to, for example, institute a financial transactions tax or break up the big banks or sufficiently regulate derivatives or put in place tax policies that would put a real dent in economic inequality or overhaul U.S. trade policy so that it benefits workers instead of corporations.
Progessives are beginning to close ranks behind the President, and that's to be expected, that's Democratic politics, but make no mistake: the ideology that he's embraced -- and that he's unlikely to abandon unless forced to -- helped produced the conditions that make OWS essential. And more of the same will produce more of the same -- or, the same but more.