There are many here who are angry at Obama's economic policies but in particular his financial regulatory policies. Wall St firms that have been bailed out and survived on low-interest loans and guarantees from the Feds have turned that easy money into big money and big bonuses. Easy criticism but Taibbi's screed which appears to have buoyed two diaries on the recommended list is wrong on several accounts.
- Obama's advisers in the campaign were not nearly as progressive as he claims.
- The watering down of financial regulatory reform has less to do with Obama's advisers and more to do with "New Democrats" such as Melissa Bean and even progressive Democrats such as Barney Frank.
There are some very valid points in his piece. Rubin Democrats got it very wrong on deregulation in the '90s (but they also got it very right by focusing on deficit reduction in the early '90s which was decried by Robert Reich among others). Rubin Democrats also didn't fully appreciate the complicated consequences of the free trade agreements (but hey Paul Krugman didn't either at the time, you may not remember but he made his name as a new Democrat pushing the benefits of free trade).
Again however Taibbi has lost touch with reality in his rant.
First, this idea that Obama jettisoned his progressive advisers is silly and wrong.
- Larry Summers was Obama's chief economic adviser for the entire general election campaign. He did not suddenly spring out of nowhere to become Obama's "economic czar." (It's interesting that Taibbi vacillates betweening blaming everything on Summers and listing all the other powerful Rubenites.)
- Austan Goolsbee is not a progressive economist. He is a centrist from the University of Chicago. In fact, he was the one who told the Canadians that Obama didn't really mean he was going to back out of NAFTA.
- Jared Bernstein is a key economic adviser. Despite his formal role under the VP, he is in on every meeting of the economic principals and has made several official WH blog posting and speeches.
- Melody Barnes (not mentioned in Taibbi) is the President's Domestic Policy Adviser and the Director of the Domestic Policy Council. She is very liberal and a former key staffer for Ted Kennedy. She joined the team after the election.
- Peter Orszag in addition to having been mentored by Robert Rubin was also earlier mentored by Joe Stiglitz (a very progressive economist to the left of Krugman). I don't think this whole mentoring thing means a whole lot but anyway.
Second, the dilution of the financial regulatory reform has been more the fault of moderate and conservative Democrats then the Obama team. I follow financial regulations as my job and I have been stunned by how a very moderate proposal by the Obama administration has been successfully watered down by "New Democrats" such as Melissa Bean and conservative Democrats.
- The Obama admin proposed a Consumer Financial Protection Agency with "plain vanilla" products. Frank took it out under pressure from "New Democrats". I would note that even a weakened CFPA barely appears to have the votes in the House (we'll see if conservative Dem Minnick's amendment today passes or not.)
- The House has added loophole after loophole to derivatives legislation. The Obama's proposal wasn't perfect to begin with but it was much stronger.
For all the criticism the Obama administration got for not being specific on health care reform, the Obama admin has been very specific with regard to financial regulatory reform to the extent that they have drafted legislative language for it all. Go read it
Its much more progressive and agressive then the "liberal" House will pass.
My point is really two-fold. Maybe Taibbi projected this firebrand economic progressive on to Obama during the election, but he really wasn't. Also his circle of advisers hasn't really changed and still includes a mix of centrists and progressive economists.
Second, this idea that Obama has the dictatorial power to pass whatever legislation he wants needs to die. If that was true Obama would have healthcare by now. We may not really know where Obama stands on healthcare, but on financial regulatory reform, the specific proposals put forward by the Obama admin are more progressive then what the House will likely pass today and god knows what will come out of the Senate next year.
There is some criticism below that I didn't deal with the substance of Taibbi's piece. I intentionally didn't. I don't agree with him, but I think there are two important memes in his piece which are factually wrong.
- Obama is a progressive turncoat - Obama ran as a center-of-left candidate and he is governing as such. His advisers were center-of-left during the election and they are center-of-left now. His policies were center-of-left during the election and they are center-of-left now. There are some changes but not much.
- The failure of the progressive agenda (or even the center-of-left agenda) is all Obama's fault - Congress is more conservative, more captured by the special interests (including Wall St), and more critical to the domestic legislative agenda then any of the Obama's advisers. Obama has the most progressive climate change team imaginable but will likely pass a watered down "centrist" "energy independence & green jobs" bill (and that only if he is lucky). Obama proposed a very progressive version of the CFPA but Democrats from Barney Frank to Melissa Bean watered it down. Having followed the financial bill very closely, I am outraged at how minor little provisions have been watered down and loophole after loophole added. For example, Obama wanted all private fund advisers to register with the SEC so that their investors would have the protection. Then quietly venture capital fund advisers were exempted. Why? Because they quietly lobbied their representatives and no one else cared.
Anyway, you can argue about policy all you want- I welcome that debate. I just don't appreciate the virtual character assisination implicit in many of the more heated criticisms of some.