Summary: Today we guess about Obama’s next term. Post your thoughts in the comments. I expect him (or Him) to finish the great work of this first term, moving the US political spectrum decisively to the Right by committing the Democratic Party to conservative policies. His first term did that with Bush Jr’s national security and financial regulation policies. Now he’ll do the same by slashing the New Deal’s safety net and firmly extending the Bush Jr’s flattish taxes (ie, only partially undoing them). First in this series about the results of Campaign 2012; see the other posts listed at the end.
“Barack Obama broadly follows Ronald Reagan’s (second term) security policy, George H.W. Bush’s spending policy, Bill Clinton’s tax policy, the bipartisan Squam Lake Group’s financial-regulatory policy, Rick Perry’s immigration policy, John McCain’s climate-change policy, and Mitt Romney’s health-care policy.”
— A charitable view of Obama by good liberal Brad DeLong (Prof Economics, Berkeley), 10 Sept 2012
Contents
- Term two will take us further to the right
- Michael Hudson explains
- Valuable articles about the election, and term II
- This series about the results of Election 2012
- For More Information
(1) Term two will take us further to the right
All public policy in America remains uncertain until adopted by both major parties. FDR’s revolutionary new deal and internationalist policies were finalized by Eisenhower and Nixon.
Bush Jr’s revolutionary policy changes were too soon, too large for Obama to absorb in one term: global interventionist military, low taxes for the rich (undoing much of the progressive tax structure), “unitary executive” (few practical limits on Executive power). But he did yeoman work, quashing the opportunity for regulatory reform of the banks and stimulus programs to start the rebuilding of America — expanding Bush Jr’s wars into new lands (especially Africa), and continuing the historic rollback of civil liberties that took centuries to achieve.
Quite an accomplishment for four years. More change than the 1% hoped for! The next four years might prove even more rewards, showing their massive expenditures in Campaign 2012 successfully shifted the Overton Window to the Right — allowing Obama to drag the Democratic Party to the Right.
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(2) Michael Hudson explains
I was going to write a detailed forecast, but Michael Hudson did it first and better: “My Take on Obama’s Big Win“, Naked Capitalism, 10 November 2012. His analysis closely tracks mine in this series. Please read this in full.
Here’s an excerpt:
Obama’s two presidential victories represent an object lesson about how the 1% managed to avoid rescuing the economy – and especially his own constituency – from today’s rush of wealth to the top. Future political annalists will see this delivery of his voters to his Wall Street campaign contributors control as his historical role. In the face of overwhelming voter opposition to the Bush-Cheney policies, the President has averted popular demands to save the economy from the 1%.
Instead of sponsoring the hope and change he promised by confronting Wall Street, the pharmaceutical and health care monopolies, the military-industrial complex and big oil and gas, he has appeased them as if There is No Alternative. … His task over the next 2 months is to avoid using deficit spending to revive the economy.
The neoliberals whom he appointed as a majority on the Simpson-Bowles Commission already have inflated their trial balloon claiming that the government must balance the budget by slashing Social Security, Medicare and Medicaid, not by restoring progressive taxation. My UMKC colleague Bill Black calls this the Great Betrayal: “Only a Democrat can make it politically safe for Republicans who hate the safety net to unravel it”.
Having appointed the Bowles-Simpson commission members who seek to shift the tax burden off business onto consumers, the President will pave the way for Bush-type privatization. In his first debate with Mitt Romney, Obama assured his audience that they were in agreement on the need to balance the budget (his euphemism for scaling back Social Security, Medicare and Medicaid). By christening this “the Great Bargain,” President Obama has refined Orwellian doublethink.
… Four years ago the economy stood at a potential turning point in the war of finance against labor and industry, President Obama could have mobilized public support for politicians willing to rescue hopes for prosperity. He could have appointed a Treasury Secretary and Federal Reserve chairman who would have used the government’s majority control of Citibank, Bank of America and other “troubled asset” holders to take these into the government sector to provide a public option. He could have written down debts to payable levels at only a fraction of the cost that was spent on rescuing Wall Street. Obama’s political genius was to avoid doing this and nonetheless keep his “street cred” as paladin defending the 99% rather than the 1%.
Having been elected with an enormous voter mandate, Mr. Obama could have reversed the sharp polarization between creditors who were pushing the 99%, industry and real estate, cities and states deeper into financial distress. Instead, his policies have enabled the 1% to monopolize 93% of America’s income gains since the 2008 financial crisis.
At a potential turning point in the direction the American economy was taking, rescue and change were averted. We have seen what will stand as a classic example of cynical Orwellian doublethink. Promising hope and change 4 years ago, President Obama’s role was to hold back the tide and divert voter pressure for change. He rescued the financial sector and the 1%, and sponsored the Republican privatization of health care instead of the public option, and to take $13 trillion onto the government balance sheet in the form of junk mortgages, largely fraudulent loans held by Fannie Mae and Freddie Mac ($5.2 trillion alone) and other casino capitalist gambles gone bad. Mr. Obama was Wall Street’s white knight.
The trick was to get re-elected as a Democrat rather than as a Republican sponsoring a health care plan crafted by the Koch Brothers’ Cato Institute, and putting Wall Street bank lobbyists in charge of the Treasury and (de)regulatory agencies.
Michael Hudson is a Professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College. His latest book is The Bubble and Beyond.
(3) Valuable articles about the election, and what is to come
Analysis of the election:
- “America’s Increasingly Tribal Electorate“, Tom Jacobs, Pacific Standard, 1 November 2012 — “A political scientist explains the disconnect between our moderate policy views and our intense hatred for the other side.”
- “How Conservative Media Lost to the MSM and Failed the Rank and File“, Conor Friedersdorf, The Atlantic, 7 November 2012
- “Obama and progressives: what will liberals do with their big election victory?“, Glenn Greenwald, The Guardian, 7 November 2012 — “With fights over social security, Medicare, ongoing war, and other key progressive priorities looming, what will they do with their new power?”
A sign of the future: applause from the Right for Obama
- “Counterterrorism Legal Policy in Obama’s Second Term“, Jack Goldsmith, Lawfare, 9 November 2012 — As in term 1, the Constitution’s enemies applaud Obama, and look forward to further assaults on the Republic.
About ORCA, the failed GOP project that contributed to defeat:
- “Inside Orca: How the Romney Campaign Suppressed Its Own Vote“, Breibart, 8 November 2012
- “The Unmitigated Disaster Known As Project ORCA“, Ace of Spades HQ, 8 November 2012
The above two posts comes to us from the dark side. Breibart is a shop manufacturing propaganda and disinformation. The headline banner for Ace of Spades is this quote from H. L. Mencken: “Every normal man must be tempted at times to spit upon his hands, heist the black flag, and begin slitting throats”.
That aphorism reads differently at a website discussing the Long War than it did in 1919. Like so many quotes used by conservatives, it’s ripped from context and given a new meaning. A comment on the website says “I like the Menken quote. It would scare the crap out of my liberal friend”. An odd view of a line from an essay titled “The New Poetry Movement”. Let’s look at the fuller quote:
Ezra Pound? The American in headlong flight from America—to England, to Italy, to the Middle Ages, to ancient Greece, to Cathay and points East. Pound, it seems to me, is the most picturesque man in the whole movement—a professor turned fantee, Abelard in grand opera. … But now all the glow and gusto of the bard have been transformed into the rage of the pamphleteer: he drops the lute for the bayonet. One sympathizes with him in his choler. The stupidity he combats is actually almost unbearable. Every normal man must be tempted, at times, to spit on his hands, hoist the black flag, and begin slitting throats. But this business, alas, is fatal to the placid moods and fine other-worldliness of the poet.
My guess (emphasis on guess) is that Mencken would find the Ace of Spades website a rich mine of material, but agree with little of it.
(4) Other posts in this series about the results of Election 2012
- Conservatives, celebrate the historic victory you won today!
- The votes were counted and one wing of our one ruling party won. Rejoice!
- How Obama AND conservatives both won on Tuesday
- Civil rights just took a step forward, the slow hard way. The right way.
(5) For More Information about hope and change
- “Don’t Let Barack Obama Break Your Heart” by Tom Engelhardt, 21 November 2008
- Obama’s national security team: I hope you didn’t really believe in change?, 26 November 2008
- Obama supporters mugged by reality (and learn not to believe in change!), 9 December 2008
- Change you should not have believed in, 10 February 2009
- Quote of the Day, 20 May 2009 — Connect the dots between Bush and Obama to see the nice picture.
- Stratfor looks at Obama’s foreign policy, sees Bush’s foreign policy, 30 August 2009
- Motto for the Obama administration: “The more things change, …”, 5 September 2009
- Change, the promise and the reality, 11 October 2009
- Another bold action by the radical leftists of Team Obama, 9 September 2010
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Dont make it so obvious that you support ANYTHING the GOP does. Did you vote GOP all the way down your ballot too? Use your brain. Both sides have issues. You cant sit here and bash one side all day while giving the other a hall pass. WAKE UP!
Skyfall continues the long tradition on the FM website of attacks in the comments from both Left and Right (for examples see About the politics of the FM website). Our marketing staff warns that this is no way to run a business. Success in America comes from joining a tribe and feeding its beliefs — passing myths and lies is the fast track to popularity.
For specific evidence that Skyfall’s comment is grossly inaccurate, see the brutal criticism of the GOP (and more broadly, the Right) in the posts listed on Politics in America Reference Page, looking in these sections.
4. About conservatives and the Republican Party
5. About the Tea Party movement
6. About Occupy Wall Street
7. About elections (in general)
8. About the McCain-Palin ticket in 2008
9. About the 2012 Campaign
Skyfall’s is a natural mistake to make after reading just this post. No flowers needed; a simple apology will suffice.
The definition of insanity is doing the same thing repeatedly and expecting a different result.
Accordingly, I plead innocent by reason of insanity because I do expect a different result – not because of Obama’s intentions, actions, or efforts but rather because overwhelming events are arising in Europe that will overwhelm any political calculus in Washington.
Duncan,
(1) “Accordingly, I plead innocent by reason of insanity”
Be careful about self-diagnosis of insanity with that definition. That comes from Alcholics Anonymous, and describes people in the grip of personal dysfunctionality.
(2) “I do expect a different result – not because of Obama’s intentions, actions, or efforts but rather because overwhelming events are arising in Europe that will overwhelm any political calculus in Washington.”
That’s intriguing! If you have a moment, please explain. How do you see change in Europe (from your previous comment, dis-union and economic stress) affecting “political calculus in Washington”?
Among other things, we seem to be headed toward a 2008-type financial crunch ( if not a greater one ) – with the world economic system less well equipped to respond than before.
I can’t predict the specific fallout from such a crunch, but I can guarantee you it would be serious
“Among other things, we seem to be headed toward a 2008-type financial crunch (if not a greater one)”
What evidence do you see suggesting that? Private sector debt levels are lower in almost all nations. The developed nations bank’s already have government backstops, the lack of which were a major contributor to the crash by Q4 of 2008. And in Q4 2008 the US had already been in recession for 3 quarters, where as we’re stable or slowly growing now.
I fully agree with Duncan Kinder:
The financial, monetary and economic disruptions caused by a resulting crash would certainly be momentous.
The other country to look for is Japan. Economically, it is not doing well; as the obfuscation and collusion of officials with nuclear energy firms are uncovered, mistrust in the population is growing; and the molten or unprotected fuel remaining in the ruins of Fukushima is still a ticking bomb. At some point, these strains may well jeopardize the entire Far Eastern policy of the USA — which has historically relied upon a solid Japan.
People tend to forecast by assuming repetition of what’s already happened. This seldom happens, especially following crashes, as the crash (like an earthquake) reduces the stress that caused the crash.
Most of this is sort of right, sort of wrong.
(1) Agreed. The EU’s austerity program has the northern European nations slowing, put some of the periphery nations into recession, and put Spain and Greece into depressions. This looks likely to continue until some form of social unrest erupts.
(2) Much of the EU private financial system is dysfunctional, operating under state control and support. That makes it less likely to collapse, not more.
(3) The largest EU real estate bubble was in Spain, and that’s slowly deflating. Now that we had a bubble, many have gone bubble-mad — seeing bubbles everywhere (it’s easy to gain attention by predicting reoccurences; difficult to do so by predicting new things). Bubbles very seldom occur in pairs. There are some probably over-valued real estate markets (eg, Canada, esp Vancouver. Some areas in China). But not widespread.
(4) The primary reason that crashes seldom quickly repeat is that the slow growth following a crash means that cyclical sectors (eg, building, auto mfg) are depressed — and just don’t have as far to fall. The EU economy is already depressed. It could easily continue to slide from the current stability (as a region) into recession. It might even slide into a depression, although that’s not likely unless there is political or social instability (the tiny current unrest, even in Greece, hardly counts).
Spain and Greece both have 25% unemployment.
Before you dismiss Greece as insignificant, note that until recently it had served as a bedrock of stability for the Balkans. No longer. And the Balkans are growing more and more Balkanized every day.
Greece is insignificant in the sense of small. Just like a fuse or blasting cap on a bomb is small.
Great articles, FM, I’m digging into them right now but I had to comment on something first.
“His task over the next 2 months is to avoid using deficit spending to revive the economy.”
Not possible. There’s not enough time and the issues are too big.
Obama has made it clear that Wall Street and the military must be made happy above all else. He and the Republicans will make a deal. If I was a betting man, I’d say they’ll have some sort of temporary deal in place before the Christmas recess that extends the current situation and then they will vigorously rearrange the deck chairs on the Titantic a few more times and call it done without really changing anything.
I’d like to put my two cents in on Europe. The primary difference between 2008 and now is that 2008 was primarily a fiscal systems crisis, the current situation is a huge political crisis. Crises of this sort can hover for a LONG time before crashing down on people’s heads. They can even become “the new normal,” lasting a decade or two under the right conditions (see Japan). But the longer they take to occur, usually the greater the resulting destruction.
In spite of FM’s comment about bubbles, I feel there is a big bubble in the US stock market right now based on overconfidence that the Fed can and will continue to protect the bigger investors from all mistakes, no matter how stupid. But I have no clue as to when the bubble will pop.
I think Pluto and I agree. I’m not clear on some of his comment.
(1) “Not possible. There’s not enough time and the issues are too big. ”
I don’t understand what there’s not enough time to do. Pluto’s summary is exactly what Hudson & I are saying: “Obama has made it clear that Wall Street and the military must be made happy above all else. He and the Republicans will make a deal”
(2) “I’d like to put my two cents in on Europe. The primary difference between 2008 and now is that 2008 was primarily a fiscal systems crisis, the current situation is a huge political crisis.”
That’s exactly what I’ve been saying all year.
(3) “Crises of this sort can hover for a LONG time before crashing down on people’s heads.”
Yes, that’s an important factor. The people of the periphery have strongly supported the austerity programs, which might have given EU leaders confidence that they will continue to do so, even as their recessions deepen. I am amazed at these nations social cohesion, and wonder how long it will remain solid.
(4) “I feel there is a big bubble in the US stock market right now based on overconfidence that the Fed can and will continue to protect the bigger investors from all mistakes.”
While I agree about people’s confidence in government support (which I believe is a true across the OECD). But “bubble” is a technical term; it is not a nifty synonym for “overpriced”.
“I am amazed at these nations social cohesion, and wonder how long it will remain solid.”
Just for the sake of illuminating the problem from another angle, let me suggest that the apparent lack of push-back by European populations might conversely be interpreted as diminishing social cohesion. Cohesion is needed for large, organized and articulate opposition; when it is missing, people tend to fall into apathy, venting their displeasure in random bouts of fury — and this is exactly what has been happening at irregular intervals in France (rioting and burning), the UK (rioting and looting), and Greece (rioting and lynching directed at the police and more recently at immigrants), for several years now, in uncontrolled and depoliticized manner.
Another point is that many of those smaller countries in crisis resort to another safety valve (which is not available to larger countries): emigration. Even with the figures reaching to 2010 only, net long-term migration has become negative in such countries as Ireland, all three Baltic States, Greece, Portugal, Slovenia. Once again, when people prefer individual flight to standing their ground together, this might be interpreted as a lack of social solidity.
But in truth, I do not really know whether high or low social cohesion explains the reaction of European populations at this stage. Resilience or resignation?
All great points!
(1) I hadn’t thought of a passive population — few protests — as a sign of low cohesion! On the other hand, perhaps there are few protests because the population agrees with the government’s strategy. The polls I’ve seen show large majorities in the periphery nations in favor of staying in the EU and with the euro — which leaves few alternatives.
(2) Emmigration — I’d like to see some expert analysis of this. The news media has provided numbers, but I don’t know enough to assess its significance. From Reuters, 17 October 2012:
My “not possible quote” that confused FM was in response to the comment that Obama will need to figure out how to avoid the Fiscal Cliff in the next couple of months without deficit spending. In the end, I suspect that we’ll just ignore the law requiring the fiscal cliff and keep spending dollars we don’t have like they were going out of style. Which might happen some day if we work hard enough at it.
The only other thing I have to add is that the media reports on what is happening in Greece and other countries is probably overstated. Here are some comments by a very smart retired US military officer who has lived in Greece for some years now: MilPub.
Pluto,
I still don’t understand.
(1) “I suspect that we’ll just ignore the law requiring the fiscal cliff and keep spending dollars we don’t have like they were going out of style.”
IMO the odds of that are microscopic, or smaller. Congress & Obama might do something large or small, or just kick the can down the road, or let the sequester run.
(2) “Which might happen some day if we work hard enough at it.”
Someday is quite vague, and might be decades (or more) in the future. Our fiscal problem results almost entirely from our crazy health care system (our peers have tested & proven many solutions), our massive military/intel spending (again, our peers spend far less), and the Bush tax cuts (ie, tax rates far below the post-WWII average). None of these are inherently difficult to fix. Note the GOP is a large obstacle to fixing all 3 problems.
(3) “The only other thing I have to add is that the media reports on what is happening in Greece and other countries is probably overstated. Here are some comments by a very smart retired US military officer who has lived in Greece for some years now.”
Aviator47’s comments about conditions in Greece state the conventional view I see in the mainstream US media. In what way are these views “overstated”?
Further note about US long-term fiscal problems
Nice statement of the importance of rising health care costs: “The single best graph on what’s driving our deficits“, Ezra Klein, Washington Post, 9 November 2012.
There is no long-term fiscal problem other than the Bush tax cuts, health care costs, and massive defense/intel expenditures.
FM: “(1) “I suspect that we’ll just ignore the law requiring the fiscal cliff and keep spending dollars we don’t have like they were going out of style.”
IMO the odds of that are microscopic, or smaller. Congress & Obama might do something large or small, or just kick the can down the road, or let the sequester run.”
Yeah, my apologies, I spoke imprecisely. I expect we’ll kick the can down the road. The second most likely possibility comes from the Republicans deciding to let the sequester run and try to blame the Democrats. In that scenario, there is a small chance that the President might get desperate enough to avoid the blame to try to cancel the tax increases (really the return to normal tax rates) via Presidential decree to “avoid damaging the economy further in these delicate times.”
FM: “Someday is quite vague, and might be decades (or more) in the future. Our fiscal problem results almost entirely from our crazy health care system (our peers have tested & proven many solutions), our massive military/intel spending (again, our peers spend far less), and the Bush tax cuts (ie, tax rates far below the post-WWII average). None of these are inherently difficult to fix. Note the GOP is a large obstacle to fixing all 3 problems.”
Agreed on all counts. I was in a grumpy mood when I typed the message and I strongly agree that it would take several more decades of bad behavior and the rise of a viable alternative before we lose our default currency status.
FM: “Aviator47′s comments about conditions in Greece state the conventional view I see in the mainstream US media.”
I don’t know what you’ve been seeing in the US MSM, but I’ve been seeing a lot of articles emphasizing the shrinking social cohesion, rioting and strikes. At least in Aviator 47’s (very small) part of Greece, the social cohesion seems to be holding up better than reported in the US MSM. Like you, I keep wondering how much longer the Greeks can keep it up.
My other unanswerable questions in what would happen in the US if we had a similar experience with fiscal austerity being imposed on us by a much larger external force. But we’ll never know until the flying saucers land.
“I’ve been seeing a lot of articles emphasizing the shrinking social cohesion, rioting and strikes. ”
You have a better grasp of what the mainstream US news media says. I don’t watch TV, and rely mostly on Reuters — plus the NY Times, BBC, London Times, Financial Times, and Der Spiegel. They’ve been quite accurate in their stories about Greece.
I should have known brad delong was a prof. at jerkley,that guys lipps are permanently glued to obamas butt.
Yes, DeLong is a straight-line true-blue Liberal. That’s why his admissions about Obama have such impact! They’d be sour grapes or such from a conservative.
“Will MSNBC continue to shill for the Great Betrayal?“, William Black (Assoc Prof Econ, U MO-KC), New Economic Perspectives, 12 November 2012 — Excerpt:
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Really, it is painfully obvious that we are heading towards another – wait, the same, but long and drawn out – financial “crisis” – call me skeptical, but those in charge in DC are nothing but looters and liars. Better buy up beans, bullets and band-aids. Have fun.
“Really, it is painfully obvious that we are heading towards”
Quite a bold statement. Do you have a record of successful economic forecasting? Color me skeptical.
“but those in charge in DC are nothing but looters”
Perhaps; that’s a matter of personal values. We know that they see themselves as “owners”, which is legally correct. The history of civilization is largely one of oligarchic rule, and the ruling elites tend to see the masses as sheep. We might dislike their characterization, but their view is usually operationally correct — and so far correct in the USA today.
“and liars.”
Do you worry about truth when speaking to sheep, cows, and dogs? How would you reply if a visitor to your farm said that you were a liar, not speaking accurately to the cattle as they move into the slaughtering pen?
“Better buy up beans, bullets and band-aids.”
You assume that we will rebel. Large, serious revolts are very rare in history. Despite what Captain Kirk said so often in Star Trek, people adapt quite easily to servitude. Certainly there are no signs today that Americans will stir themselves to electoral revolt — let alone the violent revolt you forecast.
I believe these fantasies of violent revolt are a mechanism by which Americans adjust to their conversion from citizens to sheep. They accept their new lot, but mutter about the great day when they’ll rise up and smite — whoever they focus their hate on (usually “others”, like women, ethnic or religious minorities, or foreigners).
“Have fun.”
The Declaration gives you the right to pursue happiness. That’s one right the government cannot take away, although they can make its attainment quite difficult.