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Andrew Sullivan is Right: Obama Has Governed as a Conservative

Sullivan took Obama's critics to task for not recognizing his accomplishments--sadly, those accomplishments only appeal to "conservative-minded independents" like him.
 
 
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Last week, Newsweek magazine and The Daily Beast published an article by Andrew Sullivan, “How Obama’s Long Game Will Outsmart His Critics,” which excoriated left-wing critics for failing to appreciate how much Obama has accomplished, while at the same time trying to convince conservatives that Obama is not a liberal, let alone a socialist, and that, in fact, he has governed as a conservative.  The fact that these two critiques are internally inconsistent has somehow managed to escape Mr. Sullivan.

The main case Mr. Sullivan, a self-described “conservative-minded independent,” makes for Obama is that, “he continued the bank bailout begun by George W. Bush, he initiated the bailout of the auto industry, and he worked to pass a huge stimulus package of $787 billion.”

In fact, Obama deserves even more credit for the bank bailout (TARP) than Sullivan gives him:  Obama did not simply “continue the bank bail-out,” he, more than Bush, was the main reason TARP passed Congress, as Congress first rejected TARP, then passed it by a narrow margin when Obama, then far in the lead of McCain in the Presidential race, endorsed it and actively campaigned for its passage.  It was the first, but not the last, example of Obama promoting a Republican plan.

Sullivan essentially argues that the bank rescue was necessary, so stop whining about it and give Obama the credit he deserves.  There are many problems with this theory, the first of which is that TARP, and the subsequent giveaways and guarantees given to banks by the Federal Reserve and overseen by Obama, put too much of a burden on taxpayers, too little on the bank shareholders, and placed almost no conditions on the banks in terms of how they used the federal hand-outs or how they compensated the managers of these failed banks.  Normally, when a business fails in a capitalist economy, the shareholders take the losses.  But what TARP did was shift losses for toxic investments in poorly collateralized debts (mostly mortgages) to taxpayers.  At the same time the private equity market was paying 20 cents on the dollar for toxic assets, Obama’s advisor and later Treasury Secretary, Tim Geithner, was counseling Obama to agree to pay 100 cents on the dollar for the same junk, which he did.  If you read Nobel Prize winning economist Joseph Stiglitz’ book, “Freefall,” you will see that Obama did this passively and reflexively, without any serious consideration of alternatives.  Not only did the federal government overpay and over-guarantee bank obligations, it imposed no conditions on the banks to loan money to Main Street.  

The central economic problem, of course, was the freezing up of credit, which blocked investment and development; even if saving the biggest banks was required (as opposed to other options, such as nationalizing the largest banks or letting banks fail and establishing a federal lending institution), the fact that money was not distributed downward into the economy allowed the economy to continue to stagnate while the banks were awash in cash, which they used mainly to buy up small and mid-sized banks so today the big banks are even bigger and there are fewer community-based and mid-sized banks to compete with them.  And, of course, the banks continued their excessive compensation practices unabated while most taxpayers saw their house values, pension plans and net worth fall 30-40%.  Arianna Huffington said at the time that Obama had sacrificed 70% of his credibility with voters by standing with the banks, and not average people, and that seems about right to me.  The Democrats historic shellacking in the November 2010 election confirms this assessment.  Was that huge election defeat part of Obama’s “long game,” Mr. Sullivan?

Sullivan credits Obama with saving the auto industry, and I agree that credit is warranted.  But Sullivan fails to note how differently auto workers were treated than bankers by Obama.  When the Obama Administration agreed to invest in the auto companies, they did so on the condition that future worker wages and benefits would be substantially diminished, so what you now have in the auto industry is a two-tier wage/benefits scale, with older workers getting good wages and benefits and younger workers getting substantially less now and in their futures.  No such wage or compensation limits were placed on bankers, despite the fact that the federal bank bailouts and guarantees were more than a hundred times bigger than the auto bailouts.  If and when “long game” historians write the obituary of organized labor, the auto industry’s two-tier wage cram-down by Obama will merit a chapter.

Sullivan credits Obama with creating jobs with his $787 billion stimulus plan, but fails to note that $282 billion of this was tax cuts which no one had asked for and which had very little stimulus effect, as people used their tax rebates to pay off debt.  That left only $500 billion for real stimulus---approximately 1/3 of what his economic advisors considered necessary to jolt the economy and bring it back to life.  If you read Ron Suskind’s marvelous book, “Confidence Men,” which carefully examines the stimulus decision within the Obama White House, it becomes painfully obvious that the decision had little to do with economic projections, let alone what was needed economically---instead, the decision was driven entirely by politics, with Rahm Emanuel and Obama deciding that the stimulus had to be less than $1 trillion for cosmetic and political purposes.  The fact that putting too little money into the economic stimulus might not create sufficient jobs to fix the economy and that Obama might be judged in the 2010 and 2012 elections by economic results, not political perceptions, seems to have escaped Mr. Sullivan.  Or, perhaps it is part of Obama’s “long game” that Mr, Sullivan cherishes.

Sullivan cites some job creation statistics, but all his comparisons are to Bush’s presidency, which sets an extremely low bar for job creation.  The truth is that Obama, Tim Geithner and Larry Summers badly miscalculated the problems of the economy, projecting that unemployment would top out at 8%, when, in fact, it rose to 10.2% and remains around 9% only because millions of workers have dropped out of the labor market due to discouragement.  That is the main reason Obama’s re-election is in doubt, despite the Clown Act that is the Republican Presidential primaries.

Sullivan chides his conservative friends for criticizing Obamacare.  He explains that it is a very conservative program, based entirely on Republican principles and ideas developed in conservative think tanks and endorsed by a long line of Republicans:  “Obamacare…is based on the individual mandate, an idea pioneered by the archconservative Heritage Foundation, Newt Gingrich, and, of course, Mitt Romney, in the past.  It does not have the public option, it gives a huge new client base to the drug and insurance companies; its health-insurance exchanges were also pioneered by the right.”  In fact, Obamacare is “remarkably similar to Nixon’s 1974 proposal.”

This should put to rest any claim that Obamacare is a progressive healthcare reform; in fact, it brings 30 million involuntary customers and $500 billion per year of new revenues to the private health insurance industry, with no public healthcare competition and no meaningful cost controls---despite the fact that in 2008 Obama had campaigned against the individual mandate and for a public healthcare option (was this flip-flop part of the Obama “long game,” Mr, Sullivan?).  Of course, claiming any benefits from this “reform” assumes that the individual mandate is not declared unconstitutional by the U.S. Supreme Court, but most legal analysts think there is at least a 50% chance the Court will strike it down as beyond the powers of the federal government under the Commerce Clause.  If the individual mandate falls, Obamacare totally collapses, a fact Mr. Sullivan fails to include in his assessment of Obama’s “long game.”

Sullivan gives credit to Obama for tracking down Osama bin Laden, but fails to ask why a kill order was issued, when clearly the unarmed bin Laden could have been captured and brought back for trial.  But Sullivan does not appear bothered by that or the summary executions, often of innocent people, caused by the expanded drone wars in Afghanistan and Pakistan which have fueled Islamic extremism in the most dangerous country on earth.

Sullivan credits Obama for leaving Iraq, despite the fact that the withdrawal was negotiated by President Bush, not Obama, despite the fact that the Obama Administration worked mightily to extend the occupation past the agreed departure date and despite the fact that the only reason the U.S. is finally withdrawing is that the Iraqi Parliament refused to continue to grant immunity to U.S. troops for crimes committed on Iraq soil.  In a nutshell, despite running as an anti-Iraq War candidate, Obama surrounded himself with national security advisors who all had supported the invasion of Iraq, including his Secretaries of State and Defense, and his policies and performance in Iraq have not been different in any significant way from Bush/Cheney.

Sullivan also points out that Obama ignored “the war crimes of the recent past,” which Sullivan deplores.

Sullivan acknowledges that, “Not only did he [Obama] agree not to sunset the Bush tax cuts for his entire first term, he has aggressively lowered taxes on most Americans.”  Obama’s decision to continue the Bush tax cuts for the rich was extremely unpopular; in fact, a December 3, 2010 CBS News poll showed that only 26% of voters believed tax cuts should be extended to people making more than $250,000 a year and these tax cuts for people who have done extremely well in a bad economy are projected to cost $800 billion. Surely, Sullivan argues, Obama deserves credit from conservatives for those big-ticket giveaways, especially to the rich; in fact, he argues, “You could easily make the case that Obama has been far more fiscally conservative than his predecessor….”  But Sullivan fails to acknowledge the fiscal consequence of such fiscal conservatism and continued tax giveaways---a major reduction in federal tax revenues.  As a consequence of these and other tax short-falls, Obama was the first Democratic President in American history to put on the table for negotiations with Republicans major reductions in Social Security benefits, Medicare and Medicaid---concessions sure to thrill and delight conservatives.

So, yes, Mr. Sullivan, you have convinced me.  Obama has governed as a conservative.  Progressives might want to take note.

Guy T. Saperstein is a past president of the Sierra Club Foundation; previously, he was one of the National Law Journal’s "100 Most Influential Lawyers in America."
 
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