Obama Has Amassed Enormous Political Capital, But He Doesn't Know What to Do with It

By Robert Kuttner, Huffington Post. Posted April 28, 2009.

A severe economic crisis coupled with the election of a new progressive president is an opportunity for a dramatic break with the old order. But that process doesn't just happen spontaneously. It takes exceptional presidential resolve and leadership. And there are three huge obstacles to President Obama seizing the moment to produce fundamental change, two of them systemic and one self-inflicted.

The first systemic obstacle is the lingering political power of the old order. Practical failure doesn't diminish political influence. On the contrary, it leads to a defensive redoubling of political resolve. We see this every day in the relentless lobbying by the financial industry against new regulations. We see it in the ongoing power of the health insurance and pharmaceutical industries to block comprehensive health reform, and in the efforts of corporate America generally to resist sweeping changes in corporate governance and executive compensation. The economy has crashed, ordinary people are suffering, rightwing ideology has been disgraced--and the old order endures.

A second systemic obstacle, for now anyway, is the absence of a popular movement to put wind at a progressive president's back. Among the logical candidates, the labor movement is weakened by the same economic crisis, divided internally, and it sorely needs Obama's good will for everything from the Employee Free Choice Act to the auto rescue. The web of grassroots activists who came together to elect Obama is now a website of the Democratic National Committee. MoveOn.org is organizing around issues such as universal health care, but pushes on the president only gingerly. More than anything else, the stance of most progressives is still mainly gratitude.

We got a small taste of what a more radical break might feel like when Obama briefly signaled with the release of Bush's torture memos that he might be open to further investigation of the Bush's torture policy, but then backtracked and quickly asked the Democratic leadership to shut the idea down. Evidently, Obama's political self wrestled with his constitutional conscience, and won. Civil libertarians felt a huge letdown, but protest was surprisingly muted.

Thus the most important obstacle for seizing the moment to achieve enduring change: Barack Obama's conception of what it means to promote national unity. Obama repeatedly declared during the campaign that he would govern as a consensus builder. He wasn't lying. However, there are two ways of achieving consensus. One is to split the difference with your political enemies and the forces obstructing reform. The other is to use presidential leadership to transform the political center and alter the political dynamics. In his first hundred days, Obama has done a little of both, but he defaults to the politics of accommodation.

The enemies of reform are both partisan and corporate. They include the Republican opposition in Congress and the financial elite on Wall Street. Obama's early gestures on behalf of bipartisanship were rebuffed with defiant opposition. To cultivate some Republican support for the stimulus package, he agreed that more than one-third of it would be tax cuts rather than public investment. He was rewarded with not a single Republican House vote.

In their serial efforts to rescue the banking system, Obama's senior economic team has worked hand in glove with Wall Street. Weakening the financial industry's political power has not been part of the game plan. Obama has jawboned financial executives on such second-tier reform issues as credit card abuses. He is waging a good fight to put the government-subsidized private student loan industry out of business. But rare moments of indignant language have been saved for purely symbolic affronts such as the millions paid out in AIG bonuses, but not for the more systemic and large scale episodes of larceny such as the use of AIG bailout funds as a pass-through to investment banks. AIG funneled millions in government funds as "retention bonuses" to its own executives--but tens of billions to houses such as Goldman Sachs that held contracts with AIG.

Obama's advisers clucked about the shame of the AIG bonuses, but had no harsh words for Goldman. The White House seems to view popular backlash against financial abuses as a dangerous force to be bottled up, rather than one to be mobilized to offset the concentrated power of elites.

On health reform, the White House is playing a curious game. On the one hand, the administration has repeatedly suggested that it wants both a bipartisan bill and one that is developed constructively with the health insurance industry. On the other hand, this past week the administration and the Democratic Congressional leadership took the bold tactical step of putting health reform on a fast track by tentatively making it part of the budget resolution, the one form of legislation not susceptible to a Senate filibuster. But if this is to be bipartisan, why the dramatic end run around a filibuster? Conversely, if the White House needs only a simple majority of 50 votes rather than 60 for health reform, then it can legislate without having to kowtow to either Republicans or to their industry allies.

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Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos. He is author of "Obama's Challenge: America's Economic Crisis and the Power of a Transformative Presidency."

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