Bernanke Is a Drag on the Economy and on Democrats
If the Democratic Party wants to lose—or, to be more precise, wants to lose badly in 2010 and 2012, it need only maintain its current loyalty to the most powerful interests on Wall Street.
The United States already has a party of Wall Street. It does not need two.
Yet, despite an occasional populist turn (like his current bank bashing), President Obama has, with his absurd nominations and even more absurd policies, given every indication that he intends to position the Democratic Party closer to corporate interests than all but the most reprehensible Republicans.
Forget about Obama's rhetorical flourishes. As a candidate and as president, he has too frequently chosen to side with multinational corporations rather than working Americans.
After securing the 2008 Democratic presidential nomination, Obama told Fortune magazine that business executives did not need to worry about his talk of reforming U.S. free trade policies; despite some nice rhetorical flourishes on the primary campaign trail in hard-hit industrial states, Obama said he had no intention of embracing or implementing a fair trade agenda.
Once he was elected, Obama selected as his chief of staff the Democratic party's most ardent advocate for free trade and the broader corporate program, Rahm Emanuel. Then, the new president peopled his administration with Wall Street insiders like Treasury Secretary Tim Geithner and economic adviser Larry Summers.
When it came time to push for stimulus legislation, Obama accepted a plan that squeezed necessary spending for job creation in order to pay for tax cuts for wealthier Americans. Now, instead of the promised unemployment rate of 8 percent or below, we're in double digits.
When it came time to fund an automobile-industry bailout, Obama implemented a plan that shifted tens of billions of dollars from the U.S. Treasury into the accounts of firms which then announced they would close more than two dozen U.S. auto plants and use the federal money to fund the opening of new factories in China and Mexico. At the same time, those companies forced thousands of auto dealerships to shut their doors and lay off more than 100,000 workers.
In the fight over financial-services regulation, Obama and his aides have repeatedly rejected serious moves to hold banks and brokers to account—creating a circumstance where Democrats in the House and Senate must battle not just Wall Street and the Republican Party but the White House if they hope to achieve meaningful reforms. Even now, as Obama tries to surf some of the anger at big banks, polling tells us Americans are skeptical—and rightly so, as the president's party continues to collect campaign contributions from, you guessed it, the big banks.
If John McCain had racked up Obama's record, he would be condemned by even the most moderate Democrats as a tool of the corporate elites.
Because Obama is a Democrat, many in his own party continue to cut him slack.
In doing so, they are giving the party of Franklin Roosevelt and Harry Truman just enough rope to hang itself in 2010.
Unless there is a radical shift in direction, Democrats will find themselves running in this fall's congressional and state elections as the party of an economic status quo most Americans believe is corrupt in its character and damaging in its practices.
How can the Democrats save themselves?
By saying no to Obama and to Wall Street when it comes to the direction of the Federal Reserve. Hopefully, that "no" will be heard by the president and his aides in time for the White House to set a sounder course.
But regardless of how Obama responds, congressional Democrats can and should raise the necessary objection—and act upon it when Bernanke's confirmation vote is taken later this week.
The president has nominated Ben Bernanke for a second four-year term as Federal Reserve chairman. No move sums up the failure of Obama and his aides to break with the corporatist policies of the Bush administration more explicitly than the attempt to keep George Bush's Fed chair on the job.
Because the secretive and manipulative Federal Reserve plays such a definitional role in setting and implementing economic policies, Obama's decision to retain those responsible for the current mess is wrongheaded in every sense: economically, socially and politically.
Smart Democrats and independents are refusing to go along with the president's program.
In announcing his decision to vote against Bernanke's reconfirmation, U.S. Senator Russ Feingold, D-Wisconsin, summed things up well:
A chief responsibility of the Chairman of the Federal Reserve is to ensure a sound financial system. Under the watch of Ben Bernanke, the Federal Reserve permitted grossly irresponsible financial activities that led to the worst financial crisis since the Great Depression. Under Chairman Bernanke's watch predatory mortgage lending flourished, and "too big to fail" financial giants were permitted to engage in activities that put our nation's economy at risk. And as it responds to the crisis it helped to usher in, the Federal Reserve under Chairman Bernanke's leadership continues to resist appropriate efforts to review that response, how taxpayers' money was being used, and whether it acted appropriately.
Feingold joins a growing chorus of progressive opposition to the Fed chair's reconfirmation, an opposition that has been led by Senator Bernie Sanders.
The Vermont independent noted that, as chairman of President George W. Bush's Council of Economic Advisers and Fed chair:
Mr. Bernanke, who was recently endorsed for reappointment by Alan Greenspan, played a major role in the deregulatory efforts that enabled major financial institutions to engage in reckless and illegal behavior. The American people gave us the responsibility to bring about change, not the maintenance of the status quo. Why, at this difficult moment in American history, should we reappoint Wall Street's candidate as chairman of the Fed?
Sanders offered his colleagues a list of "Four Reasons Why Democrats Should Oppose the Bernanke Reappointment," which concludes: "Instead of confirming one of the key architects of George Bush's economic agenda, a new nominee could transform the Fed into a central bank committed to the needs of the middle class of this country rather than powerful Wall Street executives responsible for the worst economic crisis since the Great Depression."
No one with any sense of the mood of the American people regarding the economy could miss the logic of this argument.
Unfortunately, President Obama seems to be missing the point—even with the recent wake-up call from Massachusetts voters who filled the late Ted Kennedy's Senate seat with a conservative Republican.
Senate Democrats have an opportunity to do more for Obama than the president is willing to do for himself.
"The defeat of Ben Bernanke would give President Obama a golden opportunity to nominate someone who will move the Fed in a new direction and put an end to the Fed's relationship with big banks and Wall Street," said Sanders.
That's the smart and necessary play.
The Senate should block Bernanke as the first step in forcing the President Obama and his administration to recognize the reality that, according to recent polls, more than 60 percent of voters see: When it comes to economics, the United States is headed in the wrong direction.
Instead of steering toward Wall Street, Obama should be veering toward Main Street.
If the president refuses to make the left turn that is needed, then Democratic senators should take the wheel and correct the country's course.