Bird that Sings

Yeah, I know what the polls say: That more people disapprove of Obama than approve of him, that only 11% approve of Congress.

But contrary to what the polls say, on all the big issues; Wall Street, the banks, the economy and environment, Republican ideas are not only unpopular, they’re not even credible. The only way for the Republicans to survive is to trash the Democrats and then say government doesn’t work.  If I were a Republican I’d do the same.

Republican obstructionism has been a real problem for the Administration, but the biggest problem has been, and will continue to be, the economy. In its early days the Administration probably managed to stave off a great depression, however, subsequently Obama and Co. banked their political capital on an economic recovery that never really blossomed and now is dying on the vine.

Though I’m not sure how the Obamaites received it, Economist Paul Krugman actually provided a valuable service to the Administration with his <em>New York Times</em> column of several weeks ago, “The Long Depression.”

Krugman’s point was that we are in the early stages of a long, but comparatively shallow Depression and that the immediate — and only — way out of it is more stimulus, <em>not</em> the austerity cuts proposed by the same economic “thinkers” who brought us the Wall Street crash of 2008.

Krugman’s argument, I believe, was meant to give cover to the administration as it switches it’s argument — perforce — from one that says we are in a recovery, to one that acknowledges what even some Finance Professionals like Mohamed El-Erian and George Soros are saying; that this deflationary trend is the new normal.

By November, the dire nature of our economic predicament will be increasingly clear to the electorate. Meanwhile the Republicans will be — insanely — making the case for both austerity budget cuts <em>as well as</em> debt ballooning, supply side tax cuts for the Rich. And they will of course receive an adoring response from Fox News and a respectful audience from the mainstream media.

It goes without saying that the Republicans will be wrong, but Democrats are not going to be able to counter their argument solely with a defense of the achievements of the Obama administration.

Rather, Democrats will have to present their own diagnosis of the country’s economic problems as well as a practical prescription for what to do about them.

Practically speaking then, here’s what the Democrats have to do to keep Congress:

1) The Democratic leadership of the Congressional party in both houses needs to commit to <strong>letting the Bush tax cuts for the rich lapse</strong> and using the new revenues both to pay down the deficit, but more importantly, sending money to the states to alleviate their own budget short falls.

This September hundreds of thousands of teachers and public service workers all over the country will be laid off from their jobs. The notices have already gone out. I know; my wife got one. Not only will these layoffs cause untold personal suffering, they will severely damage local public services and local economies, and are likely to set in motion a chain of events leading to much greater economic dislocation.

In the first decade of the 2000’s we saw what cutting taxes for the rich led to: Massive speculation and fraud in the financial and real estate markets, an immense transfer of wealth from the bottom 50 percent of the economy to the richest one tenth of one percent among us.

The extension of the Bush era tax cuts for the rich are a losing issue for Republicans and the Democrats have to nail them to the wall on it.

2) Congressional Democrats should demand that <strong>Elizabeth Warren is hired to
head the new Consumer Financial Protection Bureau (CFPB)</strong> — by
Recess appointment if necessary as suggested by Barney Frank.

Warren is very popular generally, even with some Republicans, but especially with progressives who form the vital, activist core of the Democratic base. Lose them and for Obama, it will be like losing LeBron was for Cleveland. But the second reason to hire Warren is even more salient: that Secretary of Treasury Tim Geitner and the Bankers she would help regulate don’t like her.

Ideally, the best thing Obama could do to help Congressional Democrats hold their own in the mid-terms is to fire Geitner as a broadside against Wall Street and the Bankers who rigged the faux recovery so that it built their profit sheet, even as they cut off credit to the rest of us.

Obama should fire Geitner, but won’t, so hiring Warren is the next best thing.

3) The Democrats have to <strong>reintroduce the Climate Change bill </strong>in its original form — even strengthening it — and campaign for its passage. While some pundits and journalists, most notably in the <em>New York Times</em>, have tried to blame Democrats for politicizing the climate change issue, it’s actually <em>not</em> the Democrats who have politicized Climate Change and the Environment.

Nevertheless, in the course of the fall campaign it must be made clear that the Environment is not a political issue, but an issue of planetary survival. Perhaps ironically, it is only by reframing the argument in this way that the Democratic leadership will able to build sufficient public pressure for the Bill to be reintroduced with a fighting chance of passage.

This last point goes to the broader question of political campaigns and how to win them. If you believe the electorate is a static thing made up of Democrats, Republicans and Independents, all in discrete little boxes without interaction or common cause, then given the polling, things look pretty bleak for the Democrats.

But, if you believe that elections are actually an opportunity to address the problems of the country and the system itself: that the electorate is by its nature fluid, and ideas can be transformational, then Democrats have little to fear and a world to win.

An election is a terrible thing to waste.

I was thinking about going down to DC for the inaugural last month, but decided it was too cold to sell my “I was there for the Fall of Capitalism but all I got was this lousy T-shirt.”

So I stayed home which was probably a good thing, as I don’t think it was the right crowd for my product. Even now, my impression is that people don’t really get it: that despite the great gifts of Obama, the first political-economic initiatives of his Administration suffer from a “systemic cognitive deficit.”

Then too, as a friend of mine says, “Barack didn’t put in for this.”

Obama’s 2008 campaign was like a good pop movie, but it wasn’t a populist campaign, nor a campaign that challenged the underlying assumptions of the system: it was a Public Relations campaign with Obama as “the brand” representing Hope& Change.

It was a great campaign for the end of Reagan era, but God willing, Barack was not only the best of the “branded” candidates, but the last.

Not only is the Reagan era, the Conservative era over, but so is the era of Finance Capitalism, though we are not yet ready to absorb that, nor are we ready for what comes next.
So let’s just call these, “The Years of Agonizing Reappraisal.”

Specifically, the big problem that Obama and the rest of us face is that the answers to the twin dilemmas of excess debt and falling demand plaguing the world economy are diametrically opposed.

The stimulus aims to “jump start” the economy by recreating the missing “Demand” that our missing jobs, vanished savings and mounting personal bankruptcies have led to.

But of course the way we created all that Demand in the first place was by over consuming; by running up lunatic levels of personal debt—often perforce—that mirrored what Wall Street and Big Business were doing on an enormous scale with leveraged debt in the Macro Financial economy.

In the economy of the 90’s and the aught’s, there was an explicit trade-off for your willingness to go deeply into debt. You were now empowered to buy more than you could ever reasonably afford to buy—say for example a house whose price had been artificially pumped up, in turn, by the speculative logic of the debt system.

You were rewarded by the system for being an irresponsible Super-consumer who would never ever be able to get out debt again for the rest of your (miserable) life.

The neo-cons even came up with a suitably Orwellian name for this system: they called it “The Ownership Society.”

In all, it was an evil system riding for a fall and now, like Humpty Dumpty it has.
Now we can’t recreate that missing Demand, we can’t “jump start” the economy, no matter how big the financial stimulus; we can’t put Humpty Dumpty back together again even if we wanted to.

We are in a cycle of falling demand because no one can give us credit anymore to keep up our over consumption. We are in a cycle of falling demand because the System itself has failed.

Of late though, I’ve been wondering why the mainstream economists either don’t see or don’t want talk about this, and find myself thinking back to a long ago conversation with a friend who later became an oft quoted institutional economist in the 90’s.

I ran into him at the crossroads of campus late one afternoon as he was coming out of a Hegel seminar, taught by a well known dissident Communist political philosopher. The seminar was invitation only—my friend was a nominally Marxist Phd candidate—and I was curious to know what the hell was going on in there. He told me only that it was pretty heavy going, and when I replied that at least it would help him in his future academic career he just shook his head sadly.
No, he said, it wasn’t going to help at all.

“Larry,” he explained, speaking carefully—as one would speak to a small child—“what people in the Economics department call Macro-economics is not what people like you or me call Macro-economics. In the Department they’re not interested in philosophy, they don’t see the connections and they’re not particularly interested in making them. It’s mechanical, it’s about equations and modeling out how the elements of the real economy work together, and they’re pretty good at it. But that’s all they’re interested in.”

In the classic book 1972 book “Reinventing Anthropology,” Dell Hymes points out a similar dynamic in his own discipline. “How much of what goes in departments is for the sake of mankind’s self-knowledge (let alone liberation) and how much for the sake of perpetuating, extending and propagating departments? . . . ”
“ . . . By virtue of its subject matter, the study of man, Anthropology, is unavoidably a political and ethical discipline, not merely an empirical specialty. It is founded in a personal commitment that has inescapably a reflective philosophical dimension.”

Substitute the word “Anthropology” with the name of any of the other Social Sciences: Sociology, History, Political Science, even Economics and you get the idea.

Right now, Larry Summers and Tim Geitner clearly have the upper hand in Obama Administration councils, by virtue of being economics professionals. The problem with Summers and Geitner however, judging by the solutions so far proposed, particularly their half assed bank bailout scheme, is they’re wearing ideological blinders.

To Summers, Geitner and Fed Chairman Bernanke, there is no alternative to the “free market” and apparently even short term nationalization of the banks is off the table. Instead, we have the Fed and Treasury socializing the losses of Companies that are too big to fail like Citigroup, AIG, and soon Bank of America, to avoid “spooking investors.”

Of course this bit of economic legerdemain fools no one, let alone investors. Except for the terrified political professionals in the White House, it seems pretty obvious to everyone else that Treasury is not only risking the dollars of taxpayers, but the whirlwind of their coming political wrath.

Looked at empirically, it’s possible to see exactly where the world economy is headed: toward what economists call stagnation, in this case, medium or long-term stagnation. Obama clearly has a lot on his platter, and it would be a shame if his initiatives on Health Care Reform, the Environment, Labor and potentially even the Middle East were all overwhelmed by his administration’s failure to deal honestly and effectively with this ongoing crisis.

President Obama now has a choice that will define his Presidency: go along with Summers, Geitner and Bernanke, or begin to develop new lines of thinking about the economy; particularly, about the efficacy and sanctity of the so-called free market.

In the meantime I’m going down the basement to set up the silk screen for a new T-shirt I’m printing up to sell along with the first. It’ll read, “The truth is a commodity too.”