HAW at the AHA
San Diego, January 7-10, 2010

Obama’s First Year: Why His Administration Deserves a More Enthusiastic Endorsement from the Left

Nelson Lichtenstein
University of California, Santa Barbara
nelson@history.ucsb.edu
January 8, 2010

There are two ways to think about the first year of the Obama presidency and its disappointments. First, to what extent is any discontent on the left the product of Obama’s own hesitancies, limitations, and proposals? To what extent are his low poll numbers and the obvious skittishness among the Democrats and liberals a product of an Obama program that was inadequate or misdirected?

Second, to what extent are the difficulties of the Obama presidency the product of forces and structures outside of his control, of political opposition, of the disfunctionality of American political institutions (the Senate is one key example), and of the legacy of the recession, the Bush policies, and of a popular mentality that was not in fact ready for bold reform efforts?

Let’s start with the first viewpoint. Barak Obama was in some respects the most conservative of the three main Democratic presidential candidates. For example, he was not in favor of health care mandate designed to enroll millions of additional adults in a system of near-universal health care. And he made a point of saying we should move funds and troops from Iraq to Afghanistan, even more so than Hillary Clinton.

In general I think Obama’s program was not inadequate to the times. Indeed, like other would be reformers, his ideas were not merely his own but were the product of a generation of debates, trial runs, and partial successes among reformist liberals. This has always been the case. FDR’s “Hundred Days” in 1933 were composed of legislative initiatives that had been around for decades, since the Progressives first proposed regulation of trusts, labor law reform, public works on a massive scale, and social insurance for the unemployed, for families with dependent children, and for the aged and retired. Likewise, for LBJ much that became the Great Society had been on the shelf for an entire generation. The language in Title VII of the 1964 Civil Rights Law came right out of the 1946 FEPC bill killed by Southern Democratic senators. Medicare had been part of the liberal agenda for a decade. So Obama was a consensus liberal candidate. His wall-to-wall support on the liberal left reflected a unity about the reform agenda – health care, counter cyclical spending, even labor legislation - that might not have been there in mid 1970s or 1980s when liberalism was defined more sharply by the post Sixties social issue agenda and when a certain confusion reigned among those who sought to regulate, or not regulate, an economy that for the first time in more than a generation failed to combine economic growth with a rise in working-class living standards.

In contrast, contemporary liberals and leftists had not been prepared for the financial crisis that began with the housing bust and soon convulsed Wall Street. There was no consensus here, no long period of internal debate about how to reregulate the financial system. So Obama’s reliance on Wall Street, which had been plentiful during the campaign, ended up has his default politics on this issue. Had there been no crisis, Obama’s honeymoon might well have lasted a good deal longer, but the various bailouts generated a wave of populist anger when no big reforms and no immediate return to an upward growth path emerged from the crisis. A back lash was inevitable once the dimensions of the bailout became apparent and once the real purpose, plugging the gaps and sustaining confidence in the existing financial system, became clear.

But let us be honest here. Would it really have mattered if, after spending several trillion dollars, the banks had been better regulated or even nationalized – like Fannie Mae and Freddy Mac – in terms of Obama’s political popularity. I think not. Remember that the House of Representatives rejected the Bush Administration bailout in September 2008 even at the very height of the crisis, and on a basis that was programmatically incoherent, if not rightwing. To make the obvious historical analogy, FDR’s bank holiday and his regulatory interventions in 1933 were hardly radical: in fact they stabilized a banking system that was even more widely hated and disdained than that which exists today.

On health care as well, Obama ran on a less progressive program than Hillary or Edwards, but it did not matter. The consensus among liberals was truly in place at the start of 2009, which is why Obama effortlessly shifted in favor of the individual mandate – the Edwards and Clinton policy proscription for universal coverage - with hardly anyone noticing.

The Administration/Congressional health care plan is messy and often contradictory, but in essence it embodies a grand bargain, a sort of corporatist deal not unlike many of the great welfare state reforms we associate with the New Deal and the Great Society. No radical reform of the system is possible. There are too many institutional roadblocks and too much culturally embedded fear of government, even before the tea bag eruption exacerbated such an impulse. As a consequence we are faced with the necessity of a rough bargain hammered out between those who favor a near-universal system of health care provision and those institutions, associations, and businesses whose profits, income, and operating methods are now under scrutiny. In return for a huge government subsidy and for a set of modest mandates on individuals and employers, near universal coverage can be achieved, covering some 90-94 percent of the population. With wall-to-wall coverage, including the forced draft enrollment of millions of healthy young people - 30 million new customers! - the insurance companies can finally stop cherry picking their clients and accept a limited degree of regulation, with the prospect of more to come. In effect they would become very prosperous, government-subsidized quasi-utilities.

This grand bargain was accompanied by a lot of lesser bargains, some not so pretty. The Obama people wanted to avoid the fate of the Clinton health care reformers, who had failed to nail down the support of the key business/institutional players. Or rather, the Clintonians had read the structure of American capitalism incorrectly. They knew that employer mandates would save the old line companies like GM and Bethlehem Steel lots of money, but an employer mandate would also put a new burden on big service sector employers, like Wal-Mart and Pizza Hut and the telecom companies. Hillary’s people had thought they had a deal with the Chamber of Commerce and with the big insurance companies who would become, under managed care, a cartel. But it all blew up early in 1994 when an internal revolt inside the Chamber led to the firing of the Clinton-friendly lobby staff and when the smaller, cherry-picking insurance companies launched the infamous Harry and Louise television ads.

Obama was going to avoid all this, so in the Winter and Spring of 2009 his people finalized a bunch of deals with Big Phara, with the hospital associations, with the doctors, with the insurance industry, and even with Wal-Mart, which on June 30 announced that it would be willing to accept an employer mandate in return for some kind of lid on overall health care costs. (It was immediately assailed by the rest of the retail industry as an unprincipled turncoat.) All of these deals required the institutional players to take a modest financial hit in return for guarantees that reform would not get out of hand in the Congress. Obama thereby forestalled a new round of Harry and Louise commercials; indeed some of these health industry groups put ads on the air and in the papers endorsing the general outlines of an Obama health care reform.

The other thing that President Obama thought he had learned from the Clinton health care debacle was to let Congress do it. Avoid imposing a presidential scheme on a fractious Democratic caucus. There were just too many interests and players to accommodate by putting forth a plan, no matter how rational, reasonable, and efficient. This Congressional path was further thought politically adroit because of what turned out to be a major ideological/rhetorical mistake Obama made during the campaign. He promised an era of bipartisanship which was taken serious by among others Max Bacus, chair of the Senate Finance Committee. This turned out to be a fruitless quest, but before we denounce this gambit, one should pause to note the work it did for Obama in his rise to power. By positing the possibility of cross party cooperation he won the support of huge numbers of voters, independents especially, but as we shall also see he gave to the GOP a defacto veto over this particular campaign promise.

Indeed, the single most surprising development of the political year 2009 was the remarkable, heroic, back-against-the wall solidarity of the Republican Party in general and of its Congressional delegations in particular. One would expect that after a substantial victory by the Democrats, those Republicans from blue state districts would think twice about opposing the Obama agenda, especially the stimulus, which was free money for many hard pressed state and local budgets. And on health care many Republicans had at various times favored key components of the proposed law. History too might have led one to believe that there would be a slice of GOP bipartisanship: Social Security and even the Wager Act passed with some GOP votes, Medicare had 13 Republican yes votes in the Senate and just 17 no votes, and in 2007 there had been considerable GOP support for an expansion of the Children’s Health Insurance Program over and against the opposition of President Bush.

But the Republicans held tough. I won’t detail the many reasons for their exemplary solidarity but just list some of the consequences here.

Most importantly, they destroyed one of the prime rationales for a transformative Obama presidency: it would end divisiveness and engender an era of good feelings. Here I cannot help but think that the GOP took a page from management’s anti-union hand book. Workers, especially those on the fence, hate conflict and contention. They may want a union but if the price is continual tension, then it is not worth the price, and over time managers know that such workers will blame the union, even if it is management and its anti-union consulting firms who are causing the delay, debate, and divisiveness. And this has been the GOP battle plan, with just about the same results. The fence sitters have distanced themselves against the Obama proposals, which they now see as causing so much contention while the GOP succeeds in energizing its base and capturing a million or two disallusioned voters.

Second, the Obama era has been characterized by a surprising demobilization of the left and the liberals. In part, this is a function of historical happenance. His election did not coincide with a bonus march, a strike wave, or a civil rights revolution. And historians are going to spend a lot of time figuring out why the December 2008 sit down strike at Chicago Windows and Doors, which Obama actually endorsed, had no prodigy. But beyond all that, the health care initiative has not been fertile ground for a liberal/left mobilization no matter how much they dislike the erosion of the bill. Health care politics has never been a venue for a mobilization of the left. At the ballot box, yes, but not in the streets. The passage of Medicare was not a product of mass meetings or demonstrations. The expansion of Medicaid, which would be a major innovation in the health care bill, hardly stirs leftwing hearts even thought at least 15 million more of the working poor will become eligible for this state/federal program. And of course, the demobilization of the left has in part been a product of all those clever deals the Obama people struck with the banks, the wavering Democrats, and the health care interest groups. The flip side of those agreements is an implied promise not to pull out the troops in opposition. This seems to have been the case in September 2009, in the wake of the tea party tantrum, when the prospect of a million person march on the Washington Mall, by the left, was in the offing. The Obama people did nothing to encourage it and may have urged against it.

Let me end on a somewhat optimistic note. The passage of a health care reform, whatever its deformities, will be a huge event and offer Obama liberalism a second chance. The GOP has good reason to oppose it because the reform not only will be a political victory for liberalism, but it will have its greatest impact in precisely those red state districts whose congressional representatives are most opposed. It is in South Carolina and Texas that the dramatic and humane expansion of the state into the lives of ordinary folk will be most apparent. They will see a new entitlement in action: it will make it easier to quit a job, go to school, form a union, and make further demands on the government. The individual mandates may generate a backlash in some places, but they are more likely to give citizens a warrant to make further demands upon the health care system. This is important not just as an expansion of the welfare state but as a renewal of democracy.