Wednesday, December 03, 2008
Not that Robert Reich was that special, he was more talk than action. As related by David Bacon in this book, The Children of NAFTA, he turned a blind eye to notorious Mexican violations of the labor and environmental side agreements that accompanied NAFTA while serving as Secretary of Labor. His primary purpose in the Clinton administration was to serve as ideological window dressing for its labor supporters, which he implicitly acknowledged after his departure from the cabinet.
The team’s other striking feature is its centrism. Mr Summers is on the conservative wing of Democratic economists. As Mr Clinton’s treasury secretary he backed the law that in 1999 tore down barriers between commercial and investment banks and still backs it despite recent criticism. Christina Romer, an economic historian from Berkeley, has just published a paper with her husband David showing how raising taxes retards growth. Jason Furman, likely to be named as an aide to Mr Summers, outraged unions for his 2005 article, “Wal-Mart: A Progressive Success Story”. One hedge-fund manager who, before the election, was terrified Mr Obama would usher in “confiscatory” tax policies breathed a sigh of relief. “No Robert Reichs,” he said, a reference to the leftish adviser who was Mr Clinton’s labour secretary. “There’s no radicals in the whole cabinet that anyone can find.”
Mr Obama’s backers, in fact, can with some justification feel betrayed by the presence of so many figures from the Clinton regime: Mr Summers and Mr Geithner served at the Treasury then, and Mr Orszag was on the NEC. Moreover, many of them are protégés of Mr Clinton’s second treasury secretary, Robert Rubin, whose star has dimmed considerably as Citigroup, where he has been a senior executive since 1999, has lurched from crisis to catastrophe.
But with views like the ones expressed in a recent New York Times interview, we shouldn't be surprised that there's no place for him in the incoming Obama administration:
In this response, Reich amazingly got Obama's priorities completely backwards. An Obama presidency is going to be all about corporate welfare, bailouts for business and other forms of socialized capitalism, although Reich should know that the term socialized capitalism is redundant, as capitalism has always entailed a substantial state subsidy for its most privileged interests.
I’m against corporate welfare, bailouts for business, and other forms of socialized capitalism. But I believe individual families sometimes get into trouble through no fault of their own, and they deserve help to get back on their feet.
So let’s help families stay in their homes and continue to pay mortgages that are refinanced so they can afford to pay them. And let’s have better financial oversight so the next time money is cheap, mortgage lenders don’t shove it into the hands of people who don’t know what they’re getting into.
Nor is Obama going to do much of anything to help people stay in their homes with refinanced mortgages. He made that clear when he rejected, through Jason Furman, McCain's proposal to expend approved bailout funds for precisely that purpose. Indeed, Obama's advocacy for the bailout on the campaign trail when its fate was in doubt, and his subsequent refusal to consider the diversion of any of the funds from the financial sector to home owners is a perfect crystallization of his priorities, priorities one hundred and eighty degrees different than Reich's.
Instead, we are going to get an enormous stimulus effort, which, while necessary, is not going to challenge the neoliberal structure of the US economy. It is not going to be accompanied by reductions in defense spending (estimated at around 1 trillion annually). Instead, it is going to be aggregated with such spending and the ongoing expansion of the federal debt by the Treasury and the Federal Reserve (estimated at around 2 trillion dollars, with liabilities approaching 8 trillion) for the benefit of the financial sector, and, hence, will require severe fiscal austerity measures once (or should we say if?) growth returns.
In other words, the stimulus plan is going to be a literal once in a lifetime opportunity to address some of the social needs of this country. Once it is spent, there is not going to be much money afterwards for a long, long time unless the prevailing neoliberal orthodoxy is abandoned. The ravenous appetite of the empire and its military and financial administrators will take precedence in a vicious struggle over reduced resources in a debt burden society. Better git it while the gittin' is good as they used to say.