By Marc Seltzer; originally published on March 19, 2010, at care2.com
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There is still a strong undercurrent of anger in the United States about bailouts and stimulus spending. Republicans, and even Democrats and Progressives, have reacted angrily to President Obama and his financial team. This is significant because President Obama lost political capital on the economic recovery plan, and has far less power now to push though health care, education and financial reforms than he would have absent these actions.
The common critique from the Right is that Mr. Obama is moving in a socialist direction, while from the Left it is that Geithner, Summers, Romer and Bernanke, the U.S. government’s economic chieftains, are corporatist and beholden to the bankers.
More puzzling than the conservative complaints about the administration’s stewardship of the economy, is the Left’s opposition to it. A significant part of the Democratic party seems to believe that our current leadership is on the side of the wealthy in a new class struggle, and that the government bailouts have effected a transfer of wealth from the little guy to the fat cats. To be fair, this antagonism towards saving the financial system is in part a more structural distaste for corporate political and legal power — unrelated to recent U.S. government actions. None-the-less, Obama is now trying to enact reforms in this across-the-spectrum, anti-government political climate.
To challenge the idea that Obama’s actions were pro-bank, pro-corporate, or designed to bail out the fat cats at the expense of the public, I want to compare the European response to the financial crisis with U.S. actions. European nations, often called “social democracies,” are respected by the American Left and cited as examples for their stronger safety net of worker protections, health care and liberal benefits.
Jean-Claude Trichet, the head of the European Central Bank, equivalent to our Federal Reserve Bank (Ben Bernanke), said recently about American and European government interventions:
“We had to put on the table on both sides of the Atlantic around 25% of taxpayer risk to avoid the Depression, a major Depression, which would have come had we not been that bold. When I say we, I mean the governments. Of course, the central banks also have been very bold, in engaging in non conventional measures — the Fed and us [European Central Bank].” (Bloomberg on Demand, March 12, 2010, from interview with Tom Keene)
What is insightful here is that European governments and related institutions behaved much as the American government did. As the New York Times reported in early 2009:
“So far, Europe’s largest economies, France, Germany and Britain, have been spared demonstrations. All three governments have introduced huge stimulus measures aimed at spurring employment and protecting banks.
Regardless of the outcome, the three countries will face large budget deficits and higher state borrowing, which economists say will be passed on to taxpayers. And in the case of France and Germany, the governments could find it more difficult to introduce bold reforms at a time of recession.” (New York Times, January 26, 2009.)
To be sure, European nations have faced public protests over the past year, including demonstrations in recent weeks against the Socialist government in Greece. And modern European nations are a mix of strong state intervention in industry and free markets. But despite their more left-leaning perspectives, European government actions to save banks and support their nations’ economies with emergency stimulus spending, resemble US approaches.
The underlying reason for this is plain: Healthy economies require healthy banking systems. The only other option for lawmakers in 2009 would have been to nationalize, through government takeover, the major banks and investment companies. This would not only have been too radical for a young American President in the first days of his Presidency, but was not favored by European nations, which, despite more Socialist political visions, prefer to keep most individual businesses in the hands of private owners.
It is as much of a stretch to believe that Barack Obama, community-organizer-turned-politician, attained the Presidency in order to embrace the rich and powerful over the little guy, as it is to draw the conclusion that the Socialist and left-leaning governments of Europe transformed in 2009 into standard bearers for corporate and special interests across the Continent.
Why the American Left should find itself so opposed to the positions of both European and American governments requires little guesswork. The greed, irresponsibility and power in the financial system made the public angry. The Republicans, with little post-election political power and prospects, turned anti-corporate anger into anti-government anger with some clever “grass roots” anti-Democrat marketing messages.
Now, instead of joining the administration and embracing reforms, many a Democrat flirts with anti-government energy, which is really just self-serving partisan manipulation pushed by the Republican party.
Democratic Congressman Dennis Kucinich, in discussing his last-minute decision to vote for the President’s health care reform, acknowledged the tension between pressing for progressive reform and falling into a trap laid by the opposition:
“With three years left in the Obama Presidency we have to continue to encourage him, but we’ve got to be careful that we don’t play into those who want to destroy his presidency and say, you know, the birthers and others who say he should never have been President to begin with. There is a tension that exists. . . . we have to be very careful about how much we attack this president even as we disagree with him because we may play into those who just want to destroy his presidency.” (Democracy Now!, March 18, 2010 (radio interview with Amy Goodman))
Careful indeed! It’s about time.
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