EXCERPT FROM THE INTRODUCTION OF A PRESIDENCY IN PERIL BY

ROBERT KUTTNER.

The Man and the Moment

We will need to remind ourselves, despite all our differences, just

how much we share.
—Barack Obama, The Audacity of Hope

th
Despite his 11 hour success in winning enactment of health reform,
Barack Obama remains at risk of being a failed president. What would failure
mean? Economically, not quite a second Great Depression, but very possibly a
great stagnation with prolonged suffering for ordinary people—an intensification
of trends that were intolerable before the crash began. Politically, it would mean
the lost promise of an age of reform anchored in a durable progressive governing
coalition. Failure would leave 2008–12 as merely a brief interregnum in a long
Republican era, with the far right more dominant and more extreme with each
election cycle.
Events were not supposed to turn out this way. As the financial crash of
2007 and 2008 deepened, Barack Obamaʼs appearance on the political scene
seemed an almost providential rendezvous of man and moment. Wall Street was
in shambles. Its excesses had brought the economy to the brink of depression.
The great collapse was also the practical failure of an ideology and the ruling elite
that embraced it. The claim that the banking system operated most efficiently
with the least government interference was suddenly ludicrous. The high priests
of that worldview were coming hat-in-hand to the same government for help.
The failure of the old order was pervasive. The public officials of both
parties who had assured us that financial deregulation would deliver broad
prosperity were shown to be catastrophically wrong. The Wall Street moguls who
insisted that their own grotesque enrichment was merely a by-product of their
vital service to capital markets were revealed as frauds. The free-market
economists who had given intellectual cover to the deregulators in government
and the scoundrels in the banks were now intellectually bankrupt.
For progressives, it was the ultimate teachable moment, and here was a
leader with unusual gifts as a teacher. As an outsider, Obama owed few debts to
the political establishment. His idealistic call for transformative change roused a
fearful electorate to vote its hopes. George W. Bush, meanwhile, was leaving
office as the most unpopular incumbent since Richard Nixonʼs resignation in
disgrace, adding to the impetus for a clean break.
The early signs were encouraging. In a powerful speech on the financial
collapse, in March 2008, Obama declared, “Instead of establishing a twenty-first-
century regulatory framework, we simply dismantled the old one, aided by a legal
but corrupt bargain in which campaign money all too often shaped policy and
watered down oversight. In doing so we encouraged a winner-take-all, anything-
goes environment that helped foster devastating dislocations in our economy.”
Obama displayed a superb facility for framing boldly progressive ideals
as reassuringly patriotic. In his keynote address to the 2004 Democratic National
Convention, which instantly established him as a national contender, Obama
declared:

If thereʼs a child on the south side of Chicago who canʼt read, that
matters to me, even if itʼs not my child. If thereʼs a senior citizen
somewhere who canʼt pay for her prescription and has to choose
between medicine and the rent, that makes my life poorer, even if itʼs
not my grandmother. If thereʼs an Arab American family being
rounded up without benefit of an attorney or due process, that
threatens my civil liberties. Itʼs that fundamental belief—I am my
brotherʼs keeper, I am my sisterʼs keeper—that makes this country
work. Itʼs what allows us to pursue our individual dreams, yet still
come together as a single American family.

If Obama heartened liberals, it was also because here was a black man
who had lived the American dream, a man whose own life experience was
exemplary as husband, father, scholar, and community leader—a genuinely
idealistic politician who once again could inspire. When the extended Obama
family was introduced at the 2008 Democratic National Convention, this was a
family of strivers far more evocative of the American dream than the McCain
family. It was an all-American family that just happened to be African American.
The possibility that the Obamas could be Americaʼs First Family suggested a
degree of racial healing that most of us thought weʼd never see in our lifetimes.
In the 2008 elections, the Democrats gained twenty-four seats in the
House and eight in the Senate. Soon their Senate margin would grow to sixty, the
largest Democratic governing majority in more than three decades. Young people
who knew John Kennedy only from history books had their first experience of
being deeply moved by a believable new leader. Voters casting ballots for the
first time favored Obama by an astonishing 71 percent. Obama carried states
that Democrats had long given up for lost, such as Indiana and North Carolina;
he won nearly all the important swing states, like Ohio and Florida. His campaign
strategy eventually enlisted an army of 3,000 full-time organizers and an
unprecedented 1.5 million volunteers, while more than 13 million people signed
up for his e-mail list.
Obamaʼs inspirational eloquence, his call for transforming change, and
his skill at the mechanics of retail politics suggested a president who could
mobilize citizens as a necessary counterweight to the concentrated power of
financial elites. This was not just posturing. His voting record was one of the most
liberal in the Senate. So the stage was set, seemingly, for a great ideological and
political reversal, comparable to the Roosevelt revolution of 1933. Obama was
poised to create a new majority coalition, built on the premise that rapacious
private finance had to be contained so that the rest of America could thrive.
But history has a way of playing tricks, and this hopeful scenario is not
the way Barack Obamaʼs first year unfolded. Instead of making a radical break
with Wall Street, he delivered a startling continuity with the ad hoc bank rescues
of the Bush administration. As these policies averted a second Great Depression,
the economy has bifurcated. Wall Street has recovered and its executives are
once again collecting tens of billions in bonuses, but Main Street is not sharing in
the prosperity.
Indeed, the economic pain of ordinary Americans is far more serious
than it was before the crash, when economic unease was already a prime
concern. Real unemployment is stubbornly high. Mortgage foreclosures continue
to rise. Small businesses are starved for credit. State and local budgets are in
free fall. Secure health care remains a distant ideal.
By the time Republican Scott Brown won an upset victory for the
Massachusetts Senate seat once held by Ted Kennedy, on the very eve of the
anniversary of Obamaʼs inauguration, the administration was already in deep
trouble. The Massachusetts debacle was an accident waiting to happen.
President Obama has been steadily losing the voters who took a chance on him
in 2008. As populist anger rises, and the real economic pain of regular Americans
contrasts with lavish Wall Street paydays, Obama and the Democrats are
becoming targets of the rage rather than instruments of its remediation.
One man who voted for Obama, a former steelworker now driving a taxi
in Pittsburgh, told me, “Heʼs taking over the auto industry, the mortgages, and
health care, and the banks. The deficit is going through the roof. And whatʼs it
doing for me?” When I appeared on a talk show the morning after the
Massachusetts election, one caller told me that he had worked his heart out for
Obama in 2008, “and now Iʼm sitting on my hands.” In a Hart Research poll taken
in September 2009, 76 percent of respondents said that the governmentʼs
economic policies had helped large banks, while just 24 percent felt that the
policies had helped them or their families. By a margin of 54 to 38, January polls
showed that a majority of Americans didnʼt support Obamaʼs health reform.
Pollster Peter Hart described the prevailing attitude as “total disgust” with
Washington. But “Washington” now means a Democratic administration and a
Democratic Congress.
So the stakes are immense. A rare opportunity for realignment and
reform is being missed. A loss of either house of Congress in the 2010 elections
would create legislative deadlock, making it that much more difficult for Obama to
deliver anything of substance in 2011 and 2012. Obama himself could be a one-
term president. Though conservative dominance of economic policy caused the
collapse, the Republican far right rather than the reformist left is increasingly
supplying the narrative of economic distress, and could pick up the pieces.
During the campaign of 2008, we saw glimmers of a very different
Barack Obama and a very different political future. For progressives like me,
Obama represented a chance to reclaim a tradition of enriched democracy,
affirmative government, and social justice. If Obama does fail, he takes down our
hopes with him.
 A Road Not Yet Taken

Dare we still hope that Obama may yet deliver change we can believe
in? The quiet desperation of millions of Americans is not being remedied by
either party. But for now, the economic unease is increasingly being defined and
narrated by the Republican right. The crucial question is whether Obama himself
has been so totally captured by the financial elite that his path is now irreversible.
It has become a cliché among pundits that the Democratic Party is
hamstrung by interest groups. Commentators usually have in mind groups that
are actually fairly weak politically—blacks, Hispanics, gays, feminists,
schoolteachers, trade unionists. Politicians who propitiate these groups are
accused of pandering. The fact that the most powerful interest group of them all,
the financial industry, seldom makes the list is testament to its quiet power.
Princeton University political scientist Larry Bartels observes, “In the New Deal
era, the Democratic Party was about as liberal as it could be without alienating
southern racists. In the contemporary era, the Democratic Party is about as
liberal as it can be without alienating Wall Street bankers.” That power structure
needs to be dislodged before real reform can proceed.
In principle, Obama is free to toss out his top aides and bring in a new
team. Bill Clinton repeatedly shuffled his advisers. So did Lincoln. But, as we
shall see, the threads that link Obamaʼs political aides to his Wall Street–
dominated group of top economic advisers will not be easily sundered. The
addiction of this administration to flows of Wall Streetʼs political money reinforces
the impulse to go easy on the financial industry. Obamaʼs style is to delegate and
to proceed with extreme caution. To shift course and lead a different economic
team with drastically different views and goals, Obama would have to grow
immensely in office.
There is, however, an outside chance that the Massachusetts Senate
defeat will be remembered as a salutary wake-up call, even as a turning point in
Obamaʼs presidency. In the days that followed, a stunned Obama tacked in
opposite directions. On health care, he tried to sound conciliatory. His initial
public comment, in an interview with ABC News, was that the Democrats should
not defy the verdict of the voters of Massachusetts, and that a much more
modest health reform might be salvaged with bipartisan support. “I would advise
that we try to move quickly around those elements of the package that people
agree on,” he said. But judging by the scornful Republican reaction, this was the
empty sound of one hand clapping. After a year of pummeling by a Republican
Party determined to take no prisoners, Obama, almost pitiably, was still seeking
an elusive bipartisan consensus.
Yet during that same week, he began sounding far more populist when
it came to the banks. He inserted himself for the first time directly into legislative
battles, pressing for much tougher regulation, and declaring that if the bankers
“want a fight, itʼs a fight Iʼm ready to have.” During his first year, economic
populism was treated by the Obama administration as something to be kept in a
glass case, for use only in emergencies. It was more rhetorical than real. But the
Massachusetts defeat got the presidentʼs attention. It may yet dawn on Obama
and his political advisers that he needs to deliver more for Main Street, or at least
fight harder against Wall Street even if he loses some battles. And on March 3,
as this book was going to press, Obama belatedly decided to wage a partisan
battle for health reform. It remains to be seen how much collateral damage was
done by his earlier missteps.
It is, of course, too early for a definitive judgment on Barack Obama.
History reminds us that Lincoln, in mid-1862, was facing a bleak military and
political landscape. His peers considered him a failure. His greatness came later.
John Kennedy, judged a year and a half into his term, looked like a pretty
disappointing president, too. Often, wisdom ripens with experience—and Obama
is nothing if not a learner.
Sometimes, however, leaders fail to seize moments pregnant with
possibility. Sometimes, to invert a much loved verse of the poet Seamus Heaney,
hope and history donʼt rhyme. The British historian A. J. P. Taylor, referring to the
revolutionary year 1848, when nationalist revolutions in central Europe seeking
self-determination and liberal democracy were all aborted, memorably
characterized the events as a turning point of history on which history failed to
turn. We will soon learn whether our own era is such a time.
In Obamaʼs fateful first year, there was a road not taken, a possible road
to radical financial reform, broadened prosperity, and the mobilization of an
appreciative citizenry. This book explains how the key decisions unfolded, the
stakes, and the alternatives, as we look forward to the second half of Obamaʼs
term. There is still time for him to redeem his presidency. But that time is fast
running out.
 Robert Kuttner, author of the most prescient political book of 2008, Obama's
Challenge: America's Economic Crisis and the Power of a Transformative
Presidency, is cofounder and coeditor of The American Prospect magazine, as
well as a Distinguished Senior Fellow of the think tank Demos. He was a
longtime columnist for BusinessWeek, and continues to write columns in the
Boston Globe.
His previous and widely praised books include The Squandering of America:
How the Failure of Our Politics Undermines Our Prosperity; Everything for Sale:
The Virtues and Limits of Markets (about which Robert Heilbroner wrote, "I have
never seen the market system better described, more intelligently appreciated, or
more trenchantly criticized than in Everything for Sale"); The End of Laissez-
Faire: National Purpose and the Global Economy After the Cold War; and The
Economic Illusion: False Choices Between Prosperity and Social Justice.
Kuttner"s magazine writing has appeared in The New York Times Magazine
and Book Review, The Atlantic, The New Republic, The New Yorker, Dissent,
Columbia Journalism Review, and Harvard Business Review. He has contributed
major articles to The New England Journal of Medicine as a national policy
correspondent.
Formerly an assistant to the legendary I.F. Stone, chief investigator for the
Senate Banking Committee, Washington Post staff writer, economics editor for
The New Republic, and university lecturer, Kuttner's decades-long intellectual
and political project has been to revive the politics and economics of harnessing
capitalism to serve a broad public interest.