OP-ED

The Enthusiasm Gap

Reich

I had dinner the other night with a Democratic pollster who told me Dems are heading toward next fall’s mid-term elections with a serious enthusiasm gap: The Republican base is fired up. The Dem base is packing up.

The Dem base is lethargic because congressional Democrats continue to compromise on everything the Dem base cares about. For a year now it’s been nothing but compromises, watered-down ideas, weakened provisions, wider loopholes, softened regulations.

Health care went from what the Dem base wanted — single payer — to a public option, to no public option, to a bunch of ideas that the President tried to explain last week, and it now hangs by a string as Nancy Pelosi and Harry Reid try to round up conservative Dems and a 51-vote reconciliation package in the Senate.

The jobs bill went from what the base wanted — a second stimulus — to $165 billion of extended unemployment benefits and aid to states and locales, then to $15 billion of tax breaks for businesses that make new hires.

Financial regulation went from tough new capital requirements, sharp constraints on derivate trading, a consumer protection agency, and a resurrection of the Glass-Steagall Act – all popular with the Dem base — to some limits on derivatives and a consumer-protection agency inside the Treasury Department and a rearrangement of oversight boxes, and it’s now looking like even less.

The environment went from the base’s desire for a carbon tax to a cap-and-trade carbon auction then to a cap-and-trade with all sorts of  exemptions and offsets for the biggest polluters, and now Senate Dems are talking about trying to do it industry-by-industry.

These waffles and wiggle rooms have drained the Democratic base of all passion. “Why should I care?” are words I hear over and over again from stalwart Democrats who worked their hearts out in the last election.

The Republican base, meanwhile, is on a rampage. It’s more and more energized by its mad-as-hell populists. Tea partiers, libertarians, Birchers, birthers, and Dick Armey astro-turfers are channeling the economic anxieties of millions of Americans against “big government.”

Technically, the Dems have the majority in Congress and could still make major reforms. But conservative, “blue-dog” Dems won’t go along. They say the public has grown wary of government. But they must know the public hasn’t grown even more wary of big business and Wall Street, on which effective government is the only constraint.

Anyone with an ounce of sanity understands government is the only effective countervailing force against the forces that got us into this mess: Against Goldman Sachs and the rest of the big banks that plunged the economy into crisis, got our bailout money, and are now back at their old games, dispensing huge bonuses to themselves. Against WellPoint and the rest of the giant health insurers who are at this moment robbing us of the care we need by raising their rates by double digits. Against giant corporations that are showing big profits by continuing to lay off millions of Americans and cutting the wages of millions of more, by shifting jobs abroad and substituting software. Against big oil and big utilities that are raising prices and rates, and continue to ravage the atmosphere.

If there was ever a time to connect the dots and make the case for government as the singular means of protecting the public from these forces it is now. Yet the White House and the congressional Dem’s ongoing refusal to blame big business and Wall Street has created the biggest irony in modern political history. A growing portion of the public, fed by the right, blames our problems on “big government.”

Much of the reason for the Democrats’ astonishing reluctance to place blame where it belongs rests with big business’s and Wall Street’s generous flows of campaign donations to Dems, coupled with their implicit promise of high-paying jobs once Democratic officials retire from government. This is the rot at the center of the system. And unless or until it’s remedied, it will be difficult for the President to achieve any “change you can believe in.”

To his credit, Obama himself has not scaled back his health-care ambitions all that much, and he appears, intermittently, to want to push conservative blue-dog Dems to join him on a bigger jobs bill, tougher financial reform, and a more effective approach to global warming. (His overtures to Republicans seem ever more transparently designed to give blue-dog Dems cover to vote with him.)

But our President is not comfortable wielding blame. He will not give the public the larger narrative of private-sector greed, its nefarious effect on the American public at this dangerous juncture, and the private sector’s corruption of the democratic process. He has so far eschewed any major plan to get corporate and Wall Street money out of politics. He can be indignant– as when he lashed out at the “fat cats” on Wall Street – but his indignation is fleeting, and it is no match for the faux indignation of the right that blames government for all that ails us.

Robert Reich served as the 22nd United States Secretary of Labor under President William Jefferson Clinton from 1992 to 1997.  He blogs at RobertReich.com, where this post first appeared.

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29 replies »

  1. I have the utmost respect for Dr. Reich, but whenever in the same breath you invoke the passionate fear of a 20-30% conservative and reactionary core’s distaste for activist (non-military) government; and then argue that “Anyone with an ounce of sanity understands government is the only effective countervailing force against the forces that got us into this mess” might need to find a better argument, short of proposing perpetual civil war! The progressive left, we need us some better institutions to back in this horse race.!

  2. Reich is correct. And the irony of his commentary is found in the lunacy of the foregoing comments.

  3. “I wanted to say “flogged and criminally prosecuted,” but I know you’re far too “humane” for that.”
    Flogging only for the Republicans. :>)

  4. I wanted to say “flogged and criminally prosecuted,” but I know you’re far too “humane” for that.

  5. “The lot of them should be criminally prosecuted.”
    At last archon, we can agree!

  6. I dunno. I don’t include myself in the “we” who lied about income and assets to “qualify” for loans. Looks to me like borrowers, mortgage brokers, loan officers, a lot of CEO’s, and the Wall Street “securitizers” joined grubby hands to perfect a fraud on the unsuspecting, both here and abroad. The lot of them should be criminally prosecuted.

  7. That’s us: the junkie society. The truth hurts.
    You don’t put junkies in jail, you get them into rehab.
    If we stopped using drugs, the market for same would dry up.
    Note to the wise: it WASN’T a CORPORATE debt crisis, except in commercial real estate and the auto industry. . .

  8. Margalit! The banks were merely repackaging and reselling OUR greediness. We have borrowed ourselves into oblivion, and at some point, the bill comes due. No one came and put guns to our heads and said “borrow this $14 trillion or we’ll kill you”. Grown-ups signed all those mortgages and credit card applications.
    Having said that, the banks should NEVER have been able to leverage themselves out 30:1. That was the Fed’s fault. But it was OUR debt. The banks are conduits of capital, not entities unto themselves. The capital comes from us.

  9. What does “greedy” mean? According to the dictionary it means “having or showing a selfish desire for wealth and possessions”. I would say that people, by definition, are greedy. Animals too. And so are banks.
    The point of an enlightened society is to limit one’s natural greediness to acts that do not harm other members of society.
    Banks have been throttling credit to create profit since the day they were invented. It’s how they make money. There is nothing wrong with that. What happened here, and it has happened many times before, is that the State, which represents society, has failed to limit the banks’ greediness. To judge by history, what should have happened is a “panic” followed by the demise of at least some speculators and a serious dip in the economy followed by recovery. Instead, the government decided that these folks were “too big” to suffer the consequences. Instead, as tcoyote wrote, the private bank debt has been shifted to the public balance book. So now the nation is going to suffer the consequences. Maybe it was the sensible thing to do, but no one private company should be allowed to become big enough to hold the State hostage.
    As Theophilus Fisk succinctly put it many years ago, in a similar situation, “either the State is Sovereign, or the Banks are”.

  10. tcoyote, I won’t deny that all people are greedy, even consumers, and I could see that using home equity to buy the good life was selling your future, but if you look at the real estate industry boom it was fueled by cheap money from the Fed, lies, and with agents, appraisers and lenders taking advantage of financially ignorant borrowers selling dreams not reality. Typically home values were appraised with collusion between the agent wanting the deal and the appraiser asking “What comps do you want”. Then the lenders created liar loans or at best low buy-in teaser rates with contracts not fully explained and for which the lender didn’t care if the borrower could meet future obligations because he could pass the risk on to someone else. There is also pressure in the industry to loan to the max, not what is appropiate. As a lender it is MY responsibility to separate the greed and “dream home” mentality from the buyer to make sure they can manage the debt for the life of the loan, not the borrower’s.

  11. I’m sick of the Socialist/Communist agenda and entitlements! There’s work that any of us can do! Like Dave Ramsey says, everyone of us needs to have the responsibility to “go out, kill it, and drag it home” to eat…
    You DON’T SPEND what YOU DON’T HAVE!! for anything!

  12. The root of this economic mess wasn’t greedy bankers, but greedy citizens who incurred $14 trillion in consumer debt. We went on a credit binge to end all credit binges. People were borrowing out their home equity and using it to buy big screen TVs, bass boats and vacations they could not afford otherwise.
    You can package and repackage that debt all you want, but fundamentally, we Americans borrowed far more as individuals and households than we could support. It was people defaulting on their loans that set off the cascade of bad events that crippled our economy. What we’ve done under this President and Congress is simply shifted unsustainable borrowing from private to public balance sheets without facing the reality that we have to live within our means, both as individuals and a society.
    I’m not going to defend the derivatives traders or arbitrageurs, Peter. And the bailouts made me sick. They were necessary to stop a full blown financial panic. Now that the panic is over, we need better and more thoughtful regulation of our financial markets and better management of financial practices that pose systemic risk.
    But to blame the bankers for the mess we’re in misses the fundamental point. We are now being punished for an epic credit saturnalia. There’s a morning after for every drunken binge, and we’re in it now. How long is it going to take to work off or write off $3-4 trillion of that debt? That’s how long it’s going to take to have a real recovery. If part of the program is to punish constructive investment risk taking, it will take only that much longer.

  13. It only benefits this one party system, Republocrats, to keep framing it as Democrats versus Republicans.
    True independent, moderate voters like me, me personally voting for a third party presidential candidate for most of my 25 plus years of voting right, are beyond tired of the same candidate with at best a different face every 2 to 6 years.
    Power corrupts. Hey, ignore that basic point. I’m just curious, how many times do you bend over and get that unannounced lower bowel exam before you realize to take some hesitation, and perhaps look behind yourself?
    Oh, I also forgot. Party loyalty trumps public accountability. Or, more appropo, blind faith has its rewards. Until you realize you are reaching out over a flame! The leaders didn’t warn you of that one, eh?

  14. “Just about every small business owner I meet blames government for the problems they are suffering. It’s either taxes, regualtion, or bail outs.”
    Regulation for who Nate, the financial industry? As far as bailouts I don’t think small business blames them, they just want theirs:
    http://www.msnbc.msn.com/id/28933690/
    “The small business owners are pissed that their taxes were used to bail out the big banks and auto companies.”
    Even the small businesses that sold products to the auto industry or relied on the industry’s employees for income? Who’s taxes are going to these small businesses?
    http://www.nydailynews.com/money/2010/03/01/2010-03-01_loan_tap_tight_for_small_biz_especially_startups.html
    “Its the constant change and not knowing what the rules will be tomorrow.”
    There are no rules, at least in the financial industry. Do they want NO rules, forever? Do you think some rules would have prevented the bailouts?
    “Cap n Trade scares the death out of small business owners that would be effected. Not knowing if it will pass and exactly how much it will cost them leaves them no choice but to sit on the sideline and wait. They aren’t going to invest a million dollars in a business that could be killed off in 3 months.”
    Well Nate I guess for someone who refuses to grasp the science and threat of gloabal warming I’d see why you’d think that. But tell me how this will hurt small business?
    http://www.americanprogress.org/issues/2008/01/capandtrade101.html
    “the free choice act”
    If a union is a threat to a business then it’s the fault of it’s business practices, not the workers. If you’ve looked at how business/government here in the South has legislatively blocked union organizing and then conned workers into believing that low wages, no benefits and shitty working conditions is “right-to-work” heaven in areas with no options, you’d understand how the Free Choice Act came about. But I don’t expect you to look any deeper at issues than your ingrained prejudices.

  15. “you really think this group thinks ” big government” brought this economic mess on us?”
    Just about every small business owner I meet blames government for the problems they are suffering. It’s either taxes, regualtion, or bail outs.
    The small business owners are pissed that their taxes were used to bail out the big banks and auto companies. They all say if they failed, or as they fail in to many cases, no one is there to bail them out.
    Its the constant change and not knowing what the rules will be tomorrow. Its the faviortes that politicians play.
    If you meet some business owners Peter you would be surprised how little they worry about boom and bust, that is the nature of almost every business and as an owner you need to expect it and learn to work through it if your going to last.
    “Do you think the “left” really wants to kill risk investment/reward?”
    Yes without question, this is by far the belief of your small business owner.
    Your ability to ignore the left’s culpability is amazing. Have you never heard of cap n trade? Who exactly do you think is pushing that peter? Cap n Trade scares the death out of small business owners that would be effected. Not knowing if it will pass and exactly how much it will cost them leaves them no choice but to sit on the sideline and wait. They aren’t going to invest a million dollars in a business that could be killed off in 3 months.
    Next up you have the free choice act, most don’t beleive that will pass any more but again a proposal from the left that scared small business owners away from expansion and starting new businesses.
    Healthcare another lefty montrosity, right now a small business owner doesn’t need to provide health insurance. Any day now they could we required, that is a huge obligation that easily could make the difference between a business plan penciling out or not.
    How do you ignore all these current examples of poor let policy killing the economy? Are you that clueless or that partisan?

  16. “It’s the reason why our economy isn’t recovering: private capital has gone down a gopher hole…”
    “It isn’t the “right” who is concerned about big government, it’s small business people who have to meet payrolls, moderate Dems and Republicans- in other words, the mainstream core of the country.”
    tcoyote, you really think this group thinks ” big government” brought this economic mess on us? How? Over-regualtion, taxes? You really think that for small business and risk capital to be happy they want endless cycles of boom thieves followed by government backed corporate bailouts? Tell me who lost sleep as faulty risk was bundled, relabeled “Grade A” and securitized safely away from the people who created it? Who lost sleep as cooked mortgage loans were passed on. Who lost sleep by insuring shaky hedgefunds that no one understood? Do you think the “left” really wants to kill risk investment/reward? We want true risk to really cause sleepless nights because then there’s that worn out (now meaningless) phrase “moral hazard” that keeps everyone honest. As a risk taker of private loans I’m the one who holds the risk and if I’m wrong I eat the result, I don’t get billions in bailout money because I have an in at the Fed and friends in governemnt. What’s holding up small business now; job layoffs, hard work and government money in the economy. Aren’t also risk takers consumers who want to know that their payment obligation will hold up for the life of the risk? Who took that level of comfort away from them – government, the left? If true risk takers do not restore to the economy, honesty and financial social solidariy, then they are the ones creating a new Mugabe, not the left wing wackos.

  17. Love the Zimbabwe comment. Sooner or later, our Mugabe will appear. He hasn’t surfaced yet . . .
    One thing that made me nervous about voting for Obama, which I did anyway, was his comment about capital gains being “lazy money”. In my investing experience, capital gains is “sleepless money”. Mine certainly has been. I’m not an advocate of speculation, but speculation always occurs around the fringes of productive risk taking. It’s the productive risk taking part I cannot get my “progressive” friends to grasp, and the thing that isn’t happening right now. It’s where ALL the jobs come from. It could be a long wait. . .

  18. I like the Zimbabwe model. Seize the land, cut the timber, slaughter the livestock and game, and have a big party.

  19. tcoyote, I actually consider myself the Democratic base and haven’t voted for Paul Tsongas or Bill Bradley. Wasn’t around for JFK and RFK, but I’m pretty sure I would have voted for them.
    However, there is wealth and there is “wealth”. The kind of wealth that benefits the industrious many while enriching the risk taking few is rather different than “wealth” created by pure financial speculation and all sorts of expansions and contractions. I would say we are seeing more of the latter lately than the former. And the latter doesn’t trickle down. It actually has an anti gravitational suction effect upwards.

  20. “What I keep asking my left wing Democratic friends is: how, exactly, do you believe wealth is created?”
    It just appears. It pops into the visible universe, materializing on the palms of evil “fat cats”. Then the government takes it, and gives it to the people who need it. Because it would be demonic for wealth to trickle down from corporations to the poor, but angelic for it to trickle down from the government to the poor.
    That is, quite literally, the economic theory of the left.

  21. MD as HELL writes: “Government … is hobbling markets in insurance and healthcare.”
    How does a non-government health insurance market work for a retiree who exhausts all his assets because of a serious illness?

  22. The Democratic base represents about 20% of the VOTING population of the United States, and probably about 10% of the total population. Like their rabid colleagues on the right, they periodically grab the steering wheel in their party and swerve into oncoming traffic.
    If Rahm Emanuel hadn’t gone out in 2006 and recruited a bunch of moderate Democrats (like Heath Schuler and Gerry Connelly), the Dems would be sitting in the minority in the House today. The Democratic “base” voted for Paul Tsongas instead of Bill Clinton, Bill Bradley instead of Al Gore, etc., Adlai Stevenson instead of John Kennedy, Eugene McCarthy instead of Robert Kennedy. It’s an old story: an authentic electoral death wish.
    What I keep asking my left wing Democratic friends is: how, exactly, do you believe wealth is created? Make work government jobs, defense contracting, space stations, tax credits for hiring the unemployable, $90 thousand a year pensions for public workers? Nope. It’s created by people with money who are motivated to take risks. If you treat those corporations, private equity firms and individuals as milk cows, they will either hide their money, sit on it or invest it overseas (like they are doing now), instead of making capital investments or starting new businesses that create jobs.
    It’s the reason why our economy isn’t recovering: private capital has gone down a gopher hole and is sitting there waiting until Nancy Pelosi and Henry Waxman decide how much they want to grab. There is too much political risk right now that people will actually listen to the Robert Reichs. It’s not a question of whether taxes will go up but by how much and for whom. The investment climate in the US right now sucks big time. And a lot of Obama’s army of young people will spend his entire first term living on their parents’ basements or sleeping on their friends couches as a result.
    It isn’t the “right” who is concerned about big government, it’s small business people who have to meet payrolls, moderate Dems and Republicans- in other words, the mainstream core of the country. This is a center right country, for better or worse, both constitutionally and attitudinally. We don’t trust big government because its main event is getting bigger. The federal government has grown by 250 thousand employees during this recession.
    So go have a latte, Robert, give those burnt out bums on Telegraph Ave a quarter, and have a nice day out there in Buenas California. You live in a different America than we do.

  23. MD as Hell – what colour is the sky in your world?
    If you honestly think the government was responsible for the mortgage and debt crisis then it was the Republicans and they did it whilst holding hands with their friends on Wall St.

  24. Government is the only constraint against business and Wall Street. Truer words were never spoken. Government is in the way. It is blocking job creation. It is hobbling markets in insurance and healthcare. It has led to the mortgage crisis and the debt crisis. Please just don’t try to fix anything else. You have done more than enough to prove that limited government is a good thing, and big government is a bad thing.