An up-close look at the early Obama administration — and the prodigious capacity of concentrated wealth to distort our political process.
A review of A Presidency in Peril: The Inside Story of Obama’s Promise, Wall Street’s Power, and the Struggle to Control Our Economic Future, by Robert Kuttner, Chelsea Green Publishing, 2010. 300 pp.
By Sam Pizzigati
This week, on Washington’s Capitol Hill, House and Senate lawmakers will begin meeting in conference to hash out the final version of the “financial reform” legislation that will go to President Obama.
President Obama, in short order, will almost certainly sign that legislation into law — and Wall Street’s most prominent players will breathe a celebratory sigh of relief. They will have dodged the reform bullet.
The financial legislation about to become law will, to be sure, create some inconveniences for the nation’s biggest bankers and speculators. But Wall Street’s incredibly lucrative business as usual, for the most part, will simply speed along.
How could this have happened? How could a Wall Street so totally discredited in the eyes of the American people so soundly prevail over real reformers — and a new President elected on the promise of change? How could the financial industry kingpins whose mad chase after personal fortune crashed the economy get a green light to continue that chasing?
Robert Kuttner explains just how in his just-published A Presidency in Peril, the first comprehensive history of the 2008 financial crash and the recovery and reform debates that followed.
Kuttner may be this history’s best possible author. The moving force behind the American Prospect, the nation’s premiere progressive public policy journal, Kuttner has spent the last three decades expertly dissecting the public policy decisions that have tilted America’s income and wealth ever upward.
But don’t call Kuttner a “policy wonk.” That label has never fit him. Wonks relish the complexity of public policy — and don’t particularly care if anyone outside the policy-making community understands what’s going on. Kuttner cares deeply.
In A Presidency in Peril, Kuttner takes us behind the scenes of all the key economic policy debates that have defined the nation’s response to the economic collapse of the past two years. This response, he acknowledges, has “averted a second Great Depression” — to the great benefit of a precious few.
“Wall Street has recovered and its executives are once again collecting tens of billions in bonuses,” Kuttner details, “but Main Street is not sharing in the prosperity.”
Main Street isn’t sharing because the Obama administration “has not been able to shake the hegemony of finance.” Wall Street, despite a new occupant in the White House, still reigns.
On two of the three most significant post-collapse policy challenges — mortgage relief and banking reform — the Obama White House has chosen “a continuation of Bush’s failed policies.” On the third, economic stimulus, President Obama has broken “some new ground — but not enough.”
Behind these three disappointing policy outcomes stands the same political dynamic: the “immense undertow of Wall Street influence.”
“It is seemingly baffling,” Kuttner observes, “that a president elected as a change agent opted for so much continuity — until you appreciate that paradox as a reflection of the enduring and bipartisan influence of the financial industry.”
Or, as Kuttner notes more bluntly elsewhere in A Presidency in Peril: “With concentrated economic wealth has come concentrated political power.”
In this eminently accessible new book, author Kuttner soberly — and often chillingly — shows how Wall Street wields this power, sometimes brazenly, sometimes subtly. He names names. The villains. The heroes. The sadly compromised — like Gene Sperling, the Clinton administration’s last National Economic Council chief.
After the Clinton years, the centrist Sperling, unlike many of his colleagues, did not go off to Wall Street to make his fortune. Instead, Kuttner relates, “he impressed even his critics by taking positions at think tanks.”
But Wall Street realized that Sperling would likely have a prime role in any Democratic administration elected in 2008 and moved to bring him into the high-finance fold. Goldman Sachs “helpfully created a position for Sperling as adviser to its foundation” and paid him $887,727 in 2008.
That sum would be “chump change for Goldman, but a small fortune for a policy wonk,” notes Kuttner, “whose day job at the Council for Foreign Relations paid $116,653.”
“Now Sperling is a senior economic official in the Obama administration,” continues Kuttner. “If you were he, would you cross Goldman?”
In effect, suggests A Presidency in Peril, we need to be asking the same question about President Obama and his entire administration. Contends Kuttner: “The crucial question is whether Obama himself has been so totally captured by the financial elite that his path is now irreversible.”
Kuttner, in the end, has hopes for an about-face. Harry Truman, he asks us to recall, began his presidency genuflecting before the New Deal’s powerful enemies. But Truman, shoved by pressure from below, “rediscovered his New Deal roots” and went on to challenge Wall Street’s “gluttons of privilege.”
Obama, concludes Kuttner, “has only begun to realize his full potential as a leader.” What the President eventually goes on to do, his thoughtful new book reminds progressives, “will be a test of his character — and ours.”
Sam Pizzigati edits Too Much, the online newsletter on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies. Too Much appears weekly. Read the current issue or sign up to receive Too Much in your email inbox.