A BUZZFLASH INTERVIEW
The crash on Wall Street is also the crash of free market ideology. [Obama] needs to explain to the American people why we got into this crisis--market fundamentalism--and how to get out of it--a much more pro-active role for government. And he needs to explain that government will do a better job of serving ordinary Americans when government is run by people who believe in its power for good, who are competent, and idealistic, rather than cynical.
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America is gripped by a fearful economic crisis. Yet economist and writer Robert Kuttner sees a silver lining. The crisis presents Barack Obama a rare opportunity -- the chance to unite and move the country closer to embodying its core ideals. It is a time for neither timidity nor "governing toward the middle," as Margo Baldwin, publisher of Kuttner's newest book, explains:
... transformative presidents have been leaders who rose to greatness in moments of extreme crisis, and who took themselves and the Republic to places that seemed impossible -- Lincoln, Roosevelt, and the LBJ of the civil rights era. As Kuttner writes in Obama's Challenge: "Now it is time for the wheel to turn again. Barack Obama has both the national moment and the raw material to be a transformative president ..."
Progressive radio host Thom Hartmann agrees heartily: "At a mere 200 pages, this is a book you can read in a weekend without difficulty. And yet it’ll probably more powerfully transform your understanding of American politics, progressive economics, and the role of leadership in saving a nation than any other book currently in print."
Robert Kuttner is founding co-editor of The American Prospect and a senior fellow at the think tank Demos. He answers some key questions for BuzzFlash at this crucial turning point for the United States of America.
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BuzzFlash: The U.S. jobless rate is at a 14-year high, our nation is in unprecedented debt as we bail out the finance industry, and we continue to decline as an economic power in the world. You are an economist and in Chapter Four of Obama's Challenge you write about "Repairing a Damaged Economy." How is this even possible given that we are facing a world in which other nations are successfully competing with us economically? In short, we are no longer the economic superpower we once were.
Robert Kuttner: Well, first, we're not at unprecedented debt. Today's public debt, even after Bush's deficits, is only about 40 percent of one year's GDP. After WWII, it was 125 percent. Yet because that debt had gone to rebuild American industry in order to win the War, and to make American science and technology the world's leader, that heavily indebted economy of 1945 ushered in thirty years of prosperity.
Other nations are "outcompeting" us because we've had dumb policies. We don't reinvest in our industry, because we consider industrial policy to be a sin against free markets. We don't invest enough in our workers. We make college education unaffordable unless you have rich parents. We let other countries make off with our crown jewel companies because the companies profit by moving to low-wage regions. We are still a scientific leader, and we could still be an economic leader with different policies.
BuzzFlash: In his first news conference as President-elect on November 7, Obama focused like a laser on the economy. How does he reverse the unregulated financial market madness that has been with us since Reagan was first elected?
Robert Kuttner: He needs do three things. First, he needs to do the financial rescue a lot better than Paulson is doing. Banks have to be made to use the money to restore lending, not to pay out dividends and executive bonuses. We may have to nationalize a bank or two to get this done right.
Second, regulate all financial institutions that behave like banks. Prevent them from engaging in excess speculation. Make them increase their capital to cover risks of loss. Turn the bond rating agencies into public institutions without conflicts of interest. All financial entities that create credit (and risk) need the same basic kind of regulation. Obama gave a terrific speech on this in New York last March 27.
Third, put a floor under housing prices. That means direct federal refinancing of distressed mortgages at affordable rates.
BuzzFlash: In your chapter "A Great President or a Failed One," under the subhead "Breaking the Frame" you write: "As this book will explain, all of these problems have solutions. But before Barack Obama can address them as president, he must break free of the undertow of bad ideas." At BuzzFlash, we are big fans of George Lakoff, who posts on our site from time to time. He has been informally advising the Obama campaign. During Obama's presidential campaign, do you believe that he began to reframe some of the major challenges facing us, as you and Lakoff both suggest is vital to his success as president?
Robert Kuttner: Absolutely. But he needs to be even bolder. This is not just a matter of better words and phrases. This is the president-as-teacher. The crash on Wall Street is also the crash of free market ideology. He needs to explain to the American people why we got into this crisis--market fundamentalism--and how to get out of it--a much more pro-active role for government. And he needs to explain that government will do a better job of serving ordinary Americans when government is run by people who believe in its power for good, who are competent, and idealistic, rather than cynical. This is more than just "reframing". Few presidents have the gift of transformative leadership, and Obama could be one.
BuzzFlash: Let's take one economic "false frame" that the GOP has gotten away with for nearly four decades: "spread the wealth" and "redistribution of income" as "socialist" ideas. We know that the Republicans have been redistributing income from working Americans to the wealthy since Reagan, and have been increasingly concentrating the wealth of the nation in the hands of a privileged few. How do we reframe this so that the working class understands that the Republicans have been the ones redistributing income, but only upwards?
Robert Kuttner: It's really interesting. Obama more or less backed into a very good illustration of this challenge in the way he handles the tax issue in the campaign.
Tactically, he needed to bullet proof himself against the usual Republican charge of "He'll raise your taxes." He also needed some additional revenue to pay for new outlays. So he repeated, over and over again, almost ad nauseam, that if you made less than $250,000 a year, you would pay no more taxes; and that if you were in the bottom 95 percent - 19 Americans in 20 - you would get a tax cut.
Repetition works. After a while, it sank in. So in the campaign's final days, when McCain tried to pull the Joe-the-plumber routine, and accused Obama of wanting to "spread the wealth around," Obama started asking at rallies, "If you make more than $250,000, raise your hand." And of course, nobody did. So Obama succeeded in doing two things that have eluded Democrats for many decades. He raised the issue of class, in a way that actually played to the advantage of progressives. He reminded people in the bottom 95 percent, the working and middle class, that their interests actually diverge from those of the very rich. And he put the question of who pays the taxes back on the table. Nicely done.
It turns out that most Americans actually favor "spreading the wealth around." That's what we do with public education, and Social Security, and Medicare. Most people like government to broaden opportunity. Most support progressive taxation. But it takes a leader with the gift of explanation and narrative.
BuzzFlash: Your second chapter is "How Transformative Presidents Lead." Can you summarize nearly forty pages into a couple of paragraphs?
Robert Kuttner: Sure. Great presidents turn a crisis into an opportunity. They mobilize the people to put pressure on themselves to deliver radical change. By radical, I don't mean outside the mainstream. I mean fundamental change that is outside what is deemed possible. But in a crisis, things that were barely thinkable six months ago become barely adequate six months later.
Lincoln took office hoping to save the Union. He ended up emancipating the slaves, something that had seemed inconceivable. Roosevelt moved far beyond what anyone thought possible in creating a major role for the government in the economy. LBJ got Congress to enact transforming civil rights laws that had been hopelessly blocked.
One of the most instructive aspects of transformative leadership is the relationship between the president and social movements. Lincoln had the abolitionists, pushing him to move faster. FDR had the industrial labor movement. And of course LBJ had Dr. King and the civil rights movement. Sometimes these presidents actually encouraged these movements; sometimes they disappointed the movements.
The intriguing question is what happens to the great mobilization of people who organized for Obama. How does it shift from a campaign machine into a true social movement?
BuzzFlash: How can Obama avoid the traps of the "undertow" of the myths of "the center"?
Robert Kuttner: He has to be intelligent and independent enough to reject a lot of bad advice. One of the most disabling bits of conventional wisdom is the idea that America's worst economic problem is the deficit or the national debt or the projected costs of Social Security. If only the balance sheets of America's banks were as healthy as the books of Social Security! No, America's worse economic problem is that this financial crisis could turn into a Depression. In that context, a bigger deficit for a couple of years is by far the lesser evil, and may not be an evil at all. Here again, we need Obama to step up and lead by teaching.
BuzzFlash: On page 187, you address "avoiding legislative impasse." Given that the last two years, virtually the sole Republican Capitol Hill agenda has been obstructing Democratic initiatives, how does Obama go about doing this? As of this interview, it appears that the Democrats will still likely fall one or two votes short of a filibuster-proof Senate?
Robert Kuttner: The idea that we need 60 votes to be "filibuster-proof" is something of a myth. Moderate Republicans like senators Susan Collins and Olympia Snowe of Maine, Arlen Specter of Pennsylvania, and even one John McCain, loathed the pressure they were under to vote with Bush. They like bipartisanship, and missed it.
It will not take much for a leader as gifted as Obama to cultivate these orphaned Republican moderates, reach out to them, and make them part of his governing coalition. And I don't think this will require his splitting the difference with Republican ideology. In a crisis, Republican moderates will follow his lead.
BuzzFlash: The Obama campaign has amassed an enormous database of grassroots supporters. Can this be helpful in "push-pulling" legislation through Congress?
Robert Kuttner: Yes it will. But the more interesting question is whether the grass roots supporters can become their own movement for far reaching change. There will be times when they will be called upon to support him and pressure legislators to support him. There will be other times when they will need to push him.
I remember a button from the ‘60s - "Part of the Way with LBJ." This was a play on his 1964 campaign slogan, "All the Way with LBJ." But the Movement knew that he needed to be pushed. Likewise the abolitionists and Lincoln.
BuzzFlash: As a follow-up, what responsibilities do we have as progressives to help achieve our goals, particularly on issues of economic justice?
Robert Kuttner: We need to plant a flag beyond what Obama is currently advocating. We need to be a constituency for national heath insurance. He's not there yet.
We need to make sure that he spends a lot of effort and political capital on the Employee Free Choice Act, so that people who want to join unions can exercise that right without losing their jobs, a right supposedly guaranteed by the Wagner Act of 1935 but not enforced.
He needs to ask Congress for more serious public outlay than he is currently proposing. And he needs to appoint true progressives. We won the election; now we need to work just as hard to win the administration.
BuzzFlash: Does the fact that a relatively unknown junior senator from Illinois came out of nowhere and ran a brilliant two-year campaign that fought off all challengers give you hope that he can lead the nation in a new direction rather than run toward the mythical "center"?
Robert Kuttner: Absolutely. The last unknown junior legislator from Illinois who came from nowhere was Lincoln, and he did pretty well. Obama will be under tremendous institutional pressure to move to the center. What will prevent this fate are three things. First, reality. These are dire economic times that require remedies. Second, a burgeoning progressive movement. And third, his own intelligence, character and desire not to fail.
BuzzFlash Interview conducted by Mark Karlin.
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Robert Kuttner (Wikipedia entry)
Obama's Challenge: America's Economic Crisis and the Power of a Transformative Presidency, by Robert Kuttner, available from the BuzzFlash Progressive Marketplace.