http://historyunfolding.blogspot.com/ View Blog History Unfolding: September 2010

Saturday, September 25, 2010

Today another copy of The New York Review of Books arrived, including the second part of an article by Paul Krugman and Robin Wells on the state of the economy and what to do about it. While they mention a few new steps the Federal Reserve might take to ease credit further, they really have no hope of any rapid improvement in the economy. A new and larger stimulus is obviously impossible even now and will become far less possible, it seems, after November's elections. Citing Japan's experience in the 1990s, Krugman insists that it proved that large deficits remain the cure, not danger, in an era of prolonged deflation. He might have added, however, that deficits alone will not do the trick: we need an organized effort, in FDR's words, to put people to work, and we have none on the horizon. We are failing at several different levels at once: intellectually, politically, in among our leadership. The election will for the time being make at least two of these trends worse. Why, just two years after Obama's election aroused so many hopes--not least right here--are we once again on the verge of a new series of catastrophes that will turn the United States into a second-rate power for the next few decades?

I spent last week discussing one key aspect of the problem: Republican obstructionism. This has paid remarkable medium-dividends, it seems, and they will deadlock the government for another two years; but I am afraid that, as in Germany from 1930 to 1933 (just eighty years ago!), the failure is on the left as much as on the right. To deal with the economic crisis Obama--a product of an Ivy League education--turned to today's equivalent of the best and brightest, and they have most assuredly let him down. A flood of cheap money and a single large stimulus bill was not enough to arrest the secular decline in unemployment--especially good semi-skilled employment--that has been going on since the age of Reagan. We can fault the Administration not so much for failing to implement radical solutions--that might well have been impossible--but rather for failing to propose them. The country needs a dose of genuine socialism, just as it did in the 1930s when FDR started the TVA, the Civilian Conservation Corps, and the PWA and WPA, and the Democratic Party could have been laying the political basis for it and given itself something positive to run on over the last two years. It did not. It spent all its political capital on the stimulus and on health care, a reform which has not yet had any meaningful impact and which is likely to fail anyway because it did not attack the root of the problem, the profit incentives that run our health care system. Ironically, White House spokesman Robert Gibbs attacked liberals who won't be satisfied "until we have Canadian health care" a few weeks ago--ignoring the possibility that we might actually need it in order to afford health care for all at all. Larry Summers has now announced that he is on his way back to Cambridge, where his leadership was even worse, and some pundits suggest that Obama will pick a prominent businessman to replace him, rather than someone like Joseph Stiglitz. That will doom any hope of innovation. The Administration has also failed to do anything meaningful to stem the foreclosure crisis, another area where the New Deal was more successful.

The country seems to care less and less about foreign affairs these days, and to judge from the Republicans' new manifesto, their focus groups don't show much interest in them among voters. Yet there, Obama has been if anything even more mainstream than he has been on the economy. I am looking forward to reporting to you all on Bob Woodward's forthcoming book, but the teases and reviews that are leaking out suggest that in this case, the President allowed the weight of the military and national security establishment to override his own better instincts. I happen to know (although I was not there) that a group of historians invited to dinner at the White House in the spring of 2009 warned the President that foreign adventures had doomed previous liberal Presidents. Obama seems to have wanted to limit the size and duration of the Afghanistan commitment, and it seems that there has been more frank talk about the real source of the problem--the Pakistani government--in the White House than anyone has ever let on; but he did not re-evaluate the fundamental assumptions upon which the adventure was based. General Petraeus is quoted as saying that we will leave the wars in Afghanistan and Iraq to our children, and if we do not re-evaluate our objectives, we will. I think we shall have to within a few years, but because Obama chose escalation in Afghanistan he will not get any credit for doing so when the time comes.

The entire intellectual elite, I am convinced, must also share much of the blame. We are now at a turning point in western civilization--or at least American civilization--as one of our two political parties tries to put an end to effective national government for some decades to come. This should not surprise us. At least since the 1860s powerful interests have sought, with varying degrees of success, to buy the government and restrict its fiscal demands, and the only thing distinguishing Boehner and company is their complete disregard not only for facts, but for theory. (Their new manifesto does not make the slightest attempt to suggest how we are going to get out of our present economic mess.) But meanwhile, on the other side of the political fence, my generation of academics lost interest in the great political struggles of the first two-thirds of the century several decades ago. For many years they have dismissed the whole power structure as a stronghold of racial and gender oppression, ignoring the critical point that while white males did indeed rule the west for many centuries, some white males did so very differently from others. (My generation, as the rosters of the last two Administrations shows, has admitted women and minorities to the highest reaches of power, but without having much of any effect on the generally conservative trend.)

Let me repeat that my analogy with Germany in the late Weimar era does not portend totalitarianism here in the US. While Fox News and Karl Rove could certainly have given propaganda lessons to Joseph Goebbels, they do not share similar aims. The Tea Party is a conglomeration of old rich white folks who want to get older and richer; they do not march in uniforms and aren't interested in building a network of expensive concentration camps, nor do they seem to have any foreign policy ambitions. We should keep in mind that Hitler won the allegiance of a majority of the German people in many of the same ways that FDR did: by stimulating the economy, first with huge public works programs and then with rearmament. A Republican Congressional majority or a new Republican President clearly will not attempt to do the same. The biggest casualty of this crisis will probably be our faith in our democracy. This morning's New York Times leads with a story on fraud in the Afghan legislative elections and quotes one American official as saying, "It's not necessarily the pro-Karzai bloc that has done so well, it's that the Parliament will be more dependent on big power brokers. He added that "they would be more likely to make deals with Mr. Karzai that did not necessarily serve the Afghan people." I find it hard to believe that I could have been the only reader to notice how well his comment seemed to describe the situation right here at home.

Saturday, September 18, 2010

Where the deadlock comes from

Various topics for today have been running through my head all week, but as often happens, a last-minute encounter with the current New York Review of Books changed my mind. It contains a remarkable review by Michael Tomasky of two books on the history of the Senate in general and filibustering in particular, and although some of it could have been more clearly written, Tomasky's own explanation of exactly how the filibuster works today was an eye-opener for me, and will be one for most readers as well, I am sure. I knew things were bad, but I didn't quite realize how bad.

I am old enough to remember the great filibusters of the 1950s and early 1960s against civil rights legislation. The first, a solo effort by Strom Thurmond in 1957 against a bill so watered down that Lyndon Johnson had persuaded most southern Democrats to let it pass, produced the record--24 hours--for a single Senate speech. The next two, in 1960 and 1964, were actually defeated, the last one very dramatically. I was also aware of filibusters against anti-lynching laws, which never passed, going back to the 1920s and 1930s at least. But in all those cases, filibusters and the cloture votes that sought to end them were responses to legislation that had come to the Senate floor. One reason we are in such trouble today, it seems, is that that is not how it works any more.

The key to the process, it seems, is the problem of actually bringing almost any measure, from the confirmation of a presidential appointee to the financial reform bill, to the Senate floor in the first place. For centuries this was customarily done by unanimous consent requests, made, presumably, by the majority leader, whose task it was to set the Senate calendar. Now, however, Republicans routinely refuse their consent--and according to Tomasky, no procedure exists to bring matters before the floor by a simple majority vote. Instead, he claims, the only way to get something on the floor in the absence of unanimous consent is to file what amounts to a pre-emptive cloture motion (that's my word, not his.) This process takes a few days, and the motion can be debated several times, as has happened repeatedly during the last two years. The point is that unlike in 1964, when cloture eventually defeated a filibuster and brought the Civil Rights Act to a vote after months of debate, now the cloture votes are taken to begin debate, presumably with the proviso that it will be limited. One result of all this, clearly, is to remove actual debate--that is, genuine discussion of the measure at hand in public, with an eye to improvement, amendment, and marshaling public support--from the process entirely. All the necessary deals had to be struck behind closed doors in the Senate before the Health Care Bill even came before the body at all, since Harry Reed needed his 60 votes behind him to get the discussion started.

The use of this procedure, data makes clear, has been a central part of Republican strategy now for almost twenty years, if not more. The modern Republican Party has a problem: its policies, particularly its economic policies, do not help the average voter. Clever mobilization, the use of social, racial and religious resentments, and tough-talking foreign policies have helped overcome this handicap since Reagan, but nonetheless, inevitably, severe recessions happen at the wrong time (most notably in 1991-2 and in 2007-8) and Democrats win majorities in Congress and/or the White House. The Republican problem, then, is to prevent the Democrats from actually doing anything to help the American people very much, while at the same time launching personal and extreme political attacks upon any Democratic President. The filibuster has been absolutely critical in achieving the first objective. Data provided by Sarah A. Binder and Steven Smith in one of the books under review tells the story. The Democratic Senate leadership in 1993-4 had to file 80 motions for cloture, a new record for a single Congress by a large majority. This helped block the Clinton health care plan, which never came to a vote, and the Republicans took over the Senate and the House in the fall of 1994 and held them both for most of the next 12 years. From 2003 until 2007 the Republicans controlled the Senate and the White House, and they successfully put through a great deal of their agenda, filing 130 cloture motions during that entire period, or about 32 every year. But in the last four years--since the Democrats regained the Senate--the Democratic leadership has had to file almost exactly twice as many, 256. Unfortunately, Tomasky doesn't tell us how many of the 256 have been filed since Obama became President, but it seems very likely that it is well over half.

Now there are a number of reasons why the Obama Administration has been unable to do more to help Americans hurt by the depression into which we have fallen. Some of it is their own fault: Larry Summers, Tim Geithner and the President himself apparently accepted the idea that all would be well if the Fed simply flooded the economy with cheap money, as it had failed to do under Hoover. The costs of that economic experiment now seem likely to include the death of liberalism as we have known it. But it is also true that the Administration could have done more, much more, on a variety of fronts, had not the current Senate rules and the Republican attitude of absolute obstructionism made it so hard to do anything. The House of Representatives, indeed, has done pretty much everything a good liberal could have asked for, including rapid passage of a pretty good health care bill and financial reform legislation, cap and trade, and the repeal of legislative restrictions on gays in the military. But of those four major pieces of legislation only two passed the Senate at all, each in much watered-down form. With the economy still in tatters and the airwaves filled with accusations of a socialist in the White House, there is now a 2/3 chance, according to fivethirtyeight.com, that the House will lose its Democratic majority.

There can be no doubt, incidentally, that Republicans planned all this from the moment that Obama was elected. Plenty of them remembered 1993-4 and anticipated replaying that script. That is why Mitch McConnell made it clear to his Republican colleagues that their job was to stop anything Obama wanted to do, period. And that includes even allowing the new President to run the executive branch. 20 months into the Obama Presidency, 240 appointees are awaiting Senate confirmation. That is not an accident. If the Republicans indeed do win at least one house of Congress they will begin a round of investigations of ridiculous charges against the President and the Executive Branch, just as they did under Clinton. Some of them have already announced that strategy.

Yet the Republicans still have one huge, and growing, problem: producing a Presidential candidate who can win. Republicans with national reputation and some hope of bipartisan support find it harder and harder to be nominated, and no potential consensus figure like George W. Bush is on the horizon. Christine O'Donnell's victory in Delaware has laid bare the split between the Washington Republican establishment--including such figures as Karl Rove and Charles Krauthammer, neither of whom could be called a moderate--and the other titans of the Republican Party, Rush Limbaugh, Sean Hannity, and Sarah Palin. Like the conservatives who complained about "me too" candidates from Willkie through Eisenhower, the Tea Partiers are insisting upon ideological purity, and they may be strong enough to nominate one of their own in 2012, improving Obama's prospects dramatically.

Still, the long-term prospects for the country's economy and politics are grim indeed. Europe faces many of the same problems that we do. The European nations are taking a variety of steps, but with the possible exception of Italy, they are not showing anything like the same degree of paralysis that we are. France is raising its retirement age from 60 to 62, Britain is cutting way back on government spending, and Germany has worked carefully to maintain employment. Some of these things will work, some will not, but none of these countries include a major party dedicated to stopping the national government from doing anything constructive at all. They stand a good chance of keeping the progressive tradition alive.

Saturday, September 11, 2010

What you learn in France

One does not have to be in Europe very long to realize that civic culture has not deteriorated here nearly to the extent that it has (and, apparently, will) in the United States. Not only is the public transport vastly superior, but the level of discussion of public affairs is much more sensible. Two things have particularly brought the difference home to me: a documentary film on the financial crisis in the United States, of all things, which my wife and I saw near the Sorbonne, and a few days' reading of the leading Paris newspaper, Le Monde.

The documentary, Cleveland vs. Wall Street, seems to have been made by a French director during the last year, based upon ongoing events. It seems that, at the end of 2008, the city of Cleveland, several of whose neighborhoods had been devastated by the failures of subprime mortgages, decided to sue the leading Wall Street banks. (The upkeep on abandoned properties alone is running into tens of millions of dollars.) According to the movie, the banks have managed to keep the case from coming to trial as yet, but the filmmakers, with the cooperation of both parties, managed to stage a mock trial in a Cleveland courtroom, complete with a judge, distinguished counsel, and a randomly selected jury. I would guess that the parties agreed (especially the banks and their counsel from New York) because they thought the trial would be good practice for the real thing. The staged trial seems to have lasted at least a week or so, and was edited down to two hours.

The witnesses were worthy of Balzac (whom I am reading) or Zola. They included several lower-middle class breadwinners who were about to lose their homes, having taken out successive mortgages of two to three times the real value of the house. They included a very impressive city councilman who explained just how neighborhoods had been devastated. Three witnesses, however, were particularly interesting. The first was a tall, well built black man in his thirties, who admitted that some years ago he had abandoned his former job, dealing drugs, to become, in effect, a mortgage salesman. Using some of his old contacts, he knocked on doors to find people who could be persuaded to apply for subprime mortgages. There were, he said, papers to fill out giving financial data, but even though many of his customers had had credit probelms in the past, the banks never checked them. He denied ever telling his clients to submit false data on their income, although he admitted that others had done it. And he explained that he was paid an immediate 10% of the loan, in cash, whenever a deal was closed. Like many modestly educated people, he spoke somewhat slowly, but very clearly, and said exactly what he meant to say. I wished that the plaintiff's counsel had asked him to compare his two professions--I am sure the answer would have been very interesting--but if he did, the answer didn't make the final cut.

The second witness who caught my eye was a computer geek who had gone into the financial world in the 1980s, designing highly specialized programs. As he has explained in print (I'm sorry I didn't write down his name), during the last ten years, he applied his talents to meeting the needs of the big New York banks who securitized subprimes He wrote a flexible program that could, as he put it, generated exactly the security, with exactly the date of maturity and the rate of return, that the buyer wanted. He was the critical witness, I thought, because his testimony left no doubt that there was a direct line, no matter how cleverly concealed, from the offices of Goldman Sachs, Lehman Brothers and the rest in New York through their "independent" mortgage brokers and into the neighborhoods of Cleveland and elsewhere. He obviously felt badly about his role in the crisis and I can see why, but I'm sure some one else would have played it if he had never existed or devoted his life to some other pursuit.

The third witness of particular interest was Peter Wallison (as goole just told me), who had been both White House Counsel and general counsel to the Treasury Department in Republican Administrations and is how the leading financial policy expert at the American Enterprise Institute, a job which he performs, apparently, while living in the ski resort of Snowmass, Colorado. The plaintiffs' counsels were very worried about his potential impact on the jurors, and one of them, who had seen him in action, said he could convince them that the world was flat. I don't think he did, but he tried. Patiently, but in a tone that suggested to me that even he didn't really believe what he was saying, he explained that the government's programs designed to encourage lower-income people to own their own homes had distorted the housing market, and that this was the real source of the problem. It was not clear from the editing whether his cross-examiners had really done his testimony justice. Certainly they should have asked him exactly what government program allowed individuals to take out three successive and increasing mortgages on the same piece of property, a story we had heard at least twice.

I will not describe the jury deliberations or the jurors' decision. I was ashamed, frankly, that I had to come to Paris to see this movie or even to know that it existed. Not only has it never been released in the United States, but as far as I can make out, this blog post will represent the first time that any American has written anything about it for his fellow citizens. Yet I am glad that Frenchhmen and Frenchwomen took on the task, because I continue to believe that the Atlantic world is a political unit whose different members have always had a great deal of influence on one another's politics. The United States created modern democracy in the 18th century, kept it alive in the Civil War era and encouraged the major European nations to make big steps towards it, and created the modern welfare state under the New Deal. Now we have fallen behind the Europeans in many ways, and we need them to hold out some hope.

Which leads me to Le Monde. What struck me the most about the various issues I read this week was the remarkable coverage of foreign countries. I learned, for example, that the authoritarian government of Belarus has fallen out with its Russian protectors, and that Moscow apparently would like to see a change there. I learned about a somewhat disturbing referendum this weekend to change the Turkish Constitution, one in which the voters have to cast ONE yes or no ballot on about twenty-five different changes. I read an interesting account of a meeting Valdimir Putin convened in Sochi, the Russian resort town, of foreign experts, in which he defended Russian authoritarianism and the continuing role of the Russian state in the economy. I honestly don't know where I could go in the American press--certainly not to the New York Times--to get that kind of information. It is another indication of how unlikely it is that the United States can maintain its role in the world. With fewer and fewer qualified diplomats and less and less information about foreign lands in the public domain, our influence seems bound to decline--at least for some time to come. Thankully, the spectacle of our economic and political state, to which I will return next week, will not inspire any one to copy us any time soon.

Sunday, September 05, 2010

A Vision of the Future

For months now I have been holding out hope that the political winds might shift and that Obama might emerge from November’s elect ions in a relatively strong position, but that now seems almost impossible, and it is time to reckon with more depressing alternatives. The excellent web site fivethirtyeight.com now shows the Democrats likely to emerge with only 52 or 53 seats, and the Republican lead in generic House polls is increasing. (Fivethirtyeight is working very hard to develop an accurate prediction for the House but it is not yet available. It has just pronounced the Republicans likely to capture four additional state houses.) If the Democrats hang on to narrow majorities they will still be unable to take any major new initiatives for two years. If they lose even one House, we will be treated to new rounds of bogus investigations of imaginary wrongdoing, and, I feel sure, a government shutdown. And already it seems likely that the Bush tax cuts will be extended in toto—although it would be an act of political wisdom and courage for Obama to let them expire instead.

Ever since the Bush years, some Democrats have been worrying about the onset of some kind of Fascism under Republican rule. Such fears, I now think, are entirely misplaced, for reasons that I treated two weeks ago in my post on Lukacs. Both Fascism and National Socialism had disciplined visions of where they wanted their nations to go, and Nazism, in particular, embodied all the major aspects of mid-century centralized states, such as a new transportation network and benefits for workers. It also tightly controlled the economy. This is exactly the kind of national organization of which neither Republicans nor Democrats are capable any more, and the Republicans, in particular, have become their own species of Marxists, looking forward to the withering away of the state. Marx, of course, did not believe this could take place until a proletarian revolution had created a classless society, but in an astonishing feat of propaganda, the Republican Party and its media acolytes have persuaded many millions of Americans that their happiness depends on low taxes and unregulated markets, and Democrats have totally failed to make the case for the contrary position either in theory or in practice. That indeed is their most brilliant achievement: they will get back into power, if they do, without organizing uniformed militias or physically terrorizing their opponents. And meanwhile, Fox and Clear Channel have done something Goebbels must certainly have envied, turning media propaganda not only into a major political force, but into a profit-making machine.

Indeed, the Nazi, Communist and New Deal regimes all depended on a level of organization and a sense of national destiny which seems virtually to have vanished from the earth. Like most historical changes this is actually a mixed blessing. On the one hand, it makes it impossible to recreate the totalitarian experiments of the twentieth century on a large scale. On the other, it is making the United States literally ungovernable.

Ungovernability is indeed the experiment which we seem destined to try. With Republicans threatening to re-establish political hegemony based on the idea that we can continue to cut taxes and make do with less government, no serious problem, including the deficit, can be addressed. We will see further declines in state and local services and millions of unemployed, including many young people, with no prospecs of careers. The financial, medical, energy and fast food sectors of the economy will continue to thrive while the rest withers, thanks largely to the unlimited campaign spending which they can now undertake. The House and Senate will include more and more millionaires, as will the nation's state houses. (Jane Mayher explores all these trends at length in a recent New Yorker article on the Koch family, an energy powerhouse that has devoted much of its fortune to rolling back the history of the last 80 years.) Since the Republicans are determined to oppose immigration reform we will continue to number huge numbers of illegals in our midst, with all that that implies. Our infrastructure will continue to deteriorate and there will be no large-scale attack on our energy problems.

The United States was also largely ungoverned for several decades after the Civil War, when the KKK terrorized the South and industry and corrupt political machines ruled the North. Society in those days was much simpler, however and we do not know what the consequences of less and less government will benow. There will surely be a reaction against them, as there was then, but it will come mostly from Americans born since 1982 or so. Because they will not be organized to tackle great national tasks like the GI generation was, they will have to set a personal example of frugality (which their own problems in life will encourage) and do what they can to help people on the local level, for instance in the Charter School movement. The last Awakening (1965-84) took place in a politically secure era and focused on emotional and social isues. The next one, like that of the Progressive era (about 1882-1902) will probably be much more political.D

After the elections of 2006 and 2008, some Democratic political consultants apparently concluded that demographic shifts had created a new, permanent Democratic majority. I heard James Carville in particular make this argument not long after Obama took office. He was wrong. The New York Times reported last week that fewer younger voters are identifying themselves as Democrats, a trend that will continue if the economy does not pick up. It may also be a mistake to believe that Hispanic citizens sympathize with the plight of illegal Hispanic immigrants. It is good, of course, that citizens are holding the government accountable, but sad that the Administration has been unable to change many lives for the better, with the exception of state and local government employees who were not laid off.

When Strauss and Howe wrote their books in the 1990s they believed deeply in a coming regeneracy parallel to that which had taken place in the twenty years before their births. As recently as two years ago I had the same hopes. It is astonishing to think that only a little more than a year ago we were discussing sensible solutions to real national problems. But it seems this is not to be our fate. Other generations to come will re-establish the idea of a just society and a benevolent state. We shall evidently have to content ourselves with other kinds of satisfactions, and there is no reason to believe that our political structure will be fundamentally altered..

Stereo 411