How are we doing?

The first year of the Obama presidency is nearing its conclusion--the first year of a long struggle that will shape the United States for at least the next thirty years, just as the Civil War and its aftermath created the America of the Gilded Age and the Great Depression and Second World War built the world in which I grew up. In the midst of any political struggle, as in any war, one must guard against premature assessments or flights of either optimism or pessimism, but the results of this year, like those of 1861 for Northerners or 1942 for the US in the Second World War, have been disappointing, and do not, to me at least, hold out enormous hopes for the future. Let me survey the scene as I see it and at least lay out some alternatives for this even more crucial year.

Barack Obama won election by a substantial majority, in my opinion, for three reasons: the widespread disgust with the Bush Administration, the emerging economic collapse, and the advent of the new generation that provided him with his majority. The same mixture gave the Democratic Party a comfortable majority in the House of Representatives and exactly 60 votes in the Senate--a possible basis for decisive action on health care, domestic economic policy, and in foreign affairs. The President initially took advantage of the situation to pass the stimulus package, which almost surely has prevented things from getting even worse. An entire year of bitter struggle has now yielded a very moderate health insurance reform bill, which is likely to pass during the next month. Neither on the broader economic front, however, nor in the implementation, as opposed to the presentation, of foreign policy, has Obama made many very significant changes. And as a result, he has as yet not only failed to lay the foundation for a better American future, but he also may have lost the political momentum and allowed the Republican Party, however bereft of either ideas or outstanding personalities it may be, the possibility of a comeback.

The problem, it seems to me, stems above all from the continuing, unchallenged power of both economic and foreign policy elites who refuse to admit that there might be anything fundamentally wrong with their policies and beliefs. The last few years have convinced me and others (such as Paul Krugman and James Galbraith, as well as some multi-millionaire hedge fund traders who recognized what was wrong in time) that our economy is fundamentally dysfunctional from the standpoint of the average American and needs drastic changes. The financial sector now dominates the economy and generates huge private fortunes, but without producing great increases in employment even in the best of times--indeed, its profits often depend on wrecking more productive sectors of the economy. And those in charge of it, including Ben Bernanke (a most revealing choice as Time's Person of the Year), Tim Geithner, and Larry Summers, have made it very clear that they see nothing with the system as such, and indeed are very proud to have reinvigorated it, at least temporarily, with massive infusions of federal cash. Worst of all, they have managed to keep the real solutions we need entirely off the political table. Last weekend Steven Brill wrote a long article in the New York Times Magazine about federal attempts to use TARP to control executive compensation at a few firms without even mentioning the only effective, and actually quite obvious, solution: a return to confiscatory marginal tax rates on incomes of, let us say, over $2 million a year. Stories suggest that the Obama Administration might even suggest keeping some of the Bush tax cuts that were set to expire this year or next, and the idea of re-instituting something like the Glass-Steagall Act has not been discussed either. On the one hand, the Democratic leadership reflects the values of Wall Street; on the other, it seems still to be terrified of confirming Republican stereotypes about tax increases. If you believe, as I do, that the structural weaknesses of our economy once again require drastic reforms, then we can only expect further economic stagnation, or worse, during the next twelve months.

In foreign policy the President certainly struck a much more encouraging and courageous note during his first six months in office. The withdrawal from Iraq remains a real achievement, and the President's speeches abroad, especially in Cairo, not only seemed to confirm that the United States was on a truly new course, but also won the President his Nobel Prize. Last fall, however, he faced a critical decision: whether to adopt his predecessor's view that that the security of the United States required a friendly government in control of Afghanistan, however remote the prospect of such might be. Once again, as in the economic front, he had to rely upon establishment advisers, including Richard Holbrooke, Hillary Clinton, and Robert Gates, who refused to challenge the fundamentals of that policy. That led him to increase our commitment, while trying to make sure that the trend would be reversed within a couple of more years. (An important article which appeared on the day after Christmas suggests that disagreement persists over exactly what has been decided.) That means that the United States will continue to exchange predator strikes and artillery rounds with the enemy's suicide bombers and ieds, but on a larger scale. It also means that any successful attacks on airliners or in the United States itself--which Al Queda may be using to try to ensure that American troops remain in the heart of the Muslim world--will be interpreted as failures of his policies. And it will probably forfeit a significant portion of the good will that the President initially enjoyed around the world.

Now the election looms. The Washington world is now agog over the retirements of Chris Dodd and Bryan Dorgan. I will not miss Dodd, whose connections with Countrywide Mortgage and the hedge fund industry made him exactly the kind of Democrat I am railing against, and the Democratic Party should have no trouble finding another winner in Connecticut. Dorgan's seat, however, will be vulnerable. In any case, the House in particular now includes several dozen Democrats who were elected in 2006 and 2008 simply because they were not Republicans. If the economy has not rebounded, they may have difficulty persuading their constituents that they should be re-elected. In the Senate, the loss of even one seat will apparently make it impossible for the Democrats to accomplish anything meaningful for the last two years of the Obama Administration.

Every story coming out of Washington now suggests that the White House is focusing on new communications strategies to deal with this most unfortunate situation. That is another legacy of the last forty years, in which powerful men and women have done whatever they could to detach politics from actual events on the ground. It is in the nature of crises, however, that they pose problems, such as secession or mass unemployment or world war, which demand real solutions. That, in my opinion, is where the President must keep his focus--even, or especially, when it involves disappointing the establishment figures who surround him.

It is most unpleasant to contemplate the consequences of significant Republican gains this fall. The wild card in the situation remains the Millennial generation, which, to repeat, elected the President in the first place and which, like the GIs in the 1930s, may not take their cues from the established media. The following electoral map, just posted on the usually reliable juancole.com, offers the Democrats a great deal of hope for the future and could indeed promise a new transformation of American politics.



Can these young voters be mobilized on behalf of Democratic House and Senate candidates this year, while they struggle to find jobs? If they can Obama may astonish the nation and we may begin to move forward. If not, we are doomed in the short and medium term to paralysis, and very bad outcomes for the crisis remain very possible.