To all my liberal friends who support Obama unconditionally and consider him the smartest guy in the class and always in control, the following is a primary reason why I believe you’ve bought into the image and not the man.
In early 2008, Obama was considered virtually ignorant on economic policy by those in the know. His only econ advisor was Austan Goolsbee, a University of Chicago econ professor who stands maybe just to the Left of Milton Friedman and far to the right of Paul Krugman. Obama linked up with Goolsbee in 2004 when Harvard econ dept. wouldn’t give him the time of day.
Since Obama knew what he didn’t know about econ, he did what he usually does in those situations: he went conservative. He went with the tried and true and raided the Clinton economic braintrust because they had whipped inflation and several economic crises, or so they would have you believe. Obama brought in Larry Summers, the man who gave you the Wall St. meltdown when he lobbied Congress to not regulate derivatives, and he also gave you the repeal of Glass-Stegall, another leg which was kicked out from under Wall St. that led to its collapse. He brought in Robert Rubin, who was with Goldman Sachs for 26 years before going to work for Clinton. Both Summers and Rubin never met a Wall St. brokerage firm or bank they didn’t like—a lot. The only Clinton econ alum Obama didn’t enlist was Robert Reich, the only liberal of the entire bunch. Imagine that.
A 1991 quote by Summers, who was then Chief Economist of the World Bank: “There are no… limits to the carrying capacity of the earth that are likely to bind any time in the foreseeable future. There isn’t a risk of an apocalypse due to global warming or anything else. The idea that we should put limits on growth because of some natural limit, is a profound error and one that, were it ever to prove influential, would have staggering social costs.” This is the guy who advised Obama on economics.
So, with Clinton’s braintrust firmly in place within the Obama campaign, what four names out of all available economists did they throw into the hat for Secretary of Treasury? Not Robert Reich. Not Pulitzer Prize-winning and liberal economist Paul Krugman. Nope, they went with: 1) the aforementioned Larry Summers, who had been forced out of the presidency of Harvard University under a cloud of scandal and a no-confidence vote by the faculty. 2) Timothy Geithner, who worked for Henry Kissinger, Ronald Reagan, and Clinton, and headed the Fed Reserve Bank of NY. He took over guidance of Bush’s proposed TARP for Obama. The program allowed Wall St. and banks to recoup all the money they lost or stole without being required to pay back one penny or make any operational or ethical changes to their business practices. 3) Jon Corzine, another Chicago School econ and ex-Goldman Sachs who later ran MF Global into bankruptcy. Hundreds of millions of customer-invested money are unaccounted for to this day—and Corzine maintains he doesn’t know where the heck it went. 4) Jamie Dimon, CEO of JP Morgan Chase, who just lost $3 billion of customer-invested funds by gambling on derivates (thanks to Larry Summers) and just had the Senate jostling and elbowing each other out of the way to kiss his ring.
After Obama was elected President, he chose to retain George W. Bush’s man, Ben Bernanke, as the chairman of the Fed Reserve, opting to not be concerned with the fact that it was on Bernanke’s watch that Wall St. and the banks melted down.
So, my point is this. Even if Obama hadn’t had Repugs and Blue Dogs obstructing his economic recovery plans, they were doomed to modest success anyway. The guys he goes to for advice are on the side of Goldman Sachs, Wall St., and the banks because that’s where they spent most of their entire careers. The only exception is Geithner, who spent his governmental career catering to the will and whims of Wall St. and the banks. Obama is great at speechifying, but he clearly doesn’t have the best interests of the middle and poverty classes at heart. If he did, Robert Reich would be Treasury Secretary and Paul Krugman would be running the Fed Reserve.
The ultimate irony is that despite all the Milton Friedman disciples who populate the Obama Economic Braintrust, the Jobs Bill they developed with its emphasis on national infrastructure repair is pure John Maynard Keynes. And high speed rail is just a modern day update of Dwight D. Eisenhower implementing Keynesian economic principles to build the U.S. interstate highway system.
Obama is not as smart as you give him credit to be. Or maybe he’s not really who you think he is at all. Being right on a few social issues doesn’t make him a good guy. He can propose all the reforms of mortgage loan modification and student loan programs he wants all the while knowing the Repugs will block every one. The one best thing about Obama, the primary reason to vote for him in November is that he is not Mitt Romney.