With the passing of Barack Obama’s 100th day in office, journalists and pundits are posing a simple but all-important question: How is the president doing? Robert Kuttner, author and political commentator, gave his own evaluation of the Obama presidency for the 2009 Lowell Lecture on April 30 in Emerson Hall.
Kuttner is co-founder and co-editor of The American Prospect magazine. He has authored numerous books on politics and economics, including the best-seller “Obama’s Challenge: America’s Economic Crisis and the Power of a Transformative Presidency” (Chelsea Green, 2008). Kuttner drew from themes in that book to discuss how the 44th president has the capability to enact sweeping economic reform, and why he’s falling short.
After opening with a detailed account of the economic crisis, which highlighted all the usual suspects — AIG, Lehman Brothers, Merrill Lynch — Kuttner’s narrative turned personal. He outlined his fascination with Obama’s campaign and the hopes he had pinned on the young candidate, noting “for liberals like me … the arrival of Obama was almost a miracle.”
As the economy began to spiral downward, Kuttner began thinking about presidents who had been able to turn crisis into opportunity. The list of “transformative” leaders included Abraham Lincoln, Franklin Delano Roosevelt, Lyndon Johnson in the Civil Rights era, Ronald Reagan (on the conservative side), and — if he could live up to the promise he exhibited in his campaign — Barack Obama.
“In each case, the president began with a set of constraints,” Kuttner said, “and through his leadership, dramatically moved public opinion to a point where things that began as unthinkable became possible and then became inevitable.”
That idea ultimately led to “Obama’s Challenge,” which Kuttner and his editor decided to publish before the president was actually elected. Their gamble paid off, and the book proved wildly popular. Now that Obama is in office, Kuttner has had time to reflect on whether he is proving transformative after all. On the economic side, Kuttner said, things are looking gloomy.
“I am extremely worried about the way he is going about economic policy and financial policy,” Kuttner said frankly. “You know, you feel bad criticizing this man. … This is a president who, above all, one wishes well.”
Still, Kuttner said, “there is something quite alarming about the way he is going about the financial rescue, and that in turn [is reflected in] the people he’s hired.”
A look back at the campaign period, said Kuttner, provides insight into Obama’s selection of economic advisers. When searching for a team, he was “under pressure to appoint people who were unimpeachably mainstream,” i.e., individuals who had served in the Clinton administration.
Kuttner decried plans set forth by Treasury Secretary Timothy Geithner, in particular the Public-Private Investment Program (PPIP) to guarantee and supply loans through the Federal Reserve.
A better route to recovery, Kuttner said, would look similar to what Roosevelt did with the Reconstruction Finance Corporation in the 1930s or what Reagan developed with the support of Congress in the savings and loan rescue of the 1980s. It is the same “straightforward” approach taken several times a month, Kutter said, when the Federal Deposit Insurance Corporation acts to shut down a failing medium-sized bank.
“This was the road not taken by the current administration,” he said.
In addition, Kuttner noted, two assumptions have been made that he sees as “disastrously wrong”: that this is merely a crisis of confidence, and that time is on our side.
“If you go look at the vacant houses on the fringes of Las Vegas and Phoenix, on the west coast of Florida, in Cleveland and in Detroit, you realize they are not coming back,” he said.
Kuttner argued that in terms of policy, Obama needs to create a more dramatic break with the old order, to escape what he calls an “undertow of entrenched interests.”
“Why is it that an administration that is so different from the Bush administration in every other respect [has] this seamless continuity from [former Treasury Secretary Henry] Paulson to Geithner? Why has there not been the kind of rupture with Wall Street that there was during the New Deal?”
The continuity is due in part, Kuttner said, to Obama’s personality. As a consensus-builder, Obama has been trying to create a new center that includes Wall Street and has been reticent about handing down severe criticism.
“His whole makeup is about bridging differences,” Kuttner said. “But sometimes you have to pick a fight and acknowledge that X industry is the obstacle to change.”
Kuttner views the moment as a “high-stakes,” prime opportunity for change. He believes that the administration should not be working simply to restore the American economy to its 2006 shape, but to transform the whole model of trade. It’s a tall order, but Kuttner is optimistic that Obama is up to the task.
“The circumstances will require a decision that Obama has not yet embraced but that he will come to,” Kuttner said. “The good news is, this is a very smart guy. He has been meeting privately with his fiercest critics. … This is a man with the self-confidence to get a second opinion. This is also a man who reads and thinks, who is not a prisoner to his advisers, and who above all does not want to fail.”
“And I think, if I’m right that he’s going down the wrong route, particularly on the banking part of the economic recovery plan, you will either see a different recovery plan or you will see different advisers fairly soon,” Kuttner added.
The Lowell Lecture, given annually and devoted to the major issues of our time, is sponsored by the Lowell Institute of Boston and the Harvard University Extension School.