Barack Obama’s Biggest Mistake: Neoliberalism

Time Magazine screenshot

Barack Obama had the power to overhaul the economy, but instead focused on smaller, less effective fixes. Neoliberalism

MSN - September 18, 2019

"... The long history of Democratic populism is unknown to most liberals today. Only now, in the age of Sanders and Warren and Alexandria Ocasio-Cortez, are we beginning to relearn the lessons of the past. For at least three decades, neoliberalism has brought the left economic half-measures and political despair. It’s time to demand more.

In 2009, Barack Obama was the most powerful newly elected American president in a generation. Democrats controlled the House and, for about five months in the second half of the year, they enjoyed a filibuster-proof, 60-vote majority in the Senate. For the first six months of his presidency, Obama had an approval rating in the 60s.

Democrats also had a once-in-a-lifetime political opportunity presented by a careening global crisis. Across the country, people were losing jobs and homes in numbers not seen since World War II. Just as in the 1930s, the Republican Party’s economic policies were widely thought to have caused the crisis, and Obama and his fellow Democrats were swept into office on a throw-the-bums-out wave.

If he’d been in the mood to press the case, Obama might have found widespread public appetite for the sort of aggressive, interventionist restructuring of the American economy that Franklin D. Roosevelt conjured with the New Deal. One of the inspiring new president’s advisers even hinted that was the plan.

“You never want a serious crisis to go to waste,” Rahm Emanuel, Obama’s chief of staff, said days after the 2008 election.

And then Obama took office. And rather than try for a Rooseveltian home run, he bunted: Instead of pushing for an aggressive stimulus to rapidly expand employment and long-term structural reforms in how the economy worked, Obama and his team responded to the recession with a set of smaller emergency measures designed to fix the immediate collapse of financial markets. They succeeded: The recession didn’t turn into a depression, markets were stabilized, and the United States began a period of long, slow growth.

But they could have done so much more. By the time Obama took office, job losses had accelerated so quickly that his advisers calculated the country would need $1.7 trillion in additional spending to get back to full employment. A handful of advisers favored a very large government stimulus of $1.2 trillion; some outside economists — Paul Krugman, Joseph Stiglitz, James Galbraith — also favored going to a trillion. ...
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