The Audacity of Insiders

The Audacity of Insiders

Barack Obama may yet become the reform President who rearranges power on behalf of the people. But he’ll need to resist the brotherhood of cozy insiders.


Barack Obama’s success in the Democratic primaries marked the astounding victory of an insurgent over the establishment candidate. In his campaign Obama inspired millions of Americans with his vision of change, and he denounced the Washington elite for starting the war in Iraq and conducting a domestic policy that favored corporations and the wealthy.

Now Obama has stumbled into embarrassing questions about his commitment to that message of change. It wouldn’t be the first time a Democratic presidential candidate talked about sweeping change, won over the party faithful and ordinary voters, and then abandoned them to powerful interests. But we believe Obama is better than that, and if he plans to transform Washington politics, as he has repeatedly and eloquently said he is committed to doing, he needs to resist turning to the brotherhood of cozy insiders to chart the way.

Obama’s first stumble came from revelations that Washington’s consummate insider, Jim Johnson, the former Fannie Mae CEO named to vet Obama’s list of vice presidential possibles, harvested favorable mortgage loans from Countrywide Financial and was an influential promoter of the sky-high CEO compensation Obama criticizes. This smells like business as usual. Johnson quickly withdrew from Obama’s operation, but the episode is a vivid reminder that Washington’s ethical dry rot is not limited to Republicans.

Next, Obama announced that an acolyte of Citigroup chair Robert Rubin would head his economic policy team. Jason Furman, an economist who served under Rubin in the Clinton Administration and recently headed the center-right Hamilton Project, seems worse than indifferent to labor issues. In his writings he has sneered at the union-led coalition campaigning for better wages and benefits at Wal-Mart. It’s hard to believe Furman will be an honest broker for internal economic debates.

Once again, the implicit question is, will Obama walk the walk of change or merely talk the talk? And why did the presumptive Democratic nominee rush to name Furman just three days after Hillary Clinton ended her campaign? Many insiders saw it as a reassuring signal to Wall Street: the financial-corporate establishment need not worry about Obama’s occasional critical remarks on trade or other economic matters.

That prospect sends a chill through many liberal-labor hearts, because it looks like Obama is taking the first steps in the Clinton twist–the abrupt reversal Bill Clinton executed at the start of his presidency, betraying his promise of “putting people first” by handing economic policy over to Rubin and Federal Reserve chair Alan Greenspan. Obama has shown the potential for a healthier policy through consultations with progressive economists like James Galbraith and Jared Bernstein–but we worry that this promising new leader could be swallowed up by the same old crowd that over the years has stripped the Democratic Party of its principled convictions.

It’s not news that Obama relies on established players for advice and helpful connections. But if he wins in November, and then follows their ideo- logical prescriptions, his presidency will be in trouble. The economy is deteriorating dramatically. The housing crisis threatens many thousands of families with ruin, and exploding gas prices and healthcare costs have brought immense pain not just to the poor but to millions of working- and middle-class Americans. The economy will not recover if the next President simply repeats Rubinomics.

Hard times may give Obama the chance to become a reform President who really does rearrange power on behalf of the people. But he’ll need pressure from the millions of grassroots activists he inspired in the nomination battle to overcome the intimidating power of Wall Street and the energy and insurance lobbies. The best way to support Obama is not by remaining silent and giving him a pass. Citizens who believe in a more fair and just America should keep the pressure on in various ways, reminding him of his compelling challenge to the “trickle-down, on-your-own philosophy that says there’s nothing government can do about the problems we face.”

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Katrina vanden Heuvel
Editorial Director and Publisher, The Nation

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