Obama’s Bailout Strategy

Obama’s Bailout Strategy

Framing the financial crisis as a verdict on free-market fantasies, Obama can win with a mandate to end the war and build a better economy from the bottom up.


I thought our philosophy was not simply to understand the world, but to change it. I keep receiving e-mails offering progressive alternatives to the Wall Street bailout, but none are connected to strategy or tactics. Congress, Wall Street and the media have little interest in our fine ideas unless we have a plan to do something.

That “something” is to frame the crisis clearly as the voters’ verdict on failed free-market fantasies, elect Barack Obama and a few more members of Congress, then demand emergency action to address the Wall Street crisis and its $700 billion twin, the war in Iraq.

I have no problem with Barack Obama’s supporting the bailout package as long as it keeps him on track to the presidency. He needs to be critical, to offer amendments, and to promise to return to the crisis the day after November 4.

He should take another look at The Second Bill of Rights: FDR’S Unfinished Revolution and Why We Need It More than Ever, by his Chicago friend Cass Sunstein. After the 1929 crash, Roosevelt was elected president as a fiscal conservative pushing a message of hope after Hoover’s dismal term. Then came the great social movements that, combined with Roosevelt’s pragmatism and political skill, achieved the New Deal. On the right he was accused of being worse than a friend of the Weathermen. On the left, he was accused of saving capitalism from its opponents. What’s missing today are the social movements, and I suspect they might be coming if this crisis continues to command full attention.

We need a November electoral mandate rejecting reckless unregulated free-market capitalism as a model for our century. Every minute we carry that message in these days before the election, we are building that mandate. We need a peace mandate, too.

If I had a vote, I would vote “no” on the bailout package because it remains completely weighted to Wall Street’s interests. Just look at Wall Street’s calculation: they will get $750 billion with no new strings or conditions they haven’t managed to live with, or circumvent, before. There are no performance standards for reducing foreclosures, bankruptcies and job losses. There are no penalties for failing to achieve those performance standards. There are no oversight mechanisms with new teeth, like a public monitor on private investment bank boards or inspectors general with subpoena powers within.

Democrats at least should have posted a bill that would contain real countervailing powers, and posed the question whether Wall Street really wants the money, or only public money for private use.

The Democratic proposal should be something like this:

• $300 billion immediately for Wall Street, with effective oversight, enforcement and performance standards with penalties;

• another $100 billion per month through January if there are measurable results with the first downpayment;

• no later than 2009, budget $80 billion for public works jobs by closing Bush-McCain’s tax loopholes for the rich;

• no later than 2009, budget another $80 billion for public works, healthcare and green jobs by cutting the funding for Iraq in half.

Make the rest of the package a debate over philosophy and priorities going into the election. Make the Republicans into New Dealers (unlikely) or latter-day Herbert Hoovers.

Win the election with a mandate to fix the economy and end the war. Call an emergency session of the old Congress, with the new president-elect as a Democratic Senate leader, and engage the American people in the drama of building a better economy through social movements, from the bottom up.

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