Socialist’s Report Card for Obama
Morgen on May 9, 2009
The national Vice Chairman of the Democratic Socialists of America (DSA) - a man named Joseph M. Stalin…uh, I mean Schwartz - published an article last December where he laid out a set of very clear policy prescriptions for the incoming Obama Administration. Now I happen to agree with those conservatives who say that using the “socialist” label is not really that helpful (earlier posts notwithstanding). The term has become devoid of any consistent meaning over the years, and using it makes it that much easier for the opposition to dismiss us as excessively partisan.
That said, I think it’s eerily illuminating to go through the full list of policy recommendations for Obama made by Schwartz in his article (and even more so given that he published this prior to the Inauguration):
1. Act “boldly and quickly”, ignoring the separation of powers and checks and balances defined by the Constitution. Grade: A
2. Fund massive investments in green technology. Grade: A
3. Pass a massive stimulus package of at least $700B which includes major funding for job training. Grade: A/A
4. Implement a major anti-foreclosure program. Grade: A
5. Fund preschool education and employment programs for inner city youth. Grade: A
6. Demand equity shares in the banks and other corporations that are bailed out by the Treasury. Grade: A
7. Support the inclusion of a government-run insurance plan with healthcare reform initiative. Grade: A
8. Reverse Bush-era tax cuts on the wealthy. Grade: A
9. Abolish the 15-percent tax rate on hedge fund and private equity earnings. Grade: A
10. Military: end the war in Iraq, reduce number of bases abroad by 1/3, kill the building of next generation fighter planes, and end missile-defense programs. Grade: C
11. Require that consumer, worker, and government representatives be added to the board of directors of corporations receiving government aid. Grade: A-
12. Use whatever political capital is necessary to ensure passage of the Employee Free Choice Act. Grade: B+
Huh, like I said, a little earie. Outside of some defense related issues the Obama agenda seems to have lined up pretty nicely with the agenda prescribed by one of the leaders of the DSA. Coincidence, I’m sure.
Update: The DSA article linked above is actually a condensed and sanitized version of an article published by Schwartz in the DSA Winter Newsletter.
verumserum.com
Does Obama’s Election Mean Real Change?
By Joseph M. Schwartz
Part I: Only if It Delivers
for the Working Class and People of Color
Like confusing a terrific opening scene for a dynamic three-act play, discussion as to whether or not Barack Obama’s presidential victory and increased Democratic majorities in the House and Senate represent a realigning election is premature. A realigning election – such as those in 1860, 1896, and 1932, when a majority coalition first gained long-term national political predominance behind a new gov¬erning model of economic and social policy that is seen as benefitting the coalition’s core constituencies – can only be determined in retrospect.
The Obama victory depended crucially upon major gains among Latino voters and the return to the Democratic fold of a crucial segment of the industrial working class in the Mid-Atlantic and upper Mid-West. If one takes away the votes of first and second generation Cuban-Americans, Latinos went for Obama by a margin of 72 to 28, up from 55 to 45 Democratic in the 2004 presidential election. But only if the Democrats institutionalize a governing program that over the long-term redresses growing inequality will a new Democratic majority coalition emerge. The New Deal programs of Social Security, unemployment insurance, and labor rights forged the long-term allegiance of the white immigrant industrial working class to the Democratic Party, and post-war prosperity solidified the governing nature of the New Deal coalition (particularly by means of the “affirmative action” programs for the white working class, the GI bill and the federal home mortgage programs). And Reagan’s war on government was the predominating ideology of both parties until Katrina.
The making of a new political context
The realigning election of 1932 prefigured the thirty-six year dominance of a Democratic coalition that embraced the democratic regulation of capitalism and the emergence of a modest universal United States welfare state. The New Deal coalition, however, despite opposition from radicals and pro¬gressive Democrats, excluded African-Americans and Latinos by denying the largely Black and Latino farm workers and domestic workers Social Security benefits and the National Labor Relations Act’s federal guarantee of the right to orga¬nize. The ensuing struggle to include the disproportionately non-white poor in mainstream American life culminated in the means-tested programs of the Great Society. The reac¬tion against these programs, particularly by workers whose income put them just above the level of eligibility for Food Stamps, Head Start, and Medicaid (not to mention AFDC’s indirect child care benefits) engendered the portion of white blue collar workers who defected from the Democratic coali¬tion as early as George Wallace’s 1968 third party campaign. And well before there were “Reagan Democrats,” there was Nixon’s “silent majority.” This shift of political allegiance (at least on the presidential level) of a small, but significant por¬tion of the white working class to the Republicans on “social” issues played a key role in establishing Republican presiden¬tial dominance from 1968 onwards. (Except for abortion, the “social issues” were largely racialized ones – the Democrats allegedly being lax on “law and order” and their alleged excessive “taxing and spending” to benefit the “undeserving” poor at the seeming expense of white workers.)
But the Reagan presidential coalition never established a stable “governing” economic and social strategy that firmly incorporated the new working-class strata into the tradi¬tional Republican coalition of small town white Protestants, farmers and upper-middle class economic libertarians. The Republicans never built a stable majority in the House or Senate because, while their racial and social conservatism facilitated gains in the South and Southwest, they increas¬ingly lost moderate Republican seats in the Mid-Atlantic, New England and upper Midwestern regions. When hard times came (after the recessions of 1975, 1991, and 2008), a sufficient number of “Reagan Democrats” defected back to the Democrats to engender Democratic presidential and Congressional victories.
The strongest basis for claiming 2008 to be a “realigning” election is the continued Democratic gains in the House and Senate (it’s not surprising that amidst a global recession the Democrats won the presidency). Some of those seats did swing because of demographic changes – the growth of Latino voters in the Southwest and in the economically most dynamic areas of the South, as well as the drift toward the Democrats of de-industrialized long-standing Republican areas of upstate New York, Pennsylvania, Michigan, Ohio and Indiana. But only if the Democrats can improve the eco¬nomic circumstances of voters who (at least for now) have prioritized their economic needs over cultural or religious values will these gains be long-term. And some of the can¬didates who won in formerly Republican districts are quite moderate on economic issues.
As Latinos in the Southwest (and across the nation) increasingly gain citizenship and voting rights, Republican anti-immigrant and anti-worker sentiment is likely to cost them dearly. Absent the growing Latino vote, Obama’s vic¬tories in Colorado, New Mexico, North Carolina, Virginia, and Florida would not have been possible. The percentage of the electorate that is Latino is estimated to grow by at least ten percent per election cycle through 2050. (The Latino vote went from 7 percent to 9 percent of the national electorate from 2004 to 2008). White voters only made up 72 percent of the 2008 electorate, and this will decline toward 50 percent by 2050.
But this does not mean the Republicans are done for at the
presidential level. In the midst of a visible and rapid econom¬ic meltdown, Republicans still won 42 percent of the white trade union vote; 48 percent of the white Catholic vote; and 65 per cent of the white Protestant vote. The union household “premium” remains substantial – 58 percent of white union households voted Democratic versus 42 percent of non-union households with similar incomes living in the same regions. Thus, the passage of the card-checking Employee Free Choice Act and Democratic party support for unionization is in the party’s self-interest. But if Obama cannot produce the economic goods over the next four years (and that will be difficult), Republicans will have a good chance to regain the presidency in 2012.
While GOP admonitions against “tax and spending” have lost some of their potency in the face of a near-depression, the Republican mantra that taxation means “taking money from us hardworking folks and giving it to those indolent folks of color” still resonates among a sizable portion of moderate income whites, as in their embrace of Sarah Palin and “Joe the Plumber’s” right-wing populist claim that Obama favored a “socialist” redistribution of income from the deserving to the undeserving. That mistrust in taxation and public spend¬ing can only ebb if Obama initiates government programs that make a real difference in working-class families’ lives. Ironically, those programs can only succeed if taxation is made more progressive
The Republicans are likely to retain a lock on the deep South (except in Texas, where the growing Latino vote will soon put this great electoral prize in play) and on the white, de-industrialized areas of Appalachia. While many point to Obama’s victories in Virginia, North Carolina, and Florida as evidence of a Democratic breakthrough in the South, these gains are mostly due to the in-migration into these economi¬cally dynamic states of Northern-raised university-educated middle-strata and Latino immigrants. In the deep South, which is largely excluded from the high-tech and financial centers of Southern capital, the white Democratic vote fell to new lows – below 15 percent in South Carolina, Alabama, and Louisiana, and a positively scary nine percent in Mississippi. The demise (that began in 2000) of the Democratic lock on the Appalachian districts of Tennessee, Kentucky, and, most strikingly, West Virginia demonstrates that once deindustrial¬ization has run its full course and all rational economic hope is gone, the economically forgotten may cling not only to “guns and religion” but to a racially tinged populist resent¬ment of a “liberal” establishment that does not readily speak for the excluded of all races.
Race and the election of an African-American president
Obama’s victory represents a great triumph over racism, but the punditry’s celebration of a “post-racial America” should give progressives pause as to the depth of this anti-racist victory. Already, both Republicans and moderate Democrats claim that the Obama victory means that “affirmative action” is no longer necessary. In fact, it is no accident that our first black president is not only bi-racial, but the child of a white mother, raised by a white grandmother in a Hawaii that defies the (now outdated) black-white American racial paradigm.
Consider: would Obama have done as well if either (or both) parent(s) were direct descendants of an American slave, rather than his African parent being the one who disappeared from his life (and the campaign)? Would another candidate – for example, former House member Harold Ford, the most urbane, elite-educated descendant of American slaves in the Congressional Black Caucus – have been similarly able to win, let alone someone with a working-class, urban, or rural black Southern upbringing? While Obama’s elite education did not unambiguously serve as an electoral positive, one should not underemphasize the “bleaching” effect of elite Ivy League credentialization.
Once Bill Clinton chalked up Obama’s victory in South Carolina to Black racial solidarity with Obama, Obama’s hold on the African-American community became unshake¬able. This freed him up to run a “post-racial” campaign. This is not to deny the incredible emotional power his election had for an African-American community that knows to its core the “one drop of blood” rule of vicious American anti-black racism. Nor is this to deny the emotional power for this victory to any progressive who grew up under segregation. When I teared up after the media declared his victory at 11pm EST on November 4, I had a mental flashback to the summer of 1964 and my father explaining to his Northern-raised ten-year-old son that he had inadvertently but likely became the first white to use the “colored only” bathroom at the drive-in movie in Luray, Virginia.
Tears and memories aside, Obama ran a post-racial cam¬paign, consciously avoiding appearing to be a “black can¬didate” by rarely speaking directly about inner-city poverty or the entrapment of millions of people of color within the prison-industrial complex. According to an unnamed member of his campaign’s urban committee, after Obama secured the nomination, the committee’s name changed to “the metro¬politan issues committee.” Members were instructed not to “talk of race” and to only refer to two classes in their posi¬tion papers: “the rich” and “the middle class.” This reliance on “symbolic” politics may well indicate how much pressure from below needs to be put on the new administration if it is to change the life opportunities of the working class in all hues and, in particular, the inner city poor.
Part II: Mobilizing from Below to Enact an
Economic Justice Agenda
The impressive depth and breadth of Obama’s electoral vic¬tory, combined with Democratic gains in both the House and the Senate, provides the possibility of reversing three decades of growing inequality that is the primary cause of an impend¬ing global depression. But these electoral gains will prove temporary if the Obama administration does not improve the living standards of middle- and working-class voters. To do so, the new administration will have to govern “big”
Democratic Left • Winter 2008 • page 5
and “quick.” While there is short-term consensus in favor of a major stimulus package, some of his centrist Democratic advisers are already warning that long-term spending plans will have to be put on hold, particularly universal health care and the increased taxes on the wealthy originally set to fund the program. And the moderate punditry, led by global-capitalism guru Thomas Friedman, reminds Obama that “excessive regulation” of the financial industry could “strangle” the “entrepre¬neurial risk-taking spirit of capitalism.”
We are in the midst of a global “liquidity crisis” in which banks will not lend capital out of fear that borrow¬ers will not be able to pay them back. The mainstream media – and the Obama campaign and transition team – does not yet comprehend that this crisis has everything to do with the massive growth in inequality of the past three decades. The policies of deregulation, privatization, and de-unionization, supported by both Democratic and Republican administrations, led working- and middle-class Americans to try to maintain their living standards by taking on massive consumer debt and borrowing against their home equity. Once the housing bubble collapsed, so did their purchasing power.
Only activist pressure from below can force an Obama administration to govern in a manner than could secure a Democratic realignment. With the constitutional system of checks and balances and separation of powers consciously aimed at forestalling rapid change, it is no surprise that almost all the reforms identified with the twentieth-cen¬tury Democratic Party – Social Security, the National Labor Relations Act, the Civil Rights Acts, and Medicare – occurred in the periods 1935-1938 and 1964-66, the only times when the Democrats controlled the presidency, had strong majori¬ties in both chambers of Congress, and had insurgent social movements at their heels.
If upon taking office the Obama administration boldly leads, it could pass major legislation for universal health care, massive investment in green technology, and labor law reform that would transform United States social relations for generations to come. But already the corporate community is mobilizing heavily against the Employee Free Choice Act. As a former community organizer, Obama understands that reforms do not come from the top down; in the past, they arose because moderate elites made concessions to the move¬ments of the unemployed and the CIO in the 1930s and to the civil rights, anti-war, women’s, and welfare rights movements of the 1960s. But while the December sit-down at Republic Windows indicates that a new wave of labor militancy could be in the offing, the strength of the labor movement and the Left is even weaker than they were in 1932, when an econom¬ic crisis still demobilized workers fearing losing their jobs if they rocked the boat. Nor does there exist the degree of social mobilization within excluded communities of color parallel to the vigor of the civil rights movement of 1960.
Specifics of a progressive agenda
Thus, a “realigned” new Democratic majority can only be built if the Obama administration enacts a legislative agenda that reconstructs a new “productive” egalitarian economy. I emphasize “productive” because as this economic crisis should teach us, an economy whose major “wealth” is created by the shuffling of paper assets by “mega-banks,” hedge funds, and corporate law firms will inevitably be divided between a privileged top 10 or 20 percent of credentialed “symbolic manipulators” and a precarious middle and working class who “serve” them. Only an economic system that invests in production for human needs – such as renewable energy, mass transit, and urban infrastructure, school, and housing construction – can generate a sufficient number of “good jobs at good wages.” The infotainment, finance, and service model of “post-industrial” capitalism is vulnerable to continuous speculative bubbles because it does not produce sufficient real value to sustain mass middle-class living standards.
And if the production of “useful goods” is increasingly off-shored, then United States living standards can only be sustained if the rest of the world will lend it the money to run massive trade deficits. If and when East Asian central banks decide that investment in Euros rather than U.S. Treasury bonds is a more secure way to preserve value, the entire United States model of indebted growth could collapse..
The dirty little secret is that aside from the auto industry, it is mostly military-related aerospace and military hardware production that sustains a high-wage manufacturing base in the United States. That base still produces 25 percent of our GDP, while only employing 12 percent of our workforce, whereas the financial industry has those figures reversed.. Such an imbalance between those who produce real value and those who shuffle paper value cannot sustain an egalitarian economic system. Republican intransigence and virulent anti-union sentiment is close to destroying our domestic auto indus¬try. Our domestic parts manufacturers alone employ 650,000 workers – or nearly triple the 230,000 remaining employees of the (once) Big Three – and sizeably in states outside of the Midwest. Should domestic parts suppliers go under with the Big Three, we could well lose several million industrial jobs forever. Even foreign transplants will switch to importing parts and supplies from foreign suppliers. Add in the Big Three auto dealers, who employ several hundred thousand workers, and the magnitude of the problem is clear.
Our other major remaining industrial centers – aerospace and machine tools – are heavily tied to military production. While this is a form of high-wage industrial production, it is
page 6 • Democratic Left • Winter 2008
heavily capital intensive and produces goods that have little “multiplier” effect. Tanks and planes are not capital goods – they don’t produce more material goods; rather they either depreciate or are blown up. Thus, the truth that no “strong-on-defense” Democrat speaks is that unless we transition our military production to industrial production for civilian use, we cannot create a new “productive” economy that creates a larger number of high-value-added productive jobs. Obviously, not all jobs can be outsourced. There are , and will remain, large numbers of people employed in the “infotain¬ment” industry, health care, retail, and the food and hospital¬ity industry, and further unionization could raise the living standards of those employed in these service sectors. But if the purchasers of care and leisure goods are going to be able to pay human wages to their service providers, then there must be enough industrial high-wage jobs to sustain those not working in the service sector.
Only insurgent social movement activity will push the pragmatic Obama and his centrist, technocratic cabinet to govern “big.” While Obama’s web-based network of pre¬dominantly white and youthful middle-strata progressives could be activated in favor of “global warming” policies and major investment in green technology, they are unlikely to agitate for the industrial and social policies outlined above, which only mobilization by organized labor, new immigrant communities and excluded inner-city residents could engen¬der. Obama’s victory raised hopes among these communities, but is there the organizational base within the them to mobi¬lize quickly around an economic justice agenda? A sense of hope may lead the excluded to engage in more spontaneous acts of disruption that can scare elites into offering legisla¬tive change. (FDR’s pre-1935 reforms responded more to the homeless and unemployed movements of 1932-33 and the labor unrest in Toledo, Minneapolis, San Francisco, and Seattle of 1934 than to the later emergence of the CIO.) Perhaps we will see urban militancy akin to that of the mid-1960s – though the protests against police brutality that led to mass riots were led by working- and middle-class community activists who no longer reside in the largely impoverished urban ghettos.
Stimulus plan needed now
Even before taking office, the Obama administraiton con¬fronts the most serious breakdown in the global economy since the Great Depression. Obama’s Treasury department and the Congressional Democratic leadership are likely to agree on a massive two-year stimulus package of at least $850 billion, but Republicans – perhaps joined by fiscally moderate Southern and Western Democrats – are likely to fili¬buster against such “massive deficit spending,” particularly major public investment in alternative energy technologies is part of the package.
The Obama administration will have to remind the American public that Ronald Reagan ran deficits equal to seven percent of the GDP in each of 1981 and 82 (or the equivalent of $680 billion per year [!] in today’s dollars), in the face of a much less severe recession. In addition, the Obama administration must press Congress to implement a major anti-foreclosure program (similar to FDR’s Home Loan Corporation), as the income stream from homeowner payments on refinanced, affordable mortgages should signifi¬cantly increase the value of the toxic assets of “securitized mortgages.” The Bush administration’s failure to protect the foreclosed (particularly those who could pay a reason¬able renegotiated mortgage rate on a readjusted home value) explains in large measure its utter inability to improve the balance sheets of major financial institutions.
The stimulus package should include major government funding of job-training in the inner cities (in green tech¬nologies, for example) and of opportunities for both GIs and displaced workers to return to university as full-time students (and for women on TANF to fulfill their “workfare” require¬ments through secondary and higher education pursuits). While affluent suburbs provide their residents superb public education and public services, federal cutbacks in aid to states and municipalities has worsened the life opportunities of inner city residents. With all but seven states’ budgets in the red, cuts in social services and public-sector layoffs will devastate already hard-hit communities.
The inefficient and inequitable United States health care system cries out for replacement by a universal and cost-efficient alternative. If private insurance administrative and advertising costs of 25 percent on the health care dollar could be reduced to Medicaid and Medicare’s three percent admin¬istrative overhead, both universal and affordable coverage would be achieved. Even securing “opt-out” provisions from the administration’s “pay or play” system of private insur¬ance would be an improvement. Such “opt-outs” would allow states to create their own single-payer systems and enable Medicare or the federal employees health plan to market to employers as a lower-cost alternative to private group plans.
Looking at the revenue side
But how to pay for all this? The Obama administration should reverse not only the Bush tax cuts, but also the Reagan cuts in marginal rates on high-income earners, which would each return some $300 billion in revenues to the national fisc. In addition, abolishing the preferential 15 percent tax rate on hedge fund and private equity managers’ earnings could garner another $100 billion in annual revenues. Truly ending the war in Iraq should save $100 billion per annum; a 1/3 cutback in United States military bases abroad and an end to Cold War era plans to build a next generation of fighters and an anti-ballistic missile defense could save $216 billion in federal revenue per year.
The military budget is hideously oversized for a nation that claims armaments are necessary for defense and not defense of empire. One fights terrorism by intelligence and espionage cooperation among states and via a multilateral diplomatic strategy that provides hope for the billions who still live under authoritarian governments and in extreme poverty. Obama’s call to send more United States troops to
Democratic Left • Winter 2008 • page 7
Afghanistan ignores the lessons of the Soviet experience: that foreign military presence only elevates the forces of Islamic fundamentalism into national resistance fighters.
When the ponzi scheme of “securitized mortgages” col¬lapsed with the end of the irrational run-up in housing prices, the federal government had to bail out Bear Stearns, then Fannie Mae and Freddie Mac, and then AIG. American capitalism has “privatized” gain but “socialized” risk. Yet if risk is to be “socialized,” then so should investments. The Obama administration should not only demand equity shares in the banks and corporations that are bailed out by the pub¬lic treasury, but should also require that consumer, worker, and government representatives be added to the boards of directors of corporations receiving government aid. And the administration must stick to the goal of re-regulating the finance industry so that it serves the interest of the productive economy and not those of run-amok speculators.
A “new New Deal” would have to restructure international economic institutions so that they raise-up international labor, living, human rights, and environmental standards. In large part, Obama owes his victory in the key battleground states of Ohio, Michigan, Indiana, and Pennsylvania to the efforts of one of the few integrated institutions in the United States: the American labor movement. Restoring the right to organize unions (a right that no longer exists in practice in the United States) is a key policy component in the battle against eco¬nomic inequality. Given the already massive corporate and media offensive already launched against the Employee Free Choice Act, Obama will have to place the entire prestige of his presidency behind the legislation. He must use the bully pulpit to explain to the American public that NLRB elections are not “free” – not when the time lag between petitioning and the election works in management’s favor, allowing management to intimidate workers and require them to attend anti-union meetings and leaves management free to fire pro-union workers with impunity.
What’s next for the democratic Left?
An Obama presidential victory by no means guarantees the bold policy initiatives necessary to restore equity with growth to the United States economy. His campaign did not advocate major defense cuts, progressive tax reform, and significant expansion of public provision. But FDR did not campaign on bold solutions in 1932. It was pressure from below that forced FDR’s hand. Similarly, Obama’s victory may provide space for social movements to agitate in favor of economic justice and a democratic foreign policy. Let us hope that as a president who understands the process of social change, Obama will realize that those demanding the most from his administration are those who can best help him succeed in office.
Obama, a supreme pragmatist, will either respond to the balance of social forces that press upon his administration or ignore them in the absense of pressure. Thus, the work of DSA, YDS, and the rest of the democratic Left has just begun. We must join with our allies in the labor movement, communities of color, and immigrants rights groups to advance the trans¬formative social and economic policies outlined above and in DSA’s Economic Justice Agenda (see www.dsausa.org) . And we should begin to gear up to defend progressive House and Senate gains made in the 2006 and 2008 elections and replace Republicans and conservative Democratic officials at every level of our federal government. To do this, DSA and YDS must not only build more capacity on the ground, but also build working relations with such groups as Progressive Democrats of America as well as trade unions and community organizations active in progressive electoral politics.
What will be the unique “value-added” of DSA and YDS in these broad coalition efforts to press the Obama adminis¬tration from the left? As all crucial economic justice reforms – universal national health care, EFCA, massive public investment in green technology, and inner city infrastructure – involve state action to limit the prerogatives of corporate capital, the Right will charge these reforms as being “social¬ist.” DSA’s role is to educate the American public as to the historic role of socialist-inspired reforms in rendering mixed economies less capitalist and more democratic. Until more average Americans say, “What’s wrong with socialism?” even a less exceptional and more humane American demo¬cratic capitalism will remain a utopian dream.
Joseph M. Schwartz, a vice chair of Democratic Socialists of America, teaches politics at Temple University. His most recent book is The Future of Democratic Equality: Rebuilding Social Solidarity in a Fragmented America (Routledge, 2008). Parts of this article are revised from “Memo to Obama,” which will appear in the January-February issue of Tikkun magazine.
page 8 • Democratic Left • Winter 200
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