On election night six years ago, I wrote The Tragedy of the Bush Administration. In it, I despaired that:
“Once in a generation, the stars align for a political leader. There is this perfect moment – too often based on some enormous danger of long-lasting consequences for generations to come.
Once every half century, the perfect combination of leadership and threat, of challenge and response meet. The leader – imperfect, fallible, yet ready to rise to the occasion – grabs the brass ring.
Think Winston Churchill fighting the global threat of the Nazis, Thomas Jefferson writing the Declaration of Independence, JFK’s dare to send a man to the Moon . . .”
The rest of that piece went on to lament how George W. Bush was granted that rare opportunity to grab the brass ring, to rise to the occasion — and failed miserably.
Here we sit, not half a century later as originally surmised, but a mere six years later. I once again find myself lamenting the opportunities wasted by a US President in response to a great cataclysm. In the case of President Obama, it was his response to the financial crisis. The opportunity for greatness presented itself, and was . . . ignored.
The President was swept into office on a wave of Anti-Bush sentiment. The stock market was in freefall, credit was frozen, the recession already 13 months old. As Rahm Emanuel said, “Never waste a good crisis.” A strong leader would have taken advantage of the moment, of the opportunity.
And what an opportunity it was: Over the prior 3 decades, the economy of the United States had been “financialized.” We became much more involved in ‘financial engineering’ than any other more productive engineering. Along with this financialization came increased revenue for the biggest banks and investment houses; greater profits, influence, and power. A wave of deregulation swept over the sector, freeing the banks from meddling oversight.
Thus, as the finance sector got larger and more important, it was paradoxically under ever less scrutiny, supervision, and regulation. With that new found freedom from oversight, the banks promptly blew themselves, and the global economy, to smithereens.
This was the environment in which the President came into office. What did he do in this scenario?
• He appointed two of the architects of the crisis to major White House economic positions: Lawrence Summers as CEA Chair, and Timothy Geithner as Treasury Secretary.
• He made the enormous tactical error of focusing on Health Care Reform, while the banking crisis was still in full flower.
• He failed to marshall adequate resources to respond to the worst economic recession since the Great Depression.
The first item damned him to a mediocre economic team, one that failed to respond strongly to the banks that created the crisis. The second error earned him the enmity of the opposing party. The third error was political, and likely cost him the House, and possibly the Senate.
The great irony is that the man who ran on the campaign slogan of Change failed to deliver it in any meaningful way — at least, where the public wanted it — in getting the reckless runaway banks under control, and in stimulating the moribund, post-credit crisis economy.
I hasten to add, that from a political perspective, the President was a wimp. Had Al Gore been President from 2000-08 (and controlled Congress), the next GOP President would have flailed him for the recession and crisis bank relentlessly. Hell, the GOP still beats Jimmy Carter like a piñata. Once Obama took office, that was pretty much the last we heard of the Bush recession. The public actually forget who authorized TARP, who bailed out Citibank, BofA, AIG, Fannie Mae, Bear Stearns, etc.
This amounted to political suicide.
Critics have debated Obama’s hands off approach to passing National Romney-Care, his giving up (?!) the winning issue of partial Bush tax cut extensions. I am perplexed as to why he would not force a full confirmation battle over the charming midwestern Elizabeth Warren as new Consumer Financial Protection Bureau chair — Bnaks versus your grandma.
But as far as I am concerned, those are secondary political issues. To me, his presidency began its fatal downward spiral once he allowed Robert Rubin to determine his initial financial appointments. By passing over more pragmatic candidates not tied to banks and Wall Street, the president missed his opportunity to rise to greatness.
The opportunity existed to get the renegade banks under control — to reduce their leverage, their recklessness, and to get their hands out of the taxpayers pockets.
That opportunity was squandered, and Obama ended up as a defender of the banking status quo. It is where his presidency could have achieved lasting greatness, and instead was turned into just another elected official, who over promised and under delivered . . .