The rise and fall of President Romney
The year is 2020. President Obama and Democratic Congresses are unfondly remembered. And a new party is cruising to reelection at the end of America's lost decade.
White House
January 1, 2020 — This is the story of how the United States, in a lost decade, reaped the results of wretched excess and risk-taking in its public and private sectors and how, now, we can face the future with optimism.
Looking back now, in 2020, with 2020 hindsight as it were, it is easy to see how it all happened. But few saw it coming. Those who did were scorned as dinosaurs who did not understand that the new economy, unfettered by New Deal-era regulation, could bring unparalleled riches to all who would play the game. Thinking changed at the start of the decade just passed, however. The financial/economic crisis of 2008-10 hit most Americans hard. Wrenching 2010 mid-term congressional elections expressed voter anger and focused the attention of elected officials. But it took most of the years between then and now to pull us out of the trough.
In the financial community, optimism prevailed at the start of the 21st century. The last real financial/economic squeeze, after all, had come in the wake of the hapless Jimmy Carter presidency when Federal Reserve Chair Paul Volcker had attacked high inflation and interest rates with old-time-religion strategies, which had with some pain squeezed out excesses. After that, risk and speculation became the apparent Stairway to Heaven.
In the 1990s and, at the turn of the 21st century, financial houses invented new investment instruments and derivatives that they themselves did not understand. They took on levels of risk that imperiled the general financial system. So-called hedge funds, generally unregulated, took big positions in these exotic markets. They were investing not only on behalf of wealthy individuals, willing to take risk, but were investing as well on behalf of banks, pension funds, endowments, and other institutions that normally would be expected to pursue more careful strategies. Ordinary citizens' money thus was put at risk of which they were unaware.
All of this was facilitated by lax regulatory policy and an enabling Federal Reserve whose chairman, Alan Greenspan, an Ayn Rand devotee, declared that he did not want to dampen "the animal spirits" (i.e., the will to greed) of the financial players who were behind a growing bubble. Wall Street and banking-executive arrogance grew. Their compensation and bonuses reached obscene levels.
A perfect storm built up in the housing sector. Mortgages were written for people who could not afford what they were buying. Why not write a 125 percent mortgage for an unqualified buyer? After all, home prices were rising inexorably and, presumably, permanently. The writers of the mortgages did not hold them for more than a split second. Instead, they were sold to other institutions which packaged them and sold them to yet other institutions, overseas as well as domestically. No one noticed that, in many cases, the packages' underlying real value was close to zero.
President Bill Clinton produced a balanced federal budget in a growing economy generating ample tax revenues. But, at the same time, he yielded to devotees of financial "deregulation" inside and outside his administration and unknowingly encouraged the same animal spirits so exalted by Greenspan. He helped open the casino.
There were also long-building trends in the public sector, and in the politics that drive the public sector, that had preceded the financial speculation and which contributed as well to the lost decade through which we have just passed.
President Lyndon Johnson's one-sided 1964 electoral victory over Barry Goldwater, and the election of heavy Democratic majorities in both houses of Congress, preceded the enactment in 1965 of legislation establishing Medicare, Medicaid, federal aid to education, and other Great Society measures. The Civil Rights Act had been enacted the previous year. The Voting Rights Act was part of the 1965 post-landslide legislation.
All of these were positive and long-needed programs. But, with their enactment, the roles of government and the private sector were substantially rebalanced. Moreover, Johnson knew that already existing Social Security programs, as well as Medicare and Medicaid, would expand year by year. He saw himself as completing his hero Franklin Roosevelt's New Deal. Those ambitions were temporarily checked, however, as Vietnam War expenditures led to federal deficits and crowded out domestic spending.
Voters supported the changes but many considered them excessive. Democrats lost in 1966 some of the congressional seats they had gained in 1964. Post-election polling after Nixon's narrow 1968 victory over Humphrey showed that huge numbers of traditional blue-collar and middle-income Democrats had defected either to Nixon or to third-party candidate George Wallace. Survey data indicated it was not the Vietnam War that caused their shift; instead, it was their general belief that the Johnson-Humphrey years had moved too fast, too soon with Great Society initiatives and spending.
The trend intensified in 1972, as Nixon was reelected in a landslide over George McGovern. Far larger numbers of normally Democratic voters had defected to Nixon than in 1968. Later, when they helped elect Ronald Reagan in 1980, they would be characterized as Reagan Democrats. Some left the Democratic Party permanently; many more became "independent" and swung between candidates of both major parties. In 1992, in reaction mainly to federal deficit spending, there was a huge swing to independent presidential candidate Ross Perot, who in early polling ran ahead of both President Bush and Clinton in the presidential race. Perot made one campaign pratfall after another. Yet, on election day, he gained 19 percent of the total popular vote, drawing support from alienated voters of both political parties.
The Vietnam War had required huge public expenditures and contributed to federal deficits during the Johnson and Nixon presidencies. President Reagan increased Pentagon spending as he strove to win the Cold War by forcing the Soviet Union into comparable spending that would break its economy. Then, after Clinton policies and a growing economy had restored the budget to balance, the events of 9/11 led President Bush to launch major interventions in Iraq and Afghanistan. During the same period Democrats and Republicans in Congress undertook a major domestic spending spree, with emphasis on "earmarks" that channeled billions in pork-barrel spending to their constituencies. Meantime, financial speculation and risk-taking were reaching their apex. The 2008-10 collapse followed.
Barack Obama took office in January, 2009, facing financial and economic crises for which he was not prepared. He chose initially to continue a financial-sector bailout designed in the Bush Treasury Department. One of its authors had been Tim Geithner, then president of the New York Federal Reserve. The bailout sent billions in public funds, with few strings attached, to the largest financial houses.
In forming his cabinet, Obama passed over Volcker, the hero of the post-Carter era, in favor of Geithner as Treasury Secretary. He largely delegated to Democratic congressional committee chairs the design of a nearly $1 trillion "stimulus package" which, regrettably, contained little immediate economic stimulus but instead steered money to favored congressional projects. His administration and Congress designed bailouts for the housing, auto, and banking sectors. That added further billions in federal debt and shifted unprecedented power from the private to the public sector.
Then, in a surprising move, Obama presented a plan to remake the health sector. Normally, such a plan would not have been attempted until financial and economic stability had been restored. Debate over the plan consumed a full year. It passed narrowly on what was largely a one-party basis and against majority public opinion. It, too, added to federal deficits. Even the most conservative official budget projections, in 2010, showed federal budget deficits of at least $1 trillion in each of the following 10 years.
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Comments:
Posted Wed, Aug 18, 8:46 a.m. Inappropriate
Ted, I think Obama is really Mr. Jones and it is 2020! Just he doesn't have a congress willing to take care of the people's business. It's so sad that the left and particularly the right insist on a total colapse of our system or a continuation of the rich ruling all the other classes. Common sense exists, it is just over rulled by greed. Unfortunately we may all see why some beleive they have to have guns, not to protect us from government tyranny, instead to use against each other! I saw a big 4 wheel drive truck with the words "HAVOC, bring on the fight - join the TEA party" scrawled on the back window!!! Is this the revolution that is comming? Your article is beautifully written but I hope it is not prophecy but rather a chapter in "A Christmas Carol" like story and congress is Scrooge!
Posted Wed, Aug 18, 8:55 a.m. Inappropriate
I’m not a big fan of Ted VanDyk. As a opinion writer, I think he is talking head with nothing relevant to say, a gas bag—he is always looking backward and telling you about the good ole days. Most of the article I was ready to stop until I got to the 3rd page (see what I mean about gas bag?), and it made me think about why our fiscal house is so out of order. I think it will take the rise of a new political movement to get us out—I don’t think one that is all based in anger like the tea party.
This article reminded me of an article last week by a california writer who wrote about the torch-down of califorina's economy. For different reason and though different journalist mechnisims he reached similar conclusions and fingered similart culprits.
I am pursuaded by this arguement that much of our economic woes are rooted in the combination of deregulation and special interest-based policy. I am less concerned about ear marks--other than it is a pretty haphazard way to allocate funds and there is no stragegic investment that matches a public policy goal--if funds go to construct a bridge somewhere, there are economic benefits to it.
I am a life long democrat, and general vote D, because there are few choices. I guess that means I am less uncomfortable with a bad group of democrats than a bad group of Republicans-- I hope a party like the fictional Commen Sense Party emerges. So, Mr VanDyk, you score some points with me today.
Posted Wed, Aug 18, 9:21 a.m. Inappropriate
Third parties have come and gone through out the history of this nation. The current Republican party is in serious trouble because it's picking on one of the groups that is growing in numbers, Latin American immigrants. Within a decade Texas politics will be dominated by that voting block and with an agenda of deport them all, and racial discrimination the Republicans lose big. And thus end their chances at the Presidential office.
What happens next? Another financial meltdown, unemployment rises to 20% official counts, more banks are closed as more commercial property goes un-leased. Faced with the growing prospect of large numbers of unemployed rioting, the government finally steps in and re-creates the CCC and the nation slowly begins to rebuild it's infrastructure and it's confidence. The old debts are finally written off the books, the largest banks are broken up. Chrysler is allowed to go bankrupt.
Posted Wed, Aug 18, 10:20 a.m. Inappropriate
Prognostication isn't the easiest thing, as anyone who has tried it should know. Ever since the Perot campaign and fizzling out of the Nader movement, I have been skeptical that there will be a major viable new party, or that either the Democratic or Republican parties will become inviable. The Whig Party is not the best basis for comparison; the Whigs formulated mainly as an opposition party to Andrew Jackson and suffered from a lack of cohesion; the fiasco of the Harrison/Tyler administration illustrates this well. This isn't true of today's major parties. The more likely scenario is that one of the major parties is discredited by events and falls into a chronic minority status, as happened to the Dems from about 1860 to 1930, or the GOP from 1932 to 1968. If the GOP embraces extremism, or if the Dems botch economic policy badly enough, this may happen.
The larger story, though, is that I suspect that we are moving into an era in which "common sense" is not what it used to be. The Federal Reserve has already found this, having brought interest rates as low as they can with little progress to show for it. What about upgrading the energy infrastructure, with its unsustainable dependence on fossil fuels? How are we going to insure affordable and accessible health care and broad-based quality education? I'm fairly sure that if there existed "common sense" solutions to these very challenging questions, they would have been implemented by now.
Posted Wed, Aug 18, 10:48 a.m. Inappropriate
Thanks for your comments and keep them coming. I meant the piece to stimulate discussion and rethinking.
There are many possible scenarios for the period between now and 2020. I suggested one that is not as outside-the-box as partisan Democrats or Republicans might think.
The agendas of both major parties are out of sync right now with the values and priorities of a majority of the American people. That political majority sees, not wrongly, most of the major figures in the two parties as captives of ideological or special-interested agendas with which they (a majority of ordinary voters) are uncomfortable. A "real" Ross Perot, for instance, backed by candidates at congressional, state, and local level, could quite easily gain the Presidency in 2016. Whether such a person, or movement, will materialize is another thing. The conditions are ripe.
After the upcoming 2010 elections, both White House and Congress will
recognize voter discontent, in particular, with the growing mountsins of public and private debt which are constraining their futures. But will they deal with it constructively or simply try to position themselves politically---as Democrats now are doing by charging the GOP with wanting to "destroy" Social Security and Republicans by charging Democrats with wanting to establish state socialism. The odds unfortunately favor futher 2011 polarizations and gridlock rather than serious attempts at mutual problem solving.
Posted Wed, Aug 18, 11:37 a.m. Inappropriate
As usual, the problem is where to start in addressing TVD’s numerous loaded and ill-informed statements passed off as hard-headed realism.
1. His obsession with the federal deficit – and attacking much needed programs like health care and Medicare and school funding and stimulus funding to local governments – is hard to understand rationally --particularly given that most economists say government spending has been key in keeping the recession from turning into a full-blown depression (see http://mediamatters.org/research/201008080008).
2. He ignores the strong evidence that the bank bailout and auto company bailouts, as distasteful as they were, succeeded, and the banks have paid back most of the money.
3. He continues to ignore the fact that the CBO has scored this year’s health care reform bill as significantly reducing the federal deficit, particularly in the second decade (and he offers no alternative means of tackling health care inflation, which all economists say is by far the biggest factor in the long-term deficit picture).
4. He makes lots of dubious historical statements, such as that voters saw Medicare and Social Security expansions as excessive (any poll shows those programs as very popular, and even anti-government Tea Party types know they can’t do without them).
5. While accurately noting the budget-busting wars and military expenditures, TVD keeps coming back to blaming entitlement programs and other social spending for our economic problems.
6. He skips over the fact that repealing the Bush tax cuts for wealthy people would merely raise the top marginal rates to what they were in the 90s under Clinton, when wealthy people invested robustly and did very well.
7. He predicts that Mitt Romney would pull out of Iraq and Afghanistan, which is a nice thought except that the Republican Congress that would come into power with him almost certainly would block that given the GOP ideological commitment to the military and the “war on terror.” And Romney ain’t gonna win by fighting with Palin and the Tea Partiers. He will pander to them to get their vote, just as he and John McCain and other Republicans are doing right now. (Besides, smarter observers are paying more attention to Jeb Bush than to Mitt Romney).
8. I agree with commentator chuck that Obama is the “common sense” moderate conservative president TVD seems to yearn for, but TVD and others are unable to see that because they refuse to recognize how far the Republicans have moved to the right and how intransigent they’ve been.
9. I really doubt that most Americans see federal debt as the main problem “constraining their futures,” as TVD says in his comment. They see lack of jobs and economic hope. Cutting Social Security and Medicare will only make Americans angrier and more insecure, rightfully so. We need to get to work on building a new green economy. Obama and the Dems are trying to do that. TVD and others need to recognize that rather than clinging to this nonexistent fantasy of nonpartisanship.
Posted Wed, Aug 18, 11:41 a.m. Inappropriate
In line with all this, I highly recommend Todd Purdum's new Vanity Fair piece on Obama and the presidency.
http://www.vanityfair.com/politics/features/2010/09/broken-washington-201009?currentPage=all
POLITICS
This is a key excerpt, but there are lots of poignantly true passages and quotes:
Durable achievement demands a long time horizon—something that the country as a whole seems to have lost. We can’t wait for the carrots to grow—we keep pulling them up to see how they’re doing. Thus, deeply complex problems, from illegal immigration to the BP oil spill—problems that by definition have no quick or easy solution, despite their obvious urgency—become easy emblems of presumptive failure, whatever the president may actually be doing to address them.
Posted Wed, Aug 18, 2:13 p.m. Inappropriate
I would have to say that with this post Ted has reached the ranks of the "truly Broderesque".
Whether you consider that an insult or a compliment is left up to the reader.
Posted Wed, Aug 18, 2:56 p.m. Inappropriate
"No one noticed that, in many cases, the packages' underlying real value was close to zero."
This a fun piece: an attempt to imagine a silver lining hidden in the rubble of financial and political collapse. I would account us fortunate if we do no worse in 2012 than Romney; he, at least, has sufficient smarts to comprehend the essential problems and perhaps respond to them with an intelligent strategy. On the other hand, if fear and irrationality continue to accelerate into the 2012 voting cycle, there may not even be a 2020 election in any meaningful sense -- maybe instead a short pause in the martial law blackout just long enough to hold a Soviet-style plebiscite.
Regardless of which fantasy scenario one prefers, I don't see us having the moxie to dig out of the hole without holding Wall Street accountable. The notion that all the Wall Street barons were shocked and surprised by the collapse of the derivatives market is utter crap. Some were surprised -- AIG for sure, some hedge funds and most institutional investors. But the slight-of-hand trick of taking the bottom tranche of securitized mortgages, repackaging them as a new derivative, then getting a ratings upgrade to AAA for the entire new bundle was designed and clearly understood by the key players, first as a fee-generating scam and then as a vehicle for shorting the market. The fact that these players were bailed out with public funds while the game was neither stopped nor the perpetrators punished will be understood as an invitation to repeat the process in one arcane form or another. So the illness at the center of the financial system remains untreated.
The reality is this: our so-called leaders have been bought or intimidated by the big money culture and the populace is thrashing about in a fog of populist confusion, lashing out at any shadow that moves. It's not a recipe for success, either now or in 2020.
Posted Wed, Aug 18, 4:59 p.m. Inappropriate
Again regarding Ross Perot, I read Ralph Nader's new book, Only the Super Rich Can Save Us, and heard him speak about it at Town Hall recently. The point that most struck me is one that, although it may seem obvious, people don't seem to appreciate well enough: you need money to get anything done. This doesn't necessarily constitute evil on the part of our political and economic system; it just reflects the reality that field organizing and advertising don't pay for themselves.
Since the major parties, each backed by powerful corporate, labor, and other such groups have enormous amounts of money to spend--the 2008 Presidential election was the first to cost over $1 billion for all the candidates and this seems unlikely to turn around any time soon--a serious independent candidate needs to have a lot of money. (S)he will almost certainly have to be self-funded, unless a cabal of billionaires comes together to finance the Common Sense Party as in Nader's book.
All turns out well in Nader's world, but in real life there is a major downside to a political movement that is financed by benevolent billionaires. Even with the best of intentions, money has a distorting effect on the movement. There tends to crop up a metric mentality, where numerical signs of progress such as number of members in an organization take priority over real progress, in order to keep the funders' pursestrings open. Furthermore, by putting the financial control of the movement into a few hands, ordinary citizens and the energy that they bring are severely restricted. This is not just armchair theorizing; I have seen it first hand in the nonprofit world.
The alternative is a genuine grassroots model, which works very well for some things but not so well for electoral politics (even the Obama campaign, celebrated for its grassroots, participatory nature, could have never succeeded without also having the traditional sources of financing and campaigning). Without centralization, the movement lacks organization, cohesion, and credibility.
For these reasons I see a new major party or an independent President as being very unlikely.
Posted Thu, Aug 19, 1:27 a.m. Inappropriate
Mr. Van Dyk's vision of 2020 is interesting reading, though mostly from clinical or semiotic perspectives: at best he demonstrates the deluded assumptions characteristic of Moron Nation, at worst he shows us some of the deceptions by which we are oppressed.
In either case his work is a glaring example of the PollyAnna glibness by which our leaders sidestep the ecocidal greed of capitalism and the self-protective intervention of Gaia into human affairs. The result is an obnoxiously optimistic portrait of a realm in which the American Dream – like Santa Claus or the Great Pumpkin – lives on despite absolute proof the Dream was never more than fantasy, never less than the ultimate Big Lie – and will therefore never again be of any relevance to the new Third World reality of life in the U.S.
Terminal climate change? The impending exhaustion of fossil-fuel supplies and the total loss of all technologies so derived? Class War – the Ruling Class response to the double apocalypse – the capitalist aristocracy hoarding all wealth, seizing all power, its high-tech neo-feudalism tyrannizing a slave-pen Earth?
In Mr. Van Dyk's Easter Bunny vision, no such truths and likelihoods exist.
But let's look at reality. Let's look at the one statistically meaningful result in yesterday's election: the landslide victory of Supreme Court Justice Jim Johnson over Stan Rumbaugh. Theirs was the one genuinely issue-focused fight in the entire primary – Rumbaugh of the humanitarian Left versus Johnson of the authoritarian Right -- and Johnson beat Rumbaugh by 63 percent.
So much for “progressive” Washington state. Johnson's opposition to homosexual marriage suggests a far more malevolent support for the Talibanic hatefulness of Christian theocracy in general. His participation in Tim Eyman's war on government services reveals a hatred for elderly, disabled and chronically unemployed peoples that would not be out of place in the Third Reich.
And this is the man who won 464,619 of 739,186 votes.
Admittedly the turnout was small – only 27 percent. But 442,678 primary voters also favored Sen. Patty Murray, the DemocRat Lizzie Bordon who hacked $11.9 billion from the food stamp budget. Dino Rossi, the GOPorker fat-cat who would play Sneering Scrooge to Eyeman's Malicious Miser, got 325,306 votes. Assuming all the Rossi votes were votes for Johnson, that means 32 percent of Murray's voters also voted for Johnson.
Which in turn suggests a bipartisan majority that would happily, even gleefully condemn all of us who are elderly, disabled or unemployed to extermination by abandonment and neglect.
That this is not just an Evergreen State phenomenon – that this sort of proto-Nazi hatred toward those of us who are chronically impoverished is becoming the pivotal fact of Moron Nation politics – is confirmed by every socioeconomic and psychological indicator at any level we look.
The role of Ruling Class Media in granting absolution to those who engineered the economic collapse and condemning those us who are its victims; the corollary agitation of hatred and contempt for recipients of Social Security, Medicare, Medicaid, unemployment and disability stipends; Obama's self-transformation into a latter-day Herbert Hoover; the emergence of the Teabagger lynch mobs; the complicit silence of liberals and progressives; the inept and often cowardly silence of the Left – all these Weimar Republic prerequisites to emergent despotism suggest Mr. Van Dyk either lives in total isolation or has been gravely overdosing on happiness pills.
Here in one paragraph is what will most likely happen, its parameters set not by wishful thinking but by present-day directions combined with historical precedents. It is written in the style used by Mr. Van Dyk – that is, as if it were a passage in a 2020 book – albeit in this instance a volume written in another country:
Obama's real function was to buy time for the Ruling Class. He injected just enough political opiate to disguise the imbecility of hope and hide the impossibility of change, thereby providing the interlude of political confusion in which the government built the kill-hardened war-machine – the real function of Iraq and Afghanistan – essential to complete its termination of the American experiment in constitutional democracy. Obama succeeded, but his successive betrayals left him too discredited to seek a second term, and he exited willingly into lavish retirement. The 2012 election was entirely bogus, a charade in which the Ruling Class stage-managed the public's rage into the Sarah Palin presidency. When the pathetic remnants of the Left finally began to mount effective protest, Palin unleashed her stormtroopers, the lynch mobs of Teabaggers and Christian Zealots who turned the nation into their killing ground. Then – to “restore order” – Palin abdicated her presidency to the Joint Chiefs of Staff. In the name of protecting “the God-given patriotic promise of capitalism” – infinite greed as maximum virtue, unlimited selfishness as ultimate good – the Joint Chiefs imposed zero-tolerance martial law throughout the United States and all its possessions. This is the same “Divine plan” – absolute power and boundless wealth for the Ruling Class, total subjugation and bottomless poverty for everyone else – the U.S. now seeks to impose on the rest of the world...
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