Doing some reading at the gym last night, I came across these two articles in succession: an American Prospect piece on the right's continuing obsession with the (now semi-defunct) antipoverty organization ACORN and the welfare rights champion Francis Fox Piven whose research more than forty years ago helped bring it into being, and this lengthy assessment of financial reform by the always excellent David Leonhardt in last Sunday's Times magazine.
Reading them in order told a story of assertion and repudiation--the utter certainty of the modern Right that the Obama administration and "liberals" are out to wreck the country, and the pretty much definitive proof that what they're actually up to is an all-out effort to save American capitalism and perpetuate the economic order of the late 20th century.
The assertion, which is pretty much a perfect example of the Paranoid Style, goes something like this: in 1966, Piven and her co-author Richard Cloward wrote a piece in The Nation titled "A Strategy to End Poverty," which proposed activism on behalf of poor Americans to stretch the welfare system beyond its capacity, with the goal of getting the federal government to establish a guaranteed minimal income. In the telling of Glenn Beck and other professional paranoids, this is the ur-strategy for every left-of-center politician and non-elected public figure: "create a crisis" to set the stage for profound, radical change. Obama, as a former community activist with all the unsavory leftist associations thus implied, is purportedly doing this with health care and of course the economy as the cover for creating a new socialist order. That this health care plan is far less "liberal" than anything previously proposed by Democrats in more than a half-century of debate is entirely irrelevant; remember, this is faith-based paranoia.
(I should note here that I read about this Piven/Cloward strategy many years ago, either as an undergrad or graduate student, and I always thought it wasn't just stupid but at least a little immoral. Rather than guaranteeing a handout--essentially, expanding the conditional entitlement that was Aid to Families With Dependent Children--our purpose always should have been expanding opportunity. This is why I wasn't as upset about welfare reform as just about any other liberal I knew, and why I support the anti-poverty approaches of the NYC Center for Economic Opportunity, pretty much all of which are focused on human capital development and asset-building rather than handouts. At any rate, while the "welfare rights movement" did lead to a much bigger AFDC and it briefly looked like Nixon might accept an income floor in the early '70s, the Piven/Cloward plan ultimately didn't lead to much and certainly is a dead letter for the modern center-left.)
The charge is invalidated, at least to anyone willing to look at reality, on the grounds of financial reform. If ever there was opportunity to "create a crisis," it was in late 2008 and early 2009, when the world's capital markets were on the brink of meltdown and we seemed at the precipice of a second Great Depression. Here's how Leonhardt sets the stage in his piece:
A weak system of regulation allowed Wall Street firms to take on enormous debt. Those debts let the firms make more and riskier investments than they otherwise could have, lifting their profits. But when the value of the investments began falling, the firms had little margin for error. They were like home buyers who made a tiny down payment and soon found themselves underwater.
It was tempting to let the banks fail. They certainly deserved it. But big bank failures often cause terrible damage. Credit dries up, and the economy can enter a vicious cycle of falling asset prices and job losses. That is what began to happen in 2008. To get credit flowing again, the federal government came to the rescue with billions of taxpayer dollars. It was a maddening story line: the government helped the banks get rich by looking the other way during good times and saved them from collapse during bad times.
While the Troubled Assets Relief Program (TARP) was passed during the Bush Administration, it's likely that then-Senator Obama could have killed it in late 2008 by signaling his opposition, which would have carried weight with Democrats in Congress--and, given how unpopular the bailout was with the public, might have yielded him an even bigger win in the November election. Instead, he and John McCain (as well as VP candidate Joe Biden) voted in support of the measure.
Without the bailout, a number of major banks would have collapsed (don't take my word for it; even liberal economist Dean Baker said as much in testimony last year), and in all probability the economy would have cratered. Imagine if Obama had come into office on January 20, 2009, with an even bigger political wind at his back and a much deeper crisis facing the public. What powers could he not have asked for and received? What transformational changes would have been beyond his grasp? Nationalization of banks, single-payer health care, public job creation on a scale beyond the New Deal era programs, vast new regulatory regimes... all the fever dreams of the most committed lefties could have been his. Whether it ended in disaster or glory, his would have been the most transformational presidency since Lincoln's.
Obama just isn't that guy--and thank goodness. What I try to impart to those to my left who call for some or all of these things is that transformational change isn't ever frictionless. Individuals, families, communities are mangled when the wheels of history turn too fast. I don't deny that there would have been satisfaction in letting the banks suffer their full comeuppance--but we all would have suffered with them, and probably worse than they.
After reading the Leonhardt piece as well as other recent writing on the substance and prospects of financial reform, I feel better about the proposal--but the point is that even leaders who, like Obama, have an affirmative believe in the power of government to intervene for the public good, are most effective and successful when they look to intervene in as limited a manner as possible. That this doesn't align with the disaster-porn fantasies of the fringe thinkers on the right is primarily their problem. Hopefully it'll stay that way.