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Thursday, February 12, 2009

The tightrope

Alex says: So the stimulus bill has got through, smaller than what was needed but still the largest spending measure since World War II. Geithner’s bank bill is on its way, bringing to well over $2 trillion the total spending and investment by the US government since the crisis began a few short months ago. And we should see more spending on the public sector – education, health care, insurance – and environment in the next months, both to fulfil Obama’s ambitious agenda and as a method of further job creation by the back door.

The first casualty of this conflict was bipartisanship: a mythical phenomenon that has never really existed in Washington except as a political tactic (See my post from last September). Given the majority power that the Democrats now have across two of the three branches of government, it would have been inconceivable that they concede the substance of their political goals to make an unnecessary alliance with people who advocate policies they don’t believe in. To Democrat leaders it would have been a betrayal both of their principles and their supporters ... so it didn’t happen.

That said, this is a debate that’s doomed to an early death. No-one will be giving two hoots about bipartisanship within a few months. As the social consequences of unemployment continue to multiply, social polarisation based on public fury will take over, and bipartisanship will seem like a quaint concept from a bygone era. Prime Minister Brown gained early credit in his response to the banking crisis, and his bold and decisive action helped him reconstruct support that had almost completely evaporated in the preceding year, but a few months have passed and that is a thing of the past now. Now a significant majority of Britons believe that the government has spent too much time worrying about banks and not enough time worrying about jobs. The anger is palpable, building, and threatens in the medium term to split the Labour party: my only amazement is that no leaders have yet emerged to articulate and organise it. But with a million more people likely to lose their jobs this year, it won’t be long before that happens.

Obama’s battle with polarisation will be much more dangerous than the debates over bipartisanship precisely because it is based in social reality not the idealistic hopes we might have for a more civilized world of political debate. One phenomenon is about compromise in D.C. to get bills passed; the other is about a fragmenting society. If the jobless numbers grow at the rate most of us expect them to this year, if the ranks of long-term unemployed rise as dramatically as it appears they will, and if people continue to lose their houses, the anger at the ruling elites – which has so far only produced some fairly pointless public flagellation of bankers at congressional hearings – will boil into something much more than that, and Obama will be sitting right on top of it. I don’t think many of the politicians in Washington yet have any idea what this tiger of public anger will do when it gets its claws into them.

On the one hand, Obama believes that the path to recovery lies through ambitious yet fundamentally conservative policies: renewing faith in the banking sector, raising consumer confidence, and creating jobs for Americans (which, given the modern economic system, will entail big aid to big corporations, not just money to the little man). But in the context of a rising tide of populist anger, this runs the risk of seeing him associated too closely with these forces of privilege himself. That’s what’s happened in the UK, where the Labour party is now seen as little more than a stooge of the banking industry: an unfair accusation, arguably.

This was the tightrope FDR delicately had to walk in the 1930s: first wooing the big industrialists and allowing them to consolidate to keep prices up; then, in the mid-1930s moving dramatically leftwards to respond to the challenge from populist leaders like Charles Coughlin, Huey Long, and Frances Townsend; then, moving back to the fiscal centre (disastrously) with the spending cuts early in his second term; and finally reconstructing his political support by pronouncing the death of 'Dr. New Deal' and birth of ‘Dr. Win-the-war’.

That’s how you win four elections: and that will be the real test of Obama’s political skill.

Alex Goodall
Papamoka’s European Contributor
From A Swift Blow to the Head

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