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Friday, November 07, 2008

Obama Will Be Roosevelt… Or He Will Be Hoover

All this -- including the guarded reality-based optimism -- seems to me just about right.

Robert Kuttner from this morning's Democracy Now:
[A] crisis is also an opportunity, and the crash on Wall Street was also the crash of right-wing ideology, the ideology that claimed that markets could do nothing bad and governments could do nothing good.

We’re going to have reality making the most compelling case for activist government since the New Deal. The question is whether Obama seizes the moment. He will either be Roosevelt, or he will be Hoover. There’s no middle ground….
And my bet is that Obama is smart enough that he does not want to fail and that events will force him to be sufficiently bold, but he has very little time to get this right…..

I’m a shade more optimistic for the reason that in desperate times, ideas that are usually dismissed as impossibly radical become barely adequate. And those are the times that we live in. And I hope Obama grasps this sooner rather than later…..

[I]t would be much more straightforward and effective if the government simply took some of this money and nationalized one or two banks. Then the government-owned bank could resume lending, would not have to worry about paying dividends, because there wouldn’t be any shareholders, would not have to worry about executive bonuses, because these would be civil servants. And a lot of the civil servants at places like the FDIC are a lot more competent at running banks than most of the bankers these days.

But these half-measures of throwing money at banks and then not realizing how much leverage you have, probably because Paulson still views himself as Wall Street’s guy in Washington who just happens to be occupying the post of Treasury Secretary rather than the instrument of America’s citizens and taxpayers—so you need a radical change in the way the Treasury Department views the task of recapitalizing American banks and getting credit flowing again.

You’re not going to get this by any kind of variation in the Paulson plan. Obama would be right to resist Paulson’s overtures to buy into this. It’s a disaster. But it could be done right. And if you look at today’s headlines, each European country is struggling with how to do its version of this right. And Obama has a couple of people on his team who are much more progressive than either Summers or Geithner or the rest of the crowd….

I think the jury is still out on what kind of policy Obama is going to ultimately pursue, not because he’s not a centrist—his history is that of a centrist—but I think events are going to force him to be bolder, more progressive, the same way they did with Roosevelt….

If Roosevelt [ha]dn’t become bolder, he would have been Hoover all over again.

They also had social movements. And if you look at the great presidents -- Lincoln, Roosevelt, the Johnson of the civil rights, not the Johnson of Vietnam -- you had the abolitionist movement, you had the industrial labor movement, you had, of course, the civil rights movement.

And I think there’s going to be a tug-of-war inside the administration. And the really interesting question is, what is going happen to the youth movement that became an Obama movement that I think needs to become its own movement for social change, not simply Obama groupies.

Great stuff, I think. For the whole conversation -- another moment in which I discussed a bit in my last post -- go here.

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