What the Washington insiders don’t get

February 26, 2009

The media highlights conservative objections to the Obama administration's programs as an expression of public opinion. They couldn't be more wrong.

WITHIN THE space of a month, the Obama White House managed to win congressional approval for the single largest (in dollar terms) piece of legislation ever passed. It reversed a number of Bush-era policies on issues like the Guantánamo prison camp, equal pay for women workers and funding for abortion services in U.S. foreign aid appropriations.

Yet much of the Washington chattering class had already declared the Obama administration adrift, and a failure at rallying the public behind its economic program. Republicans in Congress--only three of whom voted for the stimulus bill--acted as if their votes against the legislation were in sync with a public mood against wasteful government spending.

The only problem with this narrative is that it isn't true--not even close.

With the stimulus bill on the verge of passage, a Gallup Poll showed that all of the chatter that had driven the media coverage couldn't have been more wrong. Gallup reported that President Obama's approval rating stood at 67 percent, hardly different from his level of support when he took office.

At the same time, 51 percent of Americans said they considered the stimulus bill "critically important" for the economy, compared to 16 percent who said that it was "not that important." Some 48 percent of respondents said they approved of the congressional Democrats' views on the stimulus bill, while 38 percent said they supported the congressional Republicans' views.

In the wake of the stimulus bill's passage, Gallup found that the public's estimation of Congress increased. Yet again, the highly paid pundits--the supposed arbiters and interpreters of what "real people" think--got it wrong.

After a few days of self-reflection, when blowhards like MSNBC host Joe Scarborough had to admit that they might have underestimated Obama's support, the media were at it again--when a brief February 19 rant by CNBC reporter Rick Santelli on the floor of the Chicago Board of Trade became a media cause célèbre.

Reacting to Obama's announcement of a plan to spend billions to stem the foreclosure crisis and help homeowners refinance their mortgages at lower rates, Santelli complained that Obama's plan would help "losers" who borrowed irresponsibly, and set the U.S. on the road to socialism.

Fox newscasters, along with congressional Republicans, are out of step with public opinion

While Santelli jabbered away, dozens of traders surrounding him--many of them millionaires--whooped their support. Within hours, Santelli's performance turned up on newscasts and YouTube replays. The media made it seem like his outburst against Obama's housing plan had struck a popular nerve with the U.S. public.

It's doubtful that many ordinary Americans have ever heard of Santelli or watch CNBC. And it's even more doubtful that the majority of them would sympathize with his blather. Yet for days afterward, news outlets promoted it as a "populist" indictment of Obama's housing proposal.


THERE ARE plenty of reasons to criticize Obama's housing and stimulus proposals. SocialistWorker.org argued that Obama's programs are insufficient and too timid in taking on the corporate and Wall Street titans (a.k.a. Santelli's friends) who pushed the U.S. economy to the brink.

But these objections are 180 degrees opposite of Santelli's "populism for the rich" rant and the Republicans' demagoguery against the stimulus bill.

So the question remains: Why would the media consider conservative objections to the Obama administration's programs to be an accurate gauge of public opinion?

Besides the obvious fact that the media are corporations and therefore tend to reflect Corporate America's outlook, it's also important to note that this is a time of economic, political and ideological change, in which many of the assumptions of the previous generation are being put to the test.

The astute liberal blogger Josh Marshall of Talking Points Memo argued that Washington remains "wired" for the Republicans and conservatives, despite their losses in the last two national elections.

Marshall explained this by making a distinction between the official government, which is subject to elections, and a permanent "para-government" of lobbyists, think tanks, journalists and other hangers-on.

While the official government (now led by Barack Obama) was still establishing itself, the para-government--conditioned to operating under the assumptions of the last generation, based on Republican and conservative domination--was echoing the "Obama is failing" and "stimulus is unpopular" messages that convinced the Beltway chatterers of their own preconceived notions.

While the neoliberal era has run aground, its purveyors and defenders remain in high places--both in the official government and the para-government.

So when Obama turned to the Democratic Party "bench" to staff his administration, he automatically pulled in a whole cadre of former officials in Bill Clinton's White House, who had a hand in designing the neoliberal order of the 1990s.

For instance, the key figures driving Obama's economic policies--from former Treasury Secretary Larry Summers to current Treasury Secretary Timothy Geithner--are all peers or acolytes of Robert Rubin, the main architect of Clinton's economic policy. Rubin is now the disgraced former executive of Citigroup, who helped run that conglomerate into the ground.

Relying on people formerly invested in the neoliberal policy consensus to clean up after its wreckage is one reason why the Obama administration remains resistant to the idea of the nationalization of insolvent banks. Another is the real fear of the political implications of such a move. If Washington can nationalize the banks, ordinary people would ask, why not nationalize the health insurance industry and provide health care for all?

We hear from Obama administration officials, as if singing from the neoliberal hymnal, about how un-American or impractical nationalizing the banks is.

Meanwhile, serious economists--even conservatives like former Federal Reserve Chair Alan Greenspan--are coming to the conclusion that nationalization may be the only solution to the financial crisis.

Even against its own preconceptions, the Obama administration may be forced to move toward nationalization. Unless such a move is perceived as another attempt to bail out the fat cats, public opinion is unlikely to oppose it.

And many capitalists will conclude that putting banks into government-sponsored receivership is a lesser evil to the collapse of their system.

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