The Outrageous Barriers to Democracy

PRAISE F OR

The Outrageous Barriers to Democracy in America “ This book lays bare the malfunctions of our democracy and the solutions in a superb literary style and a convincing manner.”

GEORGE McGOV E R N DEMOCRATIC CA N D I D AT E F O R P R E S I D E N T, 1 9 7 2

“ Written in a personal, engrossing style, John MacArthur’s book draws your attention page after page with enraging and motivating stories of conditions on the ground in America. His careful narrative of political power abuses, from the national to the local, from yesterday to today and maybe tomorrow, shows us that if we do not become committed as ‘we the people,’ we will continue to be ruled by ‘hey the corporations.’ ” R A L PH NADER

“A no-nonsense political reporter. . . a stiff antidote to the pleasant notion, voiced somewhere in this country every few milliseconds in an election year, that anyone, from any background, can grow up to be president.”

CHIC AGO SUN-TIM E S

“A chapter-by-chapter postmortem of cherished American ideals. . .

MacArthur’s tone is wry-enraged, but he includes serious anecdotal discussion, looking at the startling numbers behind election-year pomp and following the end result of our politics to America’s economically depressed, hollowed-out small cities.”

T IME OUT CHIC AGO

“A critique—cogent and mostly unassailable—of the corrupt, self-serving nature of contemporary American ‘democracy’. . . Maybe a dozen more books like this one . . . and people’s attention will finally be drawn to the rot in the system and away from fleeting symptoms of that rot.”

T HE BROOK LYN RA IL

“A blistering indictment of the political and social forces that muffle the voice of the people in our beleaguered democracy grows into an invigorating wake-up call for real change.”

SHELF AWARENES S

“An able, witty, and suitably pissed-off guide.”

B OOK FORUM

“A courageous book that takes a bold new approach in the field of American political science. It helps to explain how presidents are chosen and elected, including in the money-fueled 2008 contest. This singular work is thoroughly documented, clearly written and convincingly reasoned. I suggest that it be placed on the bookshelf—next to the Constitution and the Federalist Papers—by students, librarians and thoughtful voters.”

HERBERT MITGAN G SO CIETY OF AME RIC AN H IST O RIAN S AN D AUT H O R O F ABRAHAM LINCO L N : A P RE SS P O RT RAIT

“ This book had a profound impact, as indeed it should have for every American who reads it. It’s an excellent, excellent book, perceptive and intelligent and inspiring.”

JO H N ANDERSON INDEPENDENT C A N D I D AT E F O R P R E S I D E N T, 1 9 8 0

“ This book challenges the ‘wu wu’ we all profess and preach to children: that anyone can be President. This is one of our nation’s core beliefs, even though facts don’t sustain it. I challenge you to read it and make your own decision as to whether our ‘core belief ’ is reality or a total myth.”

PATRICIA SC H ROEDER D EMOCRATIC CA N D I D AT E F O R P R E S I D E N T, 1 9 8 8

J O H N R . M a c A R T H U R is the president and publisher of Harper’s Magazine. An award-winning journalist, he has written for The New York Times, United Press International, The Chicago Sun-Times, and The Wall Street Journal. Under his stewardship Harper’s has received eighteen National Magazine Awards, the industry’s highest recognition. He is also the author of the acclaimed books The Selling of Free Trade: NAFTA, Washington, and the Subversion of American Democracy and Second Front: Censorship and Propaganda in the 1991 Gulf War. He lives in New York City.

The Outrageous Barriers to Democracy in America

Also by John R. MacArthur SECOND FRONT: CENSORSHIP AND PROPAGANDA IN THE 1991 GULF WAR THE SELLING OF “FREE TRADE”: NAFTA, WASHINGTON, AND THE SUBVERSION OF AMERICAN DEMOCRACY

The Outrageous Barriers to Democracy in America OR, WHY A PROGRESSIVE PRESIDENCY IS IMPOSSIBLE

John R. MacArthur

MELVILLE HOUSE BROOKLYN • LONDON

The Outrageous Barriers to Democracy in America Previously published as You Can’t Be President: The Outrageous Barriers to Democracy in America, in 2008 © 2008, 2012 John R. MacArthur First Melville House printing: June 2012 Melville House Publishing 145 Plymouth Street Brooklyn, NY 11201 www.mhpbooks.com ISBN: 978-1-61219-137-9 Book design: Carol Hayes Manufactured in the United States of America 1 2 3 4 5 6 7 8 9 10 Library of Congress Control Number: 2012938284

For Emme

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Contents

P R E FA C E INTRODUCTION

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PROBLEM #1 T H E S M A L L M AT T E R O F R E A D I N G THE CONSTITUTION

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PROBLEM #2 PA R T I E S Y O U ’ R E N O T INVITED TO

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PROBLEM #3 I T ’ S R E A L LY E X P E N S I V E , O R , Y O U D O N ’ T H AV E $300 MILLION, DO YOU?

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PROBLEM #4 W E O N LY P R O M O T E F R O M W I T H I N

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PROBLEM #5 YOU’RE TIED UP AT H O M E : A S T O R Y FROM PORTSMOUTH, RHODE ISLAND

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PROBLEM #6 YOU’RE TIED U P I N T H E C I T Y: LESSONS FROM CHICAGO

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PROBLEM #7 Y O U R H O R AT I O ALGER SYNDROME

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PROBLEM #8 “WHERE’D YOU GO TO SCHOOL AGAIN?”

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PROBLEM #9 YOU DON’T LOOK GOOD O N T V. . . T H E T R A G E D Y O F CONSUMER CHOICE

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PROBLEM #10 Y O U D O N ’ T H AV E T H AT KILLER INSTINCT

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PROBLEM #11 I REST MY CASE: THE 2008 ELECTION

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EPILOGUE

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ACKNOWLEDGEMENTS

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INDEX

P R E FA C E

Barack Obama came into the White House in January 2009 still floating—or so it appeared to millions of his admirers—high above the crude realities of contemporary American political life. Oldfashioned landmarks—party loyalty, ideology, campaign fundraising, patronage, corruption, even race—seemed hopelessly outdated as points of reference for understanding what was trumpeted as a new phenomenon in the nation’s civic history. “Post-racial” was perhaps the most common term used in describing the new Obama Administration, but the president’s supporters might just as well have used the term “post-political.” Indeed, Obama’s pleas for non-partisan cooperation on the great crises of the day were so insistent that at times one could almost forget he was the product of the Democratic Party and its most ferociously partisan local chapter, the Democratic machine of Cook County, Illinois.

Such credulousness and hero-worship were understandable, if not advisable, in the months between Obama’s election and his inauguration. Demoralized by eight years of George W. Bush’s bellicose

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stupidity, and frightened by the near collapse of the financial system, Americans were relieved to have as their leader one so seemingly cool, collected, and articulate. Obama may have been seen initially as having a transforming agenda, but the soothing calmness and clarity of his speech quickly made evident that he was on the same level as his two most rhetorically accomplished recent predecessors— Ronald Reagan (“It’s Morning in America”) and William Jefferson Clinton (“I know you voted for change” and “I feel your pain”).

Although uttered by the unconventionally named Obama, slogans such as “Change you can believe in,” “Yes we can!,” and “the audacity of hope” served as reassuring evidence that the new president was no radical.

To be sure, he was not. But a great many people sincerely hoped he was at least a reformer—that he might do more than just rearrange the furniture. Almost immediately, however, the presidentelect exhibited a distinct preference for the status quo in political decor. His first major appointment, to the powerful post of White House chief of staff, was of Rahm Emanuel, a veteran party functionary whose links to the Clintons and Chicago Mayor Richard M. Daley had made him a dangerous and feared force within the Democratic camp. Emanuel had risen to prominence in the Clinton Administration as a lead lobbyist for the passage of the anti-labor North American Free Trade Agreement—a bitterly contested battle that split the Democratic Party and exemplified President Clinton’s goal to raise more campaign money from corporations and Wall Street. Emanuel’s ascension demonstrated more than anything else that an Obama administration would follow the corrupted rules and protocols dictated by Congress and Washington’s most powerful lobbyists.

As if to reinforce the status-quo tenor of the new administration, Emanuel’s arrival at the White House coincided more or less with

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the departure (no doubt engineered by Emanuel) of Emanuel’s chief political rival during the 2008 presidential campaign, Democratic National Committee Chairman Howard Dean. Dean had threatened the party’s establishment with his aggressively populist run for president in 2004, and his strident declarations against Democratic acceptance of the Iraq invasion, as well as the corruption of Congress by private interests, were still offensive to a Democratic leadership that was more than happy to accommodate lobbyists and military interventionists from both parties. Symbolically, the appointment of Robert Gibbs as the president’s press secretary perfectly foretold the future of reform within the Democratic Party: Gibbs had been the spokesman for the Democratic “527” group that had done the most in 2003–04 to derail Dean’s reform campaign by running scurrilous attack ads against him.

The appointment of Emanuel, however, was nothing compared with Obama’s selection of Hillary Clinton as Secretary of State and of Lawrence Summers as chief economic advisor. Obama owed his victory over Clinton in the Democratic primaries in large measure to public anger at Senator Clinton’s vote in support of the invasion of Iraq (Obama had notably opposed the invasion in a speech when he was still a state senator in Illinois). Now he made one of the villains of the antiwar movement his chief foreign policy officer and handed her the responsibility for explaining and promoting escalation of the war in Afghanistan. When Obama addressed the army cadets at West Point on December 1, 2009, to announce that he would send an additional 30,000 troops to Afghanistan in support of the thoroughly corrupt government of Hamid Karzai, even some of his most devoted followers began to wonder who it was they had voted for. Though Obama had promised during the campaign only to shift “focus” from Iraq to Afghanistan, as of June 2012, the war in Afghanistan seemed a greater quagmire than ever.

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Meanwhile, concerning Iraq, public relations doublespeak also “surged” at the Pentagon and White House public relations commands: “combat operations” changed names to “stability operations” and for a time it looked as though American troops would remain in Iraq, similar to the U.S. “peacekeepers” stationed for nearly 60 years in South Korea, past the 2011 year’s end deadline negotiated by the Bush Administration. Ultimately, however, political reality overcame Obama’s and Hillary Clinton’s overreach. The Iraqi government of Nouri al-Maliki refused to immunize U.S. military personnel and contractors from prosecution for crimes against civilians and the regular American army departed the country in December, 2011, in time for New Year’s eve. At least 4,000 of these soldiers were to be transferred to neighboring Kuwait, where 23,000 troops were already stationed and about 6,000 mercenaries remained behind to guard the immense American State Department presence in Baghdad. Did this constitute true withdrawal from Iraq—Obama’s “Mission Accomplished,” as it were? Much would depend on Iraqi politics, which seemed unstable at best, at worst on the verge of collapse.

Whereas the seizure and occupation of Iraq paved the way for Obama’s victory over Clinton, the near collapse of the American banking system contributed greatly to his defeat of John McCain.

Yet when the time came to “reform” the recklessly deregulated financial system, Obama turned to Summers, who, as assistant secretary and then secretary of the treasury in the Clinton Administration, had opposed, along with his mentor Robert Rubin (Summers’s immediate predecessor as Secretary of the Treasury and the former co-chairman of Goldman Sachs), regulation of “derivatives,” the bundled debt offerings, including sub-prime mortgages, that nearly brought down the whole banking and credit structure in the fall of 2008. The crash in the housing and mortgage market had caused a

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failure of the closely linked derivatives market, and therefore Summers, Rubin, and their ideological allies—including former Federal Reserve Chairman Alan Greenspan and his deputy, the head of the New York Federal Reserve Bank, Timothy Geithner—would seem to have made a colossal error.

Moreover, Summers and Rubin had also supported repeal of the New Deal-era Glass-Steagall Act, which had separated the functions of commercial and investment banks precisely in order to discourage risky investments by banks holding the modest deposits of ordinary Americans. Since the collapse of the derivatives market had pushed speculation-mad commercial banks like Citigroup to the brink of insolvency, restoration of Glass-Steagall in some form seemed appropriate, but nothing of the sort was proposed by the Obama Administration.

Such inaction was more than just a disappointment for the allies of financial reform and sanity; it also represented what was perhaps the greatest single irony of Obama’s first three years in office. For Glass-Steagall did reappear briefly in the national debate, in 2009, but under rather different auspices than “Change you can believe in.”

On December 17, Senator Maria Cantwell, Democrat of Washington, and Senator John McCain, Republican of Arizona and Obama’s former rival for the presidency, announced they would introduce a bill to restore the principal provisions of Glass-Steagall in the form of the Banking Integrity Act of 2009. The Obama Administration opposed the bill, in effect, by calling it unnecessary. With a 59–41 majority, Senate Democrats were no more enthusiastic, and the bill eventually died in the Senate Banking Committee at the end of the 111th Congress in December 2010, having also been rejected as an amendment to the Dodd-Frank bill. It might not have been a coincidence that the expiration of this legislative session also marked the end of Sen. Byron Dorgan’s career as a Democratic senator

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from North Dakota. Dorgan had eloquently denounced the repeal of Glass-Steagall in 1999, voting no with just seven colleagues and predicting many of the financial calamities that followed. When the newly elected Obama named Summers as his chief economic advisor and Timothy Geithner as secretary of the treasury—the architects, along with former Treasury Secretary Robert Rubin, of Glass Steagall’s repeal—Dorgan reportedly told Obama, “I don’t understand how you could do this. You’ve picked the wrong people!”

Obama compounded his hypocrisy by naming Geithner, who notably failed to anticipate the coming crisis at the New York Fed, as his new secretary of the treasury. Surely this was some kind of parody of reform. Journalist William Greider was too polite, writing in the left-wing, but pro-Obama, Nation magazine, when he described Obama’s approach to financial reform: “he wants to rearrange the regulatory system in Washington, but he does not want to alter the fundamental structure of the financial system or prohibit banking practices known to be dangerous. Instead of proposing hard rules and specific limits on bankers, the president would empower the regulatory agencies to keep watch and put the Federal Reserve in charge of guarding against systemic risk.” Yet, as Greider noted, “the Fed, in particular, failed utterly to see the developing crisis in advance or to listen to warnings from those who did.”

Writing in Harper’s Magazine, the novelist Kevin Baker was more to the point: Obama’s handing over of the “reordering of the financial world solely” to Summers and Geithner was, he said, “as if, after winning election in 1932, FDR had brought Andrew Mellon [secretary of the treasury throughout the Roaring Twenties] back to the Treasury.” Whatever Geithner’s and Summers’s failings in their previous jobs, they still might have been chastened enough to fight alongside Congress for serious regulation of the derivatives market.

This was not the case. As Floyd Norris wrote in the New York Times,

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“You might think that as Congress considers just how much regulation is needed for the shadow financial system—the one that largely escaped regulation in the past—letting in such light would be an easy and uncontroversial move.” But Geithner was either a poor advocate for regulation or else he didn’t really support it. As Norris was writing in late November 2009, Geithner was notably failing to persuade legislators to regulate “one of [the banks’] most profitable franchises—the selling of customized derivatives to corporate customers. Remarkably, the banks have persuaded customers that keeping the market for those products secret is in their interest.”

When JPMorgan Chase announced a $2 billion dollar credit derivatives trading loss in April 2012, it only served to underline the continuing threat to the country’s small depositors posed by reckless Wall Street financiers accustomed to the rules of the casino, not a regulated banking system. (Though by June the New York Times estimated that the loss could be as high as $9 billion.)

Of course, there was nothing “remarkable” about a successful lobbying campaign by banks that went against the public interest.

After all, they paid for Obama’s presidential campaign, as well as those of Hillary Clinton and many other important Democrats. Little wonder that near the end of Obama’s first year in office, Goldman Sachs, the politically powerful bank that was Obama’s number-two private campaign contributor, was fighting a public relations battle to explain how it was that its employees were due to receive an average of $700,000 in salary and bonuses for their hard work in 2009 while the national unemployment rate hovered around 10 percent.

One reason was that the well-connected managers at Goldman were making a lot of money from the vast infusion of taxpayer money into the private banking system: according to the Financial Times, the bank “recorded only one daily loss in the third quarter” of 2009.

Thus, when the misleadingly named “Financial Reform Bill”

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was finally signed into law by the president on July 21, 2010, it largely amounted to window dressing. Known as “Dodd-Frank” after its Senate and House sponsors, its “regulatory” features were so risible that even pro-free market money managers were moved to ridicule its failings. As Michael Lewitt, the head of Florida-based Harch Capital Management, summed it up, the 848-page DoddFrank legislation “leaves so much essential work undone, and is so obviously a sell-out to special interests and expensive Wall Street lobbying efforts, that it can only be considered the latest example of all that is wrong with the American political system. In addition to leaving untouched the single biggest threat to financial stability—naked credit default swaps—it also fails to address the bleeding ulcers of Fannie Mae and Freddie Mac, ignores the deficiencies of the rating agencies and leaves most of the details of financial reform to be filled by regulators, whose record in effectively doing their jobs is, to put it more politely than it deserves, pathetic.”

The administration didn’t do much better in the realm of national security and civil rights. Writing in The New York Review of Books, Garry Wills, the great American political historian and an early supporter of Obama, noted the striking similarities between the Bush and Obama administrations, particularly on issues such as the treatment of terrorist suspects and freedom of information: “At his confirmation hearing to be head of the CIA, Leon Panetta said that ‘extraordinary rendition’—the practice of sending prisoners to foreign countries—was a tool he meant to retain. Obama’s nominee for solicitor general, Elena Kagan [who Obama would later appoint as a United States Supreme Court justice], told Congress that she agreed with [Bush Justice Department official] John Yoo’s claim that a terrorist captured anywhere should be subject to ‘battlefield law.’

On the first opportunity to abort trial proceedings by invoking ‘state secrets’. . . Obama’s attorney general, Eric Holder, did so. Obama

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refused to release photographs of ‘enhanced interrogation.’ The CIA had earlier (illegally) destroyed ninety-two videotapes of such interrogations—and Obama refused to release documents describing the tapes.” Wills saved his most withering commentary for a separate blog, after Obama’s West Point speech on Afghanistan: “If we had wanted Bush’s wars, and contractors, and corruption, we could have voted for John McCain. At least we would have seen our foe facing us, not felt him at our back, as now we do.”

It was hardly surprising, therefore, when Obama’s self-imposed deadline for closing the prison at Guantanamo Bay in Cuba passed with the infamous detention center for suspected terrorists still in operation. Nor was it a shock to witness the new administration’s seamless appropriation of the Bush’s targeted assassination program, with Obama personally selecting names on the government’s “kill list.” Due process thrown to the winds hardly caused a murmur when, in May 2011, a unit of Navy SEALS and CIA operatives killed Osama bin Laden at point blank range in front of one of his wives. But when a CIA drone missile blew up Al Qaeda’s Anwar alAwlaki, a United States citizen, some voices began to question the extent of Obama’s commitment to the Constitution he once purported to explain to law students at the University of Chicago.

So what was left of Obama’s crusade for “change you can believe in”? Health care “reform” was early on subcontracted to Senator Max Baucus of Montana, chairman of the Senate Finance Committee and recipient of millions of dollars in campaign contributions from the private insurance industry. Baucus’s legislative assistant, Liz Fowler, had previously worked for WellPoint, a health insurance company, and she remained true to the “free market” creed when she drafted Baucus’s version of the health care bill. Under “Obamacare,” there would, indeed, be health insurance for nearly everyone who didn’t now have it, but they would almost certainly be obliged

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to buy it from private companies, thus guaranteeing a huge, government-guaranteed windfall for some of the Democratic Party’s biggest donors. Estimates varied, but the estimated 46 million uninsured Americans, most of them poor, likely translated into at least 30 million new policies and billions of dollars in new revenue for insurance companies, nursing homes, pharmaceutical companies and private, for-profit hospitals and health maintenance organizations.

These compulsory new private policies (a concept Obama said he opposed during the 2008 campaign) would be paid for largely by the government, although there remained for a time the possibility that the bill would include a “public option” in competition with private insurance—that is, the option to buy an insurance policy from the government instead of from WellPoint.

As the health care debate raged on though the fall of 2009, it was no secret that forces within the president’s own party were working hard, along with their putative Republican adversaries, to eliminate the public option from the health care bill, even though Obama officially supported it. But congressional opposition to public insurance was not for the most part ideological; rather, it reflected the ongoing devotion of the Democratic Party to raising vast sums of money from big business and the rich. Reigning in the power of the private sector could only interfere with fundraising, and Rahm Emanuel was nothing if not a political pragmatist.

When the health care bill was passed on March 21, 2010, it contained no public option—indeed, it clearly favored the financial health of private insurers and the pharmaceutical companies exempted from the legislation—over the physical and mental health of the public. And Obama’s commitment to “universal” health care fell far short of the mark, since 23 million people would remain uninsured for at least nine years. The leaders of Physicians for a National Health Program denounced the bill not only for its lack of

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universality and compassion, but for its inefficiency and lack of cost controls. Their statement likened the passage of the “health bill” to “seeing aspirin dispensed for the treatment of cancer.”

“Instead of eliminating the root of the problem—the profitdriven, private health insurance industry—this costly new legislation will enrich and further entrench these firms. The bill would require millions of Americans to buy private insurers’ defective products, and turn over to them vast amounts of public money.” Moreover, the unhappy physicians predicted that “health care costs will continue to skyrocket” and, more damningly, noted that “the much-vaunted insurance regulations—e.g., ending denials on the basis of pre-existing conditions—are riddled with loopholes, thanks to the central role that insurers played in crafting the legislation. Older people can be charged up to three times more than their younger counterparts, and large companies with a predominantly female workforce can be charged higher gender-based rates at least until 2017.”

But the essential element of the Democratic Party’s “health care reform” was about the unhealthy mix of public and private interests that had come to dominate American political life. As PNHP put it, “Insurance firms will be handed at least $447 billion in taxpayer money to subsidize the purchase of their shoddy products. This money will enhance their financial and political power, and with it their ability to block future reform.” Four months later, as if to underline the truth of this statement, the administration hired Liz Fowler, Baucus’s legislative assistant and a former WellPoint vice president, to help implement the new health care law that she drafted for the benefit of her old employer.1 1 As of June 4, 2012, insurance company donations through their political action committees totaled $4,777,490 to Democratic candidates and $7,862,081 to Republican candidates, of which $560,000 went to Obama’s reelection and just over $1 million to Romney’s. The Democratic deficit reflected the resurgence of the right and the new Republican majority in the House. But the Supreme Court’s narrow vote upholding Obama’s “reform” of the healthcare system promised that the Democrats would quickly catch up. xxiii

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The Supreme Court’s 5–4 ruling in Citizens United v. Federal Election Commission unleashed another tidal wave of campaign cash from rich donors, through so-called Super PACs, most of whom preposterously denied any link with specific candidates. But the sad truth was that campaign finance reform had already been killed off by Obama’s refusal of public financing in 2008. The dream of cleaner elections, instituted by the first post-Watergate Congress and reinforced in 2002 by the McCain-Feingold Act, had no place in a political environment in which fundraising from the fewest sources with the greatest amounts of cash seemed to take priority over everything. As Obama’s national finance chair, Penny Pritzker, told Newsweek, contrary to popular myth, “it wasn’t the Internet [small contributions from modest individuals]” that carried the day for Obama. So while Obama busied himself destroying reform, the fundraising machines of America’s two-party oligarchy ground on in its endless quest for cash to pay for television advertising, create fake photo opportunities, and crush political insurgents.

It hardly caused a ripple when Hassan Nemazee, the fundraising chairman of Hillary Clinton’s presidential campaign who switched his support to Obama, was indicted in September 2009 for allegedly defrauding Citibank, Bank of America, and HSBC of hundreds of millions of dollars. A New York assistant state’s attorney, Preet Bharara, explained that “for more than ten years, Hassan Nemazee projected the illusion of wealth, stealing more than $290 million, so that he could lead a lavish lifestyle and play the part of heavyweight political fundraiser.” But no law enforcement authority was yet prepared to indict America’s political caste or its wealthy patrons for stealing democracy from the nation’s beleaguered citizens. Obama made many speeches in his first year as president, but none was more important than the one he delivered to 200 donors (about a third employed by Wall Street firms) at New York’s Mandarin Oriental

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Hotel on October 20, 2009, each of whom had contributed the legal maximum of $30,400 for the privilege of hearing it. Obama thanked the heavy hitters in the room for “backing some guy nobody ever heard of ” and noted that “not a day goes by that I don’t think about the obligations that I have as a consequence of this extraordinary honor that’s been bestowed upon me—the obligation I’ve got to every American and everybody who put their hopes into a cause that wasn’t just about winning an election, but was about changing the country.”

I did the math: one speech, $6 million. Never, it seemed, had an American politician spoken so many words about “change” and done so little to effect it.

What about changing the country, or at least a little bit of Washington’s culture of power? As I write, in June 2012, the question still hung in the public mind: just what had Obama actually done to fulfill his self-proclaimed mandate? And, more pertinent to this book, did the election of an African-American former community organizer show that meaningful change was possible?

For now, it seemed that winning reelection was more important than changing anything substantive. After losing control of the House of Representatives in the 2010 midterm elections—and a shrinking of the Democratic majority in the Senate—Obama and his party were confronted with what might be called an enthusiasm gap. Many voters who had trusted in the president’s grandiloquent campaign rhetoric had simply failed to show up at the polls to vote for Democratic candidates, allowing a reanimated radical right to carry many congressional districts. But rather than take an aggressive stance and attempt to recoup some political capital, Obama retreated yet farther from New Deal liberalism and reform. As Thomas Frank described it in Pity the Billionaire, his book about the Tea Party and the unlikely resurgence of militant right-wing ideology, Obama’s

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“low point came during the debt-ceiling debate in the summer of 2011, when the brand-new Republican House of Representatives threatened to force a default on the national debt by the U.S. government unless it received what it wanted. The Republicans followed their playbook—moving ever farther to the right, creating the catastrophe they had pretended to foresee in the preceding years—and Obama followed his. Having put himself trustingly into the Republicans’ hands some months before, Obama now declared that he was answering their demands by seeking some high-minded ‘grand bargain.’ He allowed that cuts to Social Security and Medicare, two of the proudest achievements of the Democratic Party, might well be necessary, and gave his assent as Republicans steered the economic policy of a stricken nation toward austerity.” On July 27, in the midst of the debt-ceiling debate, Rep. John Conyers became so annoyed with Obama’s appeasement of the right that he made an impromptu denunciation of the President of a severity rarely uttered by the party faithful: “I say we have to educate the American people at the same time as we educate the President of the United States. Because the Republicans, Speaker [ John] Boehner [and] Majority Leader [Eric] Cantor, did not call for cuts in the budget deal. The president of the United States called for that. And my response to him is to mass thousands of people in front of the White House to protest this.”

Of this and other choices made by Obama so at odds with his reputation for bold initiative, Frank asked, “Whom did the president think he was accommodating?” The answer seemed clear: Obama’s real “base” was not the recession-bruised victims of Wall Street’s deregulated rampage but rather the fundraising machine of the Democratic Party and the Chicago Democratic machine. How else could it be explained that when Rahm Emanuel grew restless in his job as Obama’s right-hand man—in effect functioning as deputy president—and sought the mayor’s office in Chicago abandoned by

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Richard M. Daley, his replacement in the White House was none other than William Daley, brother of Richard M. and son of the old Chicago boss, Richard J. Daley. That Bill Daley stayed only a year as chief of staff, leaving “to go back to the city I love,” was more evidence of the Chicago Democratic organization’s position of preeminent power within the national Democratic Party. Who else but two power brokers of Emanuel’s and Daley’s stature would renounce such an important job to go “home”? Beyond the cynical game of musical chairs, the Emanuel-Daley-Obama collaboration reinforced the reality that traditional, institutional political power had welded itself even more tightly to Wall Street and corporate power. In 1993, Emanuel and Daley had worked side by side as key lobbyists in the battle to pass the business-backed North American Free Trade Agreement. Later, Emanuel worked more than three years as an investment banker at Wasserstein Perella, long enough to amass a $16 million nest egg, and after he entered the Obama White House he famously referred to liberals who were impatient with Obama’s footdragging on reform as “fucking retarded.” After serving as Secretary of Commerce for a grateful Clinton, Daley was named Midwest chairman of JPMorgan Chase and joined the financial conglomerate’s executive committee. As White House chief of staff his signal service to industry and commerce was to promote greater cooperation between the administration and big business.

Notably, this included his successful urging, in September 2011, that Obama drop more stringent air-pollution standards proposed by the Environmental Protection Agency that were furiously opposed by the Business Roundtable, the American Petroleum Institute, and the National Association of Manufacturers.

Environmentalists and liberals were horrified that their hero had let them down on something so obviously harmful as excessive ozone. “Somehow we need to get back to the president we thought

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we elected,” said the writer and activist Bill McKibben. This statement certainly expressed anger and frustration. But, more importantly, it revealed a suffocating naiveté about the American political system. “Thought we elected”? What were McKibben and his confreres imagining? Chicago doesn’t send reformers to Washington.

As the election campaign for 2012 got underway, a clearly nervous Obama took what he referred to as a more “populist” tack— denouncing things like derivatives trading and subprime mortgages that he had done little to regulate, either through executive action or the tepid Dodd-Frank bill. For this reason, Obama could be confident that in his upcoming race against Mitt Romney, the former private equity partner who specialized in money-making schemes built on debt and layoffs, that no one with any serious money would take this new “progressive” posture very seriously. When Obama could have done otherwise, he failed, along with the Democrat-controlled Congress, to raise the tax on capital gains from 15 to 25 percent, as he argued for in his campaign. When Obama could have done otherwise, he kept his hands off NAFTA, which he pledged to “reform” during his bitter primary duel with Hillary Clinton in Ohio. When Obama could have done otherwise, he left largely untouched the lobby system that has so grotesquely distorted the nation’s lawmaking process. When he could have done otherwise, he allowed the Republicans to push through an extension on the Bush tax cuts for the rich. When he could have broken with past practice, he took Rahm Emanuel to visit King Fahd in his throne room in Riyadh, thus cementing the status quo relationship with the dominant oil power in the Middle East.

It was no surprise, then, that even with Romney’s impeccable credentials as a modern capitalist and an enemy of the working class, Obama entered June of 2012 with a commanding lead in fundraising over his chief Republican rivals. Despite Romney’s past career

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and ties to high finance, a grateful business sector would continue to dump money on an incumbent president all too happy to block Manhattan traffic for intimate fundraisers in the Manhattan apartments and townhouses of the ultra-rich in the banking and financial establishment. Even some partners of Bain Capital, Romney’s former employer, knew a good thing when they saw it. By the end of February 2012, they had contributed more than $149,000 to Romney and nothing to the Republican National Committee, but also a surprising $39,778 to Obama and $154,000 to the Democratic National Committee. Obama’s deficit here was of little consequence, however. Through April 30, Obama’s campaign had raised more than $217 million compared with Romney’s nearly $100 million, although these figures did not take into account unregulated Super PAC donations. Meanwhile, corporate bundlers were still hedging their bets between the two candidates. For example, employees of JPMorgan Chase or its political action committee, through the second quarter of 2012, had donated a little over $1 million to Republicans and $687,636 to Democrats, of which $411,325 went to Romney and $89,282 to Obama. Romney could boast (secretly, since under the Citizens United decision, Super PACs were prohibited from being formally affiliated with a candidate’s campaign) of what appeared to be a decisive lead in Super PAC donations. According to the Center for Responsive Politics (CRP), through June 20, a total of $56,968,494 had been donated to the pro-Romney Super Pacs Restore our Future and Citizens for a Working America, while Obama could claim $10,640,956 from the Super PACs Priorities USA Action and 1911 United. (All was not bleak for the Democrats, however. Two notable Super PACs, identified by CRP as “liberal,” were likely to help Obama: American Bridge 21st Century, totaling $5,788,187, and the NEA Advocacy Fund, a creation of the teacher’s union, chalking up $3,510,951.) Obama could say

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anything he liked to appease the liberal wing of his party and the Occupy Wall Street movement, but his record of inaction concerning the regulation of Wall Street and the rich remained his most notable failure.

Every week, it seemed, brought new information about a worsening economic and educational divide, often loudly announced on the front page of that tribune of the establishment, the New York Times. According to the newspaper, in pre-recession 2007 the wealthiest “one percent” of Americans—those made famous by the occupiers of Zucotti Park in lower Manhattan—“controlled nearly a third of the nation’s financial assets (investment holdings) and about 28 percent of non-financial assets (the value of property, cars, jewelry, etc.).” Meanwhile, a “mobility gap” between the United States and comparable industrialized countries was suddenly discovered by Times journalists in the work of Swedish, Canadian, and American researchers: “Despite frequent references to the United Sates as a classless society, about 62 percent of Americans (male and female) raised in the top fifth of incomes, stay in the top two-fifths” while “65 percent born in the bottom fifth stay in the bottom two-fifths. A study conducted by Markus Jantti found that that while “42 percent of American men raised in the bottom fifth of incomes stay there as adults,” only 25 percent of Danish males and 30 percent of British males suffered the same fate. Just 8 percent of American males at the bottom made it to the top fifth compared with 12 percent of British and 14 of Danish males.

Along with the mobility gap arrived news of an increasing “education gap” between rich and poor, discovered before the crash of 2008. New research at Stanford University had found that the disparity “in standardized test scores between affluent and low-income students had grown by about 40 percent since the 1960s, and is now double the testing gap between blacks and whites.” Meanwhile, according to the Times, University of Michigan researchers had learned xxx

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that “the imbalance between rich and poor children in college completion—the single most important predictor of success in the work force—has grown by about 50 percent since the late 1980s.”

With all these “gaps” being reported in the press, it seemed odd that no one reported on another yawning gap—a “credibility gap,” as it was known during the Vietnam War—between statements by politicians who promised to rectify the inequalities built into the country’s social infrastructure and their deeds. Quite literally on its face, Obama’s mixed race was supposed to be the definitive indicator of social progress in America, proof that anyone could grow up to be president. But in his work, Sean F. Reardon of Stanford also learned that race was not the fundamental impediment for less successful students—indeed, as the Times reporter wrote, “the gap between white and black students, regardless of income, had shrunk substantially.” Money was the difference much more than skin color.

But perhaps the fundamental question is why so many Americans believe that a single politician could, or would, transform the system without organized pressure from below. For no amount of wishful thinking, or hope in a candidate, can change the facts of political and social life that I describe in these pages: a rigid social system locked down by institutional, political, and economic forces.

Both progressives like William Jennings Bryan and “conservatives” like John McCain have tried. Obama was hardly the first politician who promised changes that he either couldn’t deliver or had no real ambition to effectuate. Indeed, it is in some sense unfair for his “disappointed” followers to be so angry. Liberals who criticize their former hero for “caving in” to the demands of the Republicans forget that Obama early on advertised his willingness to cooperate with Washington’s permanent government of party barons, corporate lobbyists, and think tank aristocrats. He has.

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