Saturday, May 2, 2015

Was President Obama "Cognitively Captured" by Wealthy Donors?

Economist Joseph Stigliz sat down for a chat with Bill Maher Friday night.


His contention that President Obama has been "cognitively captured" by big donors is something that is occasionally heard from liberals who don't agree with the President's policies. We're hearing it a lot more during the debate about trade agreements. So let's take a closer look.

First of all, in both of his presidential campaigns (2012 even more so that 2008), Barack Obama revolutionized fundraising by relying on small donations. That is simply a fact. It's true that in 2008 many employees at Wall Street firms donated to his campaign. But in 2012 after he signed Dodd/Frank, a lot of them abandoned him. The idea that he was somehow "captured" by his wealthy donors is absurd.

When it comes to campaign finance, it's also helpful to remember that the President spoke so forcefully against Citizen's United in his 2010 State of the Union speech that it caused Justice Alito to nod in dissent.

Secondly, during President Obama's first two years in office, while Democrats controlled both houses of Congress, he fought hard for 3 big pieces of legislation: the stimulus bill, Obamacare, and Wall Street reform. Simply on it's face, those are three progressive pieces of legislation. But let's look a little more closely at them.

When it comes to the stimulus bill, I would suggest that there was a sense of urgency. At the time, we were loosing 700,000-800,000 jobs per month and so something needed to be done fast. In the Senate, Al Franken's election was being contested and Sen. Spector hadn't switched parties yet. As a result, with GOP obstruction requiring 60 votes for passage, the Democrats were required to negotiate in order to get a few Republicans to support the bill. They were able to do that and get it to the President's desk 28 days after he was inaugurated. Mission accomplished. I'll leave it to Michael Grunwald's book The New New Deal to tell the rest of the story about how well it worked.

Next up came health care reform. There are probably books one could write about that one. But when it comes to Stigliz's critique, all one needs to do is google "Obamacare redistribution." Conservatives hate it because it redistributes wealth from upper incomes to lower. Jonathan Cohn does a good job of explaining all that.

Finally came Wall Street reform with Dodd/Frank. Someone will have to explain to me how the Consumer Financial Protection Bureau's inclusion in that bill demonstrates "Obama's cognitive capture" by wealthy donors. Beyond that, the whole reform process is working better than most liberals assumed it would and, as I've pointed out recently, the "too big to fail" financial institutions are shrinking because of it's regulations.

Since then, Democrats haven't been able to get much through Congress. But President Obama's proposals to deal with income inequality have included things like: raising the minimum wage, investment in infrastructure, universal pre-K, and free community college.

If one wants to critique President Obama's policies, it is entirely reasonable to do what Paul Krugman did in his article in Rolling Stone where he suggested that, while the 3 big pieces of legislation that have been passed are successful, they didn't go far enough. It is possible to have a reasoned debate about that. But that's not what Stigliz did. He avoided all the arguments about the issues and attempted to go behind the curtain to suggest what he thinks is wrong with the President's motivations. That's a cheap shot.

18 comments:

  1. Hi SP! Excellent!! I do believe Stiglitz suffers from envy of PBO! So much of his veneer of being "always right" is gone. Those liberals still clinging to Liz and Stiglitz are small minded, have no faith in PBO and less real knowledge and understanding.

    You, OTOH, are brilliant!
    Thanks for everything you do!
    Smilingl8dy

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    1. Thanks Smilingl8dy.

      But I know no more about what motivates Stigliz than he knows what motivates Obama. What I DO know is that Stigliz is wrong. So I'll stick to that :-)

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    2. Stiglitz is a smart dude and we should pay attention to what he has to say about his field of expertise. But what he is doing here is stepping outside of his field of expertise (economics) and talking about something he really isn't as smart about (politics).

      Krugman suffered from the same problem. I think he's gotten better of late. I almost sense a begrudging respect for Obama in Krugman's latest columns that wasn't there 6 years ago.

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    3. Chris, I considered titling this article, "When it comes to politics, Stigliz should stick to economics."

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  2. I've been trying for years to figure out what bugs me so much about critiques like we here from Stiglitz and I think it has something to do with the fundamentally pessimistic belief behind it. That pessimism says that, no matter how hard we work make things better, there will always be some rich guy behind the curtain who will fuck it up for us, so why bother?

    I mean really, if you were to go through life believing as Stiglitz (and many others do) that politics is fundamentally corrupt then how could you ever face another day? It is an attitude that is, at its core, hopeless.

    Rather than think, "Oh, nothing good gets done in politics because of all the corrupt money involved", try thinking, "Isn't it amazing that so many good things do get accomplished *despite* the corrupting influence of money?"

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    1. You're overthinking it. It's Obama's hands-off attitude toward banker and Wall Street crime, as well as him trying to Grand Bargain away parts of Social Security. That stuff matters to people.

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    2. Robert: What you mention are issues we could discuss. And reasonable people are likely to disagree (for example, was it Wall Street "crime" or deregulation that was the major problem?) That's not what Stigliz did in this clip.

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    3. This is a reply based on fact-free reasoning. He did NOT have 'hands off' attitude. He converted the Bush-Paulsen giveaway to loans that forbade bonuses so we got repaid with interest. Second, some bankers WERE convicted of civil matters - you seem to forget what they did was NOT a crime because of both Clinton and Bush who changed the terms of the financial world. Dodd-Frank has replaced huge barriers (whatever mushy rejection of that you may think you have) that, as Nancy has show, are breaking up banks. There are now legal provisions to nationalize failing banks that was impossible before. As for the Grand Bargain - it was a dodge to show the total fraud of the GOP. It did NOT give away parts of Social Security but did offer a slight - yes SLIGHT - modification in the NOT guaranteed COLA formulation. Passing that was ENTIRELY contingent on the GOP raising tax rates on the rich. Did they do that? NO. And that was the President's entire point - they refused at ALL gain to themselves to do that one thing that was too precious to them. The largest divide in America is racial. The second largest divide is between those of us who do close analysis of public policy and those who simply get mad over hype and know no facts at all. Sorry, Robert - you're in the latter camp. You may feel righteous. You are simply ignorant.

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    4. "The largest divide in America is racial. The second largest divide is between those of us who do close analysis of public policy and those who simply get mad over hype and know no facts at all. Sorry, Robert - you're in the latter camp. You may feel righteous. You are simply ignorant."


      ^I agree with this.

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    5. Thank you Nancy.

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    6. Fraud is a crime. Don't believe me? Try being poor and getting away with it.
      As for Social Security, maybe you're right. Maybe, conservatives will give it a pass, instead of saying it's such a problem even Barack Obama tried to use the bully pulpit to change it.

      Finally, thank Dog for Obama's DOJ going after the bankers through civil suits. Now the bankers just commit the same crime after receiving fines which amount to a fraction of their gains.

      http://neweconomicperspectives.org/2015/04/lanny-breuers-defense-of-not-prosecuting-hsbc-and-its-officers.html

      Some would call me ignorant, others would say I'm just not clapping loud enough for your heroes.

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    7. Doug: I would neither blame you for being ignorant or fornot clapping. I would say that we disagree. I'm not interested in judging your anymore than I think Stigliz should have judged Obama. We need to get used to the fact that sometimes liberals disagree and its OK to discuss those differences. That's why I wrote this in the first place.

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    8. Oops. My comment above should have been addressed to Robert.

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    9. "...you seem to forget what they did was NOT a crime..."
      Since it was fraud, and fraud is most certainly a crime, I would appreciate you merely disagreeing with me, rather than call me 'ignorant". No reason for you to be a jerk, just because you run an online Obama fanzine.

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    10. I am the one who said that, not Nancy, and no it was NOT a crime to game the system. Those who committed fraud outright are being prosecuted, but most of it was not - it was what we permitted due to changes in financial system laws from Clinton through Bush. If you're going to get mad at someone, pick the right person, because Nancy did not say that.

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  3. And notice how these baseless critiques never seem to apply to Hillary or her husband. Hmmmmm......I wonder why that is??

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    1. Oh, they will. But, honestly, it's refreshing to be on a site where the "Obots" push back so effectively. Personally, my agreement rate with Nancy runs about as high as with any pundit on the old interwebtube thingees.

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  4. I agree, Nancy. And, I take issue with this magical sounding and meaningless phrase "cognitively captured." Did the financiers cast a spell on him? They MUST have because how else could a good boy like Obama go over to the Darth Vader side? I sure hope Stiglitz has a counter-spell ready! Like you, I thought his expertise was economics, but I hope he is also a certified wizard.

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