How the Democrats Became The Party of Neoliberalism By: Arun Gupta 07 04 15

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Obama has bombed seven countries (more than Bush), deported record numbers of immigrants, killed immigration reform through neglect, undermined climate change accords in Copenhagen in 2009, attacked teachers unions, abandoned “card-check” legislation that would aid union drives, and offered little more than rhetoric on raising wages. There is a standard critique of the U.S. political system that seemingly explains why right-wing ideas drive the national agenda even when Democrats control the White House: the Democratic Party does not stand for anything and the Republicans are the party of ideologues. The six years of Obama’s presidency are exhibit A in the case. During his winning campaign in 2008, Obama presented himself as a blank slate promising amorphous “hope and change.” His campaign encouraged voters to see Obama as a transformational candidate who would wind down bloody U.S. wars, revive the economy with a Green New Deal, open space for labor organizing, resolve the immigration crisis, and take bold steps to alleviate climate change. Instead, Obama has bombed seven countries (more than Bush), deported record numbers of immigrants, killed immigration reform through neglect, undermined climate change accords in Copenhagen in 2009, attacked teachers unions, abandoned “card-check” legislation that would aid union drives, and offered little more than rhetoric on raising wages. Obama, however, spared no effort to rescue the sinking yachts.


In October 2009 the New York Times noted that the bailouts begun a year earlier were fueling a “new era of Wall Street wealth.” That will shape his legacy: the real unemployment rate is still at 12 percent, and since 2008, 5.5 million more Americans live in poverty and the median household income has declined 4.6 percent. Corporate profits are at their highest level since record-keeping began in 1929, the effective corporate tax rate is lower than any point since Hoover was president, and workers are taking home the smallest share of national income in 65 years. Obama and Democratic Party leaders have passed up few opportunities to kick their voting base in the face. They abandon supporters the instant an issue becomes contentious, such as capping carbon emissions, federal funding of reproductive healthcare, or anti-union legislation. In contrast, the Republicans stick to their guns in pursuing an ideological agenda of upward redistribution of wealth, increased police and military force, and reactionary social policies. This is why Republicans are poised to secure a majority in the U.S. Senate in congressional elections next month. They stand for something and mobilize their base. Obama, however, has done little for working Americans after healthcare reform passed in early 2010. But it’s time to rethink this notion that Democrats lack principles. They have a clear agenda and are actually more ideological than Republicans.


Democrats like Obama are willing to lose power to carry out the neoliberal agenda. Since the Clinton era, Democrats have been the most effective architects of policies that increase the wealth and power of those on the top of the economic pyramid. Now, neoliberalism is often thought of as synonymous with privatization, deregulation, and trade and capital liberalization, but the state will discard these policies for corporate handouts the instant elites get into a self-inflicted mess, as with the Wall Street crash. This has left the Democratic Party in a bind. It relies on votes from social groups like women, union members, Blacks, Latinos, and environmentalists who favor redistributive policies like gender equity in income, a higher minimum wage, lower healthcare costs, more environmental protection, and stronger immigrant rights. At the same time, Democrats need billions of dollars to run elections and their party machinery. They go hat in hand to corporations and promise more tax breaks and corporate welfare in return. But Democrats can never be as committed to the free-market ideology as Republicans. Democrats need to satisfy some needs of their social base while Republicans can move the goalposts further right and wait for the Democrats to play catch up. To resolve the contradiction, Democrats like Obama and likely 2016 presidential nominee Hillary Clinton say we will manage trickle-down economics more efficiently. This will increase taxes for modest market-based redistribution in the form of healthcare, housing and higher education subsidies, and tax breaks for the working poor. It’s the same role many traditional left parties play in other countries. Democrats offer a bit more funding, miniscule compared to military spending and corporate welfare, for food stamps, homelessness, and energy assistance. But the commitment to neoliberalism leaves the programs vulnerable. Obama readily cut tens of billions of dollars in social welfare to appease Republicans complaining about a $17.9 billion national debt.

Obamacare is part of this framework. While it did extend coverage to uninsured millions, the goal was to reduce costs through intensified neoliberal restructuring, which is reducing overall quality of healthcare. The Republicans opt for naked class warfare as with huge tax breaks to the wealthy under Reagan and Bush Jr. But the breed of hard-right Republicans that came into Congress in 1994 will play chicken with the economy if that serves their power interests, as they did by repeatedly shutting down the government and damaging the U.S. credit rating. Lacking a progressive vision, Democrats follow the GOP on economic policy, pushing the center rightward. Most media outlets have little interest in unpacking historical conditions that shape politics, preferring gossip about the personality, values, tastes and lineages of candidates. Yet it’s the historical contradiction Democrats are trapped in that explains how and why Bill Clinton and Obama pursued a neoliberal agenda that dashed the hopes of their supporters, resulting in the biggest midterm losses in Congress of any president in the modern era. It also explains why the Democrats will likely lose the U.S. Senate in November 2014. Bill Clinton campaigned as a “New Democrat”: tough on crime, fiscally responsible, and stern with welfare recipients. Clinton effectively fulfilled the Reagan Revolution by gutting welfare, passing NAFTA, deregulating telecommunications and the finance sector, and ramping up government spying, policing, and immigrant detention. Clinton could grant the right-wing’s wish list because the Democratic base was conditioned to supporting any deal no matter how bad because the Republicans would supposedly be worse. Yet Clinton needed Republicans to pass NAFTA because the Democrats controlled Congress. He threw millions of poor women and children off welfare to shore up his right flank in advance of the 1996 election. But that cynical calculation was unnecessary Clinton trounced the feeble Republican nominee, Bob Dole in a race that was never in doubt.


And deregulation happened in Clinton’s second term when he was freed from election concerns. Obama has repeated the same pattern. He is more aggressive on foreign policy than Bush. In 2011, before the explosive revelations about NSA spying and Obama’s newest wars in Syria and Iraq, Glenn Greenwald noted, “Obama has continued Bush/Cheney terrorism policies—once viciously denounced by Democrats—of indefinite detention, renditions, secret prisons by proxy, and sweeping secrecy doctrines. He has gone further than his predecessor by waging an unprecedented war on whistleblowers, seizing the power to assassinate U.S. citizens without due process far from any battlefield, massively escalating drone attacks in multiple nations, and asserting the authority to unilaterally prosecute a war (in Libya) even in defiance of a Congressional vote against authorizing the war.” Because Obama is facing a hostile GOP that comes across as mentally unhinged at times, most of the Democratic base is complacent. The rest are demoralized, leaving little opposition to his right-wing policies, just like the Clinton era. Remarkably, Obama has been less aggressive than Bush on prosecuting Wall Street crime. More significant, in January 2009, days before his inauguration, Obama told the Washington Post he would convene a “fiscal responsibility summit” to “reform” Social Security and Medicare. Rather than using his historic victory and Democratic majority in Congress to push for progressive redistribution, Obama was saying he wanted to decimate the two bedrock programs of retirement to pay for Wall Street’s epic corruption. If Obama succeeded, and the only reason he hasn’t so far is because the right has been so extreme, it would have destroyed what remains of social welfare and the Democratic Party’s base. (Clinton also tried to weaken retirement programs in the nineties.)


Additionally, numerous observers, including myself, pointed out in December 2008 that it was no secret the stimulus would fail. The $800 billion plan that passed amounted to barely 2 percent of GDP through 2011, while the gap due to the economic depression hit 7 percent at one point. The Congressional Budget Office estimated the stimulus produced 500,000 to 3.3 million full-time jobs, but more than 8 million full-time jobs were lost and overall more than 13 million workers lost jobs, dropped out of the labor force or downgraded to part-time work involuntarily. The stimulus may have prevented a repeat of the Great Depression, but by applying bandages to gaping wounds Obama enabled the right to portray it as a failure and government as the problem. Passing New Deal-style programs would have been tough, but Obama capitulated before he began, losing the chance for stronger stimulus and redistribution. With Obama entering the twilight of his powers and relevancy, the focus will shift by the New Year to the 2016 horse race. The Democrats will remain devoted to managing the state for the interests of wealthy and powerful. It’s why the Democrats are the true ideologues. Hillary may win office by talking left, but once in the White House she will readily sacrifice the Democrat power base to stay true to the neoliberal project. The silver lining is this “extreme center,” as Tariq Ali describes it, has opened up space in countries like Spain, Iceland, and Greece that left parties have used for mass mobilization. There are flickers of hope in the United States with Socialist Alternative candidate Kshama Sawant beating Democrats in Seattle and Green Party gubernatorial candidate Howie Hawkins giving New York Gov. Andrew Cuomo headaches in the upcoming election. But it’s a long row to hoe.