Obama failure on political economy impacts primary results

Continuing the topic begun by Jonathan below - Obama is not a shoo in - there is an important post at Naked Capitalism focusing on the disastrous results of two Congressional primaries in which progressive candidates were defeated by large margins, Why is the left slice of Democrats getting crushed? Reinforcing Jon's link, that most Americans do not feel there is an economic recovery, the latest study by Emmanuel Saez shows that income inequality is now far worse than it was under George Bush.

In other words, Obama has not only failed to solve the underlying problem of political economy but has made it worse. Obviously, Obama has not yet learned that income and wealth inequalities cripple the economy. This crucial fact of political economy was the foundation of my December 2007 forecast of a major financial crash and economic catastrophe, just months before the collapse of Bare Sterns. Apparently, many progressives and Democrats have yet to understand this fact as well. Matt Stoller writes:

Yup, under Bush, the 1% captured a disproportionate share of the income gains from the Bush boom of 2002-2007. They got 65 cents of every dollar created in that boom, up 20 cents from when Clinton was President. Under Obama, the 1% got 93 cents of every dollar created in that boom. That’s not only more than under Bush, up 28 cents. In the transition from Bush to Obama, inequality got worse, faster, than under the transition from Clinton to Bush. Obama accelerated the growth of inequality.

The data set is excellent, it’s from the IRS and it’s extremely detailed. This yawing gap of inequality isn’t an accident, and it’s not just because of Republicans. It’s a set of policy choices, as Saez makes clear in his paper.

In another post, an assessment of the smashing defeat of progressive candidates, Matt Stoller writes,

Since the highwater point of 2006, when progressives were able to defeat Joe Lieberman in a primary race in Connecticut (losing in the general election), the trend has been almost entirely downhill. The outcome of their efforts to elect Obama, on a policy level, has been worse (and accelerating) inequality than that we saw under George W. Bush. Americans decided to vote for the people who claimed to be progressive, and they got mostly the same thing they got under Bush, maybe a little worse. In 2010, the swing against Democrats was severe.

....Voters want stuff, information on how to live their lives, increased incomes, a better world, tax cuts, the trash picked up regularly, whatever – and if you can’t credibly get it to them, your message is unpersuasive. It’s not that your arguments don’t work, it’s that you aren’t a trusted messenger, and you can’t win in a low-trust fight because low trust channels are dominated by oligarchs. This is why the failure of the internet progressive space to focus on wages or foreclosures from 2006-2010 was so catastrophic. It’s why the fact that health care doesn’t kick in until 2014 carried significant political costs. There simply is no progressive advantage on economic arguments anymore. Sheyman laid out standard left-but-not-too-left policy prescriptions – reimplementing Glass-Steagall, lifting the Social Security cap on earnings, Medicare-for-All, gradual withdrawal from Afghanistan – and they didn’t work. Why would one really junior member of Congress without any substantive record of accomplishment really matter? Why would anyone trust the progressive brand on economics?

"Why would anyone trust the progressive brand on economics?" What is happening now is exactly what Ian Welsh warned of in November 2010, when he argued that unless Obama is challenged by the left in the primaries, Obama's neo-liberal economic policies will discredit the left for a generation or more.

Obama and Democrats had a historic chance to fix America. The rich who run America, whom the Supreme Court in Citizens United gave permission to outright buy elections, could have been broken when Obama took power. All that was necessary was to force them to take their losses. Contrary to what apologists for wealth have told you, this would not have meant disaster for the economy, there were ways to protect regular Americans while making the rich take their losses.

Instead Barack Obama, as in so many other ways, continued Bush’s policies, and kept the rich bailed out. The end result has not only been the tsunami of foreclosure issues which still threaten to swamp the banks, has not only been trillions in dollars of taxpayer money being used to keep rich people rich (much more money than was spent on the stimulus), it has been the wholesale transfer of money from poor to rich: an absolute decline in total wages, average wages and median wages of ordinary Americans, while Wall Street pays themselves even higher bonuses than before, gives record money to Republicans and the rich pay themselves more....

The left must be seen to repudiate Obama, and they must be seen to take him down. If the left does not do this, left wing politics and policies will be discredited with Obama. This is important not as a matter of partisan or ideological preference, it is important because left wing policies work. It is necessary to move back to strongly progressive taxation, it is necessary to force the rich to take their losses, it is necessary to deal with global warming, it is necessary to deal with the fact that the era of cheap oil is over, it is necessary to stop the offshoring engine which is destroying the American middle class.

Only left wing solutions to these problems will work. America has spent 30 years, since Reagan, trying to fix its problems by going more and more right wing, and it has been a disaster. Each additional step to the right has made the problem worse. (Emphasis mine).

These may not be popular ideas among Democrats and progressives. But they are the truth as I see it. Obviously, it's too late to challenge Obama in the primaries. The Occupy movement may be the vehicle that can be used to change direction, but Occupy will need to focus, intensely, on building a base able to get people elected to office. Seizing political power, in other words. Demonstrations, and especially confrontations with the police, are simply a waste of time at best, and counter-productive at worst. Occupy needs to replicate the success of the Greenbackers, People's Party, and the Non-Partisan League in targeting and winning state level races and Congressional seats.