Obama the Centrist Irks a Liberal Lion
By MICHAEL POWELL
BERKELEY, Calif. — So how would he grade President Obama’s economic
policies, and the new team put in place this week?
Though Robert B. Reich, the former labor secretary, endorsed Mr. Obama
and has traveled to the White House to provide economic counsel, he
offers a smile that looks unmistakably pained.
“We have a remarkably anemic recovery; it’s paper-thin,” Mr. Reich
says. “In the narrowest, tactical terms, in sheer dollars committed to
programs, Obama’s done pretty well, and his favorability ratings are
better than those of the Democratic Party.”
Then he sweeps his hands far apart in his sun-filled warren of an
office at the University of California, Berkeley.
“If you widen the lens, the public is being sold a big lie — that our
problems owe to unions and the size of government and not to fraud and
deregulation and vast concentration of wealth. Obama’s failure is that
he won’t challenge this Republican narrative, and give people a story
that helps them connect the dots and understand where we’re going.”
Mr. Reich, 64, is one of several prominent liberal economists who
despair of what they say is this president’s political caution, and
his unwillingness to duel with an emboldened Republican Party.
Faced with a Republican majority in the House, Mr. Obama this week
appointed Gene Sperling, a former adviser to President Bill Clinton,
as director of his National Economic Council, and William M. Daley, a
centrist politician turned banking executive, as his chief of staff.
Mr. Daley was a member of the Third Way, a group that counsels deficit
reduction, more tax cuts and perhaps trimming Social Security.
Mr. Reich is not pleased by the president’s message of late.
“By freezing federal salaries, by talking about deficits, by extending
the Bush tax cuts, he’s legitimizing a Republican narrative,” Mr.
“Why won’t he tell the alternative story? For three decades we’ve cut
taxes on the wealthy while real wages stood still.”
Mr. Obama’s liberal economics critics include Nobel Prize winners,
Paul R. Krugman, the Princeton professor and columnist for The New
York Times, and Joseph E. Stiglitz, the Columbia professor who served
as chairman of Mr. Clinton’s Council of Economic Advisors.
Simon Johnson, former chief economist at the International Monetary
Fund and a professor at M.I.T., once advised liberals to stop blaming
Mr. Obama’s advisers for pushing policies too friendly to Wall Street
— the president makes those decisions.
Mr. Reich served as labor secretary for President Clinton, and in his
latest book “Aftershock: The Next Economy and America’s Future” he
applauds Mr. Obama for deft work in preventing the economy from
toppling into a Depression.
But the president demanded too little of the bankers he saved, Mr.
Reich says, and he conflated a rising stock market and soaring
corporate profits with an improving economy.
The majority of Americans, who derive much of their wealth from their
homes rather than the stock market, are falling far behind the top 1
percent, who took in 23 percent of the nation’s income in 2007. That
inequality, he says, is at the heart of America’s malaise.
“Obama had a chance to reboot the bailout,” he says. “He could have
said to the bankers, ‘If you want more, you’ve got to put a cap on
salaries, you’ve got to agree to modify X number of mortgages.’ ”
Mr. Reich sees a parallel with his former boss, Mr. Clinton, and draws
no comfort from the comparison. Confronted with a muscular Republican
majority in the House in 1994, Mr. Clinton mastered triangulation,
which is to say he sailed into a sea neither Republican nor
Democratic. It was a strategic masterstroke, but he threw overboard
some liberal founding stones.
“I found myself truly impressed by how quickly Clinton moved to the
putative center,” says Mr. Reich, a touch archly.
Mr. Reich sees President Obama taking a similar tack. This argument
drives the president and his advisers to distraction.
To survive in a Washington where Republicans and Democrats are on
nearly permanent war footing with one another, the president’s
advisers say, requires an agility little understood by those on the
outside. They point to health care and financial reform, to extended
unemployment benefits and to the stimulus bills (which liberal
economists criticized as too small) that let city and state
governments avoid tens of thousands of layoffs. They will put their
accounting up against that of their critics.
(Congressional Republicans are split between those who have described
Mr. Obama as a liberal, or a dangerous radical, or, more exotically, a
Mr. Reich says he knows careful compromise is the daily bread of
government. He emphasizes he is not a paleo-liberal.
He favors incentives rather than the lash of requirement when it comes
to job creation. He pushes an industrial policy to make workers more
competitive. And his view that trade is a beneficial balm leads him to
a fairly benign view of China.
He also remains willing to have his heart broken by politicians. He
worked in the Gerald Ford administration — as a young lawyer he worked
for Robert Bork, now a conservative luminary — and for President Jimmy
A New Yorker in childhood, a Bostonian by academic residency for many
years, he moved west to Berkeley five years ago, and that sunny clime
seems to suit his disposition. His office, overlooking cypress trees
and a courtyard, is jammed with books and posters of his political
heroes, from Franklin Delano Roosevelt to an old Life magazine
portrait of Adlai Stevenson.
During the 2008 primaries, he wrote a tough column about Hillary
Clinton. (In a reminder that alliances are ever shifting, Mr. Sperling
fired back with a column in defense of Ms. Clinton and criticizing Mr.
Obama, who just tapped Mr. Sperling for his new economic team.)
Why does political romance so often sour into disappointment? “Even
the most visionary president — Reagan, say — gets surrounded by
ambitious tacticians,” he replies. “Everyone is giving advice about
the next battle, and there is no room for thinking about how to
communicate with all those Americans essentially sitting in the
Democratic presidents, he goes on, raise money from and are surrounded
by Ivy League-educated meritocrats, often of substantial wealth.
“Their norms are of those who earn more than $300,000, whose kids go
to private school and whose primary savings are in the stock market
rather than in their homes,” he says. “Their assumptions are different
in profound ways from most struggling Americans.”
The modern Democratic Party, he says, is removed from what he and Mr.
Krugman view as a better time: the decades stretching from World War
II until about 1970. The typical high-income earner then paid more
than 50 percent of income as taxes. The economic bargain was explicit:
government encouraged industry, and working Americans shared in the
fruits, buying houses and cars, with pensions to tide comfortable
“We tend to think of the political center as static, but it’s become
much more conservative over time,” Mr. Reich says. “What’s happened in
the last 30 years is that the private sector worker has taken a
Conservatives and centrists rejoin that a return to an age of strong
unions and fixed benefits would leave the economy gasping in a global
age. Mr. Reich has taken lumps over the years from fellow liberals as
well, and not just from conservatives.
The late Tony Judt, founder of the Remarque Institute at New York
University, once criticized Mr. Reich for writing too glibly, and not
infusing his analysis of corporate behavior with a more rigorous and
Put that question to Mr. Reich and he raises his hands: guilty as charged.
Economics, he says, takes its origin as a moral philosophy. “Tony was
right; I left out the questions of power and inequality,” he says.
“The Great Recession has made it impossible for me to ignore that.”
Ask Mr. Reich if he would go back to government, knowing idealism
would be trampled, and he nods.
As for now? He smiles.
“When you’re out, you have a lot less of a megaphone,” he says. “But
you can say a lot more.”