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A Look Under the Hood of an Obama Administration

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A Look Under the Hood of an Obama Administration
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Tuesday’s celebration hangovers have finally started to wear off, and the pieces are beginning to fall into place. Change will be coming to Washington in January, but it is difficult to decipher what form it will take. Early clues, however, suggest that Barack Obama’s administration will prove unlikely to alter the fundamental political machinery that has led us into war and economic turmoil. Below is a brief summary of Obama’s potential choices for a few key roles in his administration.

Chief of Staff

Obama’s key White House position will go to Rep. Rahm Emanuel of Illinois. While Emanuel knows his way around the corridors of Washington, qualifying him in the traditional sense, this alone doesn’t mean he’s the guy you want drawing up Obama’s policy papers day after day.

For starters, Emanuel is a shameless neoliberal with close ties to the Democratic Leadership Council (DLC), even co-authoring a strategy book with DLC president Bruce Reed. Without Emanuel, Bill Clinton would not have been able to thrust NAFTA down the throats of environmentalists and labor in the mid-1990s. Over the course of his career, Emanuel’s made it a point to cozy up to big business, making him one of the most effective corporate fundraisers in the Democratic Party. He’s also a staunch advocate of Israel’s occupation of Palestinian territories.

Emanuel’s shinning moment came in 2006 as he helped funnel money and poured ground support into the offices of dozens of conservative Democrats, expanding his party’s control of the House of Representatives. Emanuel, who supports the War on Terror, and expanding our presence in Afghanistan, worked hard to ensure that a Democratic House majority would not alter the course of US military objectives in the Middle East.

In short, Rahm Emanuel is not only a poor choice for Obama’s Chief of Staff; he’s one of the least progressive picks he could have made. While he may have decent views on abortion, tax policy, and social security, Emanuel’s broader vision is more of the same: war and corporate dominance.

Treasury Secretary

For arguably the most important position Obama will be appointing, the President-Elect may pick well-regarded economist Paul Volcker, former chairman of the Federal Reserve under Jimmy Carter and Ronald Reagan. Volker is one of Obama’s closest economic advisors and is thought to be the top-choice for the position of Treasury Secretary.

During the late 1970s and early 1980s, Volker, in an attempt to cut inflation, dramatically raised interest rates, which helped the elite maintain value in their assets but strangled the working class as credit dried up.

In his book, A Brief History of Neoliberalism, David Harvey writes that Volker personified one of the key facets of the neoliberal era.

“[Volker] engineered a draconian shift in U.S. monetary policy. The long-standing commitment in the U.S. liberal democratic state to the principles of the New Deal, which meant broadly Keynesian fiscal and monetary policies with full employment as a key objective, was abandoned in favour of a policy designed to quell inflation no matter what the consequences might be for employment. The real rate of interest, which had often been negative during the double-digit inflationary surge of the 1970s, was rendered positive by fiat of the Federal Reserve. The nominal rate of interest was raised overnight … Thus began ‘a long deep recession that would empty factories and break unions in the U.S. and drive detour countries to the brink of insolvency, beginning a long-era of structural insolvency’. The Volker shock, as it has since come to be known, has to be interpreted as a necessary but not sufficient condition of neoliberalism.”

In supporting Henry Paulson’s bailout package, Volker would not re-regulate the banks nor provide more power to shareholders, he’s simply carry on one facet of neoliberalism: tightening federal budgets which inevitably will put great budgetary pressure on federal agencies.

Another potential pick for the post is Robert Rubin, who served under Clinton in the same position and is currently Director and Senior Counselor of Citigroup. Rubin played a key role in abetting another neoliberal objective: deregulation. Where Volker was hung up on economic austerity, Rubin pushed for more deregulatory policies that ended up shifting jobs, and entire industries, overseas.

Rubin even pushed for Clinton’s dismantling of Glass-Steagall, testifying that deregulating the banking industry would be good for capital gains, as well as Main Street. “[The] banking industry is fundamentally different from what it was two decades ago, let alone in 1933," Rubin testified before the House Committee on Banking and Financial Services in May of 1995.

“[Glass-Steagall could] conceivably impede safety and soundness by limiting revenue diversification,” Rubin argued.

While the industry saw much deregulation over the years preceding these events, the Gramm-Leach-Biley Act of 1999, which eliminated Glass-Steagall, extended and ratified changes that had been enacted with previous legislation. Ultimately, the repeal of the New Deal era protection allowed commercial lenders like Rubin’s Citigroup to underwrite and trade instruments like mortgage backed securities along with collateralized debt and established structured investment vehicles (SIVs), which purchased these securities. In short, as the lines were blurred among investment banks, commercial banks and insurance companies, when one industry fell, others could too.

Robert Rubin is in part responsible for supporting the policies that pushed us to the brink of a great recession. When the subprime mortgage crisis hit, instability and collapse spread across numerous industries.

 



 

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