MONDAY, AUGUST 1, 2011
naked capitalism
As the manufactured debt ceiling crisis provides an unflattering window into the reckless incompetence of pretty much all of our elected officials in DC, more and more readers have been calling for Elizabeth Warren to run for President.
The idea of punishing Obama by introducing a wild card into his stacked deck is enormously appealing. The assumption that he can abuse his everyman base as badly as he wants to because they won’t vote for someone further to the right (no matter how little further to the right that really is) after the bait and switch of his campaign is still seen as a viable strategy by most political commentators.
But discomfiting Obama isn’t a very good reason for Warren to consider throwing her hat into the ring. And as we’ve observed in past posts, the Harvard professor attracts a tremendous amount of projection. It would be hard for her, or anyone, to live up to the hopes vested in her.
We’ll take a dispassionate look at the notion of having Warren run for President. The bottom line is there is a sound case to be made for the idea, and it trumps having her run for the Senate. And if she is to go this route, she should primary Obama rather than run as a third party candidate.
What Could Warren Accomplish by Running for President?
The obvious defect of a Warren bid for the Presidency is that she won’t win. Obama is expected to raise $1 billion for his campaign, as his Republican opponent presumably will. Warren has been branded as a scourge of banks. Even though it should be common sense that selling exploding toasters is bad business, the fact that she talks repeatedly and persuasively about the need for rules to have markets work well makes her a threat to much of Corporate America. Note that their heated opposition to the idea of fair play reveals the importance of treating customers badly, looting the official coffers, or both to their business models.
So why should she bother? She has become a forceful, self appointed advocate for middle class American families. She has thrown her weight behind this objective since she worked on the Harvard Bankruptcy Project more than a decade ago (it served as the basis for her and her daughter’s book The Two Income Trap). Whether you agree with the wisdom of her choice or not, that was what motivated her to take the position as advisor to the Treasury and President and start up the Consumer Financial Protection Bureau and suffer an aggressive hazing in Congress and in the media by banking industry shills operating through the Republican party. So she is willing to take pain and less than certain bets to advance her goals (we thought she was never going to be head of the new agency, but the people who wanted her inside the tent pissing out no doubt overrepresented the odds she’d get the nod).
Her strength is that she is a Reagan-level Great Communicator. And unlike Obama, a patrician wannabe who sees Reagan as a role model, she taps into deeply rooted traditional American values, that of a just society. Obama, by contrast, exploited the intense frustration with eight years of misrule by Bush the Second, and his liberal posturing was merely a market positioning exercise, to further differentiate him from Brand Republican.
Her position, which sounds dogmatic leftie to those lacking historical perspective, would have been dead center circa the early to mid 1980s, a Javits/Rockefeller Republican or a pretty tame Democrat of that era. But she has arrived at her views not out of ideology but out of pragmatism and rock solid knowledge of the terrain. For instance, in The Two Income Trap, she identified a bidding war for homes in decent school districts, and secondarily, the shift of bank business models to target consumers they can get on a debt treadmill, as the drivers of middle class bankruptcy, which had risen to disconcertingly high levels as of 2003. Her main solutions were simple: more widely distributed aid to schools, so that parents would have more decent districts to choose from (basically increasing the supply of good public schools) and usury ceilings (set as a spread over funding costs), which would force banks to revert to older pricing/product schemes where all consumers paid for services, as opposed to non/infrequent borrowers being subsidized by the heavy users of credit.
So the logic of having her run would be to change the terms of discourse in this country. In case you have managed to miss it, ideas that might interfere with the perquisites of those at the top of the food chain and their hired hands are virtually banned from the mainstream media.
The onetime bastion of the what passes for the left in the US, the New York Times, has (relatively speaking) moved further to the right than the country as a whole (I date the change from its late 1990s decision to become a national newspaper; Michael Thomas argues it started earlier, when Pinch Sulzberger joined the board of the Met and “had to dine with people he should have been dining on”). While it is reliably pinko on domestic social issues like gay rights and abortion, it hews to the corporate Democratic party line on the real power issues in the US, namely finance and economics, and has at most only timidly questioned America’s appalling foreign policy and human rights stance.
As we’ve noted, the lack of strong voices for what used to be the middle in this country has become even more pronounced as well heeled anti-middle class operatives like the Peterson Foundation have successfully executed soft takeovers of supposedly liberal organizations like the Roosevelt Institute, and Obama has targeted and taken out progressive groups that refused to carry the Adminstration’s water.
Although it isn’t as obvious, Warren also stands for a second set of ideas, that of competence and accountability in government. Not only did she build a major organization in an impressively short period of time, but she understands the importance of what we call in the consulting world “deliverables”, that is, providing tangible evidence of progress. She got various government agencies and banks to agree on a simplified mortgage disclosure form, a “to do” on the banking officialdom’s list that had somehow been too complicated to get done until Warren took it on. And this isn’t just good for consumers, it will also lower costs to banks.
By contrast, not only did Obama make a spectacular set of campaign promises that he failed to honor, he is completely unapologetic about those lies. While there is, sadly, a certain amount of misrepresentation that is considered normal among politicians, Obama’s looks to have set a new standard.
Warren has been most effective operating outside traditional power structures (and let us stress being a professor specializing in bankruptcy is not a power position, even at Harvard Law School). She managed to persuade the Clinton Administration to reverse itself on the pro-bank bankruptcy bill that eventually did pass in 2005. The Consumer Financial Protection Bureau was her brainchild and as a de facto unpaid lobbyist operating as a one woman think tank, got in into Dodd Frank despite being considerably outmanned by the well greased financial services industry apparatus (there are now five financial services industry lobbyists for each Congressman).
By contrast, Warren has been less successful operating from the core of the system. Even by all accounts she did a very good job at the Congressional Oversight Panel, it was a role of very limited real power. What did it accomplish save proving that the Treasury broke promises regarding transparency and accountability and making Geithner squirm?
Similarly, even though she did everything she could to build a CFPB with a strong team and good internal procedures, as we’ve noted, bad leadership can destroy an organization in remarkably short order. It would not be hard for a negligent or ideologically hostile CFPB chief to undo what she created. The main outcome of her taking that position, ironically, may not be that she created a successful agency, but that she demonstrated considerable organizational and executive skills (setting up an organization, particularly a large one, is a vastly more daunting task than running one).
So the real point of a Warren run would be to give her an even bigger megaphone for broadcasting the fallen standing of the US middle class and what can and should be done about it. Australian economist John Quggin wrote in a recent post argues that, “The wealth that has accrued to those in the top 1 per cent of the US income distribution is so massive that any serious policy program must begin by clawing it back. ” He argued that an Obama primary challenge would be an important step in making that seem both possible and reasonable:
It seems to me that a good place to start would be a primary challenge to Obama…. It would be impossible for the media to ignore completely, and might get enough votes to shift the Overton window. Whether such a challenge could form the basis of a mass movement, I don’t really know, but it seems to be worth a try.
Warren’s status as an outsider, someone who is not part of the old boy network, is particularly important for primary voters (women are a big force in Democratic primaries) and in terms of her branding generally. And the fact that she has just been part of the Administration and would choose to challenge it frontally would add to media interest.
Primarying Obama trumps having Warren run as a third party candidate. Primaries get national coverage. Quixotic third party candidates by contrast have to buy media and she will never be in the Ross Perot/Michael Bloomberg spending league. And unsuccessful primary challenges can have a lasting impact. Even if you (presumably) loathe his ideas, Pat Buchanan’s failed presidential bids played a meaningful role in moving the Republican party further to the right.
How Does Running for President Compare to Her Other Options for Effecting Change?
Warren has spent the better part of the last two years in high pressure, high visibility roles in DC. She may quite reasonably prefer to return to some semblance of her prior life. Nevertheless, two things are clear. First, that if she does want to return to the political arena, running for President is a far better option for her than running for Senate. Second, she can advance her agenda without campaigning for office.
As we have discussed in earlier posts, having Warren run for Senate might be a nice idea for the Democratic party, but it certainly isn’t a very good idea for her. If you had any doubts, the spectacle of the last few weeks should serve as proof of the Senate as “America’s Most Ineffective Body“, in the words of Marcy Wheeler. As Matt Stoller points out, Martha Coakley should count herself lucky to have lost:
Had Coakley beaten Scott Brown, she wouldn’t have been able to resist the banks as AG. She would have been in the Senate, fruitlessly whining.
For Warren to go to the Senate is simply to hobble her. Congress is dominated by a pay to play system described by Tom Ferguson in a recent Financial Times comment:
…tired recitations of astronomical campaign finance spending totals miss the bigger picture. For a tidal wave of cash has structurally transformed Congress, sweeping away the old seniority system that governed leadership selection and committee assignments. In its place, the major political parties borrowed a practice from big box retailers like Walmart, Best Buy or Target.Uniquely among legislatures in the developed world, US congressional parties now post prices for key slots in the lawmaking process….The practice makes cash flow the basic determinant of the very structure of lawmaking. Instead of possibly buffering Congress from at least some outside forces, committees and leadership posts reflect the shape of political money. Outside investors and interest groups become decisive in resolving leadership struggles within the parties…The real rub is the way the system now centralises power in the hands of top congressional leaders….The leadership’s hold over the swelling coffers of the national party campaign committees, along with the huge fixed investments in polling, research, and media capabilities these committees maintain, provide them with the extra resources they need to cajole and threaten candidates to toe the party line.
In addition, freshman Senators are supposed to maintain a low profile and any member of Congress is expected to support a President that hails from his party most of the time. Not playing ball with the party apparatus means having pretty zero change of getting any support for your own initiatives. And it isn’t as if Warren is the only candidate the Democrats could field against Scott Brown. Both Martha Coakley and Rachel Maddow poll better.
If Warren were to decide against running for a national office, there are plenty of things she could do to keep pressing for a better deal for middle class families. One would be to see if she could get a television show or a regular guest feature that would focus on middle class finances and discus a mix of pragmatic and policy issues, ideally with it including ordinary people.
Another idea would be to form a shadow CFPB to keep the real one honest. Warren built the CFPB to have a strong research function, so it would have a firm grasp of the actual practices of financial services players and their impact on consumers. She could replicate a good bit of that at Harvard by forming a not for profit that would draw on students as the backbone of its research team. They could design web-based tools that would allow consumers to upload contracts, correspondence, and add notes and call logs. This would enable the investigators to look at examples of questionable bank behavior and they could engage in outreach to other consumer groups to determine whether these cases were outliers or were examples of broad-based conduct. Warren’s profile and her strong relationships with the media would enable her group to publicize any adverse findings and pressure (or at least embarrass) regulators, in particular the CFPB if it goes asleep at the switch.
Dangers of Projection
The reactions to Warren, both on the right and left, are becoming divorced from reality. She has assumed iconic status as a lone mediagenic figure in the officialdom who reliably speaks out for the average person, a Joan of Arc for the little guy. And she drives the right crazy because she is rock solid competent and plays their game better than they do. She sticks to simple, compelling soundbites and images without the benefit of Roger Ailes and Madison Avenue packaging, and she speaks to an even broader constituency, Americans done wrong by the banks, than they target. No wonder they want to burn her at the stake.
If anything, the efforts to sanctify Warren have grown. She is treated as the last, best hope of the tattered progressives, when it isn’t even clear how much she supports their agenda. She would presumably promote policies that would stem or reverse the concentration of income and wealth in the top 1%, but her view on other issues is unclear. What is her stand on our military commitments? On gay marriage? On immigration? On our broken health care system? On out of control college costs that result in most new graduates being debt slaves? On climate change? On China? She’s a formidable policy wonk and no doubt a quick study, but even smart people who step outside their areas of expertise can become hostage to bad orthodox thinking or its ugly cousin, leading edge conventional wisdom. And well advised or not, Warren may not be as liberal as her fans like to believe.
But even if she fails to be the Great Liberal Hope, she is an influential counterweight on the most pressing battleground, that of the rearchitecting of our political and economic structures to assure and extend rent extraction by the top 1% (indeed, the top 0.1%).
The other open question is whether she can be a successful candidate. Even though Warren has done remarkably well every time she has been thrown in the deep end of the pool, this is yet another new realm, one where a lot of battlefield judgments are required (like how to respond to swiftboating).
These are gambles a large number of Americans would like to see Warren take on their behalf. She said in March in a Huffington Post interview, “My first choice is a strong consumer agency…My second choice is no agency at all and plenty of blood and teeth left on the floor.”
Perhaps Warren has since come to realize that her pugnacious impulse was right. No consumer agency or any effort that threatens the banks and plutocrats can succeed unless the fundamental terms of political discourse in this country change. Warren may be able to give that effort the impetus it desperately needs.
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