Barack Obama approaches the Presidency at a critical moment in American history, facing simultaneous crises of war, the environment, health care, but most especially in the economy. If he is able to rise to the moment, he could join the ranks of a small handful of previous presidents who have been truly transformative, succeeding in fundamentally changing our economy, society, and democracy for the better.

But this will require imaginative and decisive action as Obama takes office, action bolder than he has promised during his campaign, and will be all the more difficult given the undertow of conventional wisdom in Washington and on Wall Street that resists fundamental change. Decades of regressive politics and political gridlock have left America in its most precarious situation since the onset of the Great Depression. The collapse of the housing bubble continues, as does the financial meltdown it triggered; a revival of 1970s style stagflation threatens; incomes continue to lag behind inflation; our household and international debts pile higher; disastrous climate change looms; energy and food prices continue their escalation; and the ranks of un- and under-insured Americans grow as the health insurance system unravels.

Facing their own great challenges, Abraham Lincoln, Franklin Roosevelt, and Lyndon Johnson rallied the American people to overcome deadlocked politics in order to achieve progressive transformations—abolishing slavery, transcending economic depression, and redeeming the promise of civil rights. In his own way, Ronald Reagan oversaw a grand shift in public attitudes and government direction. Each president used exceptional leadership to change the national mood, and then the national policy.

By appealing to what was most noble in the American spirit, these presidents energized movements for change, and in turn put pressure on themselves and on the Congress to move far beyond what was deemed conceivable. They generated accelerating momentum for far-reaching reforms that proved politically irresistible.

Solutions to our multiple challenges do exist, but they won’t be found in overly cautious or expedient quick fixes. With his exceptional skill at appealing to our better angels, Barack Obama could be the right leader at the right time to re-awaken America to the renewed promise of shared prosperity coupled with responsibility towards future generations and the international community with whom we share the Earth. Invoking America’s greatest leaders, Robert Kuttner explains how Obama must be a transformative president—or a failed one.

OBAMA'S CHALLENGE

Chelsea Green Publishing

Contents

one A Great President or a Failed One......................1two How Transformative Presidents Lead.....................35three Audacity Versus Undertow.............................74four Repairing a Damaged Economy...........................121five A Work in Progress....................................179Afterword and Acknowledgments...............................201Endnotes....................................................204Index.......................................................210About the Author............................................215

Chapter One

There is a tide in the affairs of men. Which, taken at the flood, leads on to fortune; Omitted, all the voyage of their life Is bound in shallows and in miseries. -Shakespeare, Julius Caesar

Barack Obama could be the first chief executive since Lyndon Johnson with the potential to be a transformative progressive president. By that I mean a president who profoundly alters American politics and the role of government in American life-one who uses his office to appeal to our best selves to change our economy, society, and democracy for the better. That achievement requires a rendezvous of a critical national moment with rare skills of leadership. There have been perhaps three such presidents since Lincoln.

Obama unmistakably possesses unusual gifts of character and leadership. Because of the deepening economic crisis, he will have to move imaginatively and decisively. He will need all of his inspirational and political skills, as well as ones he is still learning.

On January 20, the recession that he inherits from George W. Bush will become his. He will need to act quickly to prevent further deterioration in what is already the worst financial collapse since the Great Depression. The American economy could return to a path of recovery and shared prosperity-or rapidly spiral downward.

Voters will expect concrete improvements as well as loftier national aspirations. As a simple matter of politics, if the crisis deepens in 2009 and he fails to deliver relief, his support could well erode and he could lose a working legislative majority midway through his first term in the 2010 elections. Then the country would face economic crisis coupled with political stalemate.

Obama will be challenged both by hard economic realities and by the constraints of conventional wisdom. In principle, two core premises about the economy, which have governed the economic thinking of both major parties for three decades, have been demolished by the deepening crisis. The first is that markets can accurately price complex financial inventions, with no need for government involvement. The second is that private outlays are invariably superior to public ones.

Economic recovery will require the drastic revision of these premises, just as in 1933. The Federal Reserve and the Bush Administration have already engaged in massive bailouts of private financial institutions, seemingly blowing away the idea that markets don't need government. Yet we have a national case of cognitive dissonance, for the same outmoded ideological assumptions linger on. The administration now accepts emergency interventions countermanding the free market-but only in practice, not in theory.

Despite the severe economic situation, there is an undertow of stale thinking that discourages transformative policies. Even with increased Democratic majorities in both houses of Congress and a great deal of goodwill, progress will be far from automatic. The new president will need to inspire the American people to demand enactment of bolder measures than either the Congress or Obama himself currently thinks necessary or possible.

As Doris Kearns Goodwin, to whom this book is dedicated, observes, all of the great presidents used their leadership first to transform the public understanding of national challenges and then to break through impasses made up of congressional blockage, interest-group power, voter cynicism or passivity, and conventional wisdom. In different ways, Abraham Lincoln, Franklin Roosevelt, and Lyndon Johnson found allies, respectively, in the abolitionist movement, the labor movement, and the civil rights movement, as well as the press and the general public. Each president grew immensely in office. Each changed the national mood, then the direction of national policy.

They did not do so by being "post-partisan," or centrist, but by taking huge political risks on behalf of principles that the people came to deeply respect. Often they enlisted some members of the opposition party in their cause, thereby splitting the opposition-but not by splitting the difference. Yet they also functioned as great unifiers.

By appealing to what was most noble in the American spirit, these presidents energized movements for change, and thereby put pressure on themselves and on the Congress to move far beyond what was deemed conceivable. They generated accelerating momentum for drastic reform that proved politically irresistible. The abolition of slavery seemed beyond possibility in 1860, as did the vastly expanded federal role in the economy in 1932, and the full redemption of civil rights in 1963.

As Goodwin notes,

History suggests that unless a progressive president is able to mobilize widespread support for significant change in the country at large, it's not enough to have a congressional majority. For example, Bill Clinton had a Democratic majority when he failed to get health reform. When you look at the periods of social change, in each instance the president used leadership not only to get the public involved in understanding what the problems were, but to create a fervent desire to address those problems in a meaningful way.

To the list of transformational presidents we must add one conservative, Ronald Reagan. The achievements of Reagan did not make our economy or society a more attractive habitat for most people, but they nonetheless represented profound change. Americans who were often dubious about what Reagan was selling found themselves liking the man. He had a sunny optimism. After the depressing years of the 1970s, people were ready for "morning in America." Reagan was admired for his willingness to take risks on behalf of principles, however flawed the principles themselves. He had the gift of leadership, and behind Reagan were armies of strategists able to turn a personal triumph into a systematic ideological reversal. Reagan succeeded in transforming public assumptions from the general premise that government should help to the idea that government was likely to make matters worse. Thanks to very effective Republican campaign machinery, ideological zeal, and party unity, that presumption held for another two decades-until it was ultimately discredited by events.

Now it is time for the wheel to turn again. Barack Obama has both the national moment and the raw material to be a transformative president. A forty-six-year-old freshman senator, an African American no less, does not decide to pursue his party's nomination against an all-but-certain presumed nominee unless he has an unerring sense of timing, confidence, and a feel for the bold...