Letter from the Executive Director: Operating in Obama's Washington

When Treasury Secretary Timothy Geithner announced his proposal to bail out the banking sector a couple of weeks ago, people were disappointed with its content -- and shocked by what seemed like an obvious procedural fumble. First of all, taking the stage during the height of the Congressional tussle over the stimulus bill was a mysterious bit of timing. Second, the so-called “plan” was little more than a set of general guidelines -- basically a rehash of the original TARP bailout passed last fall under President Bush -- accompanied by a price tag that ran into the trillions. Critics blanched, Wall Street plunged, and many suspected a rookie mistake from the new White House.

Today, though, as I look at the trajectory of the subsequent debate, I am not so sure. I was in Washington, DC, when the bailout plan was announced. In the hours and days that followed, I heard both progressive economists and center-Right Republicans coming out in favor of the same idea: temporary nationalization of the banks. The Administration and Congressional Democrats demurred, holding to their principled desire for a healthy private financial sector. They never ruled out a temporary takeover by the federal government, though, and recently they, too, have begun to admit the likelihood, even the apparent inevitability, of that outcome.

What’s remarkable here is how the logic implicit in the Geithner proposal fundamentally shaped this debate. Half a dozen or so of the biggest banks in the United States are essentially bankrupt, as the coming “stress tests” are almost sure to confirm. In order to stay afloat, they need gigantic infusions of capital from the federal government. We made one payment last fall; the Geithner plan proposes an even larger second round. The force of the underlying logic, which drove the rest of the debate toward nationalization, kicks in around the issue of accountability. If the taxpayers are going to give all this money to the banks, then they have a right to expect those banks to be accountable to them for the funds’ expenditure. In this way, they are no different from bank shareholders... in fact, as the primary providers of the capital on which the banks are now surviving, taxpayers are the banks’ shareholders. If that’s so, then the government “deserves” an equity stake for the bailout funds -- thus, nationalization, or something very much like it.

The Obama Administration clearly recognized nationalization as an option, so to explain their actions in rolling out Geithner’s proposal we need to consider two possibilities. Either they really didn’t want nationalization to happen but are being driven to it by outside forces -- or, temporary nationalization of the banks was their intent from the start. I can’t say which for sure, but my gut tells me it’s the latter. If the President did want nationalization, the last thing he would have done is come right out and say it. Had he done so, he would have fed the “big government liberal” narrative that has dogged his party for years, and already was threatening to stymie the stimulus package. Rather than retching from uncertainty, Wall Street would have revolted in fear. But instead, Obama sent Wall Street’s man out to drop a smoke bomb in the middle of a crowded news cycle, and constructed the ensuing debate in such a way that everyone came to the same conclusion without being visibly led to it. The administration gets the outcome they desire, and avoids the “big government” label -- win-win.

Maybe that’s how and why things happened, maybe it’s not. In either case, what’s important is to recognize how this White House is consciously creating the space in which the rest of us maneuver.  We need to learn our lessons about how we can operate effectively in that space to achieve more progressive outcomes.

First, don’t assume that the opening gambit is the same as the desired goal. The President does seem to be avoiding traditional compromise scenarios in which he comes out hard to the Left then meets the opposition in the center. We all remember how damaging the conservative minority was to Clinton when he tried to triangulate his way to major policy overhauls like healthcare. Nevertheless, Obama’s consensus-building style won’t always permit him to lead from the front. Our voices will be a key force in bringing forward progressive solutions and the political will to make them happen. We would do well to learn how to express our progressive goals in terms of shared American values, as Obama does.

Second, Obama’s favorite progressive solutions may give us some strange bedfellows. In order to get anything done within the current balance of power, the President has to build coalitions that break down the polarized alignment of forces that has dominated Washington for a generation. Fealty to market logic led Republicans like Lindsey Graham to the same conclusion on the bank bailout that progressives embraced for (perhaps) different reasons. We should anticipate similarly realigning proposals on social issues, tax policy, and more -- and we should prepare to anchor new partnerships in the ground of our shared American values.

Finally, operating in Obama’s Washington requires strategic coordination. Everyone in DC is learning the President’s strategies and adapting their own to them. If progressives wish to have the biggest possible impact on the future of this country, we have to do more than this -- we have to coordinate with each other. We don’t have to move in lock-step, of course; we all have our roles to play. But we do have to put aside our turf issues and myopic foci. We must trust one another to work together to achieve all our goals, even though we can’t achieve them all at once.

Fortunately, coordination is starting to happen. While I was in DC, I attended the biweekly “Tuesday Group,” co-convened by Campaign for America’s Future and the Center for American Progress. Many of the key players of progressive politics were there, assessing the political terrain and sharing plans.

Coordination is also one of the signature aims of the Commonweal Institute. Our next Progressive Roundtable convening this August will bring together idea-generators and grassroots activists to build more integrated processes for achieving policy change at the state and local levels. The Progressive Ideas Network, which is housed at the Institute, is uniting progressive think tanks and policy shops around a common agenda and providing a platform for collective actions. Our work, starting with Thinking Big, is getting noticed -- in fact, while I was at the Tuesday Group, I met the new White House liaison to progressive organizations. She thanked me when I handed her a copy of Thinking Big, and invited me to set up a meeting with her when I am back in DC this spring.

The work of bringing progressives together was never more urgent than it is today. We have an historic opportunity before us to elevate the common good to a central priority in our society. If we help our new leaders in Washington seize this moment, our grandchildren will teach future generations about this era, and the role that progressives like you and me played in making it happen. Thank you for taking this journey with us, and don’t stop in your fight to make the United States into the country you want those future Americans to inherit.

Onwards and upwards,

Barry Kendall, PhD
Executive Director

PS -- In the "Plus ça change..." file: While I was in Washington, DC, my political meetings and events made it very clear how much has changed. I was also on the East Coast to fundraise, and one thing seems still slow to change: the “issue silo” culture of our non-profit institutions and their funders. Though some foundations have recognized the importance of building a more unified movement, many others continue to structure their giving according to discrete issue categories.

This poses a serious challenge to our work at the Commonweal Institute, which cuts across many issues and constituencies to bring progressives together -- but you can help. Individual donations provide crucial general operating support for our research and our work as a convener, trainer, and network-builder within the progressive movement. Please give today -- and consider becoming a monthly donor. Your continued support makes our work possible. Thank you!