A Look Under the Hood of an Obama Administration

It Could be a Long, Hard Struggle

by Joshua Frank

(November 07, Washington, Sri Lanka Guardian) 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.

Defense Secretary

While Obama’s choice for this important role is speculative, quite a few fingers are pointing to Richard Holbrooke.

After Gerald Ford's loss and Jimmy Carter's ascendance into the White House in 1976, Indonesia, which invaded East Timor and slaughtered 200,000 indigenous Timorese years earlier, requested additional arms to continue its brutal occupation, even though there was a supposed ban on arms trades to Suharto's government. It was Carter's appointee to the Department of State's Bureau of East Asian and Pacific Affairs, Richard Holbrooke, who authorized additional arms shipments to Indonesia during this supposed blockade. Many scholars have noted that this was the period when the Indonesian suppression of the Timorese reached genocidal levels.

During his testimony before Congress in February 1978, Benedict Anderson of Cornell University cited a report that proved there never was a United States arms ban, and that during the period of the alleged ban; the US initiated new offers of military weaponry to the Indonesians at Holbrooke’s request.

Over the years Holbrooke, who is philosophically aligned with Paul Wolfowitz and other neoconservatives, has worked vigorously to keep his bloody campaign silent. Holbrooke described the motivations behind his support of Indonesia's genocidal actions:

"The situation in East Timor is one of the number of very important concerns of the United States in Indonesia. Indonesia, with a population of 150 million people, is the fifth largest nation in the world, is a moderate member of the Non-Aligned Movement, is an important oil producer -- which plays a moderate role within OPEC -- and occupies a strategic position astride the sea lanes between the Pacific and Indian Oceans ... We highly value our cooperative relationship with Indonesia."

Other foreign policy advisors may also include the likes of Madeline Albright, the great supporter of Iraq sanctions, which killed hundreds of thousands of innocent people. Madeline Albright, when asked by Leslie Stahl of 60 Minutes about the deaths caused by U.N. sanctions, infamously condoned the deaths. “I think this is a very hard choice,” she said. “But the price--we think the price is worth it.”

Samantha Power, that great cheerleader for humanitarian intervention, also has Obama’s ear and may even entice him to put U.S. forces in Darfur.

“With very few exceptions, the Save Darfur campaign has drawn a single lesson from Rwanda: the problem was the US failure to intervene to stop the genocide. Rwanda is the guilt that America must expiate, and to do so it must be ready to intervene, for good and against evil, even globally. That lesson is inscribed at the heart of Samantha of Power’s book, A Problem from Hell: America and the Age of Genocide. But it is the wrong lesson,” writes author Mahmood Mamdani in the London Review of Books.

As Mamdani continues: “What the humanitarian intervention lobby fails to see is that the US did intervene in Rwanda, through a proxy … Instead of using its resources and influence to bring about a political solution to the civil war, and then strengthen it, the US signalled to one of the parties that it could pursue victory with impunity. This unilateralism was part of what led to the disaster, and that is the real lesson of Rwanda … Applied to Darfur and Sudan, it is sobering. It means recognising that Darfur is not yet another Rwanda. Nurturing hopes of an external military intervention among those in the insurgency who aspire to victory and reinforcing the fears of those in the counter-insurgency who see it as a prelude to defeat are precisely the ways to ensure that it becomes a Rwanda.”

The Next Step

While the election of Barack Obama is a blow to George W. Bush-Republicanism and a gain for racial equality in this country, it is in many ways only a symbolic victory. The future of the U.S.’s foreign and economic agenda will continue to be saturated with ideologies and individuals that are directly responsible for our current predicament, both in the Middle East and domestically.

Celebrating the end of the ugly Bush era is one thing. Celebrating the continuation of their policies with a different administration in the White House is quite another. With these prospective appointments, Obama seems to be moving backwards to Clintontime. This may be sufficient change for some, but it far from a progressive push toward social, economic, and environmental justice.

For significant change to happen, the kind that is needed in order to mend the wounds of the Bush years, we have to put down our Obama signs and force Congress and the new administration to end the wars in the Middle East, and push for regulating the financial industry while providing true universal health-care and economic safety-nets for all Americans.

Given the make up of his potential advisors, we're in for a long uphill battle. So let's drop our illusions and start organizing, beginning with a discussion of what “organizing” even means in today’s political climate.

Joshua Frank is co-editor of Dissident Voice and author of Left Out! How Liberals Helped Reelect George W. Bush (Common Courage Press, 2005), and along with Jeffrey St. Clair, the editor of the brand new book Red State Rebels: Tales of Grassroots Resistance in the Heartland, published by AK Press in July 2008. He can be reached at: brickburner@gmail.com.- Sri Lanka Guardian