The financial crisis of 2009 taught us some hard lessons. Did the Democrats learn them? | David Sirota and Alex Gibney
A first Democratic term with a majority in Congress and uncompromising Republican opposition. A country disillusioned by the corruption and mismanagement of a previous administration. A working class traumatized by an economic downturn. An establishment calling not for aggressiveness and daring, but for half-measures and compromise.
If this sounds familiar to you, it’s not just because it describes this current moment, but because it’s the experience we had 12 years ago – a political collapse that destroyed the remaining faith of many Americans in their government and ultimately gave birth to the presidency of Donald Trump.
This collapse shattered faith in hope and change, and led to Maga and chaos. And if Democrats keep making the same choices, we should expect the same results – or worse.
2009 wasn’t 2021, but history tends to rhyme. At the time, the contagion was not a virus, it was a financial panic caused by the collapse of what had been the most stable pillar of the American economy: the mortgage. But the houses were built on precarious foundations. After a wave of banking deregulation, the Wall Street giants had turned into the most recent hawkers of the old Florida swamp regime, attracting borrowers and pension funds to bet the savings of a lifetime on unsustainable housing prices and debt.
When enough homeowners couldn’t make their payments and house prices plummeted millions of people were foreclosed, pension systems faced enormous strains. losses on mortgage-related investments, 401k plans faced the stock market decline, and the banks risked insolvency.
In the midst of this financial pandemic, however, there was a glimmer of something better – Barack Obama, who had campaigned on an inspiring pledge to “bring a new era of accountability and accountability to Wall Street and Washington.”
This rhetoric at the RDF resulted in a landslide in the 2008 election, a huge Democratic majority in Congress, and high hopes that a new administration would fight the Great Recession with the same kind of robust New Deal that Franklin Roosevelt rolled out for. successfully fight the Great Depression.
But that did not happen.
Obama helped the Bush administration to forge the Troubled Asset Relief Program (Tarp), whose name seemed to promise landlord assistance, but instead provided most of its advantages to a handful of financial institutions. When he took office, Obama could have changed the way Tarp’s money was spent, but he and his administration continued to funnel the money to Wall Street. The relative sum that has flowed to help borrowers has mainly extended foreclosures to “clear the trail” for financial institutions, according to Obama’s Treasury Secretary Tim Geithner. would have noted.
Shortly after, the Wall Street funded obama administration downward revision its economic recovery plan, Reverse his promise to reform bankruptcy laws, refused to sue the bankers, abandoned legislation to limit the size of banks that are too large to fail, and authorized bail out the money to subsidize the sumptuous bonuses of the rulers.
Some lonely voices in Washington have tried to sound the alarm bells. Tarp Inspector General Neil Barofsky has warned the opaque bailout is being misused. Congressman Brad Miller, a Democrat from North Carolina, tried to get Obama to keep his promise to let judges rate mortgages. And Senators Carl Levin and Ted Kaufman, a longtime collaborator of Joe Biden, urged their party to sue and dismantle the banks.
They have been largely ignored – and Obama subsequently justified the denigration by insisting that doing anything more would have “required violence against social order, an uprooting of political and economic norms.”
But defending the banks and failing to bring material gain to a nation ravaged by corporate mischief has given the Tories a Politics bailout, allowing them to further tear apart the social fabric once sewn together by a belief in shared sacrifice.
Boosted by Glenn Beck’s moaning broadsides and Rick Santelli’s CNBC dog whistle rant Against the mortgage “losers”, the Republicans managed to divide the country and present themselves as populists – and bombed Democrats in the 2010 Tea Party elections.
A few years later, confident Democratic leaders predicted that they would be able to overcome the rage of the working class with the support of the richer suburbs. After all, the richest 10% saw their fortunes increase by 27% during Obama’s presidency.
But all other strata saw their incomes drop and countless neighborhoods were eviscerated by more than 6m seizures, condemning families to lose battles with the banking bureaucracy, government red tape and a court foreclosure machine.
There was the one from Detroit Sandra hines, who tearfully told a congressional committee that she was evicted from her home in the dead of winter after falling behind on her mortgage payments.
There was Florida oncology nurse Lisa Epstein, who right after giving birth to a baby girl faced foreclosure and then endured a Kafkaesque struggle to expose fraudulent mortgage practices – which resulted in a settlement that only earned him $ 600. .
These experiments, repeated to the point of nausea as Wall Street executives pumped up their stock portfolios, convinced many to view past promises of “hope and change” as a ruse. The outrage that followed helped Republicans complete their takeover with Trump, a billionaire charlatan unleashing racial animosity and describing himself as uniquely capable of “making America great.”
The common thread from the financial crisis to Democrats’ failure to help Trump’s rise is evident in a to study from the Center for American Progress. The Democratic think-tank found that “greater proportions of submarine owners were important characteristics” of more than a third of 206 counties won by Obama in 2012 who returned to Trump in 2016.
“The legacy of the financial crisis is Donald J Trump”, concluded Trump consigliere Steve Bannon.
For Democrats today, the conclusion is not just that Trump is a pathological liar, a racist, and an undemocratic threat who has exacerbated the problems he diagnosed. The lesson is more basic: When America votes for hope and change and is rather force-fed, the backlash can be swift – and can benefit conservative opportunists who will make matters worse.
A dozen years later, as Democrats seized power amid yet another national crisis, there were early signs this lesson had been learned: Senate Majority Leader Chuck Schumer noted at the start of Biden’s presidency that Democrats must pass “big, bold and strong” bills, and he added that “we will not repeat this mistake” to weaken the legislation. The child tax credit in Covid’s initial relief plan was a solid victory – it drastically reduced child poverty, and a recent survey shows less anti-Biden animosity among Trump voters who received it.
However, much of the direct aid provided for by this legislation has been blocked, to cut Where scheduled to expire – even though nearly one in five households lost all their savings during the pandemic. Worse yet, Biden and the Democrats have considered big cuts in their already scaled down package of initiatives for housing, poverty alleviation and the climate. They also reflected on provisions to reduce drug prices and considered adding means-tested and work demands which could make access to direct aid more difficult.
All in all, it feels like we’re back in 2009.
Billionaires are do better than ever, while more and more Americans are economically pulverized – and seething with rage. One year away from the midterm elections, the last polls show that Biden’s approval rating is plummeting, with particular erosion among Democratic ridings promised change, but appear to feel they are only becoming the same.
Once again, progressive voices sounding the alarm are drowned out by conservative Democrats, their corporate donors and pundits demanding abandonment. Meanwhile, Trump and his lesser Republicans are invading the country masquerading as populists, while a new generation of right-wing media merchants convert popular discontent into growing support for right-wing authoritarianism.
But let’s remember: the past doesn’t have to be a prelude. If Democrats are prepared to learn from recent history, they still have time to make different choices.
In Congress, Democratic lawmakers may realize that there is no “middle ground” compromise with Republicans or corporate greed. They can end the filibuster and ignore business lobbyists and donors trying to stop their legislative agenda, which may be the last chance to help workers and avert a climate cataclysm.
In the White House, Biden can break with Obama’s bipartisan fetishization. Rather, he may try to be a modern day Lyndon Johnson, forcing the recalcitrant members of his party to embrace genuine hope and change.
While none of this guarantees success, it would at least give the party a fighting chance to implement its agenda and materially improve people’s lives.
This simple goal is often obscured in the political miasma induced by social media. But history suggests that thinking big and giving tangible help to a nation in need is probably the only way to restore some confidence in the government, avoid an authoritarian takeover, and end the collapse of the government. the disillusion that threatens to incinerate our democracy.
Investigative journalist David Sirota and Oscar-winning documentary filmmaker Alex Gibney are executive producers of new podcast series Meltdown, which explores the aftermath of the financial crisis
This essay is published in conjunction with the launch of Meltdown. Find the podcast episodes here