The Shell Game of the Economic Elite’s Hamilton Project

Beneath the marionette theater of American electoral and parliamentary democracy, policy is made by a “deep state” oligarchy of corporate and financial elites. The political actors atop the great quadrennial campaign carnivals speak in progressive-sounding terms of their commitment to equality, justice, peace, popular self-rule and the common good. Behind stage and screen, however, the contenders on both sides of the nation’s party duopoly—“two wings of the same bird of prey” (Upton Sinclair, 1904)—are captive to the nation’s unelected and interrelated dictatorships of money and empire. After candidates who masqueraded as champions of the people get into office, voters and pundits who believed the politicians’ election season rhetoric and imagery express surprise and disappointment at the citizenry’s betrayal by those in whom they placed hope for change. But before the election, these disillusioned citizens had failed to notice numerous clues to the candidates’ plutocratic, imperial and authoritarian essences. Take Barack Obama, who hopes to burnish his legacy by securing final congressional passage of the arch-global-corporatist Trans-Pacific Partnership (TPP). If achieved, this measure will be a fitting capstone to what Robert Reich calls “one of the most pro-business administrations in America history.” Obama has continued the cringing, Wall Street-directed corporatism of Bill Clinton, helping bring the United States to a new Gilded Age in which (as Bernie Sanders said repeatedly during his presidential campaign) the top 1/10th of the United States’ top 1 percent has nearly as much wealth as the nation’s bottom 90 percent—this while more than a fifth of the nation’s children (including nearly four of every 10 black children) are growing up beneath the federal government’s notoriously inadequate poverty level. Thanks in no small part to Obama’s chillingly fake-progressive presidency, fully 95 percent of new national income generated during his first term went to the nation’s top 0.1 percent. Corporate profits (primarily now financial sector profits) have risen to their greatest state in the U.S. economy since 1929. The Man Behind the Curtain Numerous liberals and progressives (including Sanders) have at various times expressed surprise and disappointment over Obama’s stealthy service to business rule as usual. But cautionary omens were widely available to those willing to look for them well before he ascended to the White House. I collected dozens of these unheeded alarms in my early 2008 book, “Barack Obama and the Future of American Politics.” One of the many early clues to the coming neoliberal nature of Obama’s presidency came when he affiliated himself from the start with The Hamilton Project (THP), a key neoliberal Washington, D.C., think tank. THP was founded with Goldman Sachs funding inside the venerable centrist and Democratic-leaning Brookings Institution in spring 2006. Its creator was no less august a figure in the country’s ruling class than Robert Rubin, the former Goldman Sachs CEO who served as Bill Clinton’s top senior economic policy adviser and treasury secretary. A legendary Democratic Party “kingmaker” who is often half-jokingly called “the wizard behind the curtain” of Democratic economic policy, Rubin is the veritable godfather of late 20th century and current U.S. neoliberalism. He is co-chair of “Wall Street’s Think Tank,” the Council on Foreign Relations (CFR), which formulates America’s grand imperial strategy in accord with the globalist “open door” ambitions of the nation’s leading finance-led multinational investment firms and corporations. Under Rubin’s influence, and in accord with the “Rubinomics” trilogy of balanced budgets, free trade and financial deregulation, Clinton joined with corporate Democrats and Republicans to: enact the great job-killing and anti-labor North American Free Trade Agreement, slash government spending, eliminate restrictions on interstate banking, repeal the 1933 Glass-Steagall Act (which had separated commercial from investment banking), and prevent the regulation of toxic “over-the-counter” financial derivatives with the so-called Commodity Futures Modernization Act. All this helped distribute wealth and power upward and prepare the ground for the financial collapse of 2008. Rubin left the Clinton administration in 1999, with Clinton hailing him as “the greatest Secretary of the Treasury since Alexander Hamilton.” Rubin exited to join Citigroup, the primary benefactor of the Glass-Steagall repeal, making him what American Banker calls “Exhibit A when progressives talk about the ‘revolving door’ between banks and Washington.” His formal return to the private sector hardly meant a full retreat from national politics and policy, however. Along with top positions at the CFR and Brookings, Rubin helped organize financial backing for Obama’s presidential campaign. As Greg Palast notes, “Rubin opened the doors to finance industry vaults for Obama. Extraordinarily for a Democrat, Obama in 2008 raised three times as much from bankers as his Republican opponent.” Rubin also served as a top informal Obama adviser and placed a number of his protégés in high-ranking positions in the Obama administration. Rubin’s Obama appointees included Timothy Geithner (Obama’s first treasury secretary), Peter Orszag (Obama’s first Office of Management and Budget director), and Larry Summers (first chief economic adviser). Following in his mentor’s revolving-door footsteps, Geithner has since moved on to the presidency of Warburg Pincus, a leading Wall Street equity firm. Orszag went on to become a Citigroup executive and a merger-and-acquisitions director at Lazard, an investment bank once used by the legendary junk-bond-wielding corporate raider Carl Icahn. Summers became director of the National Economic Council for President Obama and now is Charles W. Eliot professor and president emeritus at Harvard University. ‘A New Kind of Third-Way Neoliberalism’ THP’s post-ideological founding document (smart neoliberals have long claimed to have transcended ideology in the name of technocratic pragmatism) was crafted by Rubin and Orszag. Beneath standard boilerplate on its commitment to “broad-based economic growth,” “individual opportunity” and “an effective role for government in making needed investments,” THP has remained steadfastly devoted—in the words of the left political economist Jamie Peck–“to fiscal discipline and free trade, to market-oriented approaches, and to strategies for attacking inequality that are attached from new [social-democratic] entitlement commitments.” Rubin’s THP has spent the last decade advocating what leading international relations scholars Bastiaan van Apeldoorn and Nana de Graaf call “a new kind of Third Way neoliberalism (reviving that of Bill Clinton) in the context of an economy characterized by growing inequality.” “The latter,” Apeldoorn and de Graaff note, “worried a part of America’s (corporate) elite because of how it might harm social and political stability and because of the protectionist backlash it might create.” These ruling-class fears had some real basis in the wake of the populist and left-led Occupy Wall Street movement, the nominally socialist Sanders campaign, and the right-wing Donald Trump phenomenon. Since its formation, THP has been directed by a succession of elite neoliberal economists who have been groomed by Rubin and served in top federal policy positions. The list includes Orszag, Jason Furman (chair of Obama’s Council of Economic Advisers [CEA] since 2013), Doug Elmendorf (a former Clinton treasury staffer who headed the Congressional Budget Office from 2009 to 2015), and Michael Greenstone (chief economist for Obama’s CEA and currently the Milton Friedman professor of economics at the University of Chicago). Goldman Sachs personnel and veterans are prominent across THP’s Advisory Council. Pre-emptively Pacifying Wall Street As an Illinois U.S. senator, Obama was the keynote speaker at THP’s opening event in April 2006. Beginning with a special nod of thanks to “the wizard” (who sat two chairs to his right), Obama offered curious praise to Rubin, Orszag and other Clinton administration veterans in the room. He lauded them for having “taken on entrenched interests” to “put us on the pathway to a prosperity we are still enjoying.” Obama called the new body a “breath of fresh air,” a welcome nonpartisan and non-ideological agent of economic “modernization.” He hailed THP for seeking “21st century solutions” and a practical handle on “what actually works” in a national capital plagued by “tired ideologies” of right and left. It was a classic triangulating “Third Way” speech. Obama’s carefully clipped words functioned to “preemptively pacify Wall Street before declaring his presidential ambitions” (per Peck)—ambitions Obama had been harboring from the start of his U.S. Senate career — indeed, long before that. Obama’s deference to Rubin made perfect Machiavellian sense. As Harold Myerson noted in a Washington Post column on THP’s rollout, “Rubin has … become a seal of good housekeeping for Democratic candidates seeking money from Wall Street. When Bob Rubin talks, Democratic pols don’t just listen; they scramble for front-row seats and make a show of taking notes.” The junior senator from Illinois went on to set new presidential campaign fundraising records with help from Rubin and other Wall Street-connected kingmakers. ‘Warm-Hearted but Cool-Headed’ Over the last decade, THP has helped define “the philosophical core of Obamanomics” (Peck) by producing a small library of issue briefs and policy papers. These documents have matched Obama’s political persona by striving to be, in Orszag’s words, “warm-hearted but cool-headed.” There’s a useful translation for Orszag’s phrase: outwardly progressive and socially concerned but substantively neoliberal and Wall Street friendly. A consistent neoliberal formula holds across THP’s policy literature. Analysts tackle topics of concern to “warm-hearted” progressives—poverty, household expenditures, joblessness, automation, inequality, health care access, barriers to employment, declining social safety nets, over-incarceration, environmental hazards and more. These subjects are often examined with sophisticated empirical rigor but always in “cool-headed” (wealth- and power-serving) ways that stop short of any serious confrontation with underlying causes of unequal growth and regressive distribution rooted in the rule of the nation’s corporate and financial elite and the profit system that the reigning stratum sits atop. A typical THP brief from last June is titled “Where Does All the Money Go: Shifts in Household Spending Over the Past 30 Years” It shows that real consumption fell in lower-income households and that a rising share of those households’ expenditures shifted to meeting basic needs between 1984 and 2014. The study says nothing about the rising percentage of ordinary Americans’ budgets spent to meet the escalating costs of debt service payments to the nation’s leading financial institutions—to the creditor class headquartered on Wall Street. It does not mention how U.S. households’ outstanding debt rose from 83 percent of their disposable income in 1991 to a remarkable 130 percent on the eve of the Great Recession—this courtesy of the nation’s oversized financial sector. The authors conclude with milquetoast recommendations for the maintenance of minimal safety-net protections. Rock Solid Journalism

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