David Coates

The Financial Meltdown and the Obama Response

(Chapter outline)



  1. Moving to alleviate the housing crisis
  2. Recapitalizing and regulating financial institutions
  3. Stimulating the economy, searching for jobs
  4. Working with America’s global partners to reactivate global economic growth


Disappointing Results



Employment and the Recession

Conservative Condemnation



Employment and the Recession

Liberal Frustration

…the Housing Crisis

The Banking Crisis

Employment and the Recession



The Obama proposal in January 2010 to freeze discretionary federal spending from 2011 was particularly resented by his liberal allies: resented for playing into the Republican song book (that all public spending is bad, all private spending is good) and resented for hamstringing him and them down the line, blocking the route to further stimulus bills if unemployment persisted. When a progressive president can go before the American people and say that because “families across the country are tightening their belts…the federal government should do the same,” the case for counter-cyclical public spending has been entirely given away! For progressive politics to flourish in this country, the Keynesian case needs to be reclaimed and widely understood, which is why the building of that understanding is such a key task for the chapters that follows.

It is not the only task however, for what progressive politics needs right now is more than some familiarity with the writings of John Maynard Keynes. What progressive politics needs right now – and what the Obama administration is not delivering – is a compelling overarching narrative  and a body of general arguments on which it (and we) can draw to deal in a consistent way with the daily detail of American politics. Conservatism in America is so effective on a day-to-day basis – conservatism has a consistent message to send and a standardized response to make to any progressive initiative – because it has such a narrative, one built around a general argument that asserts the socially desirable outcomes of unregulated markets. We all know that story. We hear it all the time. It is a story that links freedom to free markets, and ties both to the Republican Party through a canonization of Ronald Reagan. Progressives need an equivalent and superior counter-story, one that links freedom to managed markets and – if canonization is appropriate – reminds people of FDR and the New Deal. Debunking FDR and the New Deal is so vital to conservatives – their intellectuals do that debunking regularly – because they see the progressive potential of that alternative story. If conservatives can see it and fear it, then progressives should see it too, and take heart.

So here is our task: to build an effective progressive narrative again, and to build it on the basis of the case for regulated markets.

David Coates holds the Worrell Chair in Anglo-American Studies at Wake Forest University. He is the author of Answering Back: Liberal Responses to Conservative Arguments, New York: Continuum Books, 2010.

He writes here in a personal capacity.

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