Obama’s Chicago Tactics
The first quarter of the Obama administration is finally over. The key issue was not health care, not terrorism, not jobs. Nor was it the promise of “transformational change” that permeated the presidential campaign. The key issue was power—how the power of Washington’s political culture would respond to the power of the Chicago political culture imported by the Obama team.
When the media mentioned the administration’s “Chicago tactics” or when opponents complained that the White House staff behaved like “Chicago pols,” they were saying that the Obama team could be aggressive, tough, even mean.
That mild and broad critique missed the more important features of the Chicago way of doing politics: an approach that translated brilliantly in the presidential campaign and miserably after the inauguration. Here are those features—as I’ve observed them for 50 years, first as a young person growing up in a blue-collar Chicago neighborhood, then as an organizer in Chicago, New York, and elsewhere—and a look at how Washington has responded to their presence.
The Man on Five. The mayor’s office in Chicago is on the fifth floor of City Hall. The Man on Five is the hub, center, source of all good, generator of all punishment. This has nothing to do with charisma. The two mayors named Daley and most other machine mayors have had little personal pizzazz, no speaking skills, and a more transactional than transformational approach. Decade after decade, they have methodically consolidated and centralized power and influence. There is no counterweight—no House of Representatives, no Senate, no independent committee chairs. The City Council is a vaudeville show directed by the mayor. His power is unilateral, one-way, top-down. The key White House staff—Rahm Emanuel, David Axelrod, and Valerie Jarrett—inhaled this culture and carried it with them to Washington.
But their new reality includes an outnumbered opposition that will not cringe at a call from the White House, fellow Democrats who value self-preservation over sweeping legislation that may cost them votes, and middle-level bureaucrats who have seen administrations come and go. The Washington crowd knows how to play defense, if nothing else—how to block, obstruct, stymie. At this stage, Obama may be more like Eisenhower than any other American president. When Ike, the victorious general who had commanded millions of men, took office, outgoing President Truman said, “Poor Ike, he’ll say do this and do that; and nothing will happen.”
Control is God. The organizing principle in the Chicago political culture is control—control of who gets to the Man on Five and who doesn’t, control of how a bill or event burnishes the mayor’s myth or doesn’t, control of who runs for other offices and who doesn’t. The mortal sin of this culture is independence based in any value higher than loyalty to the Mayor.
The organizing principle of Washington is also control, but scores of power brokers exercise it, each with his or her own turf and perks, each resisting encroachment. Mutual deference is fundamental. This leads to a perfectly calibrated and balanced system of non-action or minimal action. Many people were puzzled when they heard wailing from the White House over the loss of the 60th Senate vote, but the administration’s despair was logical in the context of the Chicago political culture. In the Windy City, if you don’t have total control and the ability to dominate, you have no control and are check-mated. The art of using an overwhelming majority of 59 to 41 has not been practiced for generations in Chicago. Faced with anything other than uncontestable clout, the Chicagoans who went to Washington might as well have been asked to speak Greek.
Elections Mean Everything. The one thing that the political machine excels at is managing the electoral process from start to finish. Selecting and grooming candidates. Buying or scaring off reformers. Marshaling election lawyers to knock out other candidates’ petitions. Using only paid public employees to work (illegally, but with almost no chance of being caught and prosecuted because of the care taken to avoid detection) in campaigns and on election day. Filling vacancies produced by indictments and convictions of insiders with even tighter insiders. Nobody does it better. This is why the presidential campaign did so well in caucus states and less well in those with open elections: the machine thrives on narrow or limited voting situations. But it founders on the kind of fluid and shifting series of skirmishes that, say, the health care struggle became. The president’s decision to bring his Chicago team into the White House may, therefore, have been his worst. Axelrod, Jarrett, and even Emanuel are much more suited to electoral than legislative campaigns. Imagine if a different threesome—Richard Ravitch, Donna Shalala, and George Mitchell—had filled those positions this past year.
The way forward is not bigger government or more bureaucracies in Washington. It is government revenue directed back to local people and local projects.
Other People’s Money. The Chicago political culture is run by families or tribes—Daleys, Strogers, Madigans, Mells, Jacksons, and others—that have been on the public payroll for as long as 85 years. Most members of these tribes have never earned a dollar in the private or nonprofit sectors. They have grown accustomed to drawing their salaries from public agencies, sequestering and spending tax dollars, and using their public positions to grow even richer as lawyers and consultants to private interests who need public favors, ultimately drawing pay for their private efforts from the public coffers. Back in Illinois, leaders of both parties—Democrats in the northern part of the state, Republicans in the suburbs and central parts of the state—have grown up in this culture, reinforced it, and prospered because of it. They take other people’s money for granted the way most people take oxygen for granted. Suddenly, the Chicago cohort finds itself surrounded by an opposition party and moderates within their own party who come from states and regions where there is no such sense of entitlement.
Does all this add up to the end of this administration, as some have suggested? Not at all. I’d argue this could mean that the administration, having squandered the first quarter, is finally ready to play.
But first it would have to draft some new players, remove most of the Chicago crowd and shed many of the political habits developed in a machine political environment.
Then it would have to stop playing by the rules set by the permanent elite in Washington and approach the nation’s core concerns in a very different way.
The administration’s proposal to create a new federal agency to hold financial institutions accountable is an excellent example of not doing things differently. It plays right into the hands of the Washington political and bureaucratic establishment. Metro Industrial Areas Foundation (IAF)—the organization I work for—proposed a much simpler and more targeted solution: reestablish limits on interest rates—our goal: 10 percent—so that the extraordinary drain of wealth that still harms scores of millions of Americans could be stanched. Until the late 1970s, the United States capped interest rates at 9 percent in most circumstances, and banks were still profitable. Since then, the economy has operated without fiscal speed limits. Reestablishing those limits on credit cards, payday loans, and other predatory credit vehicles would do more for the majority of Americans than another new agency or several thousand pages of regulations. The appeal for this basic restraint has been heard even by titans of finance: the CEO of Citigroup surprised the financial industry by recently agreeing that a cap on interest rates, with certain conditions, would be possible.
The White House should take advantage of all of its current administrative powers to limit the widespread—and, according to many religious traditions, sinful—practice of usury. It could deposit federal funds only in financial institutions that agree to refrain from toxic practices such as payday lending, rapid tax refunds, and predatory home financing, and that operate with a reasonable limit on interest rates and fees. Government could reward responsible institutions with massive deposits and punish others with massive withdrawals. Metro IAF leaders recently met with New York Comptroller Thomas DiNapoli—who happens to be the sole trustee for approximately $130 billion of pension funds—and asked him to consider a strategy of this sort.
The same approach could be applied to the foreclosure issue. Those financial institutions that begin to renegotiate loans in earnest and reduce principal would benefit from billions of new federal, state, and local deposits. Those that don’t would not. Financial institutions would still be free to operate irresponsibly. But there would now be a price to pay for their irresponsibility.
The crisis in unemployment and underemployment can’t be solved with simple carrots and sticks, but equally requires that the administration repudiate both the Washington and Chicago styles. There are only three ways to create jobs: encourage business expansion, consumer spending, or government spending. The notion of putting two million unemployed Americans back to work is far removed from our imagination and discussion. In addition, the ability to put that many people to work—the institutional capacity—is disappearing from our culture. China and India mobilize workers at this level, not the United States. How to do this? Perhaps something like Race to the Top would work here. The Department of Education has essentially released a request for proposals for states to respond to. Each state that chooses to apply is graded based on criteria established by the Department. The winners will receive large grants. The losers will not.
This process could be used to stem unemployment. Each state would be asked to apply for a portion of the $60 billion needed to stimulate employment for as many as two million Americans (the equivalent of a subsidy of $30,000 per worker). Here are the criteria:
• Commitment to hire new people (so that the funds aren’t used to plug budget gaps and support the existing workforce, and so that unscrupulous employers do not use the effort to fire veteran workers and hire lower-cost and subsidized new employees).
• Large-scale public works included in the proposal (cleaning and beautifying the dreadful Amtrak corridor in the northeast; maintaining national and local parks; removing blight from the burned-out and shrunken cities of the Midwest; painting and upgrading school buildings everywhere).
• Reliance on capable institutions—not political machines—to organize and deploy workers. One institution that has proven effective in many states is the military. Young veterans with experience in leading and motivating others could play an important role here. Those returning from Iraq and Afghanistan to face minimal employment or unemployment would have an option of two years of continued, paid domestic service through this effort.
• Reinforcement of small business development (still a main generator of new jobs). This is a challenge requiring supple responses—just enough incentive to buttress true entrepreneurs, just enough judgment to ferret out the hustlers and opportunists who will see the absorption of subsidy as a business opportunity in and of itself.
The states, counties, organizations, and businesses that bring the most value to the effort—preexisting support, supervision, and productive workforce training—would be rewarded with greater funding.
This scale of expenditure would require legislative action, but it would be in the interests of every congressional delegation—left, right, and center—to take this option seriously. It would place local elected officials in the position of rejecting federal support that would both put constituents to work and address local infrastructure and other needs. Local residents could organize to identify and prioritize the projects and initiatives addressed by this effort. It would be up to members of local communities to determine the number of people who would be employed and types of projects undertaken. This is not bigger government or more bloated bureaucracies in Washington. It is government revenue directed back to local people and local projects. The ownership of this effort must be real, deep, and close to the ground.
As presently constituted, the White House cannot undertake these sorts of necessary and far-reaching initiatives. The president packed his staff with those who grew up in the unique political culture of Chicago and Cook County, one of the last remaining islands of machine domination in the nation. When the machine went to Washington, it did what it has always done and what worked back home: try to crush or co-opt opponents, project and promote the image of a mythic leader, tightly control the media, and rely on those who helped win the election. The disarray that the administration finds itself in after its first year is a direct result of the failure of this culture to function under new circumstances.
Different players, with a different approach, can tackle the lingering and deepening problems that plague huge numbers of Americans. These Americans have a mind to work and are waiting to support and lead effective action.
After all, power, properly understood, is still just that: the ability to act.
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About the Author
Michael Gecan, an organizer with Industrial Areas Foundation for over 25 years, is author of After America’s Midlife Crisis and Going Public.
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In general, attempts to prevent the accrual of debt by restricting interest seem like a poor idea. We forget that something is gained through the provision of high-interest loans: credit for high-risk borrowers. It's not as though all the borrower takes on is high-interest debt.
Without high-interest lending, less credit-worthy borrowers cannot obtain any credit at all, and to the degree that credit is a vehicle for allowing those without money to begin earning it, restricting their access is unhelpful.
If lenders are barred from providing credit at a high rate of interest, poor people will not be able to get credit. True, they will not have the opportunity to be irresponsible with credit, but nor will they have the opportunity to gain from it. This blind-spot has been a constant in debates since the current recession began, with opponents of finance repeatedly failing to realize that credit is a product and, as such, it must be paid for. But it is also a product worth having.
The solution here is not a restriction on interest rates, but the provision by nonprofit entities of low-interest or no-interest loans. If the government wishes to establish such an entity, it could do so, though I do think it would be more palatable if government were not involved (after all, what are Fanny Mae, Freddie Mac, etc., apart from failed government-sponsored attempts to provide loans to what are often unworthy borrowers?). I think the author would agree that such an entity should be locally owned and operated and responsive to local concerns. Perhaps such organizations could offer credit cards with low interest rates as well. These nonprofit lenders would offer loans to individuals who could not obtain credit from banks.
Finally, the suggestion that there is something morally unacceptable about "usury" is unfortunate. It is naked pandering to the high percentage of Americans who espouse religious beliefs, utterly contemptuous of the appropriately secular basis of lawmaking in a liberal society. Yes, this religious appeal differs from right-wing "family-values" nonsense in that it presents itself as a case made in addition to the secular purpose of ensuring popular well-being through poverty prevention. But it further normalizes the dangerous idea that we should look to the teachings of religious traditions to the form basis of political decisions.
Then again, your referencing of Fannie Mae and Freddie Mac indicates the bassackwardness inherent in your post. Those institutions lost enormous market share from 2003-2006 because they refused to back the subprime loans that many banks were handing out. Why? Fannie Mae and Freddie Mac thought that the banks' Standards and types of loan construction were far too risky. It wasn't until deep in the boom cycle that Fannie Mae responded to MARKET PRESSURES and lowered its standards in order to compete again. In this case, a government agency acted in a conservative, market-oriented manner, only adjusting its standards once its growth stagnated and declined significantly. Of course, by getting in at the end of the boom and overleveraging, they lost even more from subprime mortgages than many banks. But that wasn't because of irresponsible government standards - it was in spite of an attempt to adhere to "responsible standards".
Of course, personally, I believe that subsidizing "irresponsible homeowners" and paying off huge chunks of their mortgages would have been far more socially responsible, would have stabilized the housing market at a higher level, and would have been cheaper to boot.
Additionally, Gecan's point was that when we did have interest rates capped, we still had successful and profitable banks/lenders. I'd much prefer that states be allowed to borrow huge pools from the Fed (at the current 0%) and make those pools available directly to the public at 4 or 5% interest in (say) maximum $10k blocks per person. Forcing banks to either compete or lose volume is the only way to get the economy moving short of a WPA-style program. The supply is at record highs, so it is the demand side (of course) that needs to be kicked. Loans direct to low and middle-income consumers that are more attractive for banks than shuttling between LIBOR and treasuries should be the goal. Not for housing, but for other production needs.
Or a state bank and state-run public works program better yet. I'd go "full socialist" on this one.