It was the death of hope by a thousand tiny technocratic “nudges.”
Welcome to The Decade From Hell, our look back at an arbitrary 10-year period that began with a great outpouring of hope and ended in a cavalcade of despair.
As 2009 ended, the editors of this magazine at the time took their measure of the first year of Barack Obama’s presidency and declared it, with some reservations, a modest success. “All of this might not exactly place him in the pantheon next to Franklin Roosevelt,” they said of his major domestic achievements (the stimulus package, primarily, as the Affordable Care Act had not yet been signed). “But it’s not a bad start, given all the constraints of the political system (and global order) in which he works.”
That was the broad consensus of American liberals at the time, ranging from nearly the most progressive to nearly the most neoliberal. Over the ensuing years, that consensus would crack and eventually shatter under the weight of one disappointment after another. The story of American politics over the past decade is that of a political party on the cusp of enduring power and world-historical social reform, and how these once imaginable outcomes were methodically squandered.
The bulk of that unsigned New Republic editorial in 2009 was dedicated to Obama’s foreign policy, specifically the question of whether he was waging enough war. The conclusion: He was. The editors praised “the escalation of the war in Afghanistan” as “the most consequential action of the first year of his presidency,” even though it
offended the base of his party and possibly injured his future political prospects. On strategic grounds, we believe he made the right choice.
But the thoroughness and logic of the process by which he arrived at this decision double our confidence in that choice. The is exactly the type of pragmatism and non-ideological policymaking that sentient humans have craved after the Bush years.
(Sure, escalate the endless wars—but for God’s sake, please do it non-ideologically.)
In December of this year, The Washington Post obtained thousands of pages of documents from a government oversight project called “Lessons Learned,” which included interviews with more than 600 people involved in the war in Afghanistan at some point over its 18-year history. An interview with a National Security Council official described, according to the Post, “constant pressure from the Obama White House and Pentagon to produce figures to show the troop surge of 2009 to 2011 was working, despite hard evidence to the contrary.” Nearly every piece of data used over the last decade to try to convince Americans that the war was going well, or even going according to any sort of coherent logic or reason, was phony or meaningless.
“I don’t want to be going to Walter Reed for another eight years,” Obama reportedly said in 2009, as he struggled with the decision to escalate the war. The president and his closest advisers were determined to avoid the mistakes of Vietnam. Since then, overwhelmed by billions in U.S. “aid,” the country has sunk into kleptocracy. Last year, according to the United Nations, was the single deadliest year of the war for Afghan civilians. Today, around 13,000 American service members remain in Afghanistan. The Trump administration is attempting to negotiate a peace with the Taliban that would leave it in charge of the country, just as it was prior to America’s invasion. The war in Afghanistan may finally end, but not before the close of this decade that began with that oh-so-carefully considered decision to escalate it.
The stimulus had been large (if not large enough), but with $288 billion of it dedicated to tax credits and incentives for individuals and businesses, it scarcely resembled socialism. Indeed, rather than giving Americans a greater hand in managing the economy, much of it was designed to be almost invisible. This was intentional. In the May 6, 2009, issue of The New Republic, Franklin Foer and Noam Scheiber described Obama’s “Nudge-ocracy,” a belief, inspired by behavioral economics, that the best way for the government to create good outcomes for the people was not through “heavy-handed market interventions” but via technocratic attempts to change the behavior of individuals and the incentives of market actors.
The problem with an unseen stimulus is that no one thinks it’s helping them. Obama provided tax relief for nearly every working American, but instead of sending citizens a check, as George W. Bush had done, his economists decided to structure it as a payroll tax cut, subtly increasing the size of everyone’s paycheck. The administration then intentionally did not advertise the fact that it had given nearly every working American a tax cut, in the hopes that people would be nudged into spending, rather than saving, that extra cash. Predictably, in 2010, one poll showed that only 12 percent of Americans believed they’d received a tax cut; 24 percent thought Obama had raised their taxes.
The flaw in this strategy was apparent to another author at this magazine. In late 2009, John B. Judis foresaw a presidency in serious political trouble, because Obama’s fortunes were tied not just to the state of the economy, or even economic trends, but to people’s perceptions of the state of the economy. Noting how Roosevelt “dramatized the New Deal’s contribution to the economy” by creating “colorful new agencies,” thereby “ensuring that Roosevelt was given credit for the rise in employment,” Judis called on Obama to “introduce programs that provide jobs and capture the public’s imagination.” He also suggested the president
turn a deaf ear to those who are calling for fiscal responsibility. He should keep pouring money into jobs and into the pockets of people who will spend until the unemployment rate begins going down and wages begin going up…. And, whatever he does to try to mend the economy, Obama should never stop loudly trumpeting his efforts—so that he is able to reap the credit when improvements occur.
Roosevelt liked to wrestle his enemies in public, and Team Obama preferred to be above it all.
What Judis didn’t consider, though, was that Obama didn’t want to do any of those things. The president, along with economists who worked for him such as Austan Goolsbee and Tim Geithner, all pointedly rejected comparisons to Roosevelt, based in part on a seemingly inaccurate understanding of the history of his first term but also seemingly based on aesthetics: Roosevelt liked to wrestle his enemies in public, and Team Obama preferred to be above it all. It’s hard to remember now how wise everyone made it sound that the president and his team intentionally avoided doing things they worried would be too popular, but there would not be another New Deal.
Indeed, instead of ostentatious acts of helping people, the administration almost preferred being seen standing athwart attempts to provide relief. A program that was supposed to help underwater homeowners turned down 70 percent of those applying for permanent loan modifications, even as over six million families lost their homes. The point of the program was never actually to help people stay in their homes, of course; it was to preserve the finance industry by spacing out foreclosures. In the end, it achieved its aim: The banks today are as profitable as ever, while more households are renting than in 50 years.
By far the most effective part of the Affordable Care Act, in terms of helping Americans get care, was simply expanding Medicaid. But what many Democrats and liberals were most excited about was the bill’s many experimental and technocratic attempts to “bend the cost curve”—reduce costs without price controls—and “improve quality,” mainly by encouraging insurers, with incentives, to strive for outcomes that market forces alone weren’t incentivizing them to aim for. The signature example of this may be the “Cadillac tax,” which was designed to nudge companies to force employees onto cheaper insurance plans with greater cost sharing—a tax built on the belief that one of the primary drivers of health care cost inflation was people taking advantage of their too-generous employers and greedily consuming more health care than they needed. The tax never went into effect. The individual mandate, similarly designed to force the healthiest young invincibles to enter the market to bring down costs, is equally dead. And a decade into the ACA, it has become more apparent than ever that the best way to reduce America’s absurd health care costs would simply be a single-payer program.
That is not to say that the ACA did not end up having the significant long-term political ramifications its drafters promised it would. The primary non-Medicaid structure of the ACA, with its means-tested subsidies to purchase private insurance, had the predictable effect of convincing some of its beneficiaries that Obama and the Democratic Party had nothing to do with the government assistance they weren’t sure they were getting. Then, as costs rose and rose over the decade, that structure also had the predictable effect of making people who receive partially subsidized private care resentful of those poor enough to qualify for Medicaid.
Much of the decade we have just endured has shown how the Democratic addiction to dispensing benefits through the tax code in complicated, indirect ways—combined with the usual insufficiency of these benefits—was nearly perfectly designed to foment mass resentment of others, imagined or not, who might secretly be getting the Good Benefits. The political scientist Suzanne Mettler coined the term “the submerged state” in 2010 to refer to the jungle of hidden government “programs” designed not to call attention to themselves, often perpetuated not because they are still helping the neediest, but because they are lucrative to the finance, insurance, and/or real estate industries. One of her illustrations of the effect of the submerged state is a graph showing how many people who used particular government programs admitted so only after first telling researchers they’d received no assistance.