Beto 2020's Obama problem

Beto O'Rourke is a rising political star, despite losing his Texas Senate race to Ted Cruz. Given how conservative Texas is, it's logical enough to think O'Rourke did significantly better than the average Democrat would have done, and at the least he should run again against the state's senior Sen. John Cornyn (R) in 2020. But it's also leading to speculation that O'Rourke will run for president.

Former Obama adviser Dan Pfeiffer argues he would be a strong 2020 candidate, just like Barack Obama was in 2008. It's true that O'Rourke is a demonstrated mega-fundraiser and has inspired a ton of enthusiasm. But he has so far given no sign that he has reckoned with the ideological problems that wrecked Obama's presidency. If Beto 2020 is going to be a thing, he needs to think a lot harder about political economy.

Pfeiffer's article is notable for its complete lack of any policy discussion whatsoever. O'Rourke is portrayed simply as someone who could draw big crowds, raise big money, and win big. What he would do with power is left entirely in the background — assuming a sort of "we're all Democrats here" posture that of course he would do good things, just like Pfeiffer's former boss (ahem).

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It's not so simple. Take the two largest economic policy decisions of Obama's presidency: what to do about the recession and what to do with the collapsing financial system. These were the basis for the Recovery Act stimulus package and the various bank bailout programs respectively.

The stimulus did a ton of good, but it was less than half as big as it should have been. Obama economic adviser Christy Romer figured as much at the time, using nothing but simple arithmetic (supported by Paul Krugman in his columns). But she was shut down by her then-boss Larry Summers based solely on a guess that people would have sticker shock over even a $1.2 trillion stimulus, let alone the $1.8 trillion that Romer initially calculated.

The bank bailout, meanwhile, was a success only insofar as it achieved a monstrous objective. As I covered in detail here, the basic idea was to preserve the prior financial industry status quo by shoveling limitless public money into their rotten balance sheets and shifting the huge losses from the collapsing housing bubble from banks to homeowners. The easily-foreseeable result was a tidal wave of foreclosures, and that same deference to banks meant the administration largely looked the other way when banks committed industrial-scale document fraud to carry out those foreclosures.

These two decisions were morally hideous, in that they directly caused millions of people to suffer for no just reason. But they were also politically idiotic. The undersized stimulus meant unemployment was nearly 10 percent on Election Day 2010, which as even a cursory glance at history would tell you, means the ruling party gets thrown out. The pro-foreclosure agenda made the economic damage much worse, as millions of homeowners either had their credit wrecked through foreclosure, or were stuck paying down enormous underwater mortgages.

That is why the Democrats were blown out of the water in the 2010 midterms. It's by far the biggest reason why they lost the House for eight full years, the Senate in 2014, and about 1,000 state legislative seats over Obama's whole presidency. It was fundamental political incompetence.

O'Rourke is visibly imitating Obama's affect and speaking style, and even kind of looks like him. His mega-viral speech addressed the NFL national anthem protests with Obama-style energy and nuance, and he has adopted much of Obama's anti-partisanship rhetoric (though not to the same degree).

It's natural and understandable that ambitious politicos will attempt to cultivate an affect similar to the best politician in a generation. But more worryingly, O'Rourke also appears to have the same mixture of (at least semi-genuine) rhetoric on social issues plus banking policy cynicism. Obama at least passed a watered-down financial reform in addition to serving as a political heat shield for bankers, but O'Rourke voted to significantly weaken that earlier this year (though to be fair, he grudgingly voted against a later deregulation effort that was even worse). Did he have future financial sector speaking gigs at $400,000 a pop in the back of his mind when casting that vote? It would be hard not to!

So far Donald Trump's disastrous presidency is significantly helping the Democratic Party rebuild itself. It may be the case that nearly anyone would be able to run as a Democrat against such an unpopular failure in 2020 and win.

But it is a certainty there will be another financial crisis at some point — indeed, the recent deregulation package increases the likelihood in the near term. So far I see no evidence (the economy page on his campaign website is laughably thin) he has reckoned with the lessons of the Obama administration's disastrous failures on the previous crisis, and hence no reason he wouldn't repeat the same bad decisions. He better start cracking some books, or perhaps just run for Senate again. America can't afford a repeat of the 2008-10 bungling.