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Obama’s Failure to Adequately Respond to the 2008 Crisis Still Haunts American Politics

Meltdown, a new podcast from David Sirota and Alex Gibney, makes a compelling case that the failures of 2008 and 2009 — when Barack Obama had a chance to enact the visions of reform that swept him into office — are key to understanding American politics today.

Former US president Barack Obama. (Matt A.J. / Flickr)

The question of causation in politics is almost always fraught. Complex events, after all, rarely if ever have a single cause, and in the case of a major national event like an economic collapse or an election, a wide range of factors and causes is invariably at play. In parsing these nuances, however, attempts to avoid reductionism can also become so narratively diffuse that they ignore the obvious and miss the forest for the trees. In some cases, the error is benign; in others, it’s simply convenient.

When it comes to the financial crisis of 2008–9, the story told by senior officials in the Barack Obama administration was quite literally that the corporate greed and malfeasance at the root of the collapse couldn’t be prosecuted because no one was actually responsible. “The buck still stops nowhere,” as attorney general Eric Holder put it in 2014: “Responsibility remains so diffuse, top executives so insulated, that any misconduct [can] be considered more a symptom of the institution’s culture than the result of the willful actions of any single individual.” This explanation certainly pleased the country’s leading bankers. But it has also proven mightily convenient for leading Democratic figures themselves, who had appropriately devised the perfect chin-stroking rationale for their own refusal to attack the crisis at its roots or put the interests of average people ahead of Goldman Sachs’s bottom line.

These themes run strongly throughout Meltdown, a new podcast series from investigative journalist David Sirota and documentary filmmaker Alex Gibney about the 2008–9 financial crisis and its aftermath that debuted this week. Narrated by Sirota, Meltdown’s raison d’être is more or less the inverse of the chin-stroking equivocation practiced by many of its subjects. In refreshing contrast, the series’ case is both compellingly coherent and unabashedly populist in tone and inspiration — taking up the election of Donald Trump and the ongoing crisis of American democracy as its animating questions and forcefully arguing for the centrality of its eponymous meltdown to political events today.

That meltdown, it turns out, isn’t just the economic crisis itself but also the institutional response to it — a response Sirota asserts is deeply interwoven with both the Democratic collapse of 2016 and the continued rise of the extreme right. “This is why,” he explains at the end of the series’ first episode:

. . . the meltdown of 2009 is this generation’s pivotal moment. Not the bank failures or the stock market crash in 2008. Those were obviously disasters. But the political disaster that came after. Our government stopped working for its citizens during a moment of profound crisis. We need to unbury this moment, to reexamine it. Because the failure of government then gave us the world we live in now.

In a sense, it’s quite remarkable that events both so recent and so cataclysmic need to be unburied at all. Bringing some 2.5 million home foreclosures between 2007 and 2009, the crisis liquidated working- and middle-class bank accounts, destroyed lives, and spread a plague of misery and despair throughout the US body politic. Financial institutions would be kept afloat with wads of federal government cash, while ordinary citizens caught in predatory mortgage schemes would be left to drown. Home foreclosure, in fact, became a burgeoning industry unto itself, as ad hoc courts worked hand in hand with big banks to eject people from their homes. (The morbid tale of one such court is recounted in Meltdown.)

Though at least some version of these events remains the official story of the crisis, it’s remarkable how marginal they have mostly been in accounts of what came after. For parts of the United States’ liberal intelligentsia, the election of Donald Trump was (and still is) an enigma: a kind of one-off rupture in space and time, unexplainable by the laws that typically govern the universe. One possible explanation of these omissions is that a more honest grappling with the financial crisis and its implications inevitably also involves a reckoning with the record of the Obama administration — a reckoning simply too uncomfortable for some to undertake.

The Status Quo Progressive

Some of Meltdown’s most compelling moments are fittingly those that document the appalling gulf between the administration’s public rhetoric and its actual conduct — from its quiet work against real reform to its abject refusal to confront powerful interests. Here, Sirota is able to draw on his own experience as a journalist and a political staffer, offering listeners a glimpse into the cesspool of lobbying and corporate influence peddling that so often shapes DC lawmaking. The appearances of Thomas Frank, Keeanga-Yamahtta Taylor, John Nichols, and Matt Taibbi are all highlights, but one of Meltdown’s most incredible moments takes the form of audio recorded by the narrator himself during a 2006 sit-down with none other than Barack Obama. In retrospect, what Obama told Sirota was a distinctly unsubtle clue about what was to come:

I am agnostic in terms of the models that solve these problems. . . . If the only way to solve a problem is structural, institutional change, then I will be for structural, institutional change. If I think we can achieve those same goals within the existing institutions, then I am going to try to do that, because I think it’s going to be easier to do and less disruptive and less costly and less painful.

The chasm separating Obama’s conservative instincts and his epochal oratory on the campaign trail has always been vital to understanding the country’s bleak direction of travel following the 2010 midterms. As Sirota puts it in one of his most memorable monologues:

If you were going to deliberately custom engineer a machine that takes hope and turns it into cynicism, you couldn’t design it more perfectly than this: a president saying cheery things on TV and in news conferences, while a government program hurts people, funnels them into them into a court system that’s a bear trap, all while siphoning a pile of money to bankers and finance types who lit the economy on fire.

After 2008, a popular liberal president elected with a sweeping mandate to reform the country’s institutions in the wake of a crisis opted to let banks swim, homeowners drown, and business continue as usual. In the wake of this political and economic disaster, sinister forces leveraged the ensuing despair to pull the country even further to the right, first creating an opening for the Tea Party and then for Donald Trump. Meltdown tells this story with both gusto and moral outrage, making an urgently needed case for the events of 2008–2016 to be plucked from their memory hole and reckoned with. Debuting in a week that has seen Democrats pare down their own agenda at the behest of corporate interests yet again, it’s a message that badly needs to be heard — and a reminder that, like fish, societies rot from the head down.