Post scandal, the issues are largely the same, the author writes. At least Weiner was a distraction

Most days last week, a prominent Democrat would get on TV or issue a statement calling for New York Rep. Anthony Weiner to step aside. Weiner was, they all said, too much of a distraction and was hurting the Democratic Party.

Former President Bill Clinton, it was rumored, was privately furious. House Minority Leader Nancy Pelosi issued a rare rebuke to a fellow Democrat. Reps. Allyson Schwartz and Debbie Wasserman Schultz , the Democratic National Committee chairwoman, were relentless. The only group, it seems, who wanted Weiner to stay were his constituents — a majority of whom supported him.


But it’s worth asking: how was Weiner a distraction? What is the Democratic agenda he was pulling voters away from?

Prior to the scandal, Washington’s chattering class was debating the debt ceiling, gas prices, instability in the financial markets, a collapsing housing sector and an economy balanced between a (mostly) jobless recovery and a renewed recession. Post scandal, the issues are largely the same — right down to the question of whether (or really when) Greece will default.

Sure, Democrats had spent a few weeks whacking the Washington “It” boy, Rep. Paul Ryan (R-Wis.), on his plan to give seniors coupons and complimentary copies of P90X instead of medicine. But that issue isn’t going away. Or if it is, that’s because of the debt ceiling negotiations — in which Democrats and Republicans are expected to agree on Medicare cuts.

The simple fact is: There’s no governing agenda being debated. So Weiner wasn’t a distraction — more like an in-flight soft-core movie in between election jockeying by a bored political class.

For confirmation, let’s look at the economist Rebecca Blank, a candidate to replace Austan Goolsbee as the White House’s chief economic adviser. Blank is a “pragmatic progressive” economist, which apparently means someone who feels bad about the damage caused by the problems they aren’t trying to fix.

“Could this economy take off again?” Blank said recently in the National Journal, “The answer is absolutely yes. If you look at corporate profits, if you look at consumer balance sheets [improving] … gas prices are falling. I guess I understand the reason to say, ‘Let’s see if this economy can do it on its own.’”

On its own? Really? Tell this to the more than 9 percent currently unemployed.

The polling from Weiner’s constituents stands in stark contrast to the whining by the political class. In 2006, 2008 and 2010, incumbents had no answers for voters who wanted their problems solved. I remember watching Clinton give a speech in late 2010, stumping for candidates before the Democratic immolation. Say what you will about the absurdity of his alleged fury toward Weiner, the man can give a stump speech.

Yet, after a half-hour, I still couldn’t figure out just what Clinton’s reason was for supporting the Democrats. There was something about student loans, and how it was the responsible thing to vote for bailouts. The rest was fuzzy.

Just what would congressional Democrats deliver in 2010 if reelected? They couldn’t answer that question for voters. It looked like Democrats in 2009 and 2010 delivered foreclosures and unemployment — so it’s not surprising the public chose another path.

The subtext of 2010 was that Democrats had nothing to run on — no popular accomplishments, and no agenda for 2011. The GOP faced a similar problem in 2006 and 2008 — and they also met the voters’ wrath. Having no agenda when voters face real problems is a bad omen for incumbents.

In 2009-10, the situation didn’t lack for problems. The mortgage-foreclosure situation burdened consumers with demand-destroying debt; joblessness was leaving enormous labor resources unused, and there were clear infrastructure needs.

In early 2009, the administration had enormous leverage over how to restructure our financial credit arrangements and the political capital to deliver huge policy changes. Judicial modifications of mortgages in bankruptcy, a policy the administration rejected, could have dramatically reduced the housing market carnage. Work programs, for which economist Jared Bernstein just revealed the White House had no appetite, could have stopped the specter of long-term employment. They had the ability and the mandate — but, apparently, not the will.

Now, you can argue that 2009 was a difficult year, with a mess to clean up. Well, it’s now 18 months since significant job destruction from the Great Recession ended. What has the Obama administration done?

According to the Federal Reserve’s Flow of Funds, the first quarter of 2011 saw the destruction of roughly $270 billion more in homeowner equity. That’s wealth gone from consumers — money that can’t and won’t be spent. The health care bill’s main provisions don’t kick in until after 2012, and Dodd-Frank’s rule-making is still barely off the ground.

Though the 2012 presidential election cycle is likely to have different contours than the midterms, the administration faces the same questions. What are they considering doing about jobs? What have they delivered?

If Blank is any indication, the plan is hope.

But there are at least three basic ways the administration could shift this dynamic.

One, the solution most cited now, is to use the government’s control of Fannie Mae and Freddie Mac to spark a refinancing boom, adding dramatically to consumer purchasing power. These entities could change the net present value test to allow more loan modifications, write-down debt or simply refinance loans with high loan-to-value ratios.

If the administration pushed bank regulators to account for the value of mortgages and home equity lines of credit now on their books, the write-downs would make good commercial sense as well as helping the economy.

The second solution would be to use government power to create jobs. For one example, the administration could dub the Chinese government a currency manipulator and spark domestic manufacturing by shifting our terms of trade.

It’s not as if the government is powerless. Though creativity, boldness and wisdom might be required to find the appropriate tools, I’m sure that those who have found the legal authority to attack Libya without congressional authorization could tackle our domestic problems.

Third, the Obama administration could take legislation to create jobs — an infrastructure bank, or a Works Progress Administration — and use a barnstorming tour to pressure Congress to go along.

It’s not uncommon for presidents to use the bully pulpit to soften congressional opposition — Ronald Reagan did it regularly. President Barack Obama hasn’t done this, but there’s no reason his administration couldn’t.

The oddest characteristic of the Obama administration is how, after 2010, it retained its policies in the face of public repudiation so significant you’d have to go back to 1894 to see larger Democratic losses. Yet their only change was an extension of the Bush tax cuts.

People who run government should, at some level, want to govern. They should want to use the power of a democratic channel to solve the nation’s problems. In the past 10 years, seeking to govern boldly has been frowned upon — seen as naive or impossible.

The result has been political and financial chaos, marked by periods of placid inactivity. It looks like our political leaders could well be seeking this, even as the public needs solutions.

So what’s wrong with a little distraction?

Matt Stoller worked on Dodd-Frank and Federal Reserve transparency issues as a staffer for Rep. Alan Grayson (D-Fla.). He is currently a fellow at the Roosevelt Institute.

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