THE OBAMA administration is not even one year old, but already it has lost much of its luster. It has disappointed many of its liberal supporters and even led some to suggest that what we are witnessing is, in effect, the third term of a Bush administration.

At the beginning of August, liberal columnist Frank Rich posed the question “Is Obama Punking Us?” on the op-ed pages of the New York Times. Rich quoted an Obama voter in Virginia who had told theWashington Post a few days earlier, “Nothing’s changed for the common guy. I feel like I’ve been punked.” This voter was disgusted in particular by the billions of dollars poured into bailing out the banks while millions of ordinary Americans continue to face the threat of losing their homes. Obama, it seems, has taken care of Wall Street, while largely leaving the people on Main Street to fend for themselves.

As Rich noted, however, the souring of the mood amongst many of those who supported Obama in the 2008 election has a much broader focus than just the bank bailout (otherwise known as TARP—the Troubled Asset Relief Program). It is based, in Rich’s words, on “the sinking sensation that the American game is rigged—that, as the president typically put it a month after his inauguration, the system is in hock to ‘the interests of powerful lobbyists or the wealthiest few’ who have ‘run Washington far too long.’” More precisely, it is based on the “sinking sensation” that, despite his inspiring rhetoric and calls for change, Obama is not challenging those interests, but working hand-in-hand with them instead.

Take the fight around health care reform. Obama was elected on the promises of providing affordable health insurance for everyone in the country and putting a cap on runaway health care costs. The U.S. is the only developed country that does not provide its population with universal health coverage, with the result that over 46 million people in the country are uninsured. Yet despite this, spending on health care per capita is dramatically higher in this country than in Western Europe, Canada, Japan or Australia, while health outcomes, as measured by the World Health Organization, are dramatically lower. The explanation for this amazing discrepancy is that health care is a for-profit industry in the United States, while elsewhere it has long been treated as a government-guaranteed right. The extra spending in the U.S. goes to finance huge corporate bureaucracies, as well as the bloated profits of the health-care industrial complex, including insurance companies, private hospitals and the pharmaceutical industry.

Yet far from being willing to take on the big health corporations, Obama and the Democratic leadership in Congress have placated them at every turn, with the final legislation looking like it will be little more than the Private Health Insurance Protection Act. Dr. Andy Coates, a member of Physicians for a National Health Program, encapsulated what was wrong with Obama’s plan in a SocialistWorker.org interview:

The heart of the reform is a mandate that individuals purchase health insurance—to criminalize the uninsured. In exchange for accepting some new regulation, the insurance industry will get the government to coerce people into buying their product. Because working people don’t make enough money to buy the product, tax money will be used to subsidize the private insurance premiums. The Los Angeles Times called this “a bonanza” for the health insurance industry.

Even a small government-run health plan to compete with the private insurers—and thus opposed by them—looked unlikely, at the time of writing, to make it into the final package. To understand why, we only have to remember the maxim “follow the money.” In the first half of 2009, for instance, health industry groups gave nearly $1.8 million to 18 members of Congress on both sides of the aisle playing the key roles in health care reform, including Speaker of the House Nancy Pelosi and other Democratic leaders.

“In this maze of powerful moneyed interests,” Rich observed in the New York Times, “it’s not clear who any American in either party should or could root for.” And he continued:

The bipartisan nature of the beast can be encapsulated by the remarkable progress of Billy Tauzin, the former Louisiana congressman. Tauzin was a founding member of the Blue Dog Democrats in 1994. A year later, he bolted to the Republicans. Now he is chief of PhRMA, the biggest pharmaceutical trade group. In the 2008 campaign, Obama ran a television ad pillorying Tauzin for his role in preventing Medicare from negotiating for lower drug prices. [In August] The Los Angeles Times reported … that Tauzin, an active player in White House health care negotiations, had secured a behind-closed-doors flip-flop, enlisting the administration to push for continued protection of drug prices. Now we know why the president has ducked his campaign pledge to broadcast such negotiations on C-Span.

The continuation of business as usual, or nearly as usual, can be seen across the whole range of Obama’s economic policies. It was the financial crisis precipitated by the collapse of Lehmann Brothers in September 2008, and the subsequent decision by the Bush administration to step in to save AIG and a host of other financial institutions, that probably did more than anything else to ensure Obama’s election victory. As the U.S. and world economies teetered on the brink of a new depression, the whole ideology of neo-liberalism—with its hostility to government regulation and its blind faith in the proposition that the market always knows best—seemed bankrupt too.

But if the new administration ever intended to do anything serious to curb the casino mentality on Wall Street, it now seems to have squandered the opportunity. On the anniversary of Lehmann’s declaration of bankruptcy, Obama gave a speech on Wall Street that was regarded as so unimportant by industry insiders that the CEOs of all the top financial firms skipped it. Even the mild reforms he proposed (described by Clinton-era Labor Secretary Robert Reich as “milquetoast”) have little chance of being enacted by Congress. As theNew York Times reported, “banks still sell and trade unregulated derivatives, despite their role in last fall’s chaos. Radical changes like pay caps or restrictions on bank size face overwhelming resistance. Even minor changes, like requiring banks to disclose more about the derivatives they own, are far from certain.”

Another recent article in the Times disclosed that the Wall Street whiz kids are now planning to do for life insurance what they previously did for sub-prime mortgages:

The bankers plan to buy “life settlements,” life insurance policies that ill and elderly people sell for cash—$400,000 for a $1 million policy, say, depending on the life expectancy of the insured person. Then they plan to “securitize” these policies, in Wall Street jargon, by packaging hundreds or thousands together into bonds. They will then resell those bonds to investors, like big pension funds, who will receive the payouts when people with the insurance die.

Of course, if people exceed their life expectancy, investors will lose money. But why worry? The banks know that they are “too big to fail,” and that the government will bail them out if they run into trouble, encouraging even riskier behavior. “We’re hoping to get a herd stampeding after the first offering,” one insider told the Times.

Meanwhile, with unemployment still rising, the foreclosure crisis continues to get worse (by the middle of the year about a third of all mortgages were underwater) and the number of “non-performing” loans continues to grow, meaning that credit is still exceptionally tight on Main Street. According to Reich, “Small businesses still can’t get loans. Even credit-worthy borrowers are having a hard time getting new mortgages.” This is one reason why the U.S. may be facing a double-dip recession, with the second dip likely to hit towards the end of next year, just in time for the mid-term elections. But while the crisis has had a devastating impact on millions of working Americans, Wall Street compensation packages are heading back up to record levels. Goldman Sachs alone is planning to shovel out $11.4 billion in bonuses to its executives and traders, and the total for the nine biggest banks (which received a total of $175 billion in bailout money) is $32.6 billion.

The fact that neither the Democratically-dominated Congress nor the administration has done anything to reign in Wall Street excesses once again speaks volumes about the power of campaign contributions and Washington lobbyists. By mid-September, the financial sector had spent more than $200 million on lobbying efforts since the beginning of the year (to add to the $5 billion it spent on campaign contributions and lobbying in the previous decade).

But this is not just outside pressure on the White House. From the very start, as Rich points out, Obama “assemble[d] an old boys’ club of Robert Rubin protégés and Goldman-Citi alumni as the White House economic team, including a Treasury secretary, Timothy Geithner, who failed in his watchdog role at the New York Fed as Wall Street’s latest bubble first inflated and then burst.” The inclination of these insiders, many of whom helped shape the neoliberal policies of the Clinton administration in the 1990s, has been to put the whole house of cards back together again with as few changes as possible.

Obama himself has rarely missed an opportunity to broadcast his faith in the market, most recently at the G20 summit in Pittsburgh at the end of September. In response to protests by global justice activists outside the meeting, Obama told the media, “I fundamentally disagree with their view that the free market is the source of all ills,” adding that the summits goal was to “make sure that the market is working for ordinary people.” But the problem is that the market is not working for ordinary people, and nothing the G20 agreed on in Pittsburgh will do anything to change that.

In last month’s ISR, Michael Schwartz described Obama’s foreign policy as “liberal neoconservatism,” in which the “neoconservative ambition, to transform the political, social, and economic structures of Iraq and Afghanistan (and now Pakistan), remains intact.” But the methods have changed, with a much greater emphasis on civilian rather than military forms of intervention. Perhaps a similarly paradoxical label is the appropriate description of the administration’s economic policy: “Keynesian neoliberalism,” in which Keynesian policies of government deficit spending are used to reinvigorate an essentially unchanged neoliberal economic regime, where privatization and deregulation remain the order of the day.

Of course neoliberalism over the past 30 years was always dependent on large influxes of government money at crucial junctures, including the bailout of the Savings and Loan industry 20 years ago. But the present crisis has required government intervention at a much greater level, including the $600 billion for TARP and the nearly $800 billion stimulus package passed in February, not to mention an additional $60 billion or so to rescue GM and Chrysler. In the case of the bank bailout, as noted, there has been no serious attempt to regulate or reregulate the financial sector. In the case of the auto bailout, government-guaranteed loans are being used not to create jobs, but to encourage wage cuts, downsizing, and “lean production”—all hallmarks of the neoliberal model, albeit now packaged with a green spin from Obama. In the long run, or perhaps not so long run, this may result in the worst of both worlds—new speculative booms and busts and increased inequality on the one hand, combined with unsustainable levels of government debt on the other.

There was much talk when Obama was elected that he could be the new Franklin Delano Roosevelt, ushering in an era of progressive legislation and redistribution of wealth downwards. It’s important to remember, however, that FDR did not come into office with a radical program of social reform. He was pushed from below to introduce pro-union legislation, unemployment benefit, social security and other important changes, by militant and disruptive social movements. As the sociologist Frances Fox Piven has pointed out, “The Democratic platform of 1932 was not much different from that of 1924 or 1928. But the rise of protest movements forced the new president and the Democratic Congress to become bold reformers.” The movements were led by Communists, socialists and other radicals, who didn’t wait for change to come from above, but demanded it with direct action, mass demonstrations, and factory occupations. “A pro-union labor policy was far from Roosevelt’s mind when he took office in 1933. But by 1935, with strikes escalating and the election of 1936 approaching, he was ready to sign the National Labor Relations Act.”

The most salient difference between today and 1933 is that, as yet, Obama faces no significant independent progressive movement demanding real change and forcing him to the left. That is no reason for pessimism. The conditions certainly exist for such a movement to be built. But until it is, we will continue to get punked.