By MICHAEL POWELL
Published: January 7, 2011
BERKELEY, Calif. — So how would he grade President Obama’s economic policies, and the new team put in place this week?
Though Robert B. Reich, the former labor secretary, endorsed Mr. Obama and has traveled to the White House to provide economic counsel, he offers a smile that looks unmistakably pained.
“We have a remarkably anemic recovery; it’s paper-thin,” Mr. Reich says. “In the narrowest, tactical terms, in sheer dollars committed to programs, Obama’s done pretty well, and his favorability ratings are better than those of the Democratic Party.”
Then he sweeps his hands far apart in his sun-filled warren of an office at the University of California, Berkeley.
“If you widen the lens, the public is being sold a big lie — that our problems owe to unions and the size of government and not to fraud and deregulation and vast concentration of wealth. Obama’s failure is that he won’t challenge this Republican narrative, and give people a story that helps them connect the dots and understand where we’re going.”
Mr. Reich, 64, is one of several prominent liberal economists who despair of what they say is this president’s political caution, and his unwillingness to duel with an emboldened Republican Party.
Faced with a Republican majority in the House, Mr. Obama this week appointed Gene Sperling, a former adviser to President Bill Clinton, as director of his National Economic Council, and William M. Daley, a centrist politician turned banking executive, as his chief of staff. Mr. Daley was a member of the Third Way, a group that counsels deficit reduction, more tax cuts and perhaps trimming Social Security.
Mr. Reich is not pleased by the president’s message of late.
“By freezing federal salaries, by talking about deficits, by extending the Bush tax cuts, he’s legitimizing a Republican narrative,” Mr. Reich says.
“Why won’t he tell the alternative story? For three decades we’ve cut taxes on the wealthy while real wages stood still.”
Mr. Obama’s liberal economics critics include Nobel Prize winners, Paul R. Krugman, the Princeton professor and columnist for The New York Times, and Joseph E. Stiglitz, the Columbia professor who served as chairman of Mr. Clinton’s Council of Economic Advisors.
Simon Johnson, former chief economist at the International Monetary Fund and a professor at M.I.T., once advised liberals to stop blaming Mr. Obama’s advisers for pushing policies too friendly to Wall Street — the president makes those decisions.
Mr. Reich served as labor secretary for President Clinton, and in his latest book “Aftershock: The Next Economy and America’s Future” he applauds Mr. Obama for deft work in preventing the economy from toppling into a Depression.
But the president demanded too little of the bankers he saved, Mr. Reich says, and he conflated a rising stock market and soaring corporate profits with an improving economy.
The majority of Americans, who derive much of their wealth from their homes rather than the stock market, are falling far behind the top 1 percent, who took in 23 percent of the nation’s income in 2007. That inequality, he says, is at the heart of America’s malaise.
“Obama had a chance to reboot the bailout,” he says. “He could have said to the bankers, ‘If you want more, you’ve got to put a cap on salaries, you’ve got to agree to modify X number of mortgages.’ ”
Mr. Reich sees a parallel with his former boss, Mr. Clinton, and draws no comfort from the comparison. Confronted with a muscular Republican majority in the House in 1994, Mr. Clinton mastered triangulation, which is to say he sailed into a sea neither Republican nor Democratic. It was a strategic masterstroke, but he threw overboard some liberal founding stones.
“I found myself truly impressed by how quickly Clinton moved to the putative center,” says Mr. Reich, a touch archly.
Mr. Reich sees President Obama taking a similar tack. This argument drives the president and his advisers to distraction.
To survive in a Washington where Republicans and Democrats are on nearly permanent war footing with one another, the president’s advisers say, requires an agility little understood by those on the outside. They point to health care and financial reform, to extended unemployment benefits and to the stimulus bills (which liberal economists criticized as too small) that let city and state governments avoid tens of thousands of layoffs. They will put their accounting up against that of their critics.
(Congressional Republicans are split between those who have described Mr. Obama as a liberal, or a dangerous radical, or, more exotically, a Kenyan-style socialist).
Mr. Reich says he knows careful compromise is the daily bread of government. He emphasizes he is not a paleo-liberal.
He favors incentives rather than the lash of requirement when it comes to job creation. He pushes an industrial policy to make workers more competitive. And his view that trade is a beneficial balm leads him to a fairly benign view of China.
He also remains willing to have his heart broken by politicians. He worked in the Gerald Ford administration — as a young lawyer he worked for Robert Bork, now a conservative luminary — and for President Jimmy Carter.
A New Yorker in childhood, a Bostonian by academic residency for many years, he moved west to Berkeley five years ago, and that sunny clime seems to suit his disposition. His office, overlooking cypress trees and a courtyard, is jammed with books and posters of his political heroes, from Franklin Delano Roosevelt to an old Life magazine portrait of Adlai Stevenson.