On the heels of last night’s big Republican wins in the midterm elections (control of the House, several more Senate seats, a whole bunch of governorships and state legislatures), there is a kind of reasoning going on this morning that follows this line: people didn’t like the health care bill, therefore they didn’t like big government, therefore the GOP victories should be read as a repudiation of big government and a vote for fewer programs and lower taxes. It would be foolish to deny this altogether, but more is going on.
In pushing for health care reform, President Obama was in some ways the general who fought the last war. He was the Democrat who was chasing the piece of social welfare legislation that had eluded all his predecessors. He won, but the victory cost him. One reason was the way he won. In leaving it to the Congress to construct a passable bill (learning from the Clintons‘ defeat), he leaned too far in the other direction and failed to sell, sell, sell his rationale for the bill. Then he had the bad luck to lose Ted Kennedy, which cost him his filibuster-proof majority, and then he had the bad luck to get the inert Martha Coakley, which cost him more time. 
When he finally won, the public was exhausted, and his enemies had succeeded in twisting the legislation into a big government boondoggle.
But the other reason this victory cost Obama was that it made him seem like he wasn’t focused on America’s real problems. In the midst of a fiscal crisis in which people were losing their jobs and losing their homes, he pushed a program full of benefits that would kick in down the road. Lots of people were put on the program, which is great for them but means nothing to anyone else except in a theoretical way. Kids can stay on the health plan until they’re 26, which is personally great for me, but which means nothing if your kids are under 20, because you’re still laboring under the illusion that they’re going to move out one day. People can’t be denied coverage for pre-existing conditions, which is great for people with conditions, but only a theoretical benefit if you don’t. So at a point when there was a real wolf at the door–a real, snarling, slavering wolf–Obama had his eyes fixed on the horizon, and was delivering benefits that many people only theoretically believe they will ever need.
He did this at the same time as he did the stimulus, which worked, but which didn’t work well enough because it wasn’t big enough, and which left him vulnerable to allegations of wasteful big government spending. But the problem wasn’t big government spending, or even inefficient government spending. The problem was ineffective government spending. The program did not solve the problem, it just succeeded in preventing the problem from getting worse. Again, that’s something you can feel good about only theoretically, which isn’t good enough when you’re feeling actual pain.
But the thing is, more spending probably would have made things better–based on the advice of my rabbi Paul Krugman, let’s even say it certainly would have made things better–but the problem we have had is that our society was flooded with phony wealth, with trillions of dollars of counterfeit wealth. With the baseless loans and pumped up credit default swap infused balance sheets, the society was awash for phony money, in just the same way as if a counterfeiter had introduced phony C-notes into circulation. And things can’t be healthy and won’t be healthy until the phony money is wrung out of the system. And two years into the crisis, we are wringing the 
phony money out with unemployment, with deflation, with foreclosures, with cutbacks, and with deferred dreams.
But the perpetrators of the crime have walked. The created this problem, and then the bankers got bailed out with public money. The bankers have escaped legal consequences, they have escaped monetary penalties, they have eluded real reform, and they generally dodged the moral obliquity that is the rightful reward of those who gluttony has ruined so many lives. There was never anything like the Pecora hearings in 1933 that exposed the Wall Street malefactors and methods behind the crash of 1929, and there ought to have been. Those hearings paved the way for the reforms and regulations that led to 75 years of stability, and we needed to have them again. And the American people know that. They know that. The price of the bankers’ misdeeds is being paid by a lot of 55 year old white guys who do not believe that they will ever have a good job again.
Where there is no justice, there is no peace.
Yesterday the Democrats paid the price for losing blue collar America completely, and becoming the party of the affluent intellectuals on the coasts, the party that loves the theoretical beauty of globalization and making money on Wall Street off of algorithms instead of spark plugs. The Democrats paid the price for George W. Bush‘s profligate spending on meaningless wars, poorly designed entitlements and unnecessary tax cuts; for the excesses of Fannie Mae and Freddie Mac (to which they were a party); for the Wall Street excesses (to which they were a party); for a NAFTA treaty that didn’t replace lost jobs with massive reinvestment in new technologies. Chris Matthews talked about the Republican sweep last night that took place “from Scranton to Oshkosh” –the area of the country where people made things, and he was right about that. But I don’t know if the low tax, low spending solutions favored by John Boehner and Marco Rubio are going to lead to the development of industries that will create jobs. Substantial government investment might be necessary, and I don’t know if the new gang will grok that..
I don’t think the American people voted last night for or against government policies or a governmental philosophy. I think they voted for class warfare, a war they have wanted since the crisis began in 2008. Obama, temperamentally, has not proven to be the guy who will wage one. I don’t think that the gang that was elected last night will do it, either; the Tea Party is too focused on the size of government, and the GOP establishment figures like Boehner are too invested tied up with special interests. There leaves space in the argument for a tea party of the left, for someone willing to take on big business and the ties of both political parties to big business, to fight for economic policies that benefit the middle class, and to expose, especially to expose the devious, self-enriching practices of the banks. But who that person is, and whether he/she will take on an incumbent president, is something I just don’t know.