The fallout from the 2008 financial crisis has defined national politics ever since. If President Joe Biden wants his Build Back Better agenda to have a chance of success, argues journalist and political commentator David Sirota in his new podcast, “Meltdown,” he’ll have to take the lessons of the last 12 years seriously.

[Intro music.]

Ryan Grim: In 2008, Democrats swept into Washington winning the House, the Senate, and the White House on the back of anger at Republicans over the financial crisis that was threatening to bring down the global economy. It was an exclamation point at the end of a decades-long era of deregulation and neoliberalism.

A new era is still struggling to be born from the ashes of that old one. And it has been shaped in significant part by the Democratic response to that financial crisis once the party took power.

A new podcast by reporter David Sirota in collaboration with documentary filmmaker Alex Gibney takes a close look at the decisions made in those pivotal years, the ways in which the consequences linger and what we can learn from it. It’s called the meltdown and I highly recommend giving it a listen — but only after you’ve caught up on the back catalogue of Deconstructed, of course.

David Sirota was an aide to then-Congressman Bernie Sanders back in the 1990s before launching a career as an investigative journalist. He put that on pause to be a speechwriter for the 2020 Sanders presidential campaign, and is now editor of the news outlet he founded called The Daily Poster.

David, welcome to Deconstructed.

David Sirota: Thank you. Thanks for having me.

RG: So congratulations on the podcast — and some good news, it seems like it’s doing well.

DS: It is! It is!

RG: One of the most listened to podcasts right now on the interwebs.

DS: On the worldwide web. Yes. And it’s not an easy podcast to promote, because there’s some very powerful people and corporate-media hostility to it. But clearly, there’s a listener appetite for it.

RG: Yeah, it kind of fits in a place where there isn’t much media, that wants to hear the message.

DS: Right.

RG: The right-wing doesn’t want to hear it for a lot of obvious reasons; MSNBC, CNN, don’t really want to hear it much, either.

So I wanted to have you on this week, because it feels like we’re in — the moment is, how should I put this? It’s not as if we just came out of a great financial crisis like 2007-2008. We are emerging, hopefully, from a crisis. We do have Democratic control of the House, Senate, and the presidency with the public expecting that Democrats are going to deliver on something that they campaigned on. And your podcast is about the failure of the Democrats to do that last time.

And so, let’s start with Rick Santelli.

Newscaster: We want to get to our task force right now. Rick Santelli and Jason Roney of Sharmac Capital, are standing by at the CME Group in Chicago.

RG: The rant heard round the world.

Rick Santelli: The government is promoting bad behavior, because we certainly don’t want to put stimulus forth and give people a whopping $8 or $10 in their check and think that they ought to save it.

RG: What do you think he tapped into with that rant?

DS: Well, look, I think Rick Santelli managed to singularly encapsulate how the American right was able to turn a defense of Wall Street into a populist crusade and to turn help to working people into somehow unnecessary and a horrible government boondoggle and giveaway.

The Santelli rant, you’ll notice, he literally is calling people who are being thrown out of their homes losers.

RS: How about this president and the new administration? Why don’t you put up a website, to have people vote on the internet as a referendum to see if we really want to subsidize the losers’ mortgages?

DS: He is standing on the floor of a stock exchange or a trading floor with traders around him. They’re cheering him on.

Newscaster: [Cheers and applause.] They’re like putty in your hands.

RS: No they’re not, Joe! They are not putty in our hands. This is America. How many of you people want to pay for your neighbor’s mortgage that has an extra bathroom and can’t pay their bills? Raise their hand. [Boos.] President Obama, are you listening?

DS: And he is railing on the idea of the government providing direct help to homeowners and he’s calling the people who were being thrown out of their homes the losers. He’s saying we should help the people who carry the water rather than drink the water. I mean, it’s this whole amalgam of every right-wing trope. But what’s interesting is it’s a right-wing trope in the language of almost left-wing, New-Deal style populism. It’s anti-populism, presented as populism. And, you know, I think that what what the Democrats could have done to combat that is to first and foremost, if not ignore it, just not allow it to be taken seriously by them on a policy level, not try to appease that, and instead simply deliver as much direct help to people as possible.

But that’s not what the Democrats did. I mean, the Democrats came into office during and after the financial crisis. They did not redirect the bank bailout into lots of direct help for homeowners. They kept it as a top-down bailout, handing most of the money to a handful of financial institutions. They did not pass the promised bankruptcy reform to help keep people in their homes. They did not prosecute any Wall Street banker involved in the financial crisis. They did slap-on-the wrist settlements with some of these major financial institutions, and that was it. They did not break up the banks.

And let’s be clear: That didn’t happen to the Democrats. That’s what the Democrats used their power to do. Obama did not want to have the necessary battle with the conservative elements of his party and his own Wall Street-donor base. And so there wasn’t enough help delivered to regular people. And the Republicans took advantage of that.

RG: And there are echoes of that Santelli argument in the student loan debate.

DS: 100 percent.

RG: Because Santelli is saying: Well somebody built an extra bathroom, an extra bedroom, and now they can’t pay for it. Why should we be bailing them out? You hear people say: Well, somebody went to a private school and has this big debt, why should they be bailed out, but I shouldn’t?

What do you think is the response to that?

DS: The response to that is to not let it psych you out.

There was a situation that we unburied, some history from 2009-2010 that’s directly relevant to this. Throughout the first year or two of the Obama administration, there was this mantra from Santelli and the Republicans in Congress saying: The Democrats are profligately spending, they want to give out free stuff. Right? That was their mantra. Free stuff to people. And the Democrats internalized it. And what they ended up doing is they ended up trying to meet that, to appease that, to compromise with that, by specifically rescinding about $300-$350 billion of the TARP bailout, rescinding the Obama administration’s power to use that money to directly help people. And they went out and they touted themselves as great deficit hawks: Look at how fiscally responsible we are being right now! We hear what the Republicans are saying, and look at us! We’re taking the arguments seriously.

And so they literally rescinded the money — that they didn’t need a bill to pass — that was on the books. They could have taken that $300-$350 billion and actually used it to help people, but instead they decided to rescind it and tout themselves as deficit hawks.

And so that didn’t really work out. It wasn’t good economic policy. It wasn’t morally good. And it certainly wasn’t a politically good idea because they got shellacked in the election. And so I think when you update it to, let’s say, the student loan debate here: Yes, the Republicans are making all the arguments you just said. But directly helping millions of people is probably your best way to compete in a midterm election that’s going to be difficult anyway. To be able to go out and say to millions of people: Here is how we’ve helped you. You can see how we’ve helped you. And there are, you know, millions of student debtors across this country. If you go into the election with not very many things to say you did and to ask people: Hey, listen, do you see what we did for you? If you don’t have many things to point to, then you’re probably making your political problem worse. And, I would argue, you’re probably making your political problem far worse than if the major criticism of you is: You helped too many people too much.

RG: Right. And objectively speaking: you can look at the electoral outcomes from it. And everybody focuses on 2010 but what I think gets lost, and you get into this toward the end of your podcast, is 2014 and 2016. You know, the very slow economic recovery, created hostile conditions for Democrats in 2014 that then blew up when Ebola shows up in Texas, and and ISIS goes on the march across Iraq and Syria, so you have these exogenous circumstances, but that those were layered over top of this difficult financial economic recovery that wasn’t what it could have been. If they don’t lose the Senate in 2014, Merrick Garland is a Supreme Court justice — and who knows how 2016 goes if the economy is doing a little bit better?

I was glad in your podcast that you dove into the details of the HAMP program, because I think that that’s connected to this. Tell people what HAMP was?

DS: Sure, HAMP was the small piece of the government’s response that actually was, at least ostensibly, designed to directly help homeowners. But what it ended up doing, because it didn’t want to either provide direct government aid to homeowners, and it didn’t want to really challenge the power of the banks or make the banks take losses, it ended up being this Rube Goldberg machine where people could apply for a loan modification. And the government sort of tried to incentivize banks, and lenders, and mortgage processors to allow for some temporary modifications. But in many cases, the modifications were only temporary. And people ended up being thrown out of their homes.

We tell a story about one woman who this happened to and she tried to get help, it was this horrible process of being buried in paperwork. She couldn’t figure out who to talk to. She’s a very smart person who is trying to navigate this system. And she ultimately got some help that stretched out her situation for a few months. But ultimately, she got foreclosed on.

And what was really revealing about this was that it came out that some policymakers in the Obama administration acknowledged that that was actually the point. And this is what was so dark and horrible about this part of the reporting is that there was a scene in which Treasury Secretary Tim Geithner is being asked about this problem with the HAMP program: Why are we only stretching out the foreclosures? Why aren’t we providing direct aid to people? What are we doing here? And Tim Geithner, according to TARP Inspector General Neil Barofsky, turned to Elizabeth Warren, who was asking him about this — Elizabeth Warren wasn’t in the Senate, by the way, she was one of the bailout overseers — he turned to her and he said: What you don’t understand is that this program is designed to “foam the runway” for the banks. And that phrase, “foam the runway” — the idea being that they were trying to stretch out the foreclosures, and not necessarily halt them, so that the banks would have time to financially recover themselves.

So, in other words, human beings being thrown out of their homes, were the foam on the runway for the banks, which really tells you what you need to know about what the overall policy goal of the Obama administration was. They made a decision that they had to save Wall Street which, not incidentally, had given the most amount of money to Barack Obama’s campaign in the history of presidential politics. They made the decision that to save the economy, they had to first and foremost save Wall Street.

Now, maybe you could say it’s not corruption. Maybe you say it’s ideology. Maybe you just say it’s a principal disagreement or a principal belief. And there’s one phrase that that Geithner, I believe it was Geithner, who said: That’s how we saved the economy, but lost the country.

And what’s important to know is how historically anomalous that is from the Democratic Party itself. FDR, not that he was a perfect president, but he came in during an economic crisis. And there’s a lot of evidence — a lot of his quotes, a lot of the things he said — that he understood that if there was going to be a bailout or investments, it had to be bottom up. And he understood that it had to be bottom up for three reasons: It was morally right, people were starving; it was economically a better policy; and then he also made all sorts of statements, saying that this is the way to stop the rise of fascism — that if you do not help the working class in a crisis, then you are creating the conditions for authoritarians and fascists to take advantage of the desperation. And fascism was on the rise in the Great Depression here in the United States!

And so what 2009-2010 leading into the Trump-era suggests is that FDR was right, because the Democrats, the modern version of the Democrats, didn’t do what FDR did. And it ended up creating the conditions for Trump.

RG: I want to linger on this policy decision by the Obama Treasury Department for a moment because I think for some listeners, it might sound too crazy to even be believable that they actively chose to save Wall Street by sacrificing homeowners and by tricking homeowners. And you talk about the way that HAMP was designed, that it would pay the servicers a participation fee for becoming involved in this HAMP program. And so the servicers would reach out to homeowners or homeowners could connect with servicers and say: Look, we’re gonna temporarily modify your loan. If you make your temporary modified payments, these new payments that we’ve agreed to, that are more in line with what the property values are, than what your original mortgage was, if you make those payments, then from there, we can move you into a permanent, 30-year fixed loan at that rate, because you’ve shown you can pay this modified mortgage, we’re going to keep you in your house.

The companies would get a fee for pulling those people into the temporary program, but had no real incentive to move them from the temporary to the permanent. And so they would have people just continue in this temporary program forever, constantly dangling in front of them the prospect that they could get into the permanent one.

Then often, and I remember we did a lot of reporting at the time, often they would tell them: The way that you can get permanent relief is to default. You have to stop paying for a couple of months. And once you’ve defaulted, then you’re eligible for this program. And the homeowner is like: Really, you’re telling me to default? That sounds strange. That’s not intuitive at all. But OK, you’re the representative of the government here. I’ll do that. So then they do that for a couple of months, and then bang! They get foreclosed on.

DS: That’s right. That’s right.

And what we have to understand is that this was by design. And there’s other contextual information to understand — to know — that it was by design. Let’s remember that the Troubled Asset Relief Program, the name of the bailout, was sold as a program that was going to buy troubled assets, buy mortgages, so that the government would own the mortgages, and that would put the government in a position to write down those mortgages to keep people in their homes.

But that’s not what the Troubled Asset Relief Program ended up doing. Because it was written as a blank check. What policymakers — the Bush administration, and then the Obama administration — did was use their authority to essentially give the money to the banks, not to necessarily buy up mortgages, millions of mortgages, and write them down. The government did not reform the bankruptcy laws. This issue of cram down, which is really one of the most mind boggling ones of all to me — which is that, right now, in current bankruptcy law, a wealthy person can get bankruptcy protection for their yacht, for their second home, their investment properties, but written into the bankruptcy law, are provisions that say you cannot get bankruptcy protection for your primary residence. So bankruptcy judges were, during the crisis, prevented from if a homeowner goes into court and says: I can’t pay my mortgage, the bankruptcy judge cannot say to the bank: Hey, bank, I know this person owes you $200,000, but the house is only worth $150,000 now. The bankruptcy judge can’t say: OK, the homeowner only owes $150,000. That keeps them in the house. That means the bank has to take some losses, but the bank still gets some mortgage payments. The bankruptcy judge can’t do any of that. And Obama campaigned — very explicitly, in a populist way — saying the bankruptcy system was ridiculous, saying that cram down, allowing those be written down —

RG: Right. Cramming a mortgage down.

DS: That he would pass cram down.

And they got into Congress, and Obama’s administration essentially sided with the conservative Democrats who were uncomfortable with this. Why were they uncomfortable with it? Because of their alliance with Wall Street. So my point in mentioning all of that is that so you take TARP not buying mortgages, you take Congress and the Obama administration not doing cram down; then you add into it the HAMP program, which strung people along in order to essentially not force the banks to actually take losses.

And what you get is not something that was accidental. What you see is a deliberate set of policy choices: Again, to use millions of human beings as the foam on the runway for the banks, as opposed to using the bank’s massive wealth to foam the runway for the voters.

RG: And to add to that, Jeff Merkley, senator from Oregon, actually got an explicit commitment from the White House that they would support cram down in order for him to vote for the second tranche of the bailout — because if people forget, the bailout ended up being split between the Bush administration and the Obama administration, and in order to get the second tranche of it, they had to push it through the Senate again.

And Jeff Merkley said: I’m only doing this if you promise that you’re going to make a real commitment to homeowners.

And they made that promise. They told Merkley, and he has said this publicly. They said: OK, you got it! We’re going to do this. And then they just simply did not. They broke that promise.

DS: And, look, Austan Goolsbee from the Obama administration is on our podcast. And he basically said they wanted to do it, but the conservative Democrats in the Congress blocked it.

Now, there’s two things that are true there — or all things can be true! It is true that there were conservative Democrats in the Senate who were siding with Wall Street. That’s absolutely true. But it’s also true that the Obama administration refused to have a fight over that. I mean, they just refused. I think that’s a larger point here, that you can always offer up a rotating villain. Now, it’s Joe Manchin and Kyrsten Sinema. It’s been Joe Lieberman at times, sometimes it’s been a group of conservative Democrats, Ben Nelson, and the like. But the point is, is that yes, there’s always going to be a rotating villain. But if you’re the most powerful person in the world, the President, you have a lot of tools at your disposal to try to actually get things done.

So what always ends up happening is that the Democratic president and their defenders cite the rotating villain as why things can’t be done. But they never — they are rarely — I can’t think of an example — they are rarely willing to actually have a fight. They are rarely willing to actually use the leverage that they have to actually try to get the thing done.

I don’t subscribe to the so-called Green Lantern theory of the presidency, that the President can do whatever he wants at all times, and is completely unilaterally all powerful. But I also don’t think the President is a powerless figurehead who can’t do anything, and what we’ve seen Obama — and now, I think, we see in a lot of ways, Joe Biden — use this idea that members of my party are being obstructionist. And there’s just nothing we can do about it.

This conflict aversion stops feeling like a principled decision, or a decision of weakness. And after so many times, it starts to feel deliberate. Like: This is a ruse. This is a game. This is all rigged. This is the Washington Generals playing the Harlem Globetrotters.

And I think voters sense that. You keep telling me you’re going to do things, then you get into power and you tell me there’s whatever rotating villain of the day opposes what you promised you’re going to do, then you say you can’t do anything about this rotating villain, then I get screwed, and then you ask me for my vote again in the next election. And lots of voters are saying: No, you’re not getting our vote.

[Musical interlude.]

RG: And the 2012 election that Barack Obama ran is one that a lot of Democratic consultants point to as the only time since maybe FDR that a Democratic president ran an actual populist campaign when it came to that messaging. And I think they’re particularly proud of it because they can think back to their teenage selves when they still believed in something and think: Yes, we did this. They successfully painted Mitt Romney as this blood-sucking capitalist, which despite his cheery demeanor, like the things that Bain Capital did to make its money are just absolutely gruesome. And they successfully made that argument, and they ran on what they had done for the auto industry. People forget that, you know, bailing out the auto industry and saving those hundreds of thousands of jobs in Michigan and Wisconsin in particular probably played a major role in why those states went for Obama in 2012, but did not go for Hillary Clinton in 2016 — because I suspect a lot of those voters looked at Hillary Clinton and thought that she would have agreed with Romney that Detroit ought to have gone bankrupt.

And so it’s an interesting counter-example, because bailing out the auto industry is the type of thing — and Rahm Emanuel said at the time: “Fuck the UAW,” that was his sophisticated, strategic advice. Just let it all go under. He wanted to watch him burn.

If you believe in the Santelli-vision of politics, you would say: It’s not fair. Just because you work in the auto industry, your car got beaten by Japanese cars and by German cars, too bad. We, as the taxpayer, are not bailing you out.

DS: And there’s a discrepancy between how the Obama administration treated the auto industry versus how it treated Wall Street that I think is so revealing.

RG: Yes, exactly. And — go ahead, yeah.

DS: The Obama administration fired the top executives of GM. They went in there, they got tough with the auto industry. I mean, granted, they did bail them out. But there were a lot more strings attached, and a lot more of a tough-minded behavior by the government when it came to the auto industry. None of that happened with Wall Street: The Obama administration treated Wall Street with kid gloves. It rewarded them. There weren’t mass firings of top executives at the Wall Street banks that were getting taxpayer money.

And look, I think as it relates to the 2012 election, Obama has been called in some ways, politically speaking, electorally, one of the luckiest candidates ever. Think about it: his Senate run, the candidates that he faced in that 2004 general election, and in the primary, was a complete disaster, was a clown show, right?

RG: One guy, divorce papers come out. The Republican.

DS: And look, it’s not to begrudge him. Some politicians get lucky. They have good timing, and that’s just what politics is. It’s not to begrudge him for that. But I think 2012 was another example of that: If you’re running after not really delivering real help to working people, and you’ve delivered a huge amount of help to Wall Street, and you’re running for reelection, the best thing you can draw as an opponent is Gordon Gekko. And the Republican Party produced Gordon Gekko as its nominee, an absolute cartoon of a financial executive.

I mean, one of Mitt Romney’s primary opponents, I think it was Mike Huckabee, essentially said: He’s the guy who looks like the boss who laid you off.

RG: [Laughs.] Yes.

DS: And so, yes, Obama ran a decent 2012 campaign. But let’s be honest: The luck of the draw really served him well. And it’s kind of horrifying to imagine what that election would have looked like with Donald Trump as the nominee, or with a Ron DeSantis kind of person as the nominee — or, another example, Mike Huckabee as the nominee — I think that is a disastrous situation for Democrats four years earlier than the 2016 election.

RG: Right. And he ended up just squeaking by. Squeaking by isn’t exactly right. By the end of it he won fairly comfortably, but it was touch and go for a while.

DS: Yeah!

RG: Although, in today’s climate, Mitt Romney would be more likely to get the Democratic nomination —

DS: I know. I know.

RG: — and the Republican nomination.

You touched briefly on the AIG bonuses, but you don’t elaborate on them too much. So for people who are going to go listen to your podcast, and I encourage everybody to do so, let’s dive into those a little bit, too. Because that was a very pivotal moment. I’ve talked to Obama White House officials who say, like, that was the moment that we really lost the country, and we really lost the narrative.

It was also a moment where, to your point, they just didn’t fight.

DS: 100 percent. And it was a huge, in some ways, a tempest in a teapot, but also, in other ways, exemplary of the problem. Essentially, there’s this debate, who created the bailout? Was it Obama? Was it Bush? Was it both? It was both of them. They both created it. Obama came off the campaign trail in 2008 to put his imprimatur on the bailout. That was a big moment, the TARP bailout. So both parties are responsible for the bailout as a whole.

RG: Right. And the House voted it down —

DS: That’s right.

RG: — the first time around, with a lot of Congressional Black Caucus caucus opposition to it. And Obama worked at the CBC, and again, promised homeowner relief if they would come back around.

DS: That’s right. That’s right.

So, there are some folks in the Democratic establishment who will argue: Oh, that was Bush’s bailout, it wasn’t Obama’s. That’s nonsense. It was both parties’ bailout. So Obama gets into office. And remember, the bailout gave the executive branch almost unilateral authority to do whatever it wanted with the bailout. And what ended up happening was that Chris Dodd, the Senator from Connecticut, very close to Wall Street, made a big thing about inserting a provision into the stimulus bill, the-all-too-small stimulus bill, the spending bill designed to get the economy going again, he inserted this provision that purported to put limits on executive pay and compensation at financial institutions that had received government bailout money. Big thing about, oh, we’re cracking down on executive pay, taxpayer money shouldn’t be able to subsidize executive bonuses, and all that.

So that happens. That gets put into the stimulus bill. Then, a little while later, it comes out that AIG, which was one of the central financial institutions in the entire crisis, is using the bailout money it got in part to sponsor giant bonuses for its executives. The 30 seconds on AIG about what its role in the financial crisis was: AIG was offering so-called insurance on all of the big banks bets — absurd, risky bets on the mortgage market — and the AIG insurance policies were essentially bets unto themselves, and AIG was backing all this with insurance, knowing that it almost certainly did not have the money to pay the claims if and when the housing market went south. They were essentially betting the housing market wasn’t going to go south.

So AIG was a central player. I mean, it was absolutely — arguably — some people say the driver of the financial crisis. That without the insurance, the banks wouldn’t have bet so big. But because AIG was the insurer, it created a kind of moral hazard.

Anyway, AIG: This is big scandal, AIG is using part of the bailout money to pay excessive huge bonuses. So people start asking questions: How did this happen? I thought Chris Dodd said that he put this thing in the stimulus bill to prevent this from happening. And it came out that the Treasury Department essentially tweaked the language or requested Dodd tweak the language —

RG: Although, I have some reporting on this in my book, actually, they went to his staff. They went directly to Dodd’s staff without Dodd even knowing it. [Laughs.] And got it changed, and ended Dodd’s career.

DS: Right. To essentially grandfather in AIG’s existing contracts — to basically say, the argument was, the language said that AIG could honor its contracts to pay bonuses, essentially, to the people who had helped create the financial crisis.

And Chris Dodd was potentially running for reelection, it could have been a tough reelection. And he had taken money from AIG donors. And he basically said: Yeah, I put it in there at the request of the Obama administration.

And here’s why this is important: Because it was, I think, $170-some million. That’s a lot of money. It’s not a huge amount of money in terms of the federal budget. But here’s why it was important: It gave the Republicans and the right, a political bailout, that everyone from Glenn Beck to the Senate Republicans started pointing at this as everything from proof that Obama was incompetent to they’re not in control to they’re actually corrupt and using taxpayer money — public money to help the people who had created the financial crisis, some of which were their donors. So it allowed the Republicans just after they had gotten shellacked in the 2008 election, it allowed them to go on the offense and portrayed themselves as the defend-the-little-guy populists.

RG: Right. And it became Obama’s bailout. That was that moment, and this is what White House people will say too, that was the moment that we took ownership —

DS: Oh, and I forgot to say the icing on the cake. The icing on the cake was there were a number of rank-and-file House Democrats who I think were genuinely shocked. They said: I thought the stimulus I voted for, it’s a 1000-page bill, dealt with this. Ed Markey was ticked off. A lot of rank-and-file House Democrats felt duped. And so they proposed A 90 percent tax on these kinds of bonuses to try to claw back the money that was gonna go out the door. And Obama had a choice to make; he could have applauded that. Instead, he went on “60 Minutes” and gave this academic argument about how this was an overwrought response. And he essentially stomped out even the response to the scandal from his own party. In other words, he went to bat for Wall Street against his own party that was — at least elements of — were trying to fix the situation after it had become a scandal.

RG: Right. Because you could say: Alright, Geithner got away with sneaking one past the goalie by going directly to the staff in the finance committee and slipping that in, but they’re not powerless, to your point.

DS: Right. Exactly.

RG: There is a way to fight back and say: OK, guess what, we’re taxing all of those bonuses back.

The reason I wanted to bring up the auto bailout is to make the point that these targeted relief programs — two particular industries, two particular groups of people — do not necessarily have to be politically toxic. You don’t necessarily have to lose the country to save the economy. So now that here we are, deja vu, Democrats have spent months kind of watering down the build back better bill, the agenda that Biden is trying to push through Congress — just like in 2009 they lost Virginia, they lost to New Jersey, too, in 2009. And are starting to reckon with the reality of losing their house majorities. Have you seen Democrats learn lessons from 2009?

DS: I think there was a chance, and there was a signal that they have learned lessons. Chuck Schumer, at the very beginning of the Biden presidency, said something to the effect of: We’re not going to make the same mistake we made last time now.

RG: Went on Rachel Maddow.

DS: Yeah, yeah. And he was specifically saying: We’re not going to make the mistake of trying or fetishizing, bipartisanship. We’re just going to pass what needs to be passed at this moment in time. And we’re not going to make the mistake of trying to try to do whatever we can to get Republican support that we’re not going to get. And they passed the first rescue plan, which I think suggested that maybe they’ve actually figured this out, the rescue plan was much better than the first Obama stimulus; it provided direct help to lots of people, it didn’t try a kind of Rube Goldberg machine or a top down, sort of we’ll-give-it-to-the-banks and then it will trickle down to everyone else. They provided direct help. And, as far as I can tell, that was fairly popular.

Now, those programs, a lot of them, have expired. Now we’re at a situation where they could make a new investment, a new set of investments that certainly need to be made. And now it seems like they’ve forgotten the lesson. Months and months of headlines of Biden and the Democrats removing key parts of their spending plan, key parts that are the most popular, that’s what’s so mind-blowing.

I mean, one example is the drug-pricing provisions. Granted, some very, very, very watered down version of that has reportedly been added back into the bill. There’s some deal about it. It’s as stripped down as it can be. But the point is that polls show that allowing Medicare to negotiate lower prices for drugs is the single, or one of the single, most popular things that people know about the bill. And Democrats have spent months voting to block that provision from being added to the bill, generating headlines saying they’re going to strip it out.

It’s the same down the line: Paid leave, very popular; headlines about Democrats stripping out the paid leave programs; Medicare expansion, incredibly popular to cover dental, vision, and hearing — incredibly popular. Guess what? This is apparently, or at least part of it, being stripped out of the bill. The $15 minimum wage? That was stripped out of the rescue plan, it’s nowhere to be found.

The point is that if you keep promising voters you’re going to deliver things and then you actually hold them out there as: Hey, we’re gonna move to now deliver them now that we won office, and then you end up siding with your corporate donors, not having the fight with conservative members of your own party, and stripping them out, then come election time you run the risk of voters saying: Hey, you told me you were going to do all this stuff. You didn’t do all this stuff. And so why should I believe anything that you’re telling me?

So my question is: If all that stuff gets stripped out, what does the Democratic Party have to sell to voters in the upcoming midterms?

Now, I think part of the answer is one thing they have to sell is: Hey, we have to elect us to halt the assault on democracy, halt the January 6 insurrection, halt the assault on voting rights legislation in the states and at the federal level. And the problem is: If you don’t have a lot of economic policies, economic wins to sell to voters, you run the risk of having lots of voters say: Hey, listen, I just used all those much-vaunted democratic institutions to get you into power to deliver for me, and now you’re coming to me, you didn’t deliver, and you’re saying: Please elect me to protect the democratic institutions that just delivered me you and you didn’t deliver for the working class of this country.

That’s why I think when you hear Bernie Sanders suggest that there is a link between economic policy and the rise of authoritarianism in this country, it’s the same thing FDR was saying. It’s an axiom that if you do not deliver for the public, you increase the risk that the public does not necessarily feel its vote matters, and that the public does not care about your democracy arguments.

RG: There’s an irony in this dragged-out process in which one popular policy after another keeps getting shut down is that that was another insight of Schumer’s from very early in the year when he said, you know, another thing that we learned from 2009-2010 is that we can’t negotiate in public on something like the Affordable Care Act for 14 months, because people get sick of it and it generates nothing but these bad headlines, because the thing that the press is going to report, for good reason, is the thing that’s coming out, because that’s what’s new and that’s what’s changing.

DS: Exactly.

RG: And Republicans seem to get that. When they did the Trump tax cuts, they put that sucker on the floor within just a couple of weeks of concocting the idea. Because they knew very well that they didn’t want six months of news coverage of every single giveaway to billionaires that was working its way into this tax, what Democrats called the tax scam — and there were endless giveaways in this new multi-trillion-dollar tax cut for billionaires. They just wrote it, released it, made a few tweaks, voted on it, and we’re done.

What do you think it is about Democrats that they can’t move that quickly? And they can’t move as efficiently as Republicans? Because it’s not as if the tax code is necessarily simpler? It was still a monster of a piece of legislation.

DS: Oh sure. I think part of it is a lack of presidential leadership. Look, we saw this with the ACA, the Affordable Care Act. Obama essentially delegated responsibility for the details of the bill to Congress. Now, obviously, constitutionally, that’s what Congress does.

But the point is, is that Obama very clearly said: Listen, I’m going to wait for the Max Baucus-run Senate Finance Committee and the House Ways and Means Committee to come up with a bill; I’ll lay out a couple of principles, and they can duke it out, and they can weigh in every now and again.

That’s much different than what we saw with, for instance, Donald Trump and his tax cuts, or George Bush and those tax cuts. The White House had a plan, they had a specific set of plans, and they rammed it through Congress. Now, here’s got to be a middle ground there somewhere. But the point is that it’s the same thing that’s happened with Biden, and the current reconciliation bill. Biden, in a certain sense, where is he? What is he doing? Why hasn’t the White House been much more on the ball about a specific set of proposals, going to different states to campaign for it? None of that has happened.

And the one that kind of blows my mind, although I’m no longer surprised by this kind of thing: OK, you can argue, West Virginia, Biden lost it. He doesn’t have as much political capital in a state like that. He won Arizona. He has a lot of leverage to use in a place like Arizona, with somebody like Kyrsten Sinema. That leverage in my view, I don’t see any evidence that that’s even been used.

So again, it comes back to: If your entire attitude is a conflict aversion with your own party; if you’re trying to somehow appease your corporate donors, and tell voters you’re solving the problems created by your corporate donors, and you have a hands-off attitude about how to actually get an agenda passed, then you end up with what we have now — a morass that’s going on for weeks and weeks and months of capitulations and surrenders.

And, not surprisingly, that ends up not being all that popular. Joe Biden, by one estimate, is at the lowest approval rating of any president in modern history at this time in his presidency. You can try to blame all sorts of external forces for that. But I think usually the most simple explanation is the correct one. And the most simple explanation is: He and his White House have spent months generating headlines, surrendering on the most popular policies that people want.

RG: And it produced this extraordinary situation where, while Democrats are in the midst of finalizing what would be the most significant investment in making parenting less burdensome and less difficult in the history of the country, that they got wiped out by parents in an election. That takes some special skill.

DS: It does.

RG: If they passed this bill in June, and spent the summer and fall talking about it, they’d be on, I think, much better ground.

DS: It’s not a guarantee.

RG: Right. Sure.

DS: I think everyone should understand: It’s not a guarantee that if you pass things that help people, you will end up successfully making the election about how you helped people. The opposition will try to throw sand in the gears for those plans.

But the point is also true, which is to say that at least if you’ve directly helped people, you can go out and say: Hey, listen, I know they’re yelling at you about this culture war issue or that issue. But has your life improved? You see that check that’s coming in to help you be a parent. That’s what we do as a party. That, in a sense, delivering economically gives you, politically, the best chance to make politics about those economic issues and whether or not people’s lives are materially improving, which any political party that knows how to do anything should be able to maximize. But if you go into an election, and you don’t have a compelling argument that people’s lives improved, then you are just making it harder to win.

RG: And whether it works electorally or not the point of all this ought to be materially improving people’s lives.

DS: Yes. Oh, it’s like the Lyndon Johnson quote, right? The quote where he said, and I’ll butcher it here, but he essentially, at one point in his presidency, they were talking, I can’t remember if it was civil rights or Medicare, but he said: Well, what the hell is the presidency for?

Really, if you step back for a second, yes: Delivering to help people in an economic crisis is good politics, it should help prevent disastrous midterm elections — no guarantee, but it should help. But that should be the secondary point. The primary point is that people are hurting. And what we should all be focused on is making the government help people, help the public, and help society through that crisis. But I think so much of our politics — especially, by the way, especially liberal left-of-center politics — is focused mostly on playing pundit: Oh, will this help or hurt the next election? But I think in this situation, helping the country and the political argument, which is good electorally, those two things happen to be congruent.

And, in fact, I would argue that they are typically congruent. And what’s mind-blowing to me is that — and I say this after reporting, spending two years reporting this meltdown series — what’s mind blowing to me is that after the Virginia and New Jersey elections, there’s still this dialogue out there in the elite media that the Election results prove that Democrats should help people less in order to prepare for the midterm election. That Democrats need to pare back their agenda even more in order to ward off a disastrous midterm election. That doesn’t make any sense at all. What is the empirical evidence for that? What is the logical evidence for that? That the best way to go into a midterm election is to actually reduce the amount of things you’re doing?

That is exactly what the Obama administration did. And we haven’t even talked about just the icing on the cake. After the Obama administration didn’t deliver on the Wall Street reform, watered-down the Wall Street reform bill, the bailout was a top down bailout, it didn’t do cram down, it wasn’t prosecuting Wall Street executives. Right before the election in 2010 it pivoted to cutting Social Security, it pivoted to the Social Security Commission.

Now, look, I don’t like to make direct Nazi comparisons. You know, Godwin’s Law, you don’t do that. And I’m not making a direct comparison. But there is an echo from history here that is screaming at us. And we wrote about this, Alex Gibney, the executive producer of Meltdown and I did in Rolling Stone, which is, there was a study that recently came out that showed that in Weimar Germany, that the counties, the districts that had been hit hardest by the austerity policy, the policies of the centrist Weimar Government at the time, those were the specific counties that flipped the hardest to the Nazis.

The point is not to say that America is going to become a Nazi country. But the point is to say that when you don’t deliver for working people, and then you turn to a an austerity agenda, we’re actually going to belt-tighten, we’re going to cut the German version of Social Security, we’re gonna do all this in the name of being fiscally responsible, there’s one school of thought that would say: Well, that should prompt more voters to be more socialist, like, Hey, this is unacceptable. But, in fact, what we learned from history is it tends to create the conditions for even more right-wing policies. So the idea in advance of this midterm election that the Democrats need to see the Virginia and New Jersey results and actually reduce their reconciliation bill even more, Joe Manchin is starting to beat that drum, where does that make any sense at all? What is that based on? It’s insane.

RG: Well, the podcast is called Meltdown, and it explains how insane that is. It’s available on Audible. Audible is not, in fact, paying us for this. It was a pleasure to have you on our own free will. Thank you so much for joining us.

DS: Thank you. Thanks so much for having me.

[Credits music.]

RG: That was David Sirota and that’s our show.

Deconstructed as a production of First Look Media and The Intercept. Our producer is Zach Young. Laura Flynn is our supervising producer. The show was mixed by Brian Pugh. Our theme music was composed by Bart Warshaw. Betsy Reed is The Intercept’s Editor in Chief.

And I’m Ryan Grim, D.C. bureau chief of The Intercept. If you’d like to support our work, go to the — your donation, no matter what the amount, makes a real difference. If you haven’t already, please subscribe to the show, so you can hear it every week. And please do leave us a rating or review — it helps people find the show. If you want to give us feedback, email us at [email protected] Thanks so much.

See you next week.