Ezra Klein vs Facts on "Liberal Distrust" of Barack Obama

This morning, Ezra Klein of Washington Post penned a column for his Wonkblog that was severely lacking in wonkiness and showed off the political wet spots behind his ears. He talks about how Larry Summers "lost" his nomination to head the Fed - a nomination that was never made - because liberals writ-large don't trust President Obama on financial reform. Klein declares that Summers "really lost because he was a stand-in for Obama." Talk about admitting to having Obama Derangement Syndrome.

The problem with this argument is simple. The only serious "campaign" and "sales job" to sell Summers on the part of the White House existed in the egotistically outsized heads of beltway pundits like Ezra Klein. But it was that precise line of narrative that did Ezra Klein in. Let me explain.

Ezra argues that Summers' close association with President Obama's financial reform, and namely the distrust by liberals borne by Obama's refusal to back breaking up the banks resulted in the supposed doom of his non-existent nomination. To support his thesis, Klein presents this argument from a liberal economist at MIT:
“When there was an opportunity to strengthen financial regulation in 2009 and 2010, the administration was less than enthusiastic,” says Simon Johnson, an economist at the Massachusetts Institute of Technology who has been a strong advocate of tougher financial regulations. “They didn’t support the Brown-Kaufman amendment to break up the big banks. Larry Summers isn’t a fan of the Volcker rule. There was no interest in bringing back Glass-Steagall.”
Larry Summers may not have been a fan of the Volcker rule, but you know who is? Barack Obama. President Obama stuck by the Volcker rule even when its prospects seemed bleak in Congress, and eventually, it was the president's leadership that made it law. Ezra Klein should know about this; his own newspaper reported on it at the time.

So if Ezra Klein and Simon Johnson are right and Larry Summers opposed the Volcker rule, Ezra Klein is presenting us with evidence, in plain sight, that there were clear policy disagreements between Larry Summers and President Obama. But you see, Ezra Klein can't possibly admit that perhaps it was policy disagreements like this, and not "liberal wrath", that resulted in Summers not being nominated to head the Federal Reserve in the first place. That would ruin his house of cards of a narrative that liberals "beat" Obama.

But there is an even more stunning breakdown of Ezra Klein's house of cards within that same article. His central thesis is that liberals fundamentally disagree with the White House on Wall Street reform and President Obama's refusal to break up the banks and that's why they killed a nomination that was never alive. This basically means the liberal rage against the president for not fighting to re-institute Glass Steagall -the law that separated consumer and investment banks - which was repealed by Bill Clinton with vast majorities of Democrats in the House and Senate voting for such repeal.

But you see, the liberal favorite to head the Fed, Janet Yellen, is no fan of re-instituting Glass-Steagall either. In fact, she was part of the team that repealed it.
Yellen, the current front-runner for Fed chair, has never worked for Wall Street, but there’s little evidence that she shares liberals’ zeal for financial regulation. In 1997, she stood with the rest of the Bill Clinton administration in backing the repeal of Glass-Steagall. Nothing she has said since suggests she holds a vastly different outlook from her colleagues of that era.
In other words, Ezra Klein is arguing that liberals are mad at Barack Obama and Larry Summers for not re-instituting Glass Steagall while the liberal favorite to head the Fed is someone who was part of the team that repealed Glass Steagall in the first place. Wonderful. Tell us another fairy tale, Ezra.

I have been reading Ezra Klein's Wonkbook for a long time. But I have never seen him so easily debunk his own thesis within the same article that he proposes it. When all is said and done, Ezra Klein is suggesting that Larry Summers was rejected by liberals because they disagree with the president on financial reform, while summarily ignoring a pretty big financial reform policy disagreement between Obama and Summers (re: the Volcker rule). Even more extraordinarily, he's suggesting that liberals are mad at Obama for not breaking up the bank while their hero is somebody who backed the bank consolidations to begin with.

There are only two ways these arguments can make sense. One is that Ezra Klein thinks that his readers are too dumb to notice the glaring inconsistencies between his thesis and the facts. The other is that he is - if inadvertently - admitting that certain liberals, including himself, are so infected by Obama Derangement Syndrome that they opposed Larry Summers just to spite Obama.

Either way, it's a pretty pathetic column.

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