Our Neoliberal President

Obama wants to privatize the Tennessee Valley Authority.

Melvyn Dubofsky

President Obama has repeatedly proposed to sell off one of the crowning achievements of the New Deal. (Photo by Pete Souza, official White House photographer/Wikimedia Commons.)

Pres­i­dent Obama’s 2015 bud­get request last month revived his abortive 2014 bud­get pro­pos­al to pri­va­tize the Ten­nessee Val­ley Author­i­ty (TVA). What are we to make of a Demo­c­ra­t­ic pres­i­dent repeat­ed­ly propos­ing to sell off the pub­licly financed and admin­is­tered rede­vel­op­ment pro­gram, wide­ly seen as one of the great suc­cess­es of the New Deal? This move tells us much about Obama.

Obama endorses higher minimum wages and offers rhetorical support of unions and collective bargaining, which cost not a penny of federal funds, but balks at a well-financed public works project that employs workers at good wages but might affect the federal budget.

But to under­stand what’s at stake, a look back at the TVA’s his­to­ry is in order. Cre­at­ed in 1933 as a project to revi­tal­ize one of the nation’s most pover­ty-rid­den and least devel­oped eco­nom­ic regions, TVA worked eco­nom­ic and social mag­ic. Sec­tions of sev­en south­ern states drained by the Ten­nessee Riv­er and its trib­u­taries — Alaba­ma, Geor­gia, Ken­tucky, Mis­sis­sip­pi, North Car­oli­na, Ten­nessee and Vir­ginia — obtained essen­tial infra­struc­ture for the first time, includ­ing cheap elec­tric­i­ty, clean water, sew­er sys­tems, paved roads and flush toi­lets in place of rudi­men­ta­ry out­hous­es. TVA enabled the region’s res­i­dents to heat and illu­mi­nate their homes bet­ter, to enjoy clean water at the turn of a tap, to farm their land more secure­ly and effi­cient­ly, and, in many cas­es, to find decent jobs in the indus­tries attract­ed by the region’s low-cost elec­tri­cal pow­er and improved means of trans­port. TVA proved a great tri­umph of Franklin D. Roosevelt’s New Deal, one of the few pro­grams enact­ed dur­ing the hun­dred days” that stood the test of time. Few New Deal ini­tia­tives did as much to improve the lives of the one-third of the nation that FDR famous­ly described as ill-housed, ill-clad, and ill-nour­ished.” So suc­cess­ful was the TVA in devel­op­ing the region’s econ­o­my that the Repub­li­can politi­cians who now dom­i­nate the region — and who usu­al­ly dis­miss gov­ern­ment ini­tia­tives as creep­ing social­ism” or waste­ful expen­di­tures of pub­lic funds—have been among the sharpest crit­ics of Obama’s over­tures to pri­va­tize the TVA.

The TVA’s suc­cess­es became so admired that suc­ces­sive pres­i­dents and numer­ous leg­is­la­tors sug­gest­ed sim­i­lar fed­er­al agen­cies to devel­op the Mis­souri and Colum­bia Riv­er val­leys. Pres­i­dent Lyn­don B. John­son even pro­posed a Mekong Riv­er Author­i­ty to unite the peo­ples of South­east Asia in a com­mon and peace­ful endeav­or. No polit­i­cal fig­ure or office­hold­er in the region served by the TVA dared to sug­gest its privatization.

Not that the TVA was with­out faults. The dams it built to tame the region’s rivers and gen­er­ate pow­er dis­placed thou­sands of fam­i­lies from land and homes that had been theirs for gen­er­a­tions. TVA had promised to cre­ate a par­tic­i­pa­to­ry democ­ra­cy of, by, and for the peo­ple of the region. Instead, it evolved into a gov­ern­men­tal agency oper­at­ed by pro­fes­sion­al man­agers and trained engi­neers who designed pro­grams for the region’s inhab­i­tants with­out their input. What­ev­er its faults, how­ev­er, TVA served a pop­u­la­tion that pri­vate enter­prise neglect­ed, demon­strat­ed that gov­ern­ment could pro­vide elec­tric­i­ty more cheap­ly than pri­vate util­i­ties and just as effi­cient­ly, that pub­lic author­i­ties had the abil­i­ty to con­trol wild, flood-prone rivers, and, per­haps most impor­tant­ly, that a gov­ern­ment agency could lift the curse of pover­ty from mil­lions of people.

Today most ref­er­ences to TVA link it to FDR and the New Deal. Yes, TVA was enact­ed as part of the first wave of New Deal reforms. What became TVA, how­ev­er, was the pet project not of Roo­sevelt and a Demo­c­ra­t­ic con­gres­sion­al major­i­ty but of a Repub­li­can sen­a­tor from Nebras­ka. Sen. George Nor­ris had been fight­ing for it since the end of World War I, when a Repub­li­can pres­i­dent and Repub­li­can con­gress decid­ed to rid the fed­er­al gov­ern­ment of the muni­tions-mak­ing facil­i­ties it had devel­oped at Mus­cle Shoals, Ala. Nor­ris and his fel­low Repub­li­can insur­gents and their Demo­c­ra­t­ic allies saw the muni­tions fac­to­ry as a mod­el of how the gov­ern­ment could invest in the region, and fought per­sis­tent­ly dur­ing the 1920s to use fed­er­al pow­er to serve the needs of the inhab­i­tants of the Ten­nessee Val­ley. Hard as it may be to believe today, Nor­ris and his band of Repub­li­can mav­er­icks were Tea Partiers” of a dif­fer­ent vari­ety, a fac­tion of the Grand Old Par­ty that believed in the use of fed­er­al pow­er and the pub­lic purse to improve the lives of ordi­nary cit­i­zens, uplift the least among us, and serve the 99% not the 1%. FDR and a Demo­c­ra­t­ic con­gres­sion­al major­i­ty brought Norris’s dream to fruition.

Over time, how­ev­er, the admin­is­tra­tors of TVA drift­ed from the agency’s orig­i­nal mis­sion of cre­at­ing a demo­c­ra­t­i­cal­ly admin­is­tered pub­lic agency. They still pro­vid­ed cheap elec­tri­cal pow­er to the region and kept the riv­er in check, but they also began to serve region­al busi­ness inter­ests more assid­u­ous­ly than ordi­nary cit­i­zens, to rely on coal as well as water to gen­er­ate pow­er, to wreak envi­ron­men­tal dam­age — spew­ing car­bon into the atmos­phere and foul­ing rivers with coal ash and oth­er waster prod­ucts — and to con­tract with non-union mines for the deliv­ery of cheap coal, has­ten­ing the decline of the Unit­ed Mine Work­ers. Such fail­ings like­ly played a part in Obama’s assump­tion that TVA might serve its region bet­ter were it pri­va­tized. The deci­sion was like­ly influ­enced by the fact that the TVA, whose mis­sion is not to cre­ate prof­it, spends more than it earns.

A more pro­gres­sive Demo­c­ra­t­ic pres­i­dent might have pro­posed instead that TVA remain a pub­lic agency but one that revert­ed to its orig­i­nal mis­sion by involv­ing res­i­dents more direct­ly in deci­sion-mak­ing. Such a reform might cost mon­ey and add to the fed­er­al deficit, but it would also restore the utopi­an vision of TVA’s founders. Obama’s pro­pos­als instead con­vince me that Paul Street’s two books about Oba­ma—Barack Oba­ma and the Future of Amer­i­can Pol­i­tics, cov­er­ing his pres­i­den­tial can­di­da­cy and The Empire’s New Clothes: Barack Oba­ma in the Real World of Pow­er, on his first-term as pres­i­dent — were pre­scient. Street (who, full dis­clo­sure, is my for­mer stu­dent) described Oba­ma as a can­di­date tied to Chicago’s finan­cial com­mu­ni­ty and in favor of neolib­er­al eco­nom­ic poli­cies. To Street, these neolib­er­al ten­den­cies were borne out in Pres­i­dent Obama’s ear­ly reliance on the advice of such peo­ple as Tim­o­thy Gei­th­n­er and oth­er acolytes of Gold­man Sachs to forge his administration’s ear­ly eco­nom­ic policies.

Obama’s six years in the White House also remind me of Jim­my Carter’s pres­i­den­cy. Like Carter, Oba­ma proves quite will­ing to pro­vide cost-free (in a bud­getary sense) car­rots to vital Demo­c­ra­t­ic con­stituen­cies on such issues as gay rights and women’s equal­i­ty. He endors­es high­er min­i­mum wages and offers rhetor­i­cal sup­port of unions and col­lec­tive bar­gain­ing, which cost not a pen­ny of fed­er­al funds, but balks at a well-financed pub­lic works project that employs work­ers at good wages but might affect the fed­er­al bud­get. He used his polit­i­cal cap­i­tal to cre­ate a cost­ly new health pro­gram for cit­i­zens, yet often defend­ed it in terms of the Afford­able Care Act’s pos­i­tive impact on the fed­er­al bud­get. Month after month, year after year, as the labor mar­ket remains slack and long-term unem­ploy­ment wors­ens, Oba­ma insists that cut­ting the fed­er­al deficit remains more vital than putting peo­ple back to work. His pro­pos­al that TVA be pri­va­tized fits well into a neolib­er­al frame­work and sat­is­fies Demo­c­ra­t­ic Par­ty cir­cles in the finan­cial world. As the nation’s first black pres­i­dent, Oba­ma may rep­re­sent a greater tri­umph for the dor­mant Demo­c­ra­t­ic Lead­er­ship Coun­cil — which moved the par­ty from New Deal pol­i­tics to neolib­er­al­ism — than its orig­i­nal stan­dard bear­er, Bill Clin­ton, the first fig­u­ra­tive black chief executive.

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