responsiveness to banks’ demands. Meanwhile, the presence of corporate-friendly personnel in government helped ensure that officials would interpret business disinvestment in the “right” way, as a sign that government needed to do more to boost business “confidence.” Thus, Wall Street had multiple strategies for shaping policy. The power of campaign donations, lobbyists, and pro-business personnel within government was continuously magnified through the structural power of the capital strike, and vice versa.17
Corporate Disruption in the Obama Era
As the example of Wall Street reform suggests, corporations made full use of all these instruments during the Obama administration. Much of our focus in this book will be on the Obama presidency, not because Obama was any more subservient to capitalists than other presidents, but because there was such a dramatic disjunction between his progressive promises and his actual policies. As a candidate he vowed to confront fossil fuel companies, health insurers, Wall Street banks, and other predatory business interests. In all these areas his promises had overwhelming support among Democratic voters and were also popular with many Republican and independent voters. Yet his policy reforms fell far short of his rhetoric.18 Particularly puzzling was the fact that some reforms were within reach during the two years of Democratic control of Congress, or achievable using executive powers. The Obama years demonstrate how, despite a president’s resounding electoral victory and a strong public mandate for change, corporations may remain in the driver’s seat.
For instance, Obama had promised urgently needed environmental reforms, most notably to prevent catastrophic climate change. The public was supportive. In 2008, 78 percent favored an international treaty to reduce greenhouse gas emissions and 66 percent favored government regulations that would force utilities to use more clean energy sources. Upon securing the Democratic nomination that year, Obama predicted that his presidency would be “the moment when the rise of the oceans began to slow and our planet began to heal.”19 Yet his administration’s environmental reforms stopped far short of what was scientifically necessary, legally permissible, and popular with the public. US pledges under the 2015 Paris climate accord were not remotely commensurate with US corporations’ historic responsibility and capability, and were not enforceable—even before Donald Trump withdrew from the agreement.20 The rise of the oceans did not slow, the planet did not begin to heal.
Other progressive reforms were likewise much weaker than most people had expected. On healthcare, 77 percent of respondents polled on the eve of the 2008 election (including 57 percent of those who planned to vote for Republican John McCain) said that the government “should be responsible for ensuring” that everyone’s “basic need for healthcare” is met.21 None of the plans debated within Congress or the administration would have met that need. The only policy change that would have, a single-payer system that eliminated the central role of private insurers, was ruled out from the start by the Democratic leadership. The insurers, drug companies, and private providers were invited to help craft the legislation. As a result, the 2010 Affordable Care Act (ACA) preserved the privileges of the most parasitic healthcare interests.22
In the case of financial reform, the incoming administration had an even clearer mandate. Unprecedented anger at big banks would have made strong action popular.23 But no banking tycoons were prosecuted and the 2010 reforms took great care to preserve Wall Street’s profits and prerogatives. Options like nationalization or strict limits to the size of banks were either excluded from the 2010 legislation or weakened as the new law was being implemented. The resulting policies were widely criticized as too weak, even before Trump and Congress rolled back much of the law in 2018.24
In the realm of jobs policy, the administration pushed through a substantial but inadequate stimulus bill in February 2009, and then took little further action. Polls found strong support for more government spending to reduce unemployment. Job creation, not deficit reduction, was the public’s priority. Respondents also consistently said that there was too much inequality in the United States, even while greatly underestimating the actual level of inequality.25 The conservative thrust of fiscal policy under Obama cannot be blamed on public opinion.26
In all these areas, corporations’ power of economic disruption is essential for understanding why Obama’s policies diverged so sharply from his promises. Business used capital strikes, and the threat of even deeper strikes, to scuttle or weaken progressive reform, and to get the administration to pursue pro-business initiatives like free-trade agreements and deregulation.27
Barack Obama entered the White House in 2009 in the midst of the most severe episode of disinvestment since World War II. In 2014, the business press reported that “cash on corporate balance sheets has increased almost 70 percent over the past four years,” that it was not being invested in the economy, and that this lack of investment constituted a collective decision to avoid productive investment: “Companies that are spending their cash have largely chosen to increase dividends and buy back stock” rather than increase hiring, wages, or productive investments.28 That is, business was refusing to reinvest its profits—which owed partly to Obama administration policies—back into the economy.
Long after the Great Recession officially ended in 2009, banks and nonfinancial businesses were still hoarding trillions—yes, trillions—of dollars in cash. By Obama’s last year in office, a total of around $9.25 trillion was “lying fallow,” as business observers reported: $1.94 trillion in nonfinancial companies, $2.15 trillion in bank reserves, $2.5 trillion in overseas tax shelters, and $2.66 trillion in zero-yielding money market funds. To put that figure in perspective, $9.25 trillion could end world hunger by 2030 while also funding twenty years of “Green New Deal” investments to transition the US economy away from fossil fuels—with more than $1 trillion left over.29 Capitalist hoarding on this scale is historically unprecedented. And it was not simply dictated by market conditions or the financial theory taught in business schools, which advises businesses to keep about 2 percent of their revenues as cash—as opposed to 31 percent, in Apple’s case, or almost 50 percent, in the case of General Motors. Investing the money virtually anywhere would have yielded higher profits than companies were making on the hoarded cash. While traditional economic considerations played a role in the initial accumulation of this stockpile, the decision to forego profitable investment outlets for years on end, and to use the hoarded cash as a bargaining chip to get favors from Washington, was largely political.30
The Obama administration hoped that by pursuing pro-business policies it could boost business confidence in the White House, leading executives to release their hoarded cash in the form of new hiring and loans. Reporting on Obama’s February 2011 address to the US Chamber of Commerce, the Wall Street Journal described his speech as “a call to business leaders to use the $2 trillion in cash on their balance sheets to ‘get in the game’ and start adding jobs in the U.S.” Obama recognized that corporations’ disinvestment was a conscious choice, meaning that they might change their minds if he delivered the policies they wanted. As the Journal reported, his speech was a call to Chamber members to “stop hoarding cash and start hiring in return for