The Austerity of the Obama Years

The Austerity of the Obama Years

Austerity, both as a practice and as a metaphor, defined the landscape, culture, and politics of the Obama era.

President Obama delivers the 2015 State of the Union address (Pete Souza / Wikimedia Commons)

One of the most ubiquitous images of the Obama years was the “Keep Calm and Carry On” slogan. It started life on an unused World War II poster in 1939, designed to resolve English spirits in advance of a potential German invasion, but rejected at the time in favor of other messaging. After being rediscovered it was mass produced starting in 2008, and its bold statement of orderly resolution has been everywhere since, showing up in remixed forms on posters, novelty items, and internet memes.

The writer Owen Hatherley describes the history of this image in his excellent book The Ministry of Nostalgia, and places it in the British context of the Conservative Party’s attempt to reengineer the country’s history towards one of austerity and self-reliance rather than the solidarity that built social democracy in the aftermath of the war. But that the image would take hold in the United States, which doesn’t have the British cultural imperative to maintain a stiff upper lip, is even more interesting. Why were we keeping calm during the Obama years? What were we trying to survive?

When we look back on the Obama years we’ll probably remember the new technologies, the disruptions and fracture, the politics polarizing further. But the most important experience was one of austerity. Since the financial crisis, austerity, both as a practice and as a metaphor, defined our landscapes, our culture, and our floundering recovery. This austerity was resisted, challenged, and embraced in different measures, but it ultimately characterized the world as we faced it. And the Democrat’s failings in their political response to it may have helped deliver us President Donald Trump.


Sometime around 2011 upper-middle class people started throwing away their belongings. Marie Kondo’s surprise bestselling advice to discard possessions that no longer “bring joy” encouraged an allergy to clutter. Among elites in technology, who came into their own as a ruling elite during these years, there were races to see who could lead the least attached lives and own the fewest things. This austerity-chic became its own form of vulgar elitism; the ability to simply buy whatever you needed on command became the ultimate status symbol.

This was matched by the urban aesthetic. Reclaimed wood, old lighting fixtures, and other industrial flourishes showed up in every hip neighborhood across the country. The writer Kyle Chayka used the term “airspace” to describe this new atmosphere of aspirational comfort devoid of any particular location. Originally the look of Silicon Valley, one could travel city to city, visit businesses, coffeehouses, restaurants, and bars, and find the same vibe, a mix of luxury hotel lobby and recreational break room for San Francisco programmers. Easy to capture with a picture taken on a phone and posted on social media, it spread rapidly through technology. It did the work of decorating the rapidly increasing geographic inequality of the Great Recession. If the landscape was tough to describe, it was easy to know if you were in it, if you were in a place strictly demarcated as desirable or not.

In offices, cubicles and messy desks disappeared, replaced with more open atmospheres and “hot-desking.” Workers began carrying around the cords and cables they needed to do their jobs. Though they were more likely to be contractors, not employees, of the firms they worked for, they carried the guts of their offices wherever they went.

Most pared down during the Great Recession not for aesthetic reasons but instead to adjust to economic necessity. Rapid escalations in real estate prices in desirable cities led to smaller and smaller homes. “Micro-units,” apartments with less than 400 square feet, became a real-estate term. Young people pared down due to supply constraints. A college degree no longer guaranteed a middle-class life; graduates became no more likely to own a house or a car than non-college educated people. People stopped forming both businesses—where were the customers?—and families. Kids didn’t move out, and adults didn’t have kids. People got divorced less, choosing to keep calm and carry on in miserable homes.

As the material base of production became even more abstracted from us, with more existing online and manufactured in far away countries, there was a small pull back towards older, slower technology. People bought subscriptions to music streaming services, turning music into a commodity that pours out of the wall of your house like water. But they also bought vinyl records again. Fast casual food gave office workers quicker food that tasted better, but there was a trend for pour-over coffee, the slowest possible way of getting a caffeine boost. Portlandia could parody the idea that the 1890s were in revival, with people brewing their own beer and curing their own meat. Some saw this as competitive consumerism, but underneath there was a desire to see one layer deeper into our items, to try and find what this latest stage of capitalism had removed.

As desirable urban cores embraced austerity as an aesthetic, places falling behind simply saw decay. There’s no accurate number, which itself is a telling fact, but over 6 million foreclosures happened on President Obama’s watch. The new suburban subdivisions, once the symbol of George W. Bush’s mortgage-bubble-fueled prosperity, were falling apart, left vacant in a legal limbo of mortgage-backed securities. The suburbs stopped being the American Dream and became the new home of poverty. Rural areas were hit even harder. Life expectancy for working-class whites, particularly women, fell; even simple survival couldn’t be taken for granted in the new economy.


The Great Recession was driven by austerity, but what kicked it off was an all too present weight of bad mortgage debt. This weight dragged down the economy and made the recession far worse than it would have been. Over 11 million residences, roughly 25 percent of houses with a mortgage, were underwater, or had more debt than their household was worth, as a result of the crisis. In retrospect, for all the drama the bailouts were boring, if also far too generous to Wall Street. The real struggle was this $750 billion of bad debts, an albatross tied to the economy that not only drove down spending and investment—the recession was far worse in areas deeply underwater—but also destroyed neighborhoods and communities through foreclosures.

Rather than using the vast authority, discretion, and funding available from TARP, the bailout bill, to tackle this, Obama’s policy response to troubled homeowners was “Keep Calm and Carry On.” Obama’s administration trusted the predatory financial institutions that created the crisis to manage the aftermath and buried investigations finding that predation continued. The debt was only worked down through foreclosures, and even then it’s still with us—negative equity was a solid predictor of Midwestern counties that flipped to Trump.

A void came to define the rest of Obama’s economic landscape. Picture the economy as it could have been growing before the recession, and then picture the economy as it was. This difference is technically called “the output gap,” but it’s best considered as a missing piece of economic activity and prosperity. Trying to make sense of this vacuum was the central political and economic intellectual puzzle of the Obama years. This difference was the difference between full employment and a weak job market, between more robust wage growth and stagnation, between rich investment and decaying infrastructure. Like a wound that never heals, it created an anxiety over all economic policymaking.

Immediately this absence was understood through the left-liberal theories of John Maynard Keynes. Bad mortgage debt kept households on the sidelines; weak demand and purchasing power kept firms from investing; and collapsing state budgets meant austerity would cut jobs and spending more, creating a vicious cycle. The initial optimism of the stimulus and emergency Federal Reserve actions were meant to counter this.

Though it stopped us from falling into a European-level decline, the stimulus was only enough to stabilize the gap, not enough to remove it. Instead we saw a vicious cycle of severe state and local government cuts, households retrenching following the housing trauma, and firms refusing to invest, all causes and results of austerity. This missing piece of the economy stayed missing, distorting the politics of everything around it. After major 2010 electoral losses, Obama turned to the center and blamed the business community’s fear of deficits, regulations, and “uncertainty,” as well as robots taking all the jobs. After that failed to get a Grand Bargain with Republicans to cut social insurance, Obama retreated to promoting the recovering economic numbers as they came. By the end the numbers recovered to where they were in 2007; yet the tragedy was that Obama originally won in part because the economy in 2007 wasn’t working for everyday people, and they wanted change.

Researchers tried to understand what was happening with different tools. Inequality became a greater focus, with the theories and numerical tables of Thomas Piketty showing that inequality, left to itself, would rapidly spin out of control. The right used this environment to push an even more aggressive zero-sum approach to the economy, culminating in Mitt Romney’s makers-versus-takers campaign of 2012. Others thought the economy simply ran out of steam, that we were facing an end to growth.

Some, such as former Treasury Secretary Larry Summers, turned to a Depression-era concept of “secular stagnation,” noting that the economy simply wasn’t capable of producing enough investment to keep on at full steam on its own. Still others looked to the nature of the firm itself, arguing that shareholders were so powerful, and only interested in consolidation and immediate profits, that they strangled the potential for long-term investments. Corporate profits were high and interest rates were low, yet nobody was investing, a sign of economy-wide monopoly power.

The economic landscape adjusted to the missing prosperity, with economic power concentrating at the highest levels. Trillions of dollars simply went into mergers and acquisitions, leaving the economy more concentrated than at any point in decades. Yet this power also seeped into everyday life. Work became even more precarious and disintermediated towards smaller, weak firms attached through contracts to rich flagships. Over the past ten years workers in traditional employment declined slightly, with contract and independent workers driving the increases. Beyond making activism and regulations much more difficult, this shift greatly accelerated inequality as corporate profits skyrocketed. People became contract workers and took on boarders in their homes again, like those trying to survive the nineteenth century, and elites celebrated it as an entrepreneurial wonderland.

That the Democrats could never figure out what to do about this gap in our economy showed up in the Democratic primary. An economist named Gerald Friedman argued that Bernie Sanders’s proposals would fix the gap, that if his large expansion of public works, taxes, and spending had a chance, the economy would get to and go far beyond its full potential. He walked into a bandsaw of Democratic economists attacking his argument as voodoo economics. Friedman’s analysis did have serious flaws, but the Democratic economists counter was that where we were was just the reality, that there was little-to-no room to grow further and faster. This output gap, introduced during Obama’s years, was a permanent reduction in our potential that we would have to live with. It was the economic equivalent of the Democrats “America is Already Great,” a messaging that delivered our country to Trump.


Obama’s presidency was a gamble on two theories of change. The first was that Obama’s story could overcome the bitter partisanship of the previous decades. “Goodbye to All That” Andrew Sullivan wrote in 2007, with the “that” being the fighting over the 1960s that characterized the Boomer generation. No more culture wars; Obama could move us “past the debilitating, self-perpetuating family quarrel of the Baby Boom generation that has long engulfed all of us.” It was also a gamble on a theory of coalition, that an “emerging Democratic majority” of professionals, people of color, and young people comprised a stable and actionable base sufficient to build a new progressive agenda.

As is the nature of gambles, both failed, and the party bled as a result. Even as John Judis, one of the creators of the “Emerging Democratic Majority” theory, abandoned it (“The idea of an enduring Democratic majority was a mirage”), it was taken as given that demographic winds, rather than political struggle, would fix what was broken in the Democratic Party and win them 2016. The result was an absence of political organizing and ideology as such. As Democratic power became even more ensconced in cities, gerrymandering meant that large parts of the political power distributed to smaller and more poorly populated regions was scooped up by the right. Though President Obama’s achievements were impressive, especially in his first two years in office, he leaves behind a party that hasn’t been this weak in nearly a century. A party motivated by his story didn’t show up in off-year elections or engage in building local politics. Obama for America (OFA) didn’t do the deep bench work and party infrastructure atrophied. Once it was clear this coalition didn’t exist with any sufficient strength to carry an election, Democrats found themselves with no backup plan.

For many, the defining image of the 2016 election was a cartoon dog in a kitchen on fire, slowly drinking his coffee, saying, “This is fine.” What is this image but an updated “Keep Calm and Carry On,” with the stakes upped to the slow-moving disaster of knowing we were going to elect Donald Trump President of the United States? But no matter the significant danger we are in right now, Trump, as well as the Sanders campaign (and the central role Sanders has played since the election in defense), shows that ideology is back, front-and-center, in our political life.

Steven Bannon, posing for a photo to accompany a Joshua Green Businessweek profile in October 2015, wore a polo under an Oxford button-up—collars over collars—with shorts. This might be the initial style of the Trump years. The 1980s but bloated, the preppiness long since lost to a swollen reservoir of ruddy contempt and anger. If Mad Men, with it’s sleek modernism and rapidly changing social norms was the TV show of the Obama years, The Young Pope, with its ornate, gilded, baroque hierarchy, is already one for the Trump era. It’s tough not to see the Trump years as one of decadence and riches. The incomes of the 1 percent will skyrocket after top-end tax cuts are passed later this year. But it will also see the brutality of our economic plight become more overt, as the regressive state machine the GOP built will be put into motion to destroy the public at a local level.

Worse, the spectacle and noise will continue to be the political focus. Trump will move from scandal to scandal, petty feud to Twitter war, taking a break only to sign the bills Republicans pass radically overhauling the federal government in a right-wing direction. The aesthetics will no doubt feature a surface of scandal with a darker, vicious elitism right underneath it. The austerity we just survived was painful, but the swollen opulence of Trump will give us no comfort. Though it will be a dark time, it will be fertile soil to build a leftism without a void, one with the presence necessary to push past what Trump brings.

Mike Konczal is a fellow at the Roosevelt Institute and a contributing editor at Dissent.

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