In an April 2017 Medium post, economic and political analyst Matt Stoller described Barack Obama as a Hamiltonian. He did not mean the label as a compliment. Criticizing Obama’s friendly attitude toward big banks during his presidency (and his acceptance of a $400,000 speaking fee from a Wall Street bank shortly after leaving the White House), he depicted him as trusting financial technocracy at the expense of democracy. “He believed,” wrote Stoller, “that those at the top of large concentrated financial institutions are experts, with top-tier credentials, and, therefore, rightful rulers.”
Whether Stoller’s criticism is fair or not (I share his worries about excessive trust in big finance, but I think his condemnations of Obama as antidemocratic go too far), it raises an interesting question: in what other ways was the 44th president a Hamiltonian? In my view, there are quite a few. Like Bill Clinton, Obama frequently combined a confidence in business-led, broad-based growth with a belief that government should complement and balance, but not replace, the vitality of the private sector.
For the most part, Obama shared Clinton’s Hamiltonian belief in a strong, concentrated financial sector as important to American prosperity. Coming into office during the worst economic crisis since the Great Depression, he saw that the banks that bore a large part of the blame for the crisis could not be left entirely to their own devices. He thus wisely signed the 2010 Dodd-Frank Act, which established a Financial Stability Oversight Council to monitor the vulnerabilities of the largest financial firms; created the Consumer Financial Protection Bureau to guard against predatory mortgage lending; and outlawed proprietary trading. But he resisted calls to nationalize the big banks, or to “break them up” by reinstating the separation of commercial from investment banking.
Obama not only shared Hamilton’s faith in centralized financial power, but also his willingness to use governmental power to keep financial sector problems from bringing down the rest of the economy. During an economic crisis in 1792 (caused in no small part by William Duer, a former assistant of Hamilton who organized a scheme to corner the market in US securities and Bank of the United States stock), Hamilton responded rapidly. He convinced the Bank of New York (which he had co-founded in 1784) to continue lending during the panic, and promised that the Treasury would buy securities that the Bank of New York was stuck with. Hamilton’s “crisis management techniques,” in the words of three economic scholars, “later became theoretical and practical standards of central bank behavior in crises.”
Similarly, upon taking office in 2009, Obama continued George W. Bush’s bailouts of the financial industry in response to the 2008 crisis triggered by the collapse of Lehman Brothers. As much as many of his fellow Democrats wanted him to be tough on the big banks (not without reason), he worried that a hostile relationship between Wall Street and the White House would jeopardize recovery, a concern Hamilton would likely share. But Obama did not want to let the banks completely off the hook. In 2010, he proposed a fee on large financial institutions, to help cover the cost of the bailouts they received and to provide funds that might be needed for orderly liquidation of insolvent firms. While the proposal did not become law, it is a sign that Obama was willing to insist that the banks sacrifice something to the government that had bailed them out.
Fiscal policy is also an area where there are significant similarities between Obama and Hamilton. Against the belief of James Madison that, “a public debt is a public curse,” and against Thomas Jefferson’s opposition to the federal government assuming state debts, Hamilton understood that, “A national debt, if it is not excessive, will be to us a national blessing.” Similar to the Keynesian belief in the value of budget deficits and debt during recessions, Hamilton correctly saw that investment in America’s future, in growth that would lead to large public revenues further down the road, was worth the need to borrow in the short-term.
Although Obama was never a full-throated Keynesian, he had no reservations about running massive budget deficits during a deep downturn. Between the Troubled Asset Relief Program begun under Bush, and the American Recovery and Reinvestment Act Obama signed, massive increases in federal outlays kept the US out of a second Great Depression. While both measures had their critics (anti-Wall Street populists in the former case, conservative Republicans in the latter, libertarians in both), they were vital to economic recovery. Even though Obama in 2011 signed off on the tight caps on federal spending known as sequestration (unwisely, as this held back economic growth while giving a political victory to Obama’s enemies on the right), he was far from a hardline deficit or debt hawk.
Trade is another area where, in many ways, Obama’s policies were quite Hamiltonian. For Hamilton, trade promotion and industrial strength were needed not only for economic growth, but also for national security. The young republic could not hope to hold its own against European powers (to say nothing of competing with Britain as a rival, as Hamilton wanted) if it depended on those powers for military materials. Although Hamilton was willing to impose tariffs to help American manufacturing develop, he generally preferred “bounties,” government subsidies to key sectors, over protectionism as a way to boost American industry on the world stage.
While Obama struck a populist pose by campaigning in 2008 against the outsourcing of American jobs, he took a pragmatic approach to trade while in office. He renegotiated the Korea-United States (KORUS) Free Trade Agreement begun under Bush, to better suit American manufacturing interests. The new agreement even won the endorsement of the United Auto Workers, against the trend of manufacturing unions generally opposing trade deals. Obama found a balance between increasing trade and winning the confidence of a key, trade-skeptical constituency in his party.
A combination of trade policy and geopolitics similar to Hamilton’s underlay Obama’s embrace of the Trans-Pacific Partnership. Had TPP gone into effect, it would have not only given American industry a boost, but also helped the US push back against growing Chinese influence in the Pacific. The pact contained strong protections for workers and the environment, concerns that are far more likely to be priorities for open, democratic nations than an authoritarian power like China.
China is not an American enemy (and it need not become one), but it is a rival seeking to rewrite the rules of international politics and economics to its advantage. The mistake of Bill Clinton, and of the bipartisan majorities in Congress that granted Permanent Normal Trade Relations with China in 2000, was to think a proud, ancient colossus would be content to play by trade rules written by Washington. TPP would have rebalanced the US-China relationship in a wiser way — if only Donald Trump had not withdrawn from it in favor of overly broad, often counterproductive tariffs.
Perhaps the most interesting comparison to make is on immigration. While Lin-Manuel Miranda’s musical has justly emphasized Hamilton’s status as an immigrant success story, the title character was not always as immigrant-friendly as the show’s progressive fan base might imagine. In chapter 39 of his now famous biography, Ron Chernow quotes one of Hamilton’s 1802 “Examination” essays, a series of attacks on Jefferson’s policies, where Washington’s Treasury Secretary says this about his counterpart in Jefferson’s cabinet, the Swiss-born Albert Gallatin:
“Who rules the councils of our own ill-fated, unhappy country? And who stimulates persecution on the heads of its citizens, for daring to maintain an opinion, and for exercising the rights of suffrage? A foreigner!”
Yes, this betrays an obvious lack of self-awareness on Hamilton’s part. But it also helps to show the depth of his nationalism, something that is not always apparent in Miranda’s presentation. Hamilton’s immigrant background apparently did not weigh as heavily on his mind as his desire to preserve his adopted country’s unity and prosperity, which he feared Jefferson and Gallatin were undermining.
Despite his genuine sympathies for immigrants, Obama frequently did not endear himself to defenders of a liberal immigration policy. He authorized far more deportations of undocumented immigrants than Bush had, earning the derisive label “deporter in chief.” And when he adopted a more generous stance, in the form of Deferred Action for Childhood Arrivals, it required careful information gathering and record keeping. It was far from a Jeffersonian libertarian position.
For Obama as well as Hamilton, more important than friendliness to immigrants were the rule of law and the integrity of federal power. This was a concern of Hamilton from very early on. In 1775, as a student at King’s College, he protected college President Myles Cooper from a mob angry at Cooper’s pro-British sympathies. As firm as Hamilton’s revolutionary commitments were, he could not abide anarchic violence. Similarly, while Obama was willing to use his executive power to protect people who had come to the US as children, he would have preferred for Congress to take much needed action to fix a broken immigration system. (His proposed immigration reform legislation passed the Senate, but was torpedoed by right-wing Republicans in the House of Representatives.) His liberal view of immigration did not mean he opposed any and all consequences for illegal border crossings (as many of the Democrats currently running for President seem to).
Going forward, it will be very interesting to observe the interactions between left-populist critiques of Hamilton (and of modern Hamiltonians like Obama) and the very favorable impressions of him held by large portions of America’s culturally progressive youth. As great as it is that the musical has made 18th century history relevant and accessible to 21st century Americans, we must hope that their interest in Hamilton and his contemporaries is not merely superficial, but that they understand the ways in which their hero was not quite as progressive as they may think. Meanwhile, we must also hope that the embrace of Hamilton by the young will lead left-populist critics of big finance to temper their criticism, and perhaps come to the conclusion that progressive goals and the strength of big banks are not mutually exclusive.