Workers against Wall Street

President Obama’s “shock and awe” statism is failing. On the eve of the midterm elections, the US ec

Gary, Indiana

We're hurtling through downtown Gary at about 75 miles an hour but Officer Lilley, at the wheel of our car, remains relaxed. He's telling me languid stories about the AK-47s that the local teenagers carry, about the gangs, the drugs, the overtime. Then the city's "shot spotter" pings an alert on to his laptop, which is wedged right next to the handbrake.

He mutters a call for assistance into his radio and swings the police car on to the forecourt of a gas station where about 30 people are running, pointing, strung out, screaming recriminations. There's been a fight, but the fighters are gone, as is the kid who decided to let off his pistol. Nobody is dead. Everybody is shouting into the face of Officer Lilley, a black cop in a black crowd, who simply drawls soothing phrases back at them.

Eventually seven police cars arrive and the cops fan out to disperse the crowd of onlookers, many of whom they seem to know by name. Two years ago there were times when the city could field only five cars in total on a night shift, but federal dollars have paid for 96 new vehicles and allowed Gary Police to re-employ 11 laid-off officers. This short, sharp exercise in armed social work is possible only because of the fiscal stimulus.

Gary is a city where 84 per cent of the population is black and one-third of the people live in poverty. It is one of the most obvious places on earth where an influx of taxpayer dollars might do some good. It has 3,000 abandoned homes and a decaying infrastructure, and its public finances stand two years away from bankruptcy. Yet what is obvious, amid these wrecked streets and impoverished lives, is how little the stimulus has achieved.

Gary's urban texture - grass and ivy over broken concrete - is testimony to what happens when an economic model fails. In its deserted downtown district, the churches, the concert hall, the theatre, the ballet studio, the Gothic apartments from whose windows steel magnates once surveyed the city's pulsating wealth, stand ruined, unsecured against intruders.

Though atypical of America, Gary's broken landscape is spectacularly typical of what has gone wrong in the country at large. Its meagre progress, two years into the Obama administration, signals the president's failure to solve America's most basic problems and to deliver to the very people whose votes put him in the White House.

The problem for America today is that another economic model has failed: one based on globalisation, cheap credit, home ownership and mass consumption. Six million Americans have fallen below the poverty line since December 2007. The median income has fallen by 4.7 per cent. In the same period, more than 2.5 million homes have been repossessed. And that only compounds the long-term problems America hid beneath the financial euphoria of the boom years - but average real wages have stagnated since the 1990s; the number without health insurance has grown by ten million in a decade and stands at 50 million.

The most basic problem is this: in a system based on credit, the credit system is not functioning. It's easy to spot the malfunction in a city like Gary: I saw one home for sale at $7,900 cash, the scrawled street-corner placard adding, by way of explanation, the word "Foreclosure". The only part of the credit system that does function is the destructive part; the "payday loans" store on Gary's main street is the only thing left with working neon signs. Most of the other shops are closed for good.

With a swollen mass of people unable to borrow, save or spend, the great dynamo of the world economy - American consumption - is sputtering. And the stimulus has not yet managed to restart it.

Eighteen months ago, the mayor of Gary, Rudy Clay, told me that all the city needed was $400m. With that, said the dapper veteran of the civil rights movement, Gary would "fly like an eagle and once again make America proud". In the event, the city was given just $266m - most of that earmarked for education - and for spending not on current costs, but on reorganisation.

Of the $24m Clay applied for to knock down derelict homes, $2m was delivered - and most of the buildings are still standing. It took 18 months for the money to pay for new streetlights to filter through the system. And, with $266m, Gary has managed to create the grand total of 327 jobs. That is more than $800,000 per job.

“We were last in line," Clay complains. "We keep pressing the State of Indiana for more money - to fix our roads, for example - but the problem is they spent all the money. They probably thought, 'Well, Gary voted in large numbers for the president, so the president can take care of them.'" A glance at the city's finances reveals a more complex picture. Its financial controls are archaic, its debts to other agencies high; and its tax base is heavily dependent on one source - a property tax that brings in 80 per cent of Gary's revenue.

In 2008 the Republican-controlled state government of Indiana brought in tax-capping measures that will, by 2012, halve the amount of property tax Gary can collect. While richer, whiter counties surrounding Gary have their own local income taxes, Gary does not - for the simple reason that there is very little income to tax. Within this system, redistribution is impossible unless the state and federal governments make it happen.

But that is where Gary's problems run into the culture war that has gripped America.The governor of Indiana is Mitch Daniels, a fiscal conservative who has made his reputation by balancing the state's books, privatising Indiana's major roads system in the process. Daniels - unlike some other Republican governors - agreed to accept the fiscal stimulus money, but on condition that the state retained control. He then decreed that the stimulus could not be used to fix the balance sheets of near-bankrupt city governments like Gary. Only major, one-off projects would receive federal dollars.

So, in the midst of the largest fiscal stimulus since the Second World War, one of America's poorest cities is being forced to cut taxes and cut spending. By 2012 its entire tax take will not be enough to cover the police, fire and ambulance services. Officer Lilley and his colleagues know that all the problems that fuel the crime - drugs, truancy, poor housing, unemployment - will remain unaddressed.

President Obama's stimulus was formulated with high hopes: two-thirds of the $787bn spent would be delivered not through the Bush-era mechanism of tax cuts, but through the overtly Keynesian channel of public spending. Jared Bernstein and Christina Romer, economists on Obama's transition team, predicted in January 2009 that the stimulus money would "create three to four million jobs" by the end of 2010, 90 per cent of them in the private sector. They projected that unemployment would peak at just 8 per cent in 2009.

The Romer/Bernstein forecast, like much of the Obama stimulus plan, was a triumph of optimism. Unemployment reached 10 per cent a year ago and has not been below 9.5 per cent since, even with the stimulus. Private-sector employment has shrunk. The money has been spent, but the jobs and growth did not follow.

The paucity of achievement is all the more remarkable given that, two months after the Romer/Bernstein report was published, the Federal Reserve was forced to launch its own, much bigger monetary stimulus package, known as quantitative easing (QE). By printing money and using it to buy a mixture of bank and government debt, the Fed pumped $1.75trn into the US economy.

Yet the combined results are poor. Growth is slowing. The threat of deflation is so clear that the Federal Reserve will, on the morrow of the midterm elections, be forced to throw several hundred billions more into QE.

In the housing market, there is already a double dip. Even with mortgage interest rates cut to their lowest ever, the sheer volume of un-sold properties - 1.5 million empty and a further five million trapped in a "shadow" market - has begun to push house prices down again. The banking sector has begun to shudder in turn at the prospect of another round of mortgage losses.

It is this tangible failure of economic strategy that is sapping the energy and credibility of the Obama administration. It has provided the American right with a convincing narrative to unite the plebeian conservative and "coastal elite" strands of Republicanism.

Governor Daniels, a mainstream Republican who is being tipped as the man to run against Obama in 2012, calls Obama's policy "shock and awe statism". But the real shock is how little has been achieved. Statewide, the whole of Indiana has managed to spend $4bn of stimulus money to create 10,000 jobs.

“It's not enough," the governor says, "and I would caution you that while I know the $4bn is real, I cannot say the same about the 10,000 jobs. We just don't know. They [the federal government] don't know."

Nationally, he says, "We've had this perverse outcome in which the private sector has continued to shrink and the public sector has gotten bigger. Frankly, it looks more like a way to take care of favoured constituencies than an economic policy."

So, for the mainstream American right, what explains the failure of the Obama stimulus is "crowding out": it is the size of the state that has prevented the private sector from responding to the crisis with fresh hiring and company start-ups. In addition, consistently large majorities polled by the Pew Research Centre believe that state intervention has benefited the banks and large corporations only - leaving the middle class, the poor and small businesses to rot. Finally, there is a growing fear that the size of the budget deficit will drag the United States into penury. Daniels tells me that the country faces a "survival-level threat".

It is in this context that the narrative of the Tea Party movement has emerged. And you have only to travel a hundred kilometres east of Gary, along the patched-up private motorways of Indiana, to hear it in full voice.

The hall is swaying to the tune of "God Bless the USA" - a song for which everyone except the journalists stands up, many clenching fists against chests. The crowd is 99 per cent white and 100 per cent Christian. Of those to whom I speak during the interval, several believe that the president is neither American nor Christian. One is selling a set of playing cards depicting Obama as a "Kenyan-born, lying, arrogant Muslim communist that hates America".

What the Tea Party objects to is the president's policies of state intervention. What it adds to conventional fiscal conservatism is the idea that all state intervention into economic life is immoral, un-Christian and unconstitutional. The plebeian right is convinced that a city like Gary neither deserves stimulus money nor can use it to any good effect.

Jackie Walorski, a Republican who sits in the Indiana legislature and is standing for the US House of Representatives on 2 November, tells me: "We are watching a freight train of spending in this country. Americans don't live that way. We're the land of capitalism; we're not the land of taking people's public tax money and throwing it into a concept that isn't proven, that has not produced jobs."

Does she begrudge the money spent in Gary? Would she have blocked the cash for schools, more police and police vehicles?

“It's not a question of begrudging," says Wal­orski, a 47-year-old former TV journalist. "Just because it's gone to education, police and fire doesn't mean the money has done anything in those areas. That's not what the key is in this country. You can continue to write cheques but recovery comes from private-sector jobs and holding a line on spending."

What is sapping the energy of Democratic Party supporters, even in a place like Gary, is that if you strip Walorski's words of all the rhetoric, economically they ring true. America's governance system, lacking the basic capacity, and in some places the will, to spend the money, looks ill suited to delivering maximum bang for 787 billion bucks.

But the rhetoric itself has material impact, and way beyond the worried Christian faces assembled to hear it. It is a rhetoric that - intentionally or otherwise - identifies the recipients of state spending as the enemies of the American constitution. From Indiana to the Gulf of Mexico, that means the public sector, migrants and the African-American poor.

When Walorski takes the stage at a Tea Party rally in the small rural town of Angola, Indiana as warm-up act for the Fox News commentator Glenn Beck, she points to a giant US flag behind her and whips the audience to its feet with the warning that they have just days "to fight for who we are in America".

She continues: "If we don't fight for freedom, liberty, individual destiny, they are redefining this country out from underneath us. The battle we're facing is to defend this flag on our turf, our soil. When our soldiers came out of the boats in Normandy they literally walked over the bodies of other soldiers to fight for our freedom. The battle we face today, the ideological war that we're fighting, is for standing up for a constitution. The land of the free and the home of the brave is under assault today."

It is worth unpacking this statement. In the literal text, Obama and the Democrat-voting Congress are the "they" Walorski refers to. But America's airwaves are alive with the angry voices of enraged white Christians, channelled towards coherence by the right-wing commentators. No one on the stage in Indiana needs to assert that Obama is "a racist" with “a deep-seated hatred for white people or the white culture" - because Beck already said so on TV, on 28 July 2009.

Back in Gary, for the black community activists trying to hold things together, it feels as if the word "they" has another meaning.

“When you turn on the TV and hear all this anger, all this vitriol," says Ben Clement, who helps run a community theatre group for teenagers, "well, it's culture-based, race-based, and it's frightening. And it shows that there's a disconnect - it's almost like we're living on two separate planets."

Clement, like many Obama-supporting black professionals, rues the complacency of a generation that has drifted out of activism. "Our parents went through the civil rights movement, but for our generation it's been a time of rest, where we didn't think those were going to be issues. Now, when I see Obama vilified, my stomach tightens up, because he is the best of us, the best of what we have to offer. If they feel like that about him - how would they treat me?"

This is the real culture war - an artillery battle of words in which the two sides never meet.

It has blindsided America's political commentators. The polling organisations record no perceptible increase in the numbers of extreme right- and left-wing views. But distrust and fear are tangible once you get where the American media dare not venture - into the honest and considered thoughts of ordinary people.

So, where does the battle go after 2 November? Economists on the Keynesian left of the Democratic Party are now clamouring for a further fiscal stimulus as they frantically try to recover ground in the ideological war they have essentially lost. Judging by the polling on all possible outcomes, the Congressional arithmetic makes another fiscal stimulus impossible. And even if it were possible, it is difficult to see how a second stimulus could overcome the institutional problems that Gary typifies.

Over at the Federal Reserve, the chairman, Ben Bernanke, is inching towards a further round of quantitative easing. In September, he conceded that even if the Fed did opt for a second round of quantitative easing, the impact of this might be softened: though central bankers have no way of knowing how much increased demand they get from QE, they suspect it works best as an anti-panic measure, not as an additional boost. Once "QE2" is begun, the Fed has in effect fired the last bullet in the clip. It may signal the start of a unique period of policy stasis in which all conventional options have been used up.

One route out would be through a trade war and dollar devaluation - a route as popular among the Democratic grass roots as it is among the Tea Party activists.

Back in Indiana, Walorski swaps insults with the Democratic incumbent, Representative Joe Donnelly, whose support for the stimulus, she claims, has "exported jobs to China". Meanwhile, in the union hall of Local 1066, which represents employees of US Steel Corp in Gary, workers are calling for the government to impose tough trade sanctions against Chinese steel imports.

But, for now, the Obama administration is sticking to the economic doctrines that formed the shared belief set of both parties since the 1990s: globalisation and a strong dollar. Even as Bernanke's promise of further QE caused the dollar to slide against other currencies, the treasury secretary, Timothy Geithner, took to the airwaves to promote keeping the dollar strong. "It is very important," he said, "for people to understand that the United States of America and no country around the world can devalue its way to prosperity . . . It is not a viable, feasible strategy and we will not engage in it."

Another route out is the one offered by Governor Daniels: a new, national, one-year fiscal stimulus of between $400bn and $800bn, including suspension of payroll taxes, in return for equivalent cuts in state spending and a bonfire of business regulations. Though fiscally neutral, a tax cut on this scale could put money where neither state spending nor money printing has yet managed to put it - into the pockets of American consumers.

Yet the problem remains: without restarting the credit market, nothing can sustain growth. There needs to be some kind of defibrillating shock. The American patient, with all its problems of obesity and fast food, has to have its heart restarted before the rehab and the statins can get to work.

For two years, America's political cycle and its economic crisis have been parallel stories, the one played out on brash television shouting shows, the other handled by the super-brained east coast policy elite in the privacy of summits and retreats. After the midterm elections, the two cycles will collide. Either the Obama administration will find a new kind of circuit breaker for the economy, or America will face stagnant growth, deflation and the possibility of a further banking crisis.

In Gary, the people know what they want the president to do: to break with Wall Street, ditch the doctrine of free trade, end foreclosures and deliver jobs. There is, despite the political chasm between the union guys and the Tea Party activists, a parallel desire for politicians to break with the lobbying industry and speak for the people. "He [Obama] has to drive the agenda," says Steve Dunn, a steelworker. "If you ever listen to a speech by Franklin Delano Roosevelt, it's basically you against me; it's the working class against Wall Street. And that's the way things are today - but I don't hear that from President Obama."

The irony of American politics, on the eve of the midterms, is that if anybody owns the narrative of "workers against Wall Street", it is the ultra-conservative, free-market right.

Paul Mason is the economics editor of BBC Newsnight. His reports from the US can be seen at bbc.co.uk/paulmason. A revised edition of his book "Meltdown: the End of the Age of Greed" (Verso, £8.99) is out now.

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The alt-right Leninist

Steve Bannon, the US president’s chief strategist, wants to destroy the state.

In 2013 and 2014, Steve Bannon organised “The Uninvited”, an event on the fringes of the Conservative Political Action Conference which gave a platform to right-wing thinkers deemed too extreme for the largest annual gathering of American conservatives. But on 23 February this year, President Donald Trump’s chief strategist took to the CPAC stage in his trademark uniform of an open-necked shirt, boxy jacket and rumpled chinos and greeted the audience with the self-satisfied swagger of a game-show host. Having surveyed the room with a smile, he quickly revealed a flash of malice. “Is that the opposition party back there?” he asked, gesturing towards the press corps, before jutting out his chin and nodding his head, like a brawler preparing to exchange blows.

Bannon, a 63-year-old former naval officer, Goldman Sachs banker and propagandist film-maker who owes his fortune to an early investment in the hit comedy Seinfeld, has rarely spoken in public since he joined Trump’s inner team, but on this occasion he was expansive. He hailed the president for ushering in a “new political order” and described the US withdrawal from the Trans-Pacific Partnership trade deal as “one of the most pivotal moments in modern American history”. Asked to list the new administration’s priorities, he cited three “lines of work”: first, the protection of “national security and sovereignty”; second, the promotion of “economic nationalism” by renegotiating US trade deals; and third, the “deconstruction of the administrative state”. The crowd applauded.

Bannon usually outlines his end goal using less bureaucratic language but the message is unchanged. He has described himself as a “Leninist” who shares with the Bolshevik leader a desire to “destroy the state”. “I want to bring everything crashing down, and destroy all of today’s establishment,” he told the historian Ronald Radosh in 2013. (Bannon has since said he does not recall their conversation). Described by one ally as a “walking bibliography”, Bannon is fiercely intelligent and ruthlessly ambitious, and believes that America is facing an existential crisis that can be averted only through radical action. He was one of the most widely anticipated speakers at CPAC this year and, by many accounts, is the chief manipulator and mastermind behind the Trump presidency, yet he is resolutely anti-conservative: Bannon wants to break things.

Last August, he took leave from Breitbart, the provocative, far-right news organisation he began leading in 2012, to become the chief executive of the Trump campaign. Bannon’s influence has grown since then. On 28 January, eight days after Trump’s inauguration, the president gave him a full seat on the principles committee of the National Security Council, a body made up of senior military officials and top policymakers that discusses the most pressing foreign policy issues. Although presidential aides have occasionally attended NSC meetings in the past, many see Bannon’s formal presence as demonstrating an unprecedented politicisation of national security decisions and an alarming rise to power of a man with no previous experience of government.

In an editorial following his appointment to the NSC, the New York Times suggested that Bannon was positioning himself as “de facto president” and expressed concern about his “penchant for blowing things up”. A week later, the paper published an investigation alleging that Trump was angry that he had not been fully briefed before he signed the executive order granting Bannon this exceptional access. The suggestion that Bannon may be taking advantage of the president’s short attention span and thin policy knowledge to serve his own interests is not far-fetched. Trump is “a blunt instrument for us”, Bannon told Vanity Fair last year, seemingly referring to American nationalists. “I don’t know whether he really gets it or not.”

Former colleagues have described Bannon as a “bully”, a “nasty human being” and a “monster”. Nancy Pelosi, the leader of the Democrats in the House of Representatives, has repeatedly slammed him as a “white supremacist”, and he has faced accusations of anti-Semitism, misogyny and Islamophobia. From an office at the White House that he calls “the war room”, he has driven, reporters say, some of Trump’s most contentious policy decisions, such as the ban on citizens of seven predominantly Muslim countries from entering the United States (subsequently reduced to six). He is also reported to have been one of the authors of Trump’s dystopian inauguration address, with its vision of “American carnage”.

Described in a 2015 Bloomberg Businessweek profile as “the most dangerous political operative in America”, Bannon delights in his evil overlord persona. “Darkness is good,” he told the Hollywood Reporter in November. “Dick Cheney. Darth Vader. Satan. That’s power. It only helps us when they get it wrong. When they’re blind to who we are and what we’re doing.”

 

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Stephen K Bannon was born in 1953 to a blue-collar, Irish Catholic, Democrat-voting family in Richmond, a city then of just over 230,000 people in the Southern state of Virginia. His father, Martin “Marty” Bannon, started out repairing telephone lines for AT&T and eventually moved into management. Bannon was the middle of five children and attended the all-boys’ Benedictine High School (now Benedictine College Preparatory), a Catholic, military-type institution owned and run by the monastic order. The headmaster and some of his teachers were Benedictine monks. The pupils, or “cadets”, wore military tags and were known by their surname only.

“It was a very traditional education, if you will, and definitely a very conservative school. I remember when we did mock elections, they’d be 90 per cent for the Republicans,” John Pudner, who also atten­ded Benedictine High School, told me.

Pudner now leads Take Back Our Republic, a group that aims to break the influence of big donors on campaign financing, and he has worked with Bannon on several occasions, serving at one point as the launch sports editor for Breitbart. He believes their schooling helped shape the contours of Bannon’s world-view: a commitment to small government and conventional family values, combined with a distrust of political and economic elites of all persuasions. Bannon maintained a close relationship with his alma mater. He served for a while on its board of trustees and in 2011 he joined a campaign, together with Pudner, to prevent the school from relocating from the diverse inner city to Richmond’s wealthy, all-white suburbs. Pudner says they were motivated by a sense of “Catholic mission”. “That’s part of what we understood our Catholicism to be, that you weren’t just kind of off in an elite spot . . . you mingle, and you convey ideas but you’re also part of the community,” Pudner said. They lost the campaign but not, Pudner was quick to point out, without claiming a few scalps: three county supervisors who supported the move lost their seats in that year’s election.

Bannon studied urban affairs at Virginia Tech university and was elected president of its student government association in 1975. On graduating, he joined the navy. Though he was not directly involved in the operation, he was serving as a junior officer aboard the destroyer USS Paul F Foster in 1980 when US forces launched a failed attempt to rescue 52 people held hostage at the US embassy in Tehran. “I wasn’t political until I got into the service and saw how badly Jimmy Carter f***ed things up. I became a huge Reagan admirer. Still am,” he told Bloomberg Businessweek. After Ronald Reagan’s election that year, Bannon worked in naval operations at the Pentagon while taking an MA in national security studies at Georgetown University.

In 1983 he made the first of many career changes and enrolled at Harvard Business School. A classmate from those years told the Boston Globe that Bannon was “top three in intellectual horsepower in our class – perhaps the smartest”. After completing his MBA he joined Goldman Sachs but left in 1990 to set up his own investment firm, Bannon & Co, specialising in the media industry. He acquired his stake in Seinfeld in 1993, when the sitcom, centred on the lives of four highly strung New Yorkers, was in its fourth series and still drawing relatively small audiences. Within a year, the show became one of the most popular in America. It is not known how large Bannon’s stake is, but in 2013 the Financial Times reported that Seinfeld had earned $3.1bn through syndication in the previous five years. He continues to earn royalties today.

The Seinfeld windfall helped fund his career as a film-maker. Julia Jones, a screenwriter who worked with Bannon on and off for two decades, remembers first meeting him at a party in Beverley Hills in 1991; they spoke of his plans to adapt Shakespeare for the big screen. Bannon’s overgrown hair, pasty complexion and dishevelled clothing recently prompted the comedian Stephen Colbert to describe him as “Robert ­Redford dredged from a river”, but in the 1990s, Jones told me: “He dressed down, but he was still neat and clean. He was preppy. He was really very attractive, good-looking, charismatic – and he weighed a lot less.”

They struck up a close friendship. Jones describes him as “very, very smart, but not in an obnoxious way”, and an avid reader with a keen interest in ancient philosophy and military strategy. He was fun to be around, largely because he had “an idea a minute”, some quirkier than others. When he called one day to say he had written the opening to a rap adaptation of Shakespeare’s Coriolanus set in LA during the 1992 race ­riots, she agreed to work with him on it.

Bannon’s faith was evidently important to him – at one point he considered ­adapting St Mark’s Gospel for the cinema – but the writing partners rarely discussed politics. Jones, who considers herself left-of-Bernie-Sanders, told me that though he expressed “the usual GOP views” he usually ignored rather than confronted the opinions of liberals he worked with. The most overtly political project Jones and Bannon co-wrote was his directorial debut – In the Face of Evil: Reagan’s War in Word and Deed, released in 2004. The trailer splices Reagan’s “A Time for Choosing” speech with footage from the Second World War, Communist-era Russia and the 9/11 attacks, intercut with pseudo-religious captions: “In mankind’s bloodiest and most barbaric century . . . came a man with a ­vision. An outsider, a radical with extreme views . . . of how to confront evil. Evil is powerless . . . if the good are unafraid.”

Jones says: “The Reagan documentary really launched Steve into the world of Washington politics. Before that he was a wannabe film-maker in Hollywood.” It was at an early screening of In the Face of Evil that he first met Andrew Breitbart, the founder of the eponymous news group. He later began making films with David Bossie, who leads the conservative advocacy group Citizens United. Bossie introduced Bannon to Donald Trump in 2011, when Trump was contemplating running for the Republican presidential ticket. Bossie and Bannon worked together on hagiographic documentaries of the Tea Party leaders Sarah Palin and Michele Bachmann, as well as Generation Zero (2010), which attributed the 2007 financial crash to a “failure of culture”, and Occupy Unmasked (2012), which promised to tell “the true story of the radicals behind the Occupy movement”.

“People have said I’m like Leni Riefenstahl,” Bannon told the Wall Street Journal in 2011, adding that he was a “student of” the Nazi propagandist, as well as the Soviet director Sergei Eisenstein and the liberal documentary-maker Michael Moore.

In his new incarnation as a crusading film-maker, he started to dress differently. Jones recalls how, while he was working on The Undefeated, his 2011 film about Sarah Palin, “I looked up one day and I couldn’t tell him from Michael Moore.”

 

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After the 11 September 2001 attacks, Bannon’s world-view grew darker. He has consistently argued that Islam is at odds with Western values and civilisation. In a speech delivered to a conference at the Vatican in 2014, he argued that the West is “at the beginning stages of a global war against Islamic fascism”, using the phrase popularised by Christopher Hitchens. He sees the whole religion, and not just its violent fringes, as a threat. “If you look back at the long history of the Judaeo-Christian West’s struggle against Islam, I believe that our forefathers kept their stance, and I think they did the right thing. I think they kept it out of the world,” he said.

Pudner, his friend from Richmond, says Bannon first expressed an interest in entering politics after the 2007-2008 financial crisis. Bannon’s father, who is in his nineties and with whom Bannon is very close, lost almost all his life savings as the stock market crashed. “He felt like, ‘My dad’s working class, worked his whole life, put money away to save up and now he has no money to do anything, and all my old friends at Goldman Sachs are figuring out how all the rich people are not hurt in this recession,’” Pudner told me. “That was his first motivation, when he just said, ‘You know something? I’m going to have to get into politics because something’s wrong here.’”

Bannon’s anger at the financial elite did not forestall his profound hatred for the Occupy movement. While promoting Occupy Unmasked, he said, with characteristic crudeness, that the film would leave viewers wanting “to go home and shower because you’ve just spent an hour and 15 minutes with the greasiest, dirtiest people you will ever see”. He is also no champion of the poor. The focus of his concern is those in the middle, who he believes are hardest hit in an economy that provides “socialism for the very poor and the wealthy and a brutal form of capitalism for everybody else”.

He argues that the United States faces a threat to its existence, not only because of its financial vulnerability but also because capitalism has become separated from its “Judaeo-Christian” roots. The solution he proposes is a populist, middle-class revolt against the Democratic Party and the “apparatus on the left”, which includes the mainstream media and the education system, as well as the Republican leadership.

In a speech to the Liberty Restoration Foundation in 2011, Bannon described the challenge facing post-crash America as the “great fourth turning in American history”. The Fourth Turning is a 1997 book by William Strauss and Neil Howe which argues that history works in 80-to-100-year cycles, each culminating in a two-decade “turning” or “crisis”, in which the old civic order is replaced by a new one. “Around the year 2005, a sudden spark will catalyse a Crisis mode. Remnants of the old social order will disintegrate. Political and economic trust will implode. Real hardship will beset the land, with severe distress that could involve questions of class, race, nation and empire,” the book warns. The result could be war, civil violence, a break-up of the US, or authoritarianism, “Yet Americans will also enter the Fourth Turning with a unique opportunity to achieve a new greatness as a people.”

 

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By 2012 Bannon had transformed himself again, this time from film-maker to far-right media chief. Two years earlier, he had begun offering free office space to Andrew Breitbart for his pugnacious news site. When Breitbart died of heart failure at the age of 43 in March 2012, Bannon, already a board member of the Breitbart group, was appointed chairman. Under his leadership, breitbart.com pursued an anti-immigrant, anti-Muslim agenda and ran such incendiary headlines as “‘Would you rather your child had feminism or cancer?’”. Bannon has proudly declared that the website is “the platform for the alt right”; this term covers a broad spectrum of far-right ideologies that share a core belief that white identity is under attack. Mark Potok, a senior fellow at the Southern Poverty Law Centre, a civil rights group, told me that “alt right” is best thought of, in essence, as “a whitewashing rebranding of old-fashioned white supremacy, or white nationalism”. Among the writers Bannon championed was Milo Yiannopoulos, banned from Twitter in 2016 for racially abusing the actress Leslie Jones and encouraging his followers to do the same, and who most recently made headlines for appearing to condone paedophilia.

Many of Bannon’s former colleagues, including some of his fiercest critics, have denied that he is racist or anti-Semitic. Yet he appears, at the very least, untroubled by the prejudices of those who write for Breitbart and comprise much of its readership. In July 2016, speaking to the progressive magazine Mother Jones, he conceded that some white nationalists, anti-Semites and homophobes were attracted to the alt right, but argued that the American left also attracts “certain elements”.

Ex-staffers at Breitbart have accused Bannon of exerting dictatorial control over the site’s content, using it to curry favour with friends and take down enemies, and ordering changes to articles he deemed not vitriolic enough. “Everyone who works with Steve in a position of subordination is scared shitless of him. Because he’s a bully and he yells at people and he harasses people and he’s a nasty human being,” Ben Shapiro, a former Breitbart editor-at-large, told me.

In March 2016 several staff members, including Shapiro, left Breitbart. The trigger was the organisation’s refusal to stand by one of its reporters, Michelle Fields, after she was allegedly assaulted by Trump’s then campaign manager, Corey Lewandowski. But many also objected to Bannon transforming Breitbart into a “propaganda outlet” and “a whorehouse for Trump”, as Shapiro put it. Bannon’s media strategy was two-pronged: in 2012, as he built a growing audience on the fringe right through Breitbart, he co-founded the Government Accountability Institute, a non-profit organisation whose sophisticated investigations into subjects such as the Clintons’ finances were picked up by the wider media.

In November 2015, Bannon became the founding host of the Breitbart News Daily radio show. Donald Trump was a repeat guest. Here, the frequently offensive Bannon showed himself to be also an effective sycophant. “I know you’re a student of military history . . . ” he told the candidate who professed to have too little time to read books. The pair enjoyed an easy rapport, Bannon asking leading questions and pontificating on Trump’s wealth, the size of his rallies, his skill as a deal-maker.

“The way he gets in people’s ears is by telling them that they are the greatest geniuses he has ever met and he will make them famous and powerful,” Shapiro told me. “And then he proceeds to give the go-ahead to all of their worst instincts because if you’re the yes-man you never get fired.”

 

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Bannon often boasts that he was among the first to recognise Trump’s political potential. The property tycoon and reality-TV star announced his candidacy in June 2015 with a speech in which he pledged to build a wall between Mexico and the United States to keep out immigrant rapists, drug dealers and other criminals. “The idea of somebody running for president – of all things – who talks about essentially ethnic nationalism was a wake-up call, an electrifying event for people like Bannon and in general what is called the alt right,” says Lawrence Rosenthal, the chair of the Centre for Right-Wing Studies at the University of California, Berkeley. Even before Bannon formally joined Trump’s campaign the two men enjoyed a close relationship. Trump consulted Breitbart and other fringe websites for news and echoed their anti-foreigner, America First rhetoric.

“Bannon saw in Trump someone who could be a vehicle for realising at the presidential level those kinds of ideological tenets. While Trump saw in Bannon someone who was very effective at messaging along the lines of what Trump had already understood about nativism: anti-immigrant, that kind of nationalist rhetoric,” Rosenthal says. He believes that Bannon “reveals the ideological heart of Trumpism”.

An unnamed former associate described Bannon to Politico as “the Rain Man of nationalism” because of his speed-reading habits. The Politico site reported that he had urged White House staff to read books such as Sun Tzu’s Art of War and Nassim Nicholas Taleb’s Antifragile, a treatise on how to thrive in an age of chaos and uncertainty.

Public comments made by Bannon show his familiarity with writers who remain obscure beyond far-right circles. In his 2014 Vatican speech, he cited the work of Julius Evola, whose writings provided inspiration for the Italian Fascists. He has repeatedly described the European migrant crisis as mirroring The Camp of the Saints, a 1973 novel by Jean Raspail, in which France and the rest of Europe are overrun by dark-skinned, faeces-eating, sexually predatory refugees bent on
overpowering the white population. However, Bannon may read more widely: late last year a New York Times reporter spotted him at an airport poring over The Best and the Brightest, David Halberstam’s account of foreign policy mistakes made by the brilliant young advisers who worked for J F Kennedy and Lyndon B Johnson. He told the reporter he had asked several people in the Trump administration to read the book, saying it’s “great for seeing how little mistakes early on can lead to big ones later”.

Bannon has been divorced three times and has three daughters, to whom he is reportedly devoted. During the presidential campaign, journalists uncovered police records showing that he was charged with domestic violence during his second marriage (he pleaded not guilty) as well as court records from after their divorce in which his ex-wife alleges that he didn’t want their twin daughters “going to school with Jews”, because he “doesn’t like Jews”. (He denies having said this.) Generally, however, those close to him say that the self-styled Prince of Darkness is enjoying his time in the spotlight and is thriving under the pressure of his new role.

The chief strategist had a glaringly obvious influence on Trump’s inaugural address, and is reported to have pushed for the administration’s hard line on immigration. Under Trump, the White House website no longer mentions climate change, nor does it have a section on LGBT rights. Bannon has described global warming as a “manufactured crisis” (implying it isn’t real); Breitbart similarly dismisses climate change as a “hoax” and a “scam”. He has little patience with left-wing identity politics but is obsessed with right-wing identity politics. On his watch, Breitbart published several articles under the tag “Black Crime” and stories on “immigrant” and “illegal alien” crime before Trump landed on the same theme.

He is also reported to have been responsible for some of Trump’s more reckless executive orders, such as the so-called Muslim ban, overturned by the courts again this month. His rash approach to policymaking may be a product of his combative personality. “Any time there’d be a sort of controversial move his first instinct was always: go for it . . . and that’s what blows up in his face,” Shapiro told me. Having made the transition from outsider agitator to ultimate political insider, Bannon may find his long-term success depends on an ability to curb his attack-dog instincts and to compromise.

Bannon once compared himself to “Cromwell in the House of Tudors”, the history buff perhaps having forgotten that ultimately Thomas Cromwell was executed for treason. The Trump administration having spent its first weeks in near-permanent crisis mode, that boast may yet come to haunt him. Yet the master of reinvention could equally outlast Trump. “If they all get swept out of the White House, Bannon’s still going. He’s still got an agenda; Trump isn’t all he’s interested in,” Julia Jones told me.

It is not clear where he might end up, should Trump no longer serve his interests, but this much is evident: the right-wing Leninist is unnaturally good at getting what he wants and to where he wants to be.

Sophie McBain is a New Statesman contributing writer

Sophie McBain is a freelance writer based in Cairo. She was previously an assistant editor at the New Statesman.

This article first appeared in the 23 March 2017 issue of the New Statesman, Trump's permanent revolution