[Marxism] How Obama and Valerie Jarrett Helped Launch Their Political Careers in an Outrageous 'Urban Renewal' Scheme

Louis Proyect lnp3 at panix.com
Sun Feb 24 11:43:49 MST 2013


How Obama and Valerie Jarrett Helped Launch Their Political Careers in 
an Outrageous 'Urban Renewal' Scheme
January 25, 2013

As President Obama's second term begins, and inequality, especially for 
black Americans, is worse than it was when Obama first took office, it's 
worth revisiting progressives' and Obama supporters' impression of the 
president as somebody who might actually care about equality and helping 
the most unfortunate in society. And a big centerpiece of that 
impression, which endures despite evidence that he's at best ambivalent, 
is his early days in Chicago. The narrative that Obama is a 
salt-of-the-earth community organizer has been spoon-fed to the American 
populace since Obama first began campaigning. In reality, there's a big 
piece of the president's past that has gone under-reported that will 
help us to understand Obama and his closest adviser Valerie Jarrett a 
bit better: Obama and Jarrett built the nexus of political support that 
took him to the presidency by participating in one of the most appalling 
examples of neoliberal-corrupted City Hall-"urban renewal projects" in 
recent history that enriched developers and investors and destroyed the 
lives of thousands of Chicago's poorest black residents, in some cases 
using his community organizer job as camouflage.

We have the opportunity to revisit our impression of Obama thanks to a 
speech by Robert Fitch [3], a radical journalist and activist who 
chronicled the destruction of public housing in his 1996 book, The 
Assassination of New York, in which he detailed the changing landscape 
of the city at the hands of bankers and developers. New York's poorest 
were left to the mercy of the extremely rich, who used their power and 
money to gentrify, gut and obliterate public housing. Fitch's accounts 
of the plunder of New York and Obama's efforts in Chicago offer a 
different narrative than we're often accustomed to hearing -- they 
weren't the "fault of Republicans," but rather examples of the most 
frequent attack on democracy and the general welfare: how politicians 
"of all stripes" served the interests of the richest and most powerful 
in the society. In the case of NY and Chicago, the powerful took the 
form of a collection of interests that Fitch called FIRE: finance, 
insurance and real estate.

During a speech delivered at the Harlem Tenants Associations in November 
2008, directly after Obama's presidential win, Fitch explained how the 
new president and other middle-class blacks, including Valerie Jarrett 
and Obama's wife Michelle, climbed the power ladder in Chicago at the 
expense of poor African Americans by aligning themselves with "friendly 

     ...[A]s Obama knows very well, for most of the last two decades in 
Chicago there’s been in place a very specific economic development plan. 
The plan was to make the South Side like the North Side. Which is the 
same kind of project as making the land north of Central Park like the 
land south of Central Park. The North Side is the area north of the 
Loop—Chicago’s midtown central business district—where rich white people 
live; they root for the Cubs. They’re neighborhood is called the Gold Coast.

     For almost a hundred years in Chicago blacks have lived on the 
South Side close to Chicago’s factories and slaughter houses. And 
Cellular Field, home of the White Sox. The area where they lived was 
called the Black Belt or Bronzeville—and it’s the largest concentration 
of African American people in the U.S.—nearly 600,000 people—about twice 
the size of Harlem.

     In the 1950s, big swaths of urban renewal were ripped through the 
black belt, demolishing private housing on the south east side. The 
argument then was that the old low rise private housing was old and 
unsuitable. Black people needed to be housed in new, high-rise public 
housing which the city built just east of the Dan Ryan Expressway. The 
Administration of the Chicago Housing Authority was widely acclaimed as 
the most corrupt, racist and incompetent in America. Gradually only the 
poorest of the poor lived there. And in the 1980s, the argument began to 
be made that the public housing needed to be demolished and the people 
moved back into private housing. …

     If we examine more carefully the interests that Obama represents; 
if we look at his core financial supporters; as well as his inmost 
circle of advisors, we’ll see that they represent the primary activists 
in the demolition movement and the primary real estate beneficiaries of 
this transformation of public housing projects into condos and 
townhouses: the profitable creep of the Central Business District and 
elite residential neighborhoods southward; and the shifting of the pile 
of human misery about three miles further into the South Side and the 
south suburbs.

     Obama’s political base comes primarily from Chicago FIRE—the 
finance, insurance and real estate industry. And the wealthiest 
families—the Pritzkers, the Crowns and the Levins. But it’s more than 
just Chicago FIRE. Also within Obama’s inner core of support are allies 
from the non-profit sector: the liberal foundations, the elite 
universities, the non-profit community developers and the real estate 
reverends who produce market rate housing with tax breaks from the city 
and who have been known to shout from the pulpit“ give us this day our 
Daley, Richard Daley bread.”

     Aggregate them and what emerges is a constellation of interests 
around Obama that I call “Friendly FIRE.” Fire power disguised by the 
camouflage of community uplift; augmented by the authority of academia; 
greased by billions in foundation grants; and wired to conventional FIRE 
by the terms of the Community Reinvestment Act of 1995. And yet friendly 
FIRE is just as deadly as the conventional FIRE that comes from bankers 
and developers that we’re used to ducking from. It’s the whole 
condominium of interests whose advancement depends on the elimination of 
poor blacks from the community and their replacement by white people 
and—at least temporarily—by the black middle-class—who’ve gotten 
subprime mortgages—in a kind of redlining in reverse.

Evidence of the public-private partnerships’ failures emerged almost 

The public housing included in Senator Obama's transformation plans, 
such as the 504 apartments in the squat brick buildings of Grove Parc 
Plaza, quickly fell into disrepair. Reports emerged of uninhabitable 
units [4] with collapsed roofs, fire damage, mice infestations, and 
sewage backups. In 2006, federal inspectors graded the condition of the 
complex an 11 on a 100-point scale, a score so bad the buildings were 
demolished in 2011 [5].

A Boston Globe review [6] found that thousands of apartments across 
Chicago that had been built with local, state and federal subsidies -- 
including several hundred in Obama's former district -- deteriorated so 
completely they were no longer habitable. Grove Parc, a project that 
was, along with several other prominent failures, developed and managed 
by Obama's close friends and political supporters, became a symbol of 
the broader failures of handing over public subsidies to FIRE cronies, 
private companies to build and manage affordable housing, an approach 
lauded by Obama as the best, sometimes only, replacement for public housing.

At the time, Jarrett was the chief executive of Habitat Co., which 
managed Grove Parc Plaza from 2001 until the winter of 2008 and 
co-managed an even larger subsidized complex in Chicago that was seized 
by the federal government in 2006 after city inspectors found widespread 
problems. Jarrett had earlier served as Commissioner of the Department 
of Planning and Development from 1992 through 1995. When questioned by 
the Globe, Jarrett defended Obama's position that public-private 
partnerships are superior to public housing.

     "Government is just not as good at owning and managing as the 
private sector because the incentives are not there," said Jarrett, 
whose company manages more than 23,000 apartments. "I would argue that 
someone living in a poor neighborhood that isn't 100 percent public 
housing is by definition better off."

But as theGlobe pointed out [6], Daley's plans to privatize Chicago 
public housing quickly drew criticism:

     [Chicagoans] asked why the government should pay developers to 
perform a basic public service -- one successfully performed by 
governments in other cities. And they noted that privately managed 
projects had a history of deteriorating because guaranteed government 
rent subsidies left companies with little incentive to spend money on 

     Most of all, they alleged that Chicago was interested primarily in 
redeveloping projects close to the Loop, the downtown area that was 
seeing a surge of private development activity, shunting poor families 
to neighborhoods farther from the city center. Only about one in three 
residents was able to return to the redeveloped projects.

     "They are rapidly displacing poor people, and these companies are 
profiting from this displacement," said Matt Ginsberg-Jaeckle of 
Southside Together Organizing for Power, a community group that seeks to 
help tenants stay in the same neighborhoods.

     "The same exact people who ran these places into the ground," the 
private companies paid to build and manage the city's affordable 
housing, "now are profiting by redeveloping them."

Obama believes deeply that privatization works. He once told theChicago 
Tribune that he had briefly considered becoming a developer of 
affordable housing, but after graduating from Harvard Law School in 
1991, he turned down a job with Tony Rezko's development company, 
Rezmar, to instead work at the civil rights law firm Davis, Miner, 
Barnhill & Galland. The firm represented a number of nonprofit companies 
that were partnering with private developers to build affordable housing 
with government subsidies.

The Globe reported that shortly after becoming a state senator in 1997, 
Obama told theChicago Daily Law Bulletinthat his experience working with 
the development industry had reinforced his belief in subsidizing 
private developers of affordable housing. "That's an example of a smart 
policy," the paper quoted Obama as saying. "The developers were thinking 
in market terms and operating under the rules of the marketplace; but at 
the same time, we had government supporting and subsidizing those efforts."

What Obama is describing is corporate welfare: the government subsidizes 
private companies which then lack incentive to provide services to 
tenants because the government i.e. taxpayers will continue funding them 
regardless, and then the same private companies win new contracts down 
the road when they demolish and rebuild apartments as part of a 
"revitalizing" scheme.

Oftentimes, Obama's community organizer veneer served to camouflage his 
FIRE roots. For example, Grove Parc Plaza opened in 1990 as a 
redevelopment of an older housing complex, and the new owner was a local 
nonprofit company called Woodlawn Preservation and Investment Corp, led 
by two of the neighborhoods' most powerful ministers, Arthur Brazier and 
Leon Finney. All of this sounded like grassroots in action. However, 
Woodlawn Preservation hired a private management firm, William Moorehead 
and Associates, to oversee the complex. The company then lost that 
contract and a contract to manage several public housing projects for 
allegedly failing to do its job, and was subsequently convicted of 
embezzling almost $1 million in management feeds theGlobe reported.

Woodlawn Preservation then hired a new property manager, Habitat Co., 
where Valerie Jarrett served as executive vice president. Residents told 
the Globe that the complex deteriorated under Moorehead's management and 
the decline continued after Habitat took over. A maintenance worker at 
the complex told the Globe that money often wasn't available for steel 
wool to plug rat holes, but regardless federal inspectors rated Grove 
Parc an 82 out of 100 as late as 2003.

In their extensive report on Obama's private-public partnership 
failings, theGlobe profiles one of the largest recipients of government 
subsidies: Rezmar Corp, founded in 1989 by Tony Rezko, who between 1999 
and 2008 used more than $87 million in government grants, loans, and tax 
credits to renovate about 1,000 apartments in 30 Chicago buildings. 
Companies run by the partners also managed many of the buildings, 
collecting government rent subsidies. Neither Rezko, nor his partner 
Daniel Mahru, had any development experience [6]:

     Rezmar collected millions in development fees but fell behind on 
mortgage payments almost immediately. On its first project, the city 
government agreed to reduce the company's monthly payments from almost 
$3,000 to less than $500.

     By the time Obama entered the state senate in 1997, the buildings 
were beginning to deteriorate. In January 1997, the city sued Rezmar for 
failing to provide adequate heat in a South Side building in the middle 
of an unusually cold winter. It was one of more than two dozen 
housing-complaint suits filed by the city against Rezmar for violations 
at its properties.

     People who lived in some of the Rezmar buildings say trash was not 
picked up and maintenance problems were ignored. Roofs leaked, windows 
whistled, insects moved in.

     "In the winter I can feel the cold air coming through the walls and 
the sockets," said Anthony Frizzell, 57, who has lived for almost two 
decades in a Rezmar building on South Greenwood Avenue. "They didn't 
insulate it or nothing."

"Affordable housing run by private companies just doesn't work," Mahru 
told the Globe. "It's difficult, if not impossible, for a private 
company to maintain affordable housing for low-income tenants."

Most of Rezko and Mahru's buildings have since been foreclosed upon, 
forcing the tenants to find new housing.

When Obama opened his campaign for state senate in 1995, Rezko's 
companies gave $2,000 on the first day of fundraising, and as the 
Globepoints out, essentially "seeded the start of Obama's political career."

While Obama eventually distanced himself from Rezko, he maintained close 
ties to other developers. Jarrett became a close adviser, and Obama 
chose Martin Nesbitt, chairman of the Chicago Housing Authority, as his 
campaign treasurer. Nesbitt was one of the key overseers of the shift 
toward private management and development. And Obama kept the rich 
families around him.

 From the Globe story [6]:

     As a result, some people in Chicago's poorest neighborhoods are 
torn between a natural inclination to support Obama and a concern about 
his relationships with the developers they hold responsible for 
Chicago's affordable housing failures. Some housing advocates worry that 
Obama has not learned from those failures.

     "I'm not against Barack Obama," said Willie J.R. Fleming, an 
organizer with the Coalition to Protect Public Housing and a former 
public housing resident. "What I am against is some of the people around 

     Jamie Kalven, a longtime Chicago housing activist, put it this way: 
"I hope there is not much predictive value in his history and in his 
involvement with that community."

In a 2012 Harpersmagazinearticle, Ben Austen [7] writes that the area 
around Cabrini-Green no longer resembles the neighborhood he remembered 
from his years growing up in Chicago in the '70s and '80s.

     Down the street from 1230 N. Burling stood a mixed-income 
development of orange-bricked condos and townhomes called Parkside of 
Old Town. Its squat buildings were outfitted with balconies and adorned 
with purple ornamentation and decorative pillars. There was a new 
school, a new police station, a renovated park, and a shopping center 
with a Dominick’s supermarket and a Starbucks. A Target was expected on 
the site the last tower would soon vacate. Later, I would warm up two 
blocks south in @Spot Café, where employees from Groupon’s nearby 
corporate headquarters streamed in to pay full price for lattes and panini.

     Today, what seems harder to fathom than the erasure of entire 
high-rise neighborhoods is that they were ever erected in the first 
place. For years the projects had stood as monuments to a bygone effort 
to provide affordable housing for the poor and working-class, the 
reflection of a belief in a deeper social contract.

Shortly before the demolition of 1230 N. Burling in 2012, Austen 
attended a Chicago Housing Authority meeting during which residents 
protested the board in response to the city forcing poor people off 
prime real estate. Activists included residents and supporters of a 
housing project called Lathrop Homes, a development in a well-off 
section of the North Side that was next in line to be demolished.

“The residents didn’t want to be forced into the private market or into 
temporary housing, especially since they doubted they’d be able to 
return to whatever replaced Lathrop; nor did they agree that market-rate 
apartments were needed in the redeveloped community, as the surrounding 
area was already full of market-rate condos,” Austen wrote.

Chicago’s $1.6 billion “Plan for Transformation [8]” envisioned a mix of 
public-housing residents with market-rate condos and subsidized rentals 
or homes, with one-third of each in these new communities.

In late 2012, NPR detailed how after more than a decade in the works, 
one of the country’s most closely watched public housing experiments was 
badly failing, partly due to the flailing economy.

NPR profiled Lathrop resident Mary Thomas [8]:

     Thomas has lived here for eight years with her husband and 
7-year-old son. Lathrop sits on what many now consider prime land, next 
to the Chicago River. A busy street splits the development into a north 
and south section.

     The north side is completely shuttered, cordoned off by gates, a 
ghost town of boarded-up buildings. Thomas lives in the open southern 
section, where steam from the old heating system wafts into the street. 
About 170 of the 900-plus units are occupied.

     Thomas says all three of the concepts for Lathrop should be dumped 
and there should be more input from residents. She says there's little 
affordable housing in the area and there's no need for market-rate units 
at all.

Far from adopting a reflective attitude in the wake of Chicago’s failed 
experiment in public-private housing partnerships, Obama has now taken 
his love of public-private codependence to a national level, touting 
public-private partnerships in everything from creating jobs to 
education to tackling insurance fraud to collaborations involving 
foreign nations [9], which you can bet means the wealthiest 
multinational conglomerates teaming up to increase their profits at the 
expense of the 99 percent.
The First Lady played her own part in the Chicago racket of profiting 
off the poor. Michelle Obama worked at the University of Chicago Medical 
Center "redirecting" low-income patients to community hospitals in order 
to use its own beds for rich patients. Nick Jouriles, president of the 
American College of Emergency Physicians, released a statement [10] 
saying the practice comes "dangerously close to patient dumping," a 
practice made illegal by the Emergency Medical Labor and Treatment Act 
(EMTALA), and reflected an effort to "cherry pick" wealthy patients over 

     "This is a dangerous precedent that could have catastrophic effects 
in poor neighborhoods across the country. Congress needs to hold 
hearings about the problems facing emergency patients. If other 
community, non-profit hospitals follow this example and shift the lion’s 
share of resources to its high-revenue elective patients and procedures, 
it will leave many emergency patients virtually out in the cold. The 
University of Chicago Medical Center is located in a poor neighborhood 
whose residents have few, if any, other options for emergency care."

     The media barely paid any attention to Michelle Obama's role in all 
of this, though the Chicago Sun-Times reported in 2008 that her 
$317,000-a-year role as Vice-President of the hospital helped create the 
patient-dumping program.

Quoted in a related Washington Post [11] article, Quentin Young, a South 
Side physician, remarks the scheme is nothing more than an "attempt to 
ensure that the hospital retains only affluent patients with insurance."

     "If you put enough money into it, you could save a whole bunch of 
community health centers," Young said. "But to date, they haven't."

     Edward Novak, president of Chicago's Sacred Heart Hospital, 
declined to discuss the center's initiative in particular but dismissed 
as "bull" attempts to justify such programs as good for patients. "What 
they're really saying is, 'Don't use our emergency room because it will 
cost us money, and we don't want the public-aid population,' " Novak said.

At the end of January this year, community residents launched a protest 
outside the University of Chicago Medical Center, angry that the 
hospital ignored their needs [12], especially for "victims of gun 
violence," according to a news report: "One woman said her son, shot 
just blocks away from the university, died on the way to a hospital ten 
miles away." Four were arrested at the protest.

Robert Fitch’s words hold true: the poor remain at the mercy of the 
rich, who are seeking profits on everything possible, including their 
homes, but also their water, healthcare and education.

[1] http://www.alternet.org
[2] http://www.alternet.org/authors/allison-kilkenny
[3] http://www.scribd.com/doc/92392289/Fitch-on-Obama
[7] http://harpers.org/archive/2012/05/the-last-tower/2/
[10] http://www.acep.org/content.aspx?id=44294
[12] http://wgntv.com/2013/01/27/4-arrested-at-hospital-protest/
[13] http://www.alternet.org/tags/obama-0
[14] http://www.alternet.org/tags/chicago
[15] http://www.alternet.org/tags/community-organizer
[16] http://www.alternet.org/tags/robert-fitch
[17] http://www.alternet.org/%2Bnew_src%2B

More information about the Marxism mailing list