Obamanomics—Bad Economics, Awful Politics
When it comes to the economy, the Obama Administration seems politically brain dead — clearly not attuned to the kind of real world economics folks on Main Street must live with on a daily basis. There are many problems here, but the basic one seems to be that people at the top of this administration have bought into the notion that what’s good for Goldman Sachs is good for America,
Franklin Roosevelt won office in 1932 because he ran against the banks. He won reelection in 1936, when the country was still deeply mired in a Depression, because be was still running against the banks, against Wall Street, not only rhetorically but with real legislation that limited the games these institutions could play with the economy, games that benefited the few and hurt the many.
The Obama Administration, on the other hand, isn’t running against the banks on Wall Street. It’s fronting for them.
Yesterday a 50 percent levy on bank bonuses was announced in the U.K. Today Nicholas Sarkozy, France’s leader, said his own country might sign on to such a one-time levy. This is a simple and obvious reaction to a situation in which institutions whose past bungling has caused such global distress, institutions only saved from ruin by public intervention, institutions whose top management then turns around and gifts itself to an outrageous extent while most people still suffer the effects of their bungling, are made to pay back a bit.
This levy is being assessed in The City, the British equivalent of Wall Street and the world’s second biggest financial center, and may soon be done on the Bourse, the huge French financial center. But is there a cry from Obamaland for a similar tax here? Heaven forbid.
Oh, the President and his Treasury Secretary Tim Geithner are making shame-shame noises at Wall Street for its own $140 billion mega-bonus payments this year. They seem shocked, however, shocked!, that the trough feeders on The Street who did everything they could to feather their own nests at the expense of the public in years past are feathering them more than ever after the public bailed them out. What’s most shocking to virtually everyone else, however, is how these Washington best and brightest can be so oblivious to the public’s anger about Wall Street continuing to ride high while Main Street has been brought so low.
Don’t people at the Treasury, the Fed, the West Wing, have access to daily news media? A poll released yesterday shows that 84 percent of Americans do not believe that the recession is over, in spite of the fact that Tim and Wall Street tell them it’s over, because this 84 percent sees its own economic prospects getting darker, not better while Wall Street wallows in a sea of cash. Another poll released just today shows people want Wall Street bonus babies to pay for generating more jobs on Main Street. Add to this the several polls of recent days that show that most Americans no longer view Mr. Obama favorably, in large measure because they see his policies aiding Wall Street and the banks rather than themselves.
Politically speaking, Obamanomics has been a disaster for the President and his party. Why then, do they pursue this path? Why do they not push for an excess profits tax on Wall Street bonuses? Why not press ahead for a transaction tax on The Street’s own massive version of worthless day trading? Why are they backing off on limiting the pay of executives who still work in companies the government (i.e. us) largely own?
It all comes back to the incredible view that what’s good for Goldman Sachs is good for America.
In a later post I’ll examine the merit of this belief. In the interim, may I suggest to people in this administration that they wake up to the fact that all the money funneled to them directly and indirectly by Street next year is not going to save them from a nasty trouncing at the polls if they don’t stop acting like The Street’s water carrier.