Obama Won on a Populist Surge -- So Where's the Populist Policy?
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I don't mind losing when we lose, but I hate losing when we win.
One big reason that Barack Obama now occupies the big chair in the Oval Office is that he embraced the public's rising indignation at the blatant greed of Wall Street bankers, striking the proper populist tone in last year's presidential election. After all, these slick financial elites crashed our economy, yet they kept enriching and pampering themselves, even as taxpayers were being forced to throw hundreds of billions of dollars at their failing institutions.
Having won and taken office, Obama proceeded to rip right into the bankers' shameless avarice, denouncing their "culture of narrow self-interest and short-term gain at the expense of everything else."
Great stuff! Go get 'em, Barack!
A week later, however, the president's treasury chief, Timothy Geithner, rolled out the administration's plan to add more than a trillion dollars to the ongoing Wall Street bailout, and -- Holy William Jennings Bryan -- Obama's populist bark had been reduced to a puppy whimper! It seems that Geithner and Obama's top economic advisor, Lawrence Summers -- both of whom have long been cozy with the very same greed-headed bankers who caused the financial mess we're in -- had been cooing into the president's ears about the "danger" of "harshly" punishing executives and "spooking" private investors.
Thanks to them, even though populist politics won, populist policy lost. Gone from Obama's proposal is the idea that top managers of the failed banks -- the executives who made the foolhardy investments that brought the system down -- should be ousted (if not tarred and feathered). Instead, our trillion-plus bucks are to be put right into those same hands! If ignorance is bliss, Geithner and Summers must be ecstatic.
The Soft-on-Wall Street boys also prevailed over those who pushed to impose strict limits on the pay of top executives whose banks are getting our bailout money. While Obama's team did put a $500,000 annual cap on cash paid to the CEO, the restriction does not apply to Citigroup, Bank of America, JPMorgan Chase and about 350 other banks that've already grabbed bailout funds. It only applies to those taking money in the next phase of the giveaway. Also, the executives who do fall under the cash cap can receive unlimited bonuses in the form of stock payments.
The worst part of this political cave-in is not in the details, but in the principle that was abandoned. Obama hit it on the head when he denounced "the culture" of executive entitlement that has infested America's corporate world.
In the past couple of decades, the ethical notion that business leaders should be trustees for the enterprise -- with responsibilities to future shareholders, employees and the larger society -- has been displaced by a singular focus on amassing short-term wealth for the few by driving up the stock price, no matter what shortcuts must be taken to achieve that soulless goal. CEOs who can jack up those prices, by hook or crook, are hailed as geniuses and treated as royalty, no matter how much damage they're doing to their company or our country.
This celebration of manipulated wealth has even fostered an absurd bit of conventional wisdom that we can't get competent executive talent for a mere $500,000 a year. This stems from the prevailing (and pernicious) corporate fiction that the best are, by definition, the ones who're paid the most. Yet 500K is 25 percent more than our country's president makes, more than our top-rated non-profit leaders receive, more than most community bankers take and way more than America's finest teachers are paid. Wall Street conveniently equates compensation with value -- and since CEOs compensate themselves extravagantly, they've come to assume that they are America's most valuable people. Indispensable, even.