The White House spin doctors are getting a lot of help this morning from their scribes, trying to sell the point that the $165 million in bonuses to AIG executives is but a drop in the bucket compared to the much larger problem of fixing the economy. Rahm Emanuel says they are a "big distraction." There is tremendous pundit anxiety that the ignorant masses in their blood lust will pervert serious efforts to deal with our economic challenges and make unseemly demands for vengeance.
I live in DC now, and it's a very nice place, insulated from the pressures being felt by the rest of the country. Those economic hardships remain largely invisible here: money still flows to federal employees and government contractors, nearby counties are among the richest in America, and Tina Brown declared that the cultural center has shifted here from New York. It's a world that reveres people in the Obama administration as the new celebrities. The confidence that the American people have expressed in their ability to fix the country's problems is exceeded only by their own.
It's not that people here are unaware of those problems, far from it. But as Krugman says this morning, the "best and the brightest" in the administration are products of the financial system and they have a fundamental belief in its integrity. They think that pumping money into it with no strings attached will solve its maladies, and share the underlying assumption that bankers should continue to profit handsomely.
Here is Geithner on Feburary 10 announcing his economic stability plan, telling people what they want to hear: