Why Obama praised obscene CEO bonuses (the untold story)
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This week President Obama got himself into an awkward controversy after he apparently praised the massive CEO bonuses for Lloyd Blankfein of Goldman Sachs and Jamie Dimon of JP Morgan.
Paul Krugman delivered probably his most stinging rebuke to the president, calling him “clueless” and said if that’s how Obama thinks, “we’re doomed” (the latter of which he sort of retracted later, but regardless..).
But what almost nobody seemed to notice was a key development leading up to the interview, which seems to clearly explicate his motives. The day before it, the New York Times had a story called “In a Message to Democrats, Wall St. Sends Cash to G.O.P.” (emphasis here is mine):
If the Democratic Party has a stronghold on Wall Street, it is JPMorgan Chase.
Its chief executive, Jamie Dimon, is a friend of President Obama’s from Chicago, a frequent White House guest and a big Democratic donor. Its vice chairman, William M. Daley, a former Clinton administration cabinet official and Obama transition adviser, comes from Chicago’s Democratic dynasty.
But this year Chase’s political action committee is sending the Democrats a pointed message. While it has contributed to some individual Democrats and state organizations, it has rebuffed solicitations from the national Democratic House and Senate campaign committees. Instead, it gave $30,000 to their Republican counterparts.
The shift reflects the hard political edge to the industry’s campaign to thwart Mr. Obama’s proposals for tighter financial regulations.
Wall Street doesn’t want to be regulated (surprise!) and Obama’s agenda includes regulating them. Wall Street loves huge, undeserved executive bonuses (surprise!) and Obama has slammed them in the past. So, Wall Street’s message to Obama is: get behind our cause or face the consequences.
Does anybody honestly think this didn’t measure into Obama’s practically surreal response? It seems highly unlikely Obama actually approves of the bonuses or meant what he said; it’s more probable he’s simply playing the role of loyal party leader. Because the Democratic Party — like the GOP — is highly dependent on campaign cash from the Street.
The US government is well on its way to becoming a wholly owned subsidiary of corporate America — and the Supreme Court is doing its part to to help.
Obama spent his first year trying to simultaneously do two contradictory things — please his progressive base and placate the corporations that help fill Democratic coffers. Which brings me to why his agenda is teetering, and why his and his party’s approval ratings are tumbling.
Campaign cash may help the party plan its short-term election strategies. But it does nothing to keep voters on their side. The fact is 2008 was a mandate for sweeping progressive change, and Democratic are flailing because they haven’t delivered it. The notion that they’ve been leftist ideologues is pure garbage — progressives have gotten the shaft on every last piece of legislation this Congress has considered (or not considered).
The fact that today’s Washington is less corrupt and corporate-subservient than the Washington under Republican rule (and it’s true, the two aren’t even in the same league) is beside the point. Voters are disillusioned because they feel taken by promises that haven’t been fulfilled.
My former political science professor Jack Pitney (once a Republican operative) put it this way:
The president’s basic problem is that he set expectations that he could not meet… David Axelrod, his chief strategist, merely shrugged when a reporter asked about the congressional dealmaking: “That’s the way it has been. That’s the way it will always be.” Many political observers would agree with Axelrod, but that’s beside the point. If Democrats had wanted a nominee with experience in “the way it has been,” they would have chosen Hillary Clinton.
Hard to argue with this. To me, Obama’s fatal flaw from the earliest days of his election campaign was thinking he alone could change the way Washington works. Nobody can. He’s surely changed the way the White House works — more transparency, more attempts at bipartisanship, less exploitation of fear, more reality-based dialogues, less petty bickering — a complete 180 from the Bush House. But the rest of Washington hasn’t changed in any serious way, and it’s impossible for me to imagine how a president could do it alone.
Moreover the latest installment shows that presidents effectively have limits to their power beyond what the Constitution mandates. As the leader of the Democratic Party, Obama has to do things he doesn’t want to do for its benefit. In this case, Democrats would be at a huge disadvantage in November races if Wall Street pulled its campaign cash and sent it to the GOP instead.
And that further feeds the problematic bigger picture. Voters are sick of hearing one thing and seeing something else. Unless something changes there, the outlook for the Democratic Party isn’t good.
But this year Chase’s political action committee is sending the Democrats a pointed message. While it has contributed to some individual Democrats and state organizations, it has rebuffed solicitations from the national Democratic House and Senate campaign committees. Instead, it gave $30,000 to their Republican counterparts.
The shift reflects the hard political edge to the industry’s campaign to thwart Mr. Obama’s proposals for tighter financial regulations.
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Oh yeah, complete 180. Theres huge transparency in the Obama White House with those backroom deals on healthcare where a certain senator from Nebraska gets paid off for his support. (Petty bickering perhaps within the Dems was the cause? Duh! otherwise they wouldntve have needed to pay him off). And it sure was bipartisan, buying a vote within your own party. And if there was nothing to fear, whyd they have to convince those within their own party to go along? And so transparent. It’s also definitely reality to bring in a healthcare system anything like the one the Canadians got cause they never come here for their major surgeries, and MA is sure loving their getting less for more deal too.
So basically, you listed transparency, bipartisanship, fear, reality based dialogues, and petty bickering have all moved for the better since Bush. I think I just blew all 5 outta the water.
Mr. Kapur,
You quite correctly identified one half of the problem, the power of Wall Street. However, what is missing in your piece is the lack of any push from forces supporting greater regulation. It is a one sided fight. Mr. Obama, for all of his populist rhetoric, has so far only relied upon the existing power structure, i.e. corporate power. He has never actually attempted to use other centers of power to push his own agenda. He has certainly never attempted to go directly to the American people to rally them to support his policies. If one million people had shown up at a rally at the Capitol building demanding health care reform and greater regulation of wall street last Autumn, things would have worked out quite differently. Mr. Obama is never going win in Washington simply relying on the existing balance of forces.
Very good point.
In response to another comment. See in context »“Meet the new Boss, same as the old Boss, we won’t get fooled again” said The Who, but we fall for it over and over and over again………………..
Hello fleetlee,
Well, it was not like there were a lot of choices. Whatever else one wants to say about Mr. Obama, he is doing better than Ms. Clinton or Mr. McCain (or heaven help us, Ms. Palin) would have.
In response to another comment. See in context »I expected the reason any politician says one thing to one audience and the opposite to another is to curry favor.
In this case, it didn’t take long to find out the motive, and it doesn’t surprise me in the least given the way the health insurance industry purchased Obama’s silence throughout that process.
I am somewhat stunned that he could be bought so cheaply. $30,000 is an insult coming from these multi-billion dollar white collar thieves.
President Obama is doing enormous damage to his credibility by being cozy with Wall Street. Now the American public may not be as informed on as many issues as those of us who follow politics would like to see, but there is one issue that they understand quite clearly.
The public understands the fact that the vast majority of Wall Street firms are criminal enterprises. No need to wait for the jury to come back with a guilty verdict on this one.
President Obama and the rest of the Democratic Party had better figure this out quickly and shake their addiction to Wall Street money and break the big banks up, and then put in place much stronger financial regulations.