[Marxism] Bracing for a Bailout Backlash

[Dbachmozart@xxxxxxx]

Bracing for a Bailout Backlash 
 
 
 
By _ADAM NAGOURNEY_ 
(http://topics.nytimes.com/top/reference/timestopics/people/n/adam_nagourney/index.html?inline=nyt-per)
 
Published: March 15, 2009 
 
WASHINGTON â The Obama administration is increasingly concerned about a  
populist backlash against banks and Wall Street, worried that anger at 
financial  
institutions could also end up being directed at Congress and the White House  
and could complicate _President Obama_ 
(http://topics.nytimes.com/top/reference/timestopics/people/o/barack_obama/index.html?inline=nyt-per)
 âs agenda.

 
The administrationâs sharp rebuke of the _American International Group_ 
(http://topics.nytimes.com/top/news/business/companies/american_international_group/
index.html?inline=nyt-org)  on Sunday for handing out  $165 million in 
executive bonuses â _Lawrence H. Summers_ 
(http://topics.nytimes.com/top/reference/timestopics/people/s/lawrence_h_summers/index.html?inline=nyt-per)
 , director 
of the presidentâs  National Economic Council, described it as 
âoutrageousâ on 
âThis Weekâ on ABC â  marks the latest effort by the White House to 
distance 
itself from abuses that  could feed potentially disruptive public anger. 
âWeâve got enormous problems that need to be addressed,â _David Axelrod_ 
(http://topics.nytimes.com/top/reference/timestopics/people/a/david_axelrod/index.
html?inline=nyt-per) , Mr. Obamaâs senior adviser, said in an  interview. â
And itâs hard to address because thereâs a lot of anger about the  
irresponsibility that led us to this point.â 
âThis has been welling up for a long time,â he said. 
Mr. Obamaâs aides said any surge of such a sentiment could complicate efforts 
 to win Congressional approval for the additional bailout packages that Mr. 
Obama  has signaled will be necessary to stabilize the banking system.  
As it is, there have already been moves in Congress to limit compensation to  
executives at banks and Wall Street firms that are receiving government help 
to  survive. 
Beyond that, a shifting political mood challenges Mr. Obamaâs political  
skills, as he seeks to acknowledge the anger without becoming a target of it. A 
 
central question for Mr. Obama is whether his cool style â âin a time of 
crisis,  we cannot afford to govern out of anger,â he said in his address to 
Congress  last month â will prove effective when the country may be feeling 
more  
emotional. 
Even as Mr. Summers was denouncing A.I.G. for the bonuses, he suggested that  
there was little if anything the government could do to stop them, seconding 
the  conclusion of _Treasury_ 
(http://topics.nytimes.com/top/reference/timestopics/organizations/t/treasury_department/index.html?inline=nyt-org)
  Secretary 
_Timothy F. Geithner_ 
(http://topics.nytimes.com/top/reference/timestopics/people/g/timothy_f_geithner/index.html?inline=nyt-per)
 . But even if their 
reasoning was  legally sound, they also risked having the administration look 
ineffectual in  the face of what Mr. Summers said was the worst financial abuse 
of 
the last 18  months, since the economy began turning down in earnest. 
âNever underestimate the capacity of angry populism in times of economic  
stress,â said Robert Reich, a professor of public policy at the University of 
 
California, Berkeley, and labor secretary under President _Bill Clinton_ 
(http://topics.nytimes.com/top/reference/timestopics/people/c/bill_clinton/index.html?
inline=nyt-per) . âA big challenge for President Obama will  be to maintain a 
rational and tactical public discussion in the midst of this  severe 
downturn. The desire for culprits at times like this is strong.â 
In a further development, A.I.G. on Sunday named dozens of financial  
institutions that benefited from its huge rescue loan from the Federal Reserve  
last 
fall. The list included _Goldman Sachs_ 
(http://topics.nytimes.com/top/news/business/companies/goldman_sachs_group_inc/index.html?inline=nyt-org)
 , _Merrill 
Lynch_ 
(http://topics.nytimes.com/top/news/business/companies/merrill_lynch_and_company/index.html?inline=nyt-org)
  and Wachovia. 
On Monday, the White House is expected to unveil proposals to help small  
businesses, an effort to make clear that the administration is not only 
focusing  
its attentions on Wall Street and big corporations like the automakers.  
But the _financial crisis_ 
(http://topics.nytimes.com/top/reference/timestopics/subjects/c/credit_crisis/index.html?inline=nyt-classifier)
  is the most 
acute problem facing the  administration, one it will not be able to play down. 
_Christina D. Romer_ 
(http://topics.nytimes.com/top/reference/timestopics/people/r/christina_d_romer/index.html?inline=nyt-per)
 , the White Houseâs chief 
economist,  said Sunday on âMeet the Pressâ on _NBC_ 
(http://topics.nytimes.com/top/news/business/companies/nbc_universal/index.html?inline=nyt-org)
  that the 
administration was close to unveiling  details of its plan to remove the 
worst of the bad assets from the books of  banks, a move sure to refocus 
attention 
on winners and losers from bailouts. 
The disclosure that A.I.G., which has received $170 billion in government  
assistance to remain afloat and avert a cascade of failures in the financial  
system, is paying bonuses to its executives is the latest in a series of  
episodes that Mr. Obamaâs aides said seemed to be feeding a resurgence of 
public  
anger.  
The public responded angrily to previous disclosures of large bonuses on Wall 
 Street, to auto executives who flew on corporate jets to Washington for  
Congressional bailout hearings, and to last weekâs face-off between _Jon 
Stewart_ 
(http://topics.nytimes.com/top/reference/timestopics/people/s/jon_stewart/inde
x.html?inline=nyt-per)  of âThe Daily Showâ and _Jim Cramer_ 
(http://topics.nytimes.com/top/reference/timestopics/people/c/james_j_cramer/index.html?inline
=nyt-per) , the CNBC financial commentator, over the  networkâs reporting on 
the crisis. 
âThereâs unquestionably a strong populist surge out there,â said Joel  
Benenson, Mr. Obamaâs pollster, citing his own polls and focus groups. 
âItâs  been 
brewing for close to four years. For the last two years, Americans were  
clearly indicating that they believe that one of the biggest obstacles to  
progress on Americaâs toughest challenges â notably health care and energy  
independence â was the influence of special interests and corporate interests 
on  the 
agenda in Washington.â 
A New York Times/CBS News Poll in February found that 83 percent of  
respondents said the government should cap the amount of compensation earned by 
 
executives of companies that are getting federal assistance. 
Mr. Obamaâs advisers argued that to at least some extent, this was a  
sentiment they could tap to push through his measures in Congress, including  
raising 
taxes on the wealthy. They pointed out that in his speech to Congress,  Mr. 
Obama denounced corporations that âuse taxpayer money to pad their paychecks  
or buy fancy drapes or disappear on a private jet.â  
âThe president has been very clear about this,â Mr. Axelrod said. âThere 
is  
reason for anger, but we also have to solve the problem. We need a 
functioning  credit system. Thatâs our responsibility, and he intends to meet 
it.â 
Still, aides acknowledged the risks of a backlash as Mr. Obama tries to  
signal that he shares American anger but pushes for more bail-out money for  
banks 
and Wall Street.  
For all his political skills and his capturing of the nationâs desire for  
change in the 2008 election, Mr. Obama, a product of _Harvard_ 
(http://topics.nytimes.com/top/reference/timestopics/organizations/h/harvard_university/index.ht
ml?inline=nyt-org)  Law School who calls upscale Hyde Park in  Chicago home, 
has shown little inclination to strike a more populist tone. The  danger, 
aides said, is that if he were to become identified as an advocate for  the 
banks 
and Wall Street, people could take out their anger on him. 
âThe change now is you have a free-floating economic anxiety that has  
expressed itself in a kind of lashing out at those being bailed out and people  
who 
are bailing out,â said Michael Kazin, a professor at _Georgetown University_ 
(http://topics.nytimes.com/top/reference/timestopics/organizations/g/georgetown_
university/index.html?inline=nyt-org)  who has written on populism.  âThereâ
s not really a sense of what the solution is.â 
âI do think thereâs a potential for a âdamn everybody in powerâ kind of 
 
sentiment,â Mr. Kazin said.  
<_http://www.nytimes.com/2009/03/16/us/politics/16assess.html?hp_ 
(http://www.nytimes.com/2009/03/16/us/politics/16assess.html?hp) >
**************A Good Credit Score is 700 or Above. See yours in just 2 easy 
steps! 
(http://pr.atwola.com/promoclk/100126575x1220439616x1201372437/aol?redir=http:%2F%2Fwww.freecreditreport.com%2Fpm%2Fdefault.aspx%3Fsc%3D668072%26hmpgID
%3D62%26bcd%3DfebemailfooterNO62)
________________________________________________
YOU MUST clip all extraneous text when replying to a message.
Send list submissions to: Marxism@xxxxxxxxxxxxxxxxxxx
Set your options at: 
http://lists.econ.utah.edu/mailman/options/marxism/archive%40archives.econ.utah.edu