The bailout backlash problem
posted at 11:36 am on March 16, 2009 by Ed Morrissey
The New York Times writes carefully today about a growing concern in the White House over a backlash on its bailouts for private industry. Adam Nagourney notes that a rising populist anger against financial institutions and leaders make the subsidies fraught with political peril. He fails to note, however, the people who spent the last two years stoking all of that populist anger:
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’s agenda.
The administration’s sharp rebuke of the American International Group on Sunday for handing out $165 million in executive bonuses — Lawrence H. Summers, director of the president’s National Economic Council, described it as “outrageous” on “This Week” on ABC — marks the latest effort by the White House to distance itself from abuses that could feed potentially disruptive public anger. …
Beyond that, a shifting political mood challenges Mr. Obama’s 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 — “in a time of crisis, we cannot afford to govern out of anger,” he said in his address to Congress last month — 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 Secretary Timothy F. Geithner. 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.
“Never underestimate the capacity of angry populism in times of economic stress,” said Robert Reich, a professor of public policy at the University of California, Berkeley, and labor secretary under President Bill Clinton. “A 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.”
Both Nagourney and Reich seem to have suffered from amnesia. The angry populism in the electorate didn’t begin with the bailouts, or the economic crisis. Democrats spent the last two years — really, the last six years — stoking that anger and attempting to turn it into electoral gold.
The turn towards populism began with John Edwards in the 2004 election, with his “Two Americas” nonsense. He tried his best to gin up as much class-warfare anger as he could, and almost built it high enough to use half of a term in the Senate as a springboard to the White House, losing out to John Kerry in the 2004 primaries. Kerry tried harnessing Edwards’ populism but fell short of the presidency.
In this past election, Edwards again tried his Two Americas schtick, but eventually both Barack Obama and Hillary Clinton stole his thunder. Obama spent a lot of his time railing against high profits in the oil industry, for instance, as a means to gain support for windfall-profits taxes. Obama made more successful use of populist anger against institutions of wealth and power than anyone since Jimmy Carter, winning a clear majority largely on the basis of his populist rhetoric in a time of economic crisis.
Now he’s worried that his partnership with his former targets will damage him politically. Obama may be belatedly discovering some ancient wisdom: a rabble, once roused, is very difficult to un-rouse. Provoking anger and class warfare is a dangerous game, one that usually burns the person who set the torch as much as anyone else.
Michelle has more on how that populist anger has begun to focus on Obama. We can expect more of this as the economy sinks. Just wait until people finally realize that class warfare is all Obama has in his arsenal.