Bailout Watch: Bush's Subtle Scheme to Stop Obama Reforms

In his first radio address as President-elect, Barack Obama made this strong statement:

"[We will] ensure that the rescue plan that passed Congress is working to stabilize financial markets while protecting taxpayers, helping homeowners and not unduly rewarding the management of financial firms that are receiving government assistance."

That's an important marker - this Financial Week story shows, the corporate community takes the declaration seriously. All of that is good news. As Naomi Klein ably shows, fixing the bailout is not just a piddling side project - if left the way it is, it could cripple the economy.

That said, it looks like the Bush administration is going to do everything it can to keep things just the way they are.

Buried in the Washington Post's paean to George Bush's newfound commitment to transparency and bipartisanship, we get this nugget ascribing a more pernicious motive to the niceties:

Likewise, the administration is laying the groundwork for an unusual level of access to the Treasury Department and other agencies involved in attempts to stabilize the foundering economy. White House spokesman Tony Fratto said Friday that Treasury is preparing office space that will allow Obama aides to sit alongside current dministration officials.

Fratto said such efforts are intended to send a signal that Treasury's approach will not change too abruptly when Obama takes office. (emphasis added)

There you have it - in newspaper print, no less. The current administration on record saying the objective of involving Obama's transition team in Treasury decisions is to try to coerce that team into backing off Obama's own promises (to use the Times' own phrasing) to abruptly change Treasury's current approach.

Now, I don't think for a second the scheme is going to fully work. Obama's not filling his first economic declarations with promises of bailout reform with the intent of allowing a humiliated Bush administration to stop him. I may be cynical, but I'm not cynical enough to believe that Obama goes totally flaccid on this issue. He saw the presidential exit polls showing the bailout bill is more unpopular than ever. And he clearly has the capacity to understand that a poorly executed bank rescue could destroy his ability to right the economy.

That said, anyone who has worked in government knows things are never black and white. When expectations are forged, subtle pressure administered, and devilish details written, it can be difficult to convert foundational principles into federal law, especially when you are effectively sharing power with another power player (in this case, the outgoing president).

So bottom line: The bailout, because it vests so much power in the White House, is certainly something to keep a close watch on during this transition and in the early months of the Obama administration. The incoming president will have near-dictatorial control to change the program any way he sees fit, without much input from Congress at all. But the outgoing president has that dictatorial control now - and is now on record saying he's going to try to use that control to try to preemptively tie the hands of President Obama.

Comments

[darthdarcy]

Now is everyone still feeling great about this Bi-Partisan nonsense while Bernanke is stealing Trillions out from under our noses and refusing to say you got the money, and Paulson slipped a little memo through that changes Federal Tax Law Sec. 382 costing the American people $142 Trillion and why keep FBI Director Mueller if he sits by and allows our Treasury to be plundered..as many say illegally...?

Bi-Partisan my A$$..!

[Joeyjackal]

In any case, these are numbers in taxpayer dollars that are so large it's difficult to wrap one's mind around them. However, I think you meant 142 billion rather than trillion. The first instance in which I was introduced conceptually to something enumerated in quadrillions (a thousand trillion) concerned the weight of our entire planet in pounds. I know this isn't a silver lining except maybe for the plutocrats. When history looks back on the Bush presidency, I'm afraid it will be regarded as a run on the US treasury. Robber barons, yes and compassionate conservatives, not so much.

[dctackett]

I think you've got it wrong...

WaPo: "such efforts are intended to send a signal that Treasury's approach will not change too abruptly when Obama takes office."

Sirota: "current administration on record saying the objective... is to try to coerce that team into backing off Obama's own promises to abruptly change Treasury's current approach."

where do you see that their "objective... is to try to coerce that team into backing off Obama's own promises"?

I understand the suspicion... but really... don't go grasping at straws...

It sounds like exactly what it says... they get involved now, so when Obama becomes president the changes aren't so abrupt...

[northstar11]

are you not assuming the treasury will bend towards obama, while sirota assumes the treasury will bend obama to its point of view.

[darthdarcy]

There is nothing subtle about it David, it's Bush's Scorched Earth Policy...!

Leave nothing for the new administration to use to aid the average American and then after four ineffectual years due to the largest heist in the history of mankind, win reelection...

Simple as that..

[research]

Yup, then the GOP "suddenly" discover fiscal restraint for the democratic administration.

"Do as I say, Not as I do" is the GOP command.

[americaforme]

I'm glad you refuse to be discouraged. The quicker the destructive Bush&Co. gets out the better. They are behaving like rentals, destroying as much as possible, in as short of time. Old Fashion loyalty flys out the window, when folks dont want to make major changes. Too bad, suck it up, Bush&Co.

[Sundialsvc4]

"Dictatorial control" can just be shortened to the word "dictator."

It is indeed true that you have thousands of civil officers in this Government, from the highest offices to the most mundane, who will do everything in their considerable power to make sure that the High Crime does not stop.

The Prodigal Son did not stop his self-destructive ways until he was literally starving, and had probably just gotten the s**t kicked out him yet-again by an angry sow. (Those animals can kill a man rather easily.) Frankly, as long as they continue to wield the un-challenged power to simply declare that "the Constitution is 'off the table,'" it's a sign that your doom is still to continue that downward spiral.

When "the Son" finally hit bottom... who was it who "got up, tried to clean himself up a bit, and went home?" The son himself, and none other.

The American people are tired of being Plaintiffs, and they're utterly aware that this is precisely what they HAVE become. They remember, and revere, the promises made in the Preamble of a founding document that they, in fact, respect and treasure quite deeply.

The criminals, per contra, treasure nothing at all. "Their ending has been ordained," as the saying goes. Their nefarious influence will continue until a leader finally arises that will use the full and terrible authority of the Executive Branch to speak the word that is one everyone's tongue:

"No."

[MaynardGK]

The lame-duck congress needs to de-authorize all unallocated funds (at least $300b) and revisit the whole issue.

[vippy]

I really believe they had much more sinister plans for us, remember Bush said we are facing the ABYSS if we don't hurry but Rush Limbaugh says it is all Obama's fault. Are we stupid yet?

[darthdarcy]

Bush in true Republican fashion is practicing a "Scorched Earth Policy"...it's always "Party First" when it comes to Republicans, Party over Country every time...!

[tompoe]

Suppose it turns out that a shift to air and solar power, decentralized, projects several trillion dollars more than shifting centralized air and power and traditional energy resources over the same period. It then becomes a no-brainer to institute energy reforms away from centralized corporate control. Obama has a mandate that allows such a decision, regardless of what war criminal Bush thinks or does. The numbers are there. The experts are there. What's to worry? Unless, of course, there's this little detail of financial market reform. Will Obama defer to the EU and Asia? That, I think, is the kicker.

[NorCalNative]

David, I'm disgusted with this administration's attitude towards governmental leadership in general. This is simply another step in their attempts to dismantle our Democratic Republic and shape it into something radically different that what our Founding Father's intended.

How long can we keep distorting the fundamentals of markets and keep calling what we have Capitalism? Doesn't the concept of Moral Hazzard STILL deserve a place at the table? If capitalism depends on competition and free markets, then I think what we're talking about here is a completely different animal.

And, as much as this radical lefty would love to heap all the blame on Republican's the real problem is our American lifestyle's based on OVER-CONSUMPTION OF GOODS. We are acting on a national level as if we have several planet Earth's at our convenient disposal. Much of the blame must be placed on Bush and the corporate media, but citizens of all political stripes are also complicit because of partaking in the established and accepted norms of American consumption.

[RoloTomassi]

The real problem is NOT over-consumption; it is a problem, such is not at the core of the issue. And your assumptions about capitalism are couched in the nonsense of free market fundamentalism, which is about as scientific/logical as Catholicism.

The fundamentals of the market need to be controlled, and contrary to all that you've heard, capitalism can function just fine without the nonsensical mantra of "distortion free" free markets--that concept is an economic fallacy, and one that needs to be discredited across the board.

Read up on what is happening, and to better understand the true economic origins, definitely read Klein's SHOCK DOCTRINE; we cannot afford to muddle about in ignorance, regurgitating Chicago doctrine talking points while free market fundamentalists are conniving new ways to head off progressive change and maintain the status quo.

[knowBuddhaU]

Thanks, o brother my Brother.

I was very encouraged to hear Obama say he'd review the bailout. And even moreso to learn he is side-stepping the obvious traps laid for him by Paulson.

Whoever tries to play word games with our Poet-President-Elect has a rude awakening in store. As a poet myself, I'm horrible at number games.

But only a fool plays word games with poets. We see right through them, almost always right away. Be assured of this, o reader my Reader: ***We don't like it.*** So, to whoever else may be reading, take my advice: don't go there. You won't like it, either.

[avraamjack]

.
In any case, it is good that Obama's people are up to speed on day zero.
.

[JBS]

Not if it turns out the current administration managed to divert them down a blind alley.

[newsferret]

I have a feeling Bush's administration underestimates the transition team and what will be the Cabinet - and they most certainly underestimate President Elect Obama. He is a formidably intelligent man with a razor intellect.

Already he's calling Bush's bluff and making it known that he will not renege on commitments to human rights issues with respect to Columbia so that Bush can play back scratching games with him on the auto industry. Obama demands and will have open, transparent and fully accountable government, a concept to which the current gang are complete strangers. No doubt Bush will leave tripwires, snares and bearpits behind him, but Obama already knows that and will be well prepared.

My guess, going by the rumble on the net, is that he will send in his transition team to work like sharp-eyed sniffer dogs alongside the outgoing administration, but Obama will distance himself from Washington for the time being so as not to be caught up in mindgames and blackmails. He's a very clever man and a principled one.