Barack Obama was elected to the White House just after the turmoil of TARP and the climax of the crisis of financial markets. People throughout the country had deep suspicions of the government and justifiably so. After all, the Bush years were a feeding frenzy for cronyism and corporate welfare. The TARP and the AIG scandals called a bailout emitted a stench that fortified the convictions of those who say government is there to fleece people on behalf of powerful interests. Our president elect, who had so artfully inspired us to suspend our cynicism and believe that under his leadership we could make things better, faced an uphill challenge.
On inauguration day taming the financial crisis was still job one. Obama had, in the pressure of the financial fears, turned to a team of veterans from the Clinton economics team, most notably Larry Summers and Tim Geithner. They were shovel ready policy makers having manned the pumps at the Treasury in the 1990s. Unfortunately, their appointments aroused suspicions that the practice of shoveling money into Wall Street cronies would continue unabated.
Stories of Treasury Secretary Geithner dining with Pete Peterson in New York, or consulting with Robert Rubin in the halls of the Treasury were reassuring signals to the inside players of too big to fail finance. Yet they were tone deaf transmissions that could not be narrowcast only to those financial insiders. An enraged public was paying attention like never before. Business as usual was corrosive to the image of the newly elected President and the team did not get it. That image, crafted by candidate Obama, included anti lobbying statements and the Cooper Union speech on financial regulation. It was an image that had been heartily embraced by a body politic that was angered by the financial shenanigans of insiders who had used the people's money to limit their own losses and trashed the economy. Obama the candidate conveyed that he understood and would solve the problem. His pragmatism was part of his magnetism.
As AIG bonuses were announced, and defended by the Obama economic team on television, people talked along two tracks that could barely cohere. Obama is a good guy, give him a chance, give him time, was the melody of the music. Disbelief that his appointees were tone deaf to the concerns outside Wall Street and carrying on financial sector pandering was the discordant harmony.
The President is a wonderful communicator. A charismatic on the scale of JFK, and his poll numbers have ridden above the Congress and exhibit an extraordinary resilience. Yet, it is often observed by the wise old sage types, that one's brilliance stands adjacent to, and in partnership with, one's tragic flaw.
Rather than take on Wall Street with tough action that would demonstrate once and for all that the era of unregulated greed fed by a failed ideology was over, Obama tried to convince the American people that strength was demonstrated in resisting the urge to lash out at the captains of finance rather than in bringing them to heel. One wonders if he really thought this was true. Unfortunately none of us could infer if this was pandering to financial sector power or displaying a stroke of pragmatic genius.
But it had a terrible side effect. It did not abruptly and clearly differentiate him from the Bush regime that preceded him and the TARP tainted crony capitalism that was the closing act of Bush's tenure in office. Together with tepid efforts to affix blame onto the Bush/Cheney years for the large fiscal deficits he inherited, Obama, through his choice of appointees and early actions that were too Wall Street friendly, became responsible for the dysfunctional economy rather than the knight in shining armor that would solve the problems and lead us back to prosperity. Many people today, who see the Wall Street rebound and their bonus pool explosion alongside rising unemployment and foreclosures, have lost hope because they see no end in sight for the politics of Wall Street protectionism.
One year after his election, and 10 months after taking office people are feeling acute stress in a faltering economy. People need actions and will not depend upon mere words, however artfully delivered. Charismatic speeches are losing traction like a boy who cries wolf. People still appear to feel that the President is a good-hearted man in a tough job. But they can rightly ask if he has the nerve to get the job done.
A person with great persuasive power can use it in two ways in politics. It can be used to cultivate the energy of the general interest, to enliven participation to take on the special interests, or it can be used to try and mollify the people and to facilitate the agenda of elites behind the disguise. The former use of persuasive power cannot be successful if it is suspected of being the latter. The public can return to cynicism.
Our President must now resist the temptation to rely on his historic strength, oratory prowess. He and his advisors would do well to decide which subset of the powerful industry groups they will abandon as they navigate the remainder of Obama's term. This is not something they have done well in the health care debate where all the industry groups were taken care of, while the population's concerns were largely left behind the door.
To turn things around, after the elections in New Jersey and Virginia last night sent a shot across his bow, Obama must choose those enemies in the money politics world in order to give himself space to create benefits for the people who elected him. The people, particularly the young people, who are the ones he inspired to believe that under his leadership we could transform this nation into a hopeful nation built on personal responsibility and fair play, are waiting for actions, not words. As a nation we are stagnant now and the pain is increasing. The imbalances in our society are there for all to see and I sense that the pressure for action will not abate in the months ahead. If our President tries to talk his way out of this challenge without taking the risk of meaningful economic and financial reform, he will likely be viewed as a leader who was, in Tavis Smiley's words, Tragically Charismatic.