By Dan Froomkin
4:12 PM ET, 01/29/2009
Well, that changes things a little. President Obama, in an appearance with Treasury Secretary Timothy F. Geithner, just ripped into banks for continuing their profligate ways even as they are being bailed out with taxpayer money. He even mentioned the $50 million luxury jet that I referenced earlier today.
"One point I want to make is that all of us are going to have responsibilities to get this economy moving again," he said. "And when I saw an article today indicating that Wall Street bankers had given themselves $20 billion worth of bonuses -- the same amount of bonuses as they gave themselves in 2004 -- at a time when most of these institutions were teetering on collapse and they are asking for taxpayers to help sustain them, and when taxpayers find themselves in the difficult position that, if they don't provide help, that the entire system could come down on top of our heads, that is the height of irresponsibility. It is shameful...
"The American people understand that we've got a big hole that we've got to dig ourselves out of, but they don't like the idea that people are digging a bigger hole even as they're being asked to fill it up....
"And, you know, Secretary Geithner already had to pull back one institution that had gone forward with a multimillion-dollar jet plane purchase at the same time as they're receiving TARP money.
"We shouldn't have to do that, because they should know better. And we will continue to send that message loud and clear."Where's Obama the Populist?
By Dan Froomkin
1:14 PM ET, 01/29/2009
(For an explanation of the recent format change, please read this post.)
Barack Obama campaigned as a champion of the little guy -- and kicked off his presidency on decidedly populist notes. The marquee event of inauguration night was a "neighborhood ball" open to everyday Americans. The next morning, the president and first lady welcomed people off the street into their new home for an open house.
But as Obama takes on the enormous challenge of trying to right a perilously listing economy, he seems to be abandoning at least some of that populism in an attempt not to upset Republicans and Wall Street.
In his first days, Obama has spent more time jawing with -- and making concessions to -- Republicans than Democrats. His photo ops are with corporate CEOs, not labor leaders or laid-off workers. His senior economic team represents the dominant Wall Street culture, and is apparently considering a financial rescue plan that will most directly help the same fat cats who gave themselves more than
$18 billion in bonuses last year, even as they tanked the economy. Despite dramatic new ethics policies, Obama is peppering his administration with lobbyists. And he appears to be in no hurry to repeal Bush's tax cuts for the rich.
At the same time, the Obama team is eschewing even the easiest appeals to populism, responding with discreet pressure rather than more public outrage earlier this week when it was revealed that executives at Citibank -- who received a $45 billion infusion of tax dollars -- were buying a $50 million corporate jet.
And what does Obama have to show for all this outreach and restraint? So far, not much. He got his stimulus bill passed in the House yesterday -- but without a single GOP vote.
My Live Online audience yesterday was in high dudgeon about Obama's concessions on the stimulus bill -- first loading it up with business tax cuts, then bowing to GOP pressure and cutting funding for family planning and the restoration of the Mall.
New York Times opinion columnist Paul Krugman responded to yesterday's vote with an angry blog post: "The House has passed the stimulus bill with not a single Republican vote. Aren't you glad that Obama watered it down and added ineffective tax cuts, so as to win bipartisan support?"
But the real populist test case may be the Obama economic team's response to the crisis afflicting the country's financial institutions. Rather than address the underlying foreclosure epidemic, his advisers are focusing on the banks. And rather than nationalize institutions that took outrageous risks and should therefore suffer the consequences, they appear to be intent on a massive bailout with taxpayer money.
David Cho wrote in The Washington Post yesterday: "President Obama's top advisers are in the final stages of debating several perilous options to right the financial system, all of which are likely to prove unpopular and in some cases carry a significant risk of failure, according to sources in contact with the officials...
"On the table are several approaches, which officials have begun to experiment with on a smaller scale. One would give the firms a federal guarantee protecting them against losses on assets that are backed by failing mortgages and other troubled loans. Another would set up new government institutions to buy these toxic assets. A third would inject more money into financial firms in exchange for ownership stakes, perhaps ending with nationalization in all but name....
"Publicly, these officials said they plan to provide clearer guidelines and oversight for how government money is spent and promised to use rescue funds to help homeowners, small businesses, municipalities and other consumers as part of a comprehensive plan, which could be released this week or next. But other senior government officials and economists said they expect the bulk of the rescue funds to continue going to financial firms...
"All of the rescue efforts are difficult to explain to ordinary Americans, who criticize the government for spending too much money to aid financial firms that started the crisis in the first place."
Stephen Labaton and Edmund L. Andrews write in the New York Times that newly-minted Treasury Secretary Timothy F. Geithner yesterday "discouraged speculation that the plan would include the nationalization of some banks.
"'We have a financial system that is run by private shareholders, managed by private institutions, and we'd like to do our best to preserve that system,' he said."
By contrast, consider this CNN commentary from Nobel-Prize winning economist Joseph E. Stiglitz, who raises the question: "Perhaps the entire strategy is flawed? Perhaps what is needed is a fundamental rethinking. The Paulson-Bernanke-Geithner strategy was based on the realization that maintaining the flow of credit was essential for the economy. But it was also based on a failure to grasp some of the fundamental changes in our financial sector since the Great Depression, and even in the last two decades."
Stiglitz looks back at the government's recent experiment with "equity injection, without strings." The result was that "as we poured money into the banks, they poured out money, to their executives in the form of bonuses, to their shareholders in the form of dividends.
"Some of what they had left over they used to buy other banks -- to pursue strategic goals for which they could not have found private finance. The last thing in their mind was to restart lending."
The alternative, Stiglitz writes, is for the the government to take over "those banks that cannot assemble enough capital through private sources to survive without government assistance.....
"To be sure, shareholders and bondholders will lose out, but their gains under the current regime come at the expense of taxpayers. In the good years, they were rewarded for their risk taking. Ownership cannot be a one-sided bet."
He concludes: "Inevitably, American taxpayers are going to pick up much of the tab for the banks' failures. The question facing us is, to what extent do we participate in the upside return?
"Eventually, America's economy will recover. Eventually, our financial sector will be functioning -- and profitable -- once again, though hopefully, it will focus its attention more on doing what it is supposed to do. When things turn around, we can once again privatize the now-failed banks, and the returns we get can help write down the massive increase in the national debt that has been brought upon us by our financial markets."
Dean Baker, co-director of the liberal Center for Economic and Policy Research, wrote recently on Huffingtonpost.com: "The idea that we would give one more penny to this crew that has wrecked the economy should make taxpayers furious. There is a legitimate public interest in keeping the banks operating; a modern economy needs a well-operating financial system. But, there is zero public interest in rewarding shareholders and overpaid banks executives.
"These executives bankrupted their banks and brought the economy down with them. They belong in an unemployment line not collecting multi-million dollar paychecks in their designer office suites.
"The obvious answer is to take over the insolvent banks, just as we did with the insolvent S&Ls....
"This is the only reasonable solution to the mess that the bankers have created. The other solutions are simply efforts to transfer dollars from hardworking taxpayers to overpaid and incompetent bank executives. It is hard to believe that anyone would take it seriously, if not for the enormous political power of the Wall Street gang."
And in the view of influential Washington blogger Steve Clemons, that power extends right into the highest levels of the White House.
"Obama and [Chief of Staff] Rahm Emanuel have hired a group of people who are going to make the rich stay rich -- and who are not designed to really change things for the middle class or the struggling lower end," Clemons writes.
"After all, it was they who said that the economy was booming, that offshoring was great, that manufacturing was not important, that those CEOs deserved that high pay and little could be done about it, and the reason that the middle class was being left behind is that they were becoming less globally competitive and/or they didn't have the educational background or fortitude to keep pace with the highest end earners."
Obama could have hired advisers "who might have kept some balance between those who could think through the micro-economic dimensions of economic policy and the macro types who helped contribute to today's problems -- but Obama's selections have mostly been the latter type of Robert Rubin acolytes. I would count Council of Economic Advisors Chair Christina Romer in that mix as well as both National Economic Council Chair Lawrence Summers and Treasury Secretary Timothy Geithner....
"Obama has essentially brought in the same crowd of people or ideological fellow travelers who helped hatch the Clinton era manic finance fest that the Bush administration made worse."The Lobbyists
By Dan Froomkin
12:32 PM ET, 01/29/2009
Obama's new lobbying rules are undeniably the strictest the White House has ever had. But the exceptions are starting to pile up.
Kevin G. Hall writes for McClatchy Newspapers: "President Barack Obama on Wednesday named a politically connected top executive of a financial services company that's seeking federal bailout money to be his chief legal counsel on the economy, a move raising ethical concerns with watchdog organizations and casting a shadow on Obama's campaign theme of change.
"In a statement on Wednesday morning, Obama said he appointed Neal Wolin, division president of The Hartford Financial Services Group Inc., to become his deputy White House counsel for economic affairs. That makes Wolin the top legal adviser on economic issues...
"'It raises questions. He may be a great lawyer, but he has to be walled off from insurance decision-making, and I assume he will be, based on Obama's statements,' said Robert Hunter, director of insurance for the Consumer Federation of America, a consumer watchdog organization. 'If he isn't, I would be very troubled.'...
"White House spokeswoman Jen Psaki defended the selection last night.
"'Neal has unparalleled experience in dealing with financial issues as a lawyer in both government and the private sector,' she said. 'We are fortunate to have his counsel in this time of financial crisis. It is unlikely he will have any need to address the Hartford specifically in his work in the White House, and if he does he will recuse.'"
Kenneth P. Vogel and Mike Allen write for Politico that "at least a dozen former lobbyists have found top jobs in his administration, according to an analysis done by Republican sources and corroborated by Politico.
"Obama aides did not challenge the the list of lobbyists appointed to administration jobs, but they stressed that former lobbyists comprise a fraction of the more than 8,000 employees who will be hired by the new administration."
Pete Yost writes for the Associated Pres: "The White House on Wednesday defended Treasury Secretary Timothy Geithner's choice of Mark Patterson — an ex-lobbyist from Goldman Sachs — to be his chief of staff."
Ian Swanson writes for The Hill: "'These waivers are supposed to be very select and very rare,' said Public Citizen's Craig Holman, who advised Obama's transition team as it crafted the lobbying rules. He said there are 'plenty of competent people' available to the Defense Department who do not work for major defense contractors.
"'The waiver we saw already was inappropriate,' Holman said of the exception granted to Lynn. He said Lynn has a vested interest in Raytheon, and could serve as a model for why the lobbying rules preventing conflicts of interest are necessary....
"Kenneth Gross, a lobbying ethics expert at Skadden, Arps, Slate, Meagher & Flom, thinks Obama will face more pressure to issue waivers across his administration. ...
"Officials with expertise in housing, finance, trade, healthcare and energy will be needed across the administration, and Gross and others say that in order to hire the most qualified people, Obama will face pressure to hire those with lobbying experience. Restricting lobbyists from some appointments could force the administration to rely on more inexperienced help, or appointees from academia."
The highest-profile waiver thus far has been granted to William Lynn, to serve as deputy secretary of defense fresh from a stint as a lobbyist for defense contractor Raytheon.
Mark Thompson writes for Time that "the idea that Lynn is 'uniquely qualified' — the White House's language — for the post is simply bogus. The phrase doesn't mean merely good or talented — it means that Lynn, of all the possible candidates for the position, is the only person who could fill it."An End to War(s)
By Dan Froomkin
12:09 PM ET, 01/29/2009
Roger Cohen writes in his New York Times opinion column: "In his first White House televised interview, with the Al Arabiya news network based in Dubai, United Arab Emirates, President Obama buried the lead: The war on terror is over.
"Yes, the with-us-or-against-us global struggle — the so-called Long War — in which a freedom-loving West confronts the undifferentiated forces of darkness comprising everything from Al Qaeda to elements of the Palestinian national struggle under the banner of 'Islamofascism' has been terminated.
"What's left is what matters: defeating terrorist organizations. That's not a war. It's a strategic challenge.
"The new president's abandonment of post-9/11 Bush doctrine is a critical breakthrough. It resolves nothing but opens the way for a rapprochement with a Muslim world long cast into the 'against-us' camp. Nothing good in Israel-Palestine, Afghanistan or Iran could happen with that Manichean chasm."
Los Angeles Times opinion columnist Rosa Brooks raises Cohen three wars: "Barack Obama ended four wars during his first week as president. With just a few words and strokes of his pen, the president ended the war on terror, the war on Islam, the war on science and the war on women....
"Don't make the mistake of thinking that these assorted 'wars' were only metaphors, incapable of producing real harm. The 'war on terror' was practically a gift to Osama bin Laden: Our detention and interrogation policies probably fueled far more terrorism than they prevented. Ditto for the Bush administration's undeclared war against Islam.
"The Bush administration's replacement of science with ideology was equally devastating: How many lives will be lost or blighted as we all pay the price for a decade of denial about the human causes of global warming? And some estimate that as many as 500,000 women worldwide have died since 2001 as a result of botched abortions, many of which might have been prevented if the Mexico City policy hadn't pushed abortions and abortion counseling underground in many countries.
"Obama's job is just beginning. The wars in Afghanistan and Iraq will be far harder to end.
"Still, not bad for a week's work."
By Dan Froomkin
12:05 PM ET, 01/29/2009
Anne E. Kornblut writes in The Washington Post about how Obama is sticking close to home for now, and "will be delegating a heavier-than-expected share of the travel duties to his most prominent surrogates, including Vice President Biden."
Sheryl Gay Stolberg writes in the New York Times about the "many signs that a more informal culture is growing up in the White House under new management."
Michael D. Shear and Juliet Eilperin write for washingtonpost.com about how Interior Secretary Ken Salazar took to the podium in the White House briefing room yesterday and vowed to "clean house at his department, ridding it of the 'ethical transgressions, the blatant conflicts of interests, wastes, and abuses that we have seen over the last eight years.'"
Edward Cody writes in The Washington Post that "The United States, it turns out, has declared war on Roquefort cheese." Chalk it up to a last-minute move by the Bush administration.
Debbi Wilgoren, Rich Leiby and DeNeen L. Brown write in The Washington Post: "President Obama this morning signed a law that expanded the time frame in which workers can sue for discrimination they have experienced based on gender, race, national origin or religion."
Joe Klein writes in Time that Obama "has reversed the tactical, win-the-news-cycle sensibility of recent presidencies. During his first week in office, at least, he opted for strategy and substance over show biz."
Helen Thomas writes in her Hearst opinion column: " President Obama has promised an administration that is open and transparent. I'll believe it when I see it... All the administrations I have covered -- dating back to Kennedy -- have been secretive and shown little respect for keeping the people informed of what is being done in their name -- unless a president wants to brag about an accomplishment. Then the government's giant information machine whirls into action."
And Rush Limbaugh makes a modest proposal in a Wall Street Journal op-ed: "Fifty-three percent of American voters voted for Barack Obama; 46% voted for John McCain, and 1% voted for wackos. Give that 1% to President Obama. Let's say the vote was 54% to 46%. As a way to bring the country together and at the same time determine the most effective way to deal with recessions, under the Obama-Limbaugh Stimulus Plan of 2009: 54% of the $900 billion -- $486 billion -- will be spent on infrastructure and pork as defined by Mr. Obama and the Democrats; 46% -- $414 billion -- will be directed toward tax cuts, as determined by me."My Morning Read
By Dan Froomkin
9:45 AM ET, 01/29/2009
President Obama gets his stimulus bill passed in the House -- but without one GOP vote. So who really won? Who was vindicated? What does this bode for the future?
Peter Wallsten writes in the Los Angeles Times about how Obama's first big legislative victory nevertheless didn't deliver the post-partisan era that he called for in his inauguration address.
Paul Kane writes in The Washington Post that a top White House adviser warned of the political fallout GOP lawmakers could face from constituents struggling in tough economic times.
Steven T. Dennis and Shira Toeplitz write in Roll Call (subscription required) about how congressional Republicans have placed a very large bet against Obama.
Here is Obama's statement after the vote.
Meanwhile, the question I think I'll be exploring for my main item today is this: How much is Obama abandoning economic populism in his quest not to upset Republicans and Wall Street? And is that serving him well? Your thoughts in comments would be welcome.
UPDATE AT 1:20
Here's some commentary on the stimulus vote:
Blogger Hilzoy writes: “There are good reasons to try for bipartisan support regardless of how likely you think you are to succeed.
“If you do succeed, then both parties have some ownership of the stimulus bill, neither will be as eager to politicize it, and it will be harder for either to use it to beat up the other. This is good. If you try hard, and publicly, to attract Republican support, but fail, then Republicans look like intransigent ideologues who would rather try to score political points than actually deal with the serious problems the country faces. You, by contrast, look reasonable: you tried to reach out, but your efforts were rejected.”
The New York Times editorial board writes: “The signature achievement of the $819 billion stimulus and recovery bill, passed on Wednesday by the House, is that it directs most of its resources where they would do the most good to stimulate the economy….
“President Obama and the lawmakers who wrote the bill are to be commended for not letting size distort the substance. Contrary to the claims of Republican opponents that the bill indiscriminately rains money down, the amounts and categories of spending have, for the most part, been calculated carefully and chosen well.”
E.J. Dionne Jr. writes in his Washington Post opinion column that the main battle over how to improve the economy is now taking place among Democrats. “One camp favors using the stimulus to focus on the needs of Americans of modest means,” while another “sees the bills as shorting investments for infrastructure: roads, bridges and particularly mass transit,” and “environmentalists have pushed for large investments in clean energy and conservation.”
What about the GOP? “Because of their philosophical leanings, most Republicans have chosen to make themselves irrelevant to the debate,” Dionne writes. “They prefer to insist on more tax cuts for the well-off and for business, ignoring the reality that all but the most ideological economists dismiss such measures as having limited value in boosting the economy.”The Daily Schedule
By Dan Froomkin
9:42 AM ET, 01/29/2009
Today's public schedule for President Obama and Vice President Biden, after the jump.
DAILY GUIDANCE AND PRESS SCHEDULE FOR THURSDAY, JANUARY 29, 2009
President Barack Obama will deliver remarks and sign the Lilly Ledbetter Bill tomorrow morning in the East Room. Following the signing the President will briefly drop by a reception where Mrs. Obama and Lilly Ledbetter will speak. This bill will be a big step forward not just for women, but for families. It is not only a measure of fairness, but can be the difference for families struggling to make ends meet during these difficult times. The remarks and bill signing are open to print and riser space is already allocated.
The President will receive the Presidential Daily Briefing, the Economic Daily Briefing and attend a meeting with senior advisors tomorrow morning in the Oval Office. In the afternoon, President Obama will hold a meeting with Vice President Biden and Treasury Secretary Timothy Geithner in the Oval Office. There will be a pool spray at the top of the meeting. The President will meet with Secretary of State Hillary Clinton in the Oval Office. This will be closed press.
Press Schedule for January 28, 2009
6:45am POOL CALL TIME (outside north doors of the Palm Room)
10:00am THE PRESIDENT signs Ledbetter Bill, Mrs. Obama will also attend
East Room OPEN PRESS (Pre-set 8:30am Final Gather Time: 9:30am)
10:40am THE PRESIDENT will stop by a reception
State Dining Room Closed Press
11:00am THE PRESIDENT receives Presidential Daily Briefing
Oval Office Closed Press
11:30am THE PRESIDENT receives Economic Daily Briefing
Oval Office Closed Press
11:50am THE PRESIDENT meets with senior advisors
Oval Office Closed Press
3:00pm THE PRESIDENT meets with Vice President and Treasury Secretary
Oval Office POOL SPRAY (Gather time: 2:30)
3:45pm THE PRESIDENT meets with Secretary of State
Oval Office Closed Press
1:45 PM Briefing by Press Secretary Robert Gibbs
James S. Brady Briefing Room
DAILY GUIDANCE FOR VICE PRESIDENT JOE BIDEN
Thursday, January 29th, 2009: The Vice President will be in Washington D.C. today. He will have a breakfast meeting at the Naval Observatory with Secretary of Health and Human Services-designee Tom Daschle. The Vice President will then join the President for the signing ceremony for the Lily Ledbetter Bill in the East Room. The Vice President will then attend the Presidents Daily Briefing and the Presidents economic briefing. He will also join the President for meetings with Secretary of Treasury Timothy Geithner and Secretary of State Hillary Clinton.Cartoon Watch
By Dan Froomkin
9:38 AM ET, 01/29/2009
Mike Luckovich, Tony Auth, John Darkow, Jim Morin, and Bill Mitchell on Obama and the Republicans, Rob Rogers on Obama's dilemma, David Cohen on transparency, Jimmy Margulies on being green, and Jeff Danziger and Steve Sack on Rush Limbaugh.