By Dan Froomkin
3:40 PM ET, 03/19/2009
President Obama is attempting to redirect the public fury over the AIG bonuses into outrage over the way the whole economy's been tilted toward the super-rich over the last decade -- precisely the problem he's trying to address with his hugely ambitious budget plan and his push for greater financial regulation.
It's not clear that Obama will succeed in rerouting the rage, though -- at least not yet. The public's anger, as reflected in the media, seems to be particularly focused on the fact that these wildly undeserved bonuses were paid for with tax dollars. And that happened on Obama's watch.
Nevertheless, it's understandable that he would try to use this powerful expression of public sentiment to move the country in what he considers to be a better direction. And to that end, Obama yesterday unleashed some of his most provocative language yet about the Bush-era economy, likening it to one big Ponzi scheme.
Here's the transcript of his town hall meeting in Orange County, Calif.
Obama acknowledged the anger over the AIG bonuses, and said he shared it -- then quickly pivoted to a broader critique and his proposed solution.
"But these bonuses, outrageous as they are, are a symptom of a much larger problem," he said. "And that's the system and culture that made them possible -- a culture where people made enormous sums of money, taking irresponsible risks that have now put the entire economy at risk....
"We don't need these house of cards, these Ponzi schemes, even when they're legal, where a relatively few do spectacularly well while the middle class loses ground....
"I want to describe to you the kind of economy that we want to build: an economy that rewards hard work and responsibility, not high-flying finance schemes -- (applause); an economy that's built on a strong foundation, but not one that's propelled by overheated housing markets and maxed-out credit cards."
What's important, Obama said, "is that we make sure we don't find ourselves in this situation again, where taxpayers are on the hook for losses in bad times, and all the wealth generated in good times goes to those who are at the very top of the income ladder. That's the kind of ethic we've had for too long. That's the kind of approach that led us into this mess. That is something we have to change if we're truly going to turn our economy around and move this country forward."
And long-term economic growth, he said, depends on the sorts of investments in health care, energy and education that he has proposed in his budget.
Obama tried to put the details of the AIG scandal behind him, by taking responsibility for the situation -- if not blame: "And I know Washington is all in a tizzy and everybody is pointing fingers at each other and saying it's their fault, the Democrats' fault, the Republicans' fault. Listen, I'll take responsibility; I'm the President. (Applause.) We didn't grant these contracts, and we've got a lot on our plate, but it is appropriate, when you're in charge, to make sure that stuff doesn't happen like this. So we're going to do everything we can to fix it."
Instead, what he wanted to talk about was whether he is trying to do too much at once. "Now, there are those who say these plans are too ambitious; we should be trying to do less, not more. Obama is trying to do too much, they say; just focus on Wall Street, focus on the banks," he said. "Well, I say our challenges are too large to ignore. The cost of health care is too high to ignore. The dependence on oil is too dangerous to ignore. Our education deficit is too wide to ignore. (Applause.)
"To kick these problems down the road for another four years or eight years, that would be to continue the same irresponsibility that got us to this point."
And he encouraged an anti-Washington populism that would serve his ends: "For all of you know deep down -- and what folks in Washington sometimes forget -- in the end, a budget is not merely numbers on a page or a laundry list of programs. It's about your lives; it's about your families; it's about your dreams for the future. You did not send us to Washington to stand in the way of your aspirations. You didn't send us there to say no to change -- you sent us there to get things done and bring about change, and that's what I intend to do. (Applause.)"
Obama telegraphed his intentions in a short talk with reporters before flying to California yesterday: "I don't want to quell anger," he said "I think people are right to be angry. I'm angry. What I want us to do, though, is channel our anger in a constructive way."
Scott Wilson writes in The Washington Post: "Striking a sharp populist tone, President Obama used a town hall meeting here Wednesday to argue that he is 'trying to bring balance back to our economy' after years when only the wealthiest Americans benefited from government policy and lack of regulation."
Laura Meckler writes in the Wall Street Journal: "President Barack Obama said he will take the blame for bonuses being paid at American International Group Inc. if it will settle an intense finger pointing under way over how such payments were possible at a company that has received tremendous taxpayer aid....
"The comments were an effort to change the subject, which has engulfed Washington this week, and pivot to his push to overhaul financial regulations that govern the system and that many blame for the underlying problems...
"White House officials had expected questions about AIG, given the furor over the $165 million in bonuses given to officials at the company, which has received $180 billion in government aid.... But not one person asked about the matter. Instead the questions were about issues that hit closer to home: teachers losing their jobs, immigration law, union organizing and the ability of community banks to continue making loans."
Helene Cooper writes in the New York Times that Obama's populist tone "found favor with the crowd of about 1,300 people."
Stephen Collinson writes for AFP that Obama "is deploying every weapon in the presidential armory to bolster his economic rescue strategy." He has another town hall meeting today, "as well as a spot awaiting Thursday on the couch of late night "Tonight Show" host Jay Leno...
"Next Tuesday, the president will crank his campaign up another notch with a prime time televised press conference."
E.J. Dionne Jr. writes in his Washington Post opinion column: "The president needs to do two things at once. The administration has no choice but to spend piles of money to unwind the financial mess. A share of the largess...may indirectly benefit some of the malefactors in this saga. But Obama has to be unambiguous in asserting that the purpose of this spending is not to reward those who got us into this fix but to solve a problem that affects us all.
"To make this case, the administration should be unafraid to use its proposals on health care, taxes, education, energy and financial regulation to argue that it is building a new economy on the ashes of the old -- an economy based on fair rewards to capital and labor alike, not on an ethic of greed and excess."
Meanwhile, who knew what when? David Cho and Michael D. Shear write in The Washington Post: "Federal Reserve officials knew for months about bonuses at American International Group but failed to tell the Obama administration, according to government and company officials, exposing problems in a relationship that is vital to addressing the financial crisis....
"Treasury Secretary Timothy F. Geithner, a central figure in the decision to bail out AIG last fall as president of the Federal Reserve Bank of New York, said in an interview yesterday that he had not been aware of the size of the bonuses and the timing of the payments [until March 10]....
"Two days later, Geithner told the White House."
But: "Democrats and Republicans in Congress are increasingly questioning how Geithner could not have known about the bonuses, given his past role in AIG's bailout, which has totaled more than $170 billion."
And there's still no evidence that the bonuses set off the appropriate alarm bells at the White House when officials there still had the time to block the checks from going out.
"For the new administration, the bonuses were a distraction from what senior aides called the main focus: getting the economy working and people back to work. 'People are not sitting around their kitchen tables thinking about AIG,' [senior adviser David] Axelrod said. 'They are thinking about their own jobs.' "
Is Axelrod right? Or terribly wrong? We'll know soon enough, I guess -- based at least in part on whether Obama's new pitch seems to be working.
Finally, a note about the protests outside Obama's town hall yesterday. Jennifer Muir, Doug Irving and Cameron Bird write in the Orange County Register: "On the sidewalk along Fairview Road, outside the fairgrounds, a crowd that grew to 35 waved signs and jeered as the heavy blades of Marine One and three other beige choppers sounded overhead.
"'Go back home, leave us alone!' said Elisa Mohr, her head titled up. 'Go back to Chicago. We don’t want you here!'
"'How about, ‘go back to Kenya,' Bobby Florentz suggested."