On the technocratic side: Obama evidently has great potential as a transformational president, but unless he is seen as successful in dealing with the economic crisis, the American people will not follow him on the rest of his agenda. And unless he solves the banking problem, he’ll not succeed with the banking problem.
On the “morality play” side: Obama has begun his presidency backed by enormous public respect and enthusiasm. But unless the American people continue to see him as on the right side of the issues they feel most strongly about, they will not continue to trust him. And as the AIG-bonus scandal shows, the American people feel strongly about the arrogance and greed and corruption so clearly on display with these bonuses.
The economic crisis is not just a threat to the Obama presidency, but is an enormous opportunity. The American people have far more intense passions –fear, outrage, need-- connected with this crisis than with any of the other issues that make up Obama’s agenda. Everyone feels deeply impacted by the economic breakdown, whereas only some feel any deep need with respect to the issues of education and health care and renewable energy.
The economic crisis therefore provides an opportunity for Obama to cement a more profound leader-follower relationship with the American people than virtually any other situation could have afforded him.
So, how Obama handles this crisis can truly either make or break his presidency.
Blowing It: The consensus seems to be gathering that Obama’s on the wrong track.
First, with respect to the technocratic dimension, he seems committed to the Geithner/Summers approach, which involves treating the main corporate actors as salvageable, and pouring more money into to the institutions and the hands that created the mess in the first place. Such economists as Krugman, Roubini, Kuttner, Baker, and Galbraith (and more and more others) see this as a) throwing good money after bad and, even worse, b) transferring money from the victims of this crisis (the American people generally) to the perpetrators.
This second point connects with the morality play aspect. This crisis didn’t just happen; it was the product of selfishness and greed and irresponsibility and corruption that led to de-regulation and led to various shady (but no longer illegal) corporate practices that enriched various individuals but put the whole system at risk. Obama’s policies have seemed indifferent to this dimension, except for a few recent gestures, and they continue to be moving in a direction that treats that moral/corruption dimension as peripheral.
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