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Obama's Missing the Opportunity the Banking Crisis Presents

By   Follow Me on Twitter     Message Andrew Bard Schmookler     Permalink
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On Thursday, with the AIG-bonus scandal breaking, I found ideas –concerning Obama and the handling of the economic crisis—just tumbling out of me. I posted them as they came –on…-- some 3,000 words—and now I will attempt to order and condense them into a more coherent and manageable presentation.

I would love for my worries about Obama’s present course to be misguided. I’d love it because I’ve loved seeing this guy’s wisdom and genius and singing his praises more than seeing him making a serious mistake. I’d love it because the nation would be a whole lot better off if I’m wrong. And I’d love it because it seems increasingly clear that Obama has chosen his course and will be sticking with it.

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But this is how it looks to me. And not just me.

These thoughts, the more free-flowing original form of which were written last Thursday at, were partly sparked by a piece by E.J. Dionne about the need for Obama to get out in front of “populist anger.” In the ensuing days, a whole chorus of voices have been addressing such themes.

I hope we’re all wrong.


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There are two dimensions of this economic crisis: the technocratic dimension (how to get the system out of the ditch and back onto the road) and the “morality play” (how to deal with the forces of greed and corruption that drove the country –and the world—into this disaster).

Obama is, most unfortunately, in danger of blowing it on both accounts.

The Stakes: The stakes couldn’t be higher.

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.

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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.

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Andy Schmookler, an award-winning author, political commentator, radio talk-show host, and teacher, was the Democratic nominee for Congress from Virginia's 6th District. His new book -- written to have an impact on the central political battle of our time -- is (more...)

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