Off to the Races

President Obama has governed little like a populist so far but he sometimes campaigned as such and he certainly owes much of his election to populist outrage over the previous eight years of Republican policies. Turnabout is fair play and the Obama Administration is now starting to experience a populist backlash regarding its policies to stem the financial crisis.

Most Republicans and a growing number of Independents are certain Obama is spending too much. Far-left progressives within Obama’s own Party worry he is not spending nearly enough. Still others fret not over the amount of spending but if we are directing it in the right/best places. Whatever the motivation, concern and discontent is rapidly beginning to spill over into outright hostility.

Such was the scene yesterday in my hometown of Cincinnati Ohio, when a vocal crowd assembled downtown for a “Tea Party,” designed to show disapproval for what protestors viewed as wasteful government spending. Signs declared outrage and defiance, with slogans such as, “Give us Liberty, not Debt,” “Where's My Free Pony?” and “Honk if I’m Paying Your Mortgage.”

Cincinnati Police estimated the crowd at about four thousand, less than the six to seven thousand that organizers had predicted. It was also largely white, which, given Cincinnati’s demographics, strongly suggests it was comprised mostly of people driving in from outlying, heavily Republican townships and suburbs rather than city residents. Unsurprisingly, these protestors were the portion of Hamilton County least inclined to vote for Obama in the first place.

However, Obama is now their President too and this makes the intensity of their disgruntlement problematic for him and his economic agenda.

Doubtless, this and other protests were fueled by news that financial giant AIG, which has received $170 billion in federal government assistance to date and is now eighty percent owned by U.S. taxpayers, nonetheless paid out a whopping $165 million in executive bonuses last week.

The Obama Administration attempted to distance themselves from such practices, with multiple spokespeople condemning AIG over the news talk circuit this weekend. Unfortunately, they undercut themselves by continuing to insist that AIG was one of a handful of companies too important to U.S. economic stability to allow their failure as well as questioning the government’s ability to forbid the bonuses, many of which represented contractual agreements existing prior to bailouts.

The government’s ineffectualness in this situation is especially regrettable, as it strongly overshadowed the good news Obama and his lieutenants had to report. Citigroup, another bailout recipient, announced it operated at a profit for the first two months of 2009 and does not require more government aid, consumer spending appears to have stabilized, housing inventories are starting to decline, and key credit spreads are substantially narrower than they were last fall.

Obama stressed yesterday how this could domino, in a positive way, to a group of CEOs.

“There's a young family out there right now who’s thinking about buying a home and if we can get them credit, they're going to buy that home. And if they buy that home, then a construction worker, maybe he comes in and remodels the kitchen and that means that he can buy a computer for his kid at school. And we’re off to the races.”

It is hard to judge whether this is the type of cheerleading that some suggest the President needs to do more or if it sounds naïvely and feebly optimistic in the face of populist wrath. Michael Kazin, a professor at Georgetown University, notes the anger over bailouts is merely one expression of “a free-floating economic anxiety.”

Robert Samuelson echoes that sentiment in today’s Washington Post. “We live in the shadow of the Great Depression,” he writes. “There is . . . an amorphous anxiety that we are falling into a deep economic ravine from which escape will be difficult.”

Peggy Noonan observed a similar phenomenon in the Wall Street Journal last Friday. “People are in a kind of suspended alarm, waiting for the future to unspool and not expecting it to unspool happily.” However, Noonan also sees America’s potential depression as not merely economic but also psychological. “People sense something slipping away, a world receding . . . a world of old structures, old ways and assumptions.”

This is a supremely conservative reaction, as one would expect from Noonan. On the other hand, many of those who voted for Obama as a repudiation of the GOP still maintain highly traditional morals and values. Protestors at populist rallies may be directing their anger at bankers and government but it reflects broader fears over what constitutes a re-definition of the American Dream for many, particularly given the broad and ambitious initiatives in energy, healthcare, and entitlement reform Obama seems determined to implement simultaneously with his stimulus package.

In that sense, Treasury Secretary Geithner and National Economic Council Chairman Summers are off the mark by insisting they can still provide social and economic justice by giving wealthy executives a bonus at the office but then raising their taxes at home. The American public vaguely appreciates that wealth has been accumulating inequitably in this country for the past several decades but they clearly and readily understand that rewarding malfeasance, stupidity, and greed is unacceptable.

The continued presence of AIG and others as trusted legal entities really is as important for U.S. and international economic stability as the Obama Administration argues; their management teams, however, not so much. Obama needs to be far more aggressive at holding the feet of bailout recipients to the fire and even firing the worse culprits.

At the same time, Obama needs to be more aggressive about holding all of our feet to the fire as well. Populist outrage will only become widespread politically dangerous to Obama if his critics permit the majority of voters to see themselves as entirely innocent victims of corporate shenanigans and progressive government largesse.

As one sign at yesterday’s rally in downtown Cincinnati read, “I live off what I make,” implying that banks and the federal government need to do the same. There is no arguing with the sign’s conclusion. Its postulate, however, is highly questionable when applied toward all-too-many Americans.

Obama is calling us to the races. We do not want to run but it has nothing to do with track conditions or the direction in which he wishes us to sprint. The problem is that running is hard work. We want continue sitting in the stands, getting rich by making bets that paid off so often they hardly qualified as risk.

In the 1980s and 1990s, we watched the stock market soar, fueled by bubbles first among high tech stocks and then the housing market. Later, we learned many of the companies ranked as top performers by Wall Street were cooking their books. Finally, we believed it when told we could fight two major wars and cut taxes if everybody just shopped more.

After the tragedy of September 11, both conservatives and liberals yearned publicly for more of a sense of shared sacrifice. Today, Obama hands us sacrifice and we jerk back at the prospect of sharing.

It is easy to oppose Obama along these lines. It is more than just the fact that the President is more popular personally than many of his policies. As Washington Post columnist David Broder adroitly pointed out on Sunday, “Despite his popularity, Obama is not an intimidating figure,” preferring consensus to intimidation.

Forcing angry voters in revolt to listen to him is Obama’s onus. However, mob mentalities seldom correspond with wisdom and those with complaints, no matter how legitimate, are making a mistake if they think because Obama is easy to ignore, he is not telling them something important that they need to hear just as much as he needs to hear them.

The race for long-term economic stability is not one between Republicans and Democrats, between conservatism and progressivism, or between small government and socialism; it is a race between making hard choices versus shaking our fists at those telling us we need to make them.

And they’re off . . .