Here's something a bit worrisome: It is now apparent President Obama failed the first test of his decision-making abilities when he appointed Timothy Geithner to the Treasury. Worse, it was the one cabinet position that needed to sufficiently filled for the times we live. Shockingly, the administration has backed dubious bank-friendly policies and incoherent explanations from Geithner about what he intends to do with the banks. Nobel Laureate Joseph Stiglitz has a fine article in The Nation this week that illustrates the Treasury Department's apprehension to make the tough decisions.
Robert Reich says get rid of him before more damage is done, although he recommends Paul Volcker, whose monetary policies were the reason for the 1981-82 recession--the original worst recession since the Great Depression?
It is possible that we will look back at the administration's feeble attempts to dissuade AIG not to pay up to $165 million in bonuses to the very people who torched the company and the economy as the beginning of populist anger that can be easily co-opted by the Republican party. Most likely, the immense pressure the White House and Congress can apply will force AIG to find some sort of escape clause allowing them to recoup the bonuses, but the damage has been done. While the former president signed off executive orders with impunity, even possibly trashing the Constitution in the process, this president cannot stop an insolvent insurance company masquerading as a hedge fund from doing the wrong thing. This is not the sort of change in Washington Obama vowed to bring.
Although Obama currently garners the support of about two-thirds of opinion polls, it's hard not to see the likelihood of Congressional losses in 2010 and here the seed may have been sown. History has shown the havoc that can be caused with a restless, underemployed electorate. Mix in, an incredibly weak minority party waiting for the perfect campaign theme and you have the recipe for a reawakened Republican party.
By the fall, the poor economy can fairly be viewed as "owned" by Obama's policies and populist anger is something that can easily be molded to your own means. All Republicans would have to do in mid-term elections is point to the perception no one in administration seems to know how to fix the problem, so they just throw "taxpayer" money at it. The Republicans don't even have to be particularly dirty to make the point, either.
Rep. Mitch McConnell makes a cogent point in the Times, "The government has been heavily involved in A.I.G. for some months now. It’s shocking that they would — the administration would come to us now and act surprised about these contracts. Why didn’t they ask the question two weeks ago, before they gave them $30 billion?” An editorial in today's Wall Street Journal also makes this point and rightly points the finger at politicians, too.
If the public continues to see the economy grow worse in tandem with these easily recognizable abuses by the financial sector, it is likely conservatives will make positive gains next year while the image of Obama as the "chosen one" is greatly diminished.
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