In the Arena

Osawatomie On My Mind

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Ah, class warfare! Here’s my favorite example, so far, of right-wing Soviet-style agitprop. It comes from the minimally talented, but maximally gaseous, Daniel Henninger of the Wall Street Journal. He writes that Obama’s was a speech that could have been delivered in Caracas, by Hugo Chavez presumably. He actually writes this, although I can’t imagine he believes it.

The right-wing strategy is simple: accuse a moderate Democrat who has taken Republican ideas on health care, education and social welfare…and call him any crazy old intemperate thing you can. If you live on GOP Fantasy Island, as so many Fox viewers do, you might begin a meme that could stick.

But here’s where Henninger’s myopia really gets hilarious:

Mr. Obama says everyone has to play by his new rules: “Unless you’re a financial institution whose business model is built on breaking the law, cheating consumers and making risky bets that could damage the entire economy, you should have nothing to fear from these new rules.” Really? Citigroup on Thursday said it will eliminate 4,500 jobs. In the third quarter alone, 2,500 U.S. banks cut 20,332 jobs. Let ’em go. In the coming Obama economy, they can “make wind turbines and . . . high-powered batteries.”

Henninger fails to note that Citibank recently paid a $285 million fine for cheating its clients. It was Exhibit A in the plutocratic engorgement and double-dealing that caused our current economic woes (Goldman-Sachs was equally sociopathic, but slightly more competent). Assorted radicals, like Paul Volcker, think the Obama Administration went easy on Citi, that it should have been broken up.

Henninger’s brand of moral and ethical blindness–on top of his disastrously wrong theories about economics–is the reason why Obama’s Osawatomie call to arms was overdue, welcome and insufficient. Where’s the program, Mr. President? Where has it been? Why have you been so unwilling to push back against those who, over the past 30 years, shoved the financial community from productive investment toward casino gambling? (A robust high-powered battery industry would be a good thing; a U.S. extraction industry that could compete with China for Afghanistan’s lithium deposits would be nice, too.)

The President’s aides argue–and they’ve been browbeating me a bit lately–that Obama had to be cautious in the scary days of 2009, when an imprudent nudge could have brought the entire House of Cards down. They have a point…but this economic crisis was, to coin a phrase, a “teachable moment” and the President chose not to teach.

One example: He chose not to fight for Elizabeth Warren as head of the Consumer Finance Protection Bureau. She was going to lose, I’ve been told. And that is true. But the Republicans in the Senate are also blocking Warren’s able, but less vivid, replacement, Richard Cordray.

If Obama had chosen to make a big, high-profile fight over Warren, he would have placed his more extreme opponents on the side of pay-day lenders, check-cashing shysters and assorted the small-print credit card greedheads. This is not exactly a precinct where productive economic growth is likely. He might also have pointed out that the U.S. military are popular marks for these shysters, and that Holly Petraeus–the wife of the general–was so concerned about this that she went to work for Warren at the Consumer Finance Protection Bureau.

And so, as for Osawatomie–nice speech. A fine rhetorical response to the class warfare practiced by the 1%–no let’s be generous, let’s say the top 5%–against those Americans whose disposable income has been gradually¬† diminishing during the past decade.

But where’s the program? Dodd-Frank gave a lot of power to regulators who are (a) easily overwhelmed by the big banks or (b) soon go to work for the big banks. The real remedies here are legislative–something on the order of an updated Glass-Steagall–or fiscal: a transaction tax on financial derivatives.

Henninger would argue that a tax would drive derivative business off-shore. Great! The smart young Americans who are going to Wall Street for the big bucks, instead of into the production of brilliant high-tech batteries, can move to Dubai if that’s how they want to live. But I’ll bet a significant number of them will stay home, make fortunes and build a real economy here.