Insurance giant AIG, now 80% owned by the US taxpayer, is getting ready to pay hundreds of millions in bonuses to its exectives. This has the class warfare juices flowing among Democrats who see the AIG bailout as a metaphor for Republican management of the economy during the last 8 years.
They will apparently try and deflect attention from their own failures by igniting populist sympathies against big banks, big business, and the rich:
Beyond that, a shifting political mood challenges Mr. Obama’s political skills, as he seeks to acknowledge the anger without becoming a target of it. A central question for Mr. Obama is whether his cool style — “in a time of crisis, we cannot afford to govern out of anger,” he said in his address to Congress last month — will prove effective when the country may be feeling more emotional.
Even as Mr. Summers was denouncing A.I.G. for the bonuses, he suggested that there was little if anything the government could do to stop them, seconding the conclusion of Treasury Secretary Timothy F. Geithner. But even if their reasoning was legally sound, they also risked having the administration look ineffectual in the face of what Mr. Summers said was the worst financial abuse of the last 18 months, since the economy began turning down in earnest.
“Never underestimate the capacity of angry populism in times of economic stress,” said Robert Reich, a professor of public policy at the University of California, Berkeley, and labor secretary under President Bill Clinton. “A big challenge for President Obama will be to maintain a rational and tactical public discussion in the midst of this severe downturn. The desire for culprits at times like this is strong.”
And no doubt, the Democrats plan on playing the blame game to the hilt:
But the populist rage also might present a bigger challenge to the political party that’s more associated with big business, less regulation, and tax cuts for the wealthy. In fact, if there was a time for the Obama administration and Democrats to push to let the Bush tax cuts to expire, to press for the Employee Free Choice Act (or “card check”), or to institute new regulations, this is the time, right? Still, now’s a time when everyone in Washington is suddenly going to be channeling his/her inner-populist. Who will have the most credibility doing it? As for the short term, Congress is going to want a pound of flesh (and then some) from AIG. Obama also will discuss AIG during his remarks today.
If the economy really starts to meltdown as a result of the failure of the Obama Administration to come up with a viable plan to stabilize the banks and the financial markets, you can bet that they arleady have a fallback position with regard to blaming the rich for the nation's troubles. And Obama will use this resentment to get card check, health care, and other populist programs through Congress.
It will be class warfare on a scale never before seen in America - not even during the Great Depression.