AIG And The Democrats' Cheap Populism

I fear that Americans are about to learn to their sorrow that moral exhibitionism and cheap populism make a miserable brew. In its permanent campaign, Team Obama picks a villain of the week and initiates a campaign of outrage and vilification against that target of opportunity, hoping to create the illusion of Obama as a dragon slayer defending ordinary Americans against some domestic evil doer. Last week it was Rush Limbaugh. This week it’s AIG. But these brouhahas are pure smokescreen.

The bonuses that provoked so much chest pounding were announced more than a year ago, long before AIG took a cent of bailout money. The man who wrote the legislation granting AIG its no-strings-attached bailout was Timothy Geithner, the tax cheat whom Obama judged as so indispensible to his Treasury Department that Geithner’s tax evasion was overlooked. One of the outraged is Senator Christopher Dodd (D-Waitress Sandwich), who inserted an amendment into Obama’s porkulus bill that explicitly exempted bonuses from limitations on executive pay. Dodd was the only senator to attract more Wall Street campaign contributions than Barack Obama. And Dodd has been rewarded with extra special low interest rate mortgages from the scandal-ridden Countrywide Financial. He also traded his influence for a sweet deal on an Irish vacation home.

Unfortunately, populist demagoguery sells. And when it’s combined with moral vanity, it traps its users. Honest men would have admitted that those bonuses were AIG’s inescapable contractual obligation. But morally vain men who leap to the podium and run their mouths before informing their grandstanding cannot admit error. And this moral vanity is actually hobbling our government.

During the campaign, Barack Obama harvested a great deal of populist hay by bashing lobbyists. (Disclosure: I have actually been a lobbyist.) Lobbyists are often the only people who actually read the laws and are smart enough to interpret the gibberish for those who vote. Excluding lobbyists from executive appointments deprives government of the most talented and informed candidates.

According to insiders, including Barney Frank (D-Fannie Mae and Freddie Mac) who chairs the House Financial Services Committee, Obama’s Treasury Department is terribly understaffed due to the inability of the administration to find even minimally qualified candidates who have paid their taxes for fear that the media will actually report these ethical lapses.

“I think it's a problem, although I will say this - for the media to blame that entirely on the Senate seems to me a little bit self serving,” Frank said. “I mean, the media is the problem here, in part. It is the over-focus on part of people in the media to relatively minor infractions that causes this. I guarantee you my colleagues would not, on their own, be doing this. So I do think we are in a culture now where a lack of perfection exacts too strong a toll, but that's the politicians reacting to the media.”

NBC’s Andrea Mitchell, actually agreed that the media were to blame. “I take your point, Mr. Frank, Mr. Chairman,” she said. "You're right and we plead guilty because this is, this culture right now of ‘gotcha’ has gotten completely out of control.”

When I try to picture any reporter confessing to overzealous scrutiny of a Republican administration, somehow, I can’t. I just lack the imagination.

The same Barack Obama who had pundits swooning for admitting he screwed up with his appointment of Tom Daschle as Secretary of Health and Human Services, now cannot bring himself to confess that his populist campaign proscription against lobbyists left him with too small a talent pool to allow him to staff his administration. An ignorant compulsion for moral exhibitionism drove his demagoguery and now his vanity prevents him from admitting his error and making a correction that would greatly increase the talent pool he can draw on. He might even be able to find someone who pays his taxes.

Democrats invested a great deal into their demonization of the firm Dick Cheney presided over before returning to public service. The oil services giant Halliburton eventually took the hint that it was not welcome in the United States and moved its operations to Dubai. Dubai has made it clear that it would like to become the world’s financial capital. If The One adheres to his populist agenda of limiting Wall Street pay, that talent will take their skills to where they are rewarded.