The power of lobbyists' special access

In his otherwise excellent piece, Paul Krugman assumes President Obama is so smart that he can’t possibly believe his foolish argument against financial industry compensation reform:

I was startled last week when Mr. Obama, in an interview with Bloomberg News, questioned the case for limiting financial-sector pay: “Why is it,” he asked, “that we’re going to cap executive compensation for Wall Street bankers but not Silicon Valley entrepreneurs or N.F.L. football players?”

That’s an astonishing remark — and not just because the National Football League does, in fact, have pay caps. Tech firms don’t crash the whole world’s operating system when they go bankrupt; quarterbacks who make too many risky passes don’t have to be rescued with hundred-billion-dollar bailouts. Banking is a special case — and the president is surely smart enough to know that.

All I can think is that this was another example of something we’ve seen before: Mr. Obama’s visceral reluctance to engage in anything that resembles populist rhetoric. And that’s something he needs to get over.

…The administration… has suffered more than it seems to realize from the perception that it’s giving taxpayers’ hard-earned money away to Wall Street, and it should welcome the chance to portray the G.O.P. as the party of obscene bonuses.

Equally important, in this case populism is good economics. Indeed, you can make the case that reforming bankers’ compensation is the single best thing we can do to prevent another financial crisis.

I interpret Obama’s defense of status quo financial compensation (“heads I win; tails you lose”) as another example of the mind-bending power wielded by lobbyists with exclusive access to those who run our government. Even a man as bright as President Obama can be blinded to reality if he only ever talks with those he should be regulating in the — we hope — aftermath of The Great Recession.

A truly wise president — like JFK — made sure he heard from a wide variety of voices. Had President Kennedy listened only to military voices, for example, we probably would have fought a nuclear war over Cuba.

The Obama Administration has gone out of its way to exclude liberal voices. And President Obama has gone out of his way to distance himself from what Fox News loves to disparage as “the wacky liberal fringe” and similarly absurd epithets. If you ignore labels and look at Americans' policy views, a majority of Americans are liberals. Yet intellectually honest liberals are systematically excluded from our nation’s policy debate. That’s no small part of the reason we’re in such a mess.

Posted by James on Monday, September 21, 2009