Paul Krugman wrote in the New York Times yesterday:
I don’t know if administration officials realize just how much damage they’ve done themselves with their kid-gloves treatment of the financial industry, just how badly the spectacle of government supported institutions paying giant bonuses is playing. But I’ve had many conversations with people who voted for Mr. Obama, yet dismiss the stimulus as a total waste of money. When I press them, it turns out that they’re really angry about the bailouts rather than the stimulus — but that’s a distinction lost on most voters.
So there’s a growing sense among progressives that they have, as my colleague Frank Rich suggests, been punked. And that’s why the mixed signals on the public option created such an uproar.
Krugman makes a good point. Progressives are furious that the giant gamblers which caused the financial crisis have gotten taxpayer money showered on them by the government, without any reform. (Whether Krugman’s take on Keynesian stimulus is right or wrong is beyond the scope of this discussion.)
And Krugman is right that progressives are more sceptical of Obama’s “public option” than they would have been if Obama hadn’t so obviously sold out on financial issues.
Krugman’s reference to Frank Rich, of course, refers to Rich’s essay “Is Obama Punking Us?”, where Rich writes:
Yet there is real reason for longer-term worry in the form of a persistent, anecdotal drift toward disillusionment among some of the president’s supporters. And not merely those on the left. This concern was perhaps best articulated by an Obama voter, a real estate agent in Virginia, featured on the front page of The Washington Post last week . “Nothing’s changed for the common guy,” she said. “I feel like I’ve been punked.” She cited in particular the billions of dollars in bailouts given to banks that still “act like they’re broke.”
But this mood isn’t just about the banks, Public Enemy No. 1. What the Great Recession has crystallized is a larger syndrome that Obama tapped into during the campaign. It’s the sinking sensation that the American game is rigged — that, as the president typically put it a month after his inauguration, the system is in hock to “the interests of powerful lobbyists or the wealthiest few” who have “run Washington far too long.” He promised to smite them…
What disturbs Americans of all ideological persuasions is the fear that almost everything, not just government, is fixed or manipulated by some powerful hidden hand, from commercial transactions as trivial as the sales of prime concert tickets to cultural forces as pervasive as the news media. It’s a cynicism confirmed almost daily by events … legitimate suspicions on the right and left alike that even their loudest public voices can be silenced if the business interests of the real American elite decree it…
[Obama’s] first questionable post-victory step was to assemble an old boys’ club of Robert Rubin protégés and Goldman-Citi alumni as the White House economic team, including a Treasury secretary, Timothy Geithner, who failed in his watchdog role at the New York Fed as Wall Street’s latest bubble first inflated and then burst. The questions about Geithner’s role in adjudicating the subsequent bailouts aren’t going away, and neither is the angry public sense that the fix is still in. We just learned that nine of those bailed-out banks — which in total received $175 billion of taxpayers’ money, but as yet have repaid only $50 billion — are awarding a total of $32.6 billion in bonuses for 2009…
The larger fear is that Obama might be just another corporatist, punking voters much as the Republicans do when they claim to be all for the common guy. If anything, the most unexpected — and challenging — event that could rock the White House this August would be if the opposition actually woke up.
So it is not just progressives that feel like they’ve been punked by Obama. Remember that many conservatives, mainstream Democrats, and libertarians voted for Obama as well. Conservatives, libertarians, liberals, progressives all feel like they’ve been punked. It is not a partisan issue.
Indeed, the only people who don’t think they’ve been punked are:
1. The banksters, derivatives traders and others who have directly benefited from the bailouts and maintaining the broken financial system the way it is without any true reform
2. Those who believe the propaganda of group number 1.