What is President Obama going to do in light of the thrashing his party suffered at the hands of Massachusetts voters? Washington, D.C., is agog with advice and speculation. Will he tack toward the middle? Will he dig in his heels on health care? Will he provide a convincing economic plan to create more jobs in his State of the Union speech, scheduled for next Wednesday night?
The early verdict is that he is heeding the advice of the left and has decided to declare jihad against the banks. This will be his new “pivot” on which he will seek to restore the economy and produce jobs.
As Ronald Reagan would say, “there he goes again” — which means, there he goes again jumping off another political cliff.
Soon after the Tuesday massacre, Arianna Huffington echoed many on the left who have the ear of the president. Quoting one of the architects of one of the biggest electoral disasters in a half-century, Huffington said: “Celinda Lake, Martha Coakley’s pollster, spoke the truth yesterday when she said their campaign was hurt by the White House’s failure to confront Wall Street.”
The evidence is that Mr. Obama’s advisers, still insulated from the real American economy, believe Arianna and Lake’s formulation makes good politics. Actually, they believe it’s great politics. After all, no one likes the banks.
This is a great strategy!
But his policy of imposing new fees on non-FDIC investments means people will run away from the few investments that are making money in our economy. Treasury bills, bonds, CDs, and money-market funds have remained in the tank all year long. The only places grandma and grandpa and their children can make a dime is in mutual funds and stocks.
But let’s tax those! This ought to make Main Street really happy!
His second attack — also on banks — is on the size of those institutions. Yes, it may seem like good politics. It may be. But it’s awful economics.
As James Carville, Clinton’s guru, once said, “It’s the economy, stupid!”
Minutes after he declared war again on the banks, the stock market tanked 200 points, with banks taking the heaviest hits.
Now, in the post-Brown era, there also is the “who’s in and out” game. This always is interesting inside-the-Beltway chatter.
But it also relates to Obama’s new “post-Brown” anti-bank crusade.
With sclerotic economic advisor Paul Volcker — who has been almost invisible throughout the year — beaming at his side, Obama confronted the evil bankers.
The word on the street, however, is that Treasury Secretary Timothy Geithner doesn’t have the stomach for this new type of warfare. This morning Reuters reports that Geithner is concerned that the proposed limits on big banks’ trading and size could impact U.S. firms’ global competitiveness.
The Reuters sources were speaking anonymously because the Treasury secretary has not spoken publicly about his deep reservations.
The new proposed bank rule, called the “Volcker Rule,” apparently has shifted the seats on the Titanic. Almost reminiscent of a Kremlinologist analysis of who was in and out among Soviet leaders, today’s Washington Post proclaimed the ex-Fed chairman is up and the Treasury secretary is down.
Want to set up a pool about how long the battered Mr. Geithner may stay around? Stay tuned.
As if Rahm Emanuel and his colleagues might not yet have gotten the hint about their political standing among investors, there is this morning’s Bloomberg poll showing “U.S. investors overwhelmingly see President Barack Obama as anti-business and question his ability to manage a financial crisis.”
The global quarterly poll of investors and analysts found “77 percent of U.S. respondents believe Obama is too anti-business and four-out-of-five are only somewhat confident or not confident of his ability to handle a financial emergency.”
Apparently, the Republicans are also prepared to “pivot” on the economy. John Murray, the communications director for Rep. Eric Cantor (R-VA), summed up their analysis this morning in an email: “Just three weeks into the new year, President Obama, Speaker Pelosi, and Harry Reid are pushing financial policies that will make credit even less available for the small businesses that need it, and only end up putting more Americans out of work. We can foresee the April headlines now: ‘Democrats to pivot on jobs. AGAIN.'”
There he goes again.