I posted a comment yesterday about separating the more important limitations on the bailout plan from the less important ones. My point was that we should not to sacrifice less-sexy-but-more-substantive issues like taxpayer equity, foreclosure relief, phased-in implementation and intelligent bad-loan pricing for feel-good issues like executive compensation and yesterday's "getting an apology from Wall Street", which may play better for a month, but will have far less impact on whether a victorious Obama will have enough economic maneuverability to implement his agenda.
Unfortunately, now that the real horse-trading on the baillout is about to begin, the early returns give some cause for concern. Barney Frank, who will speak today, is still pushing hardest on executive compensation limits, and the seven-point response Obama circulated last week seemed to be morphing into a get-the-bad-guys campaign slogan.
Yesterday's Obama email to supporters was titled Greed and Irresponsibility and read in part:
The era of greed and irresponsibility on Wall Street and in Washington has created a financial crisis as profound as any we have faced since the Great Depression. . ..
Please sign on to show your support for an economic recovery plan based on the following:
• No Golden Parachutes . . ..
• Main Street, Not Just Wall Street -. . ..
• Bipartisan Oversight . . ..
A front-page story in this morning's New York Times seemed to pick up the hint:
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Congress wants Wall Street to feel it where it hurts: the wallet. The stratospheric pay packages of Wall Street executives have become a lightning rod issue as Congress shapes a $700 billion bailout for financial firms. Proposals circulating on Capitol Hill vary, but they all would impose some limits or approval authority on salaries of executives whose firms seek help.
My point simply is this: I favor a bailout to the extent it is done carefully, efficiently and with foresight. I think that Obama and the Democrats have handled the politics of the bailout almost perfectly until now. The first trillion dollars will not be coming back from Iraq. It is critical that as much as possible of the next trillion has not been spent before the end of the year, so that investing in education, alternative energy, healthcare, special education, helping the poor, and restoring our infrastructure can finally stop being just campaign slogans. The best way to do that is to make sure that over the next few days, the budget objections do not themselves turn into a campaign slogan. To do so would truly be throwing the baby out with the bathwater.
I say, give all Wall Street executives perceived to be greedy four months to write their apologies, let them take their parachutes with them before they jump out of the airplane, there will be plenty of time to round them up before they drift to the ground. Sorry for mixing my metaphors but I am late for work.
Between the grief given to Paulson yesterday, Buffett's move, Obama's perfect-pitch on the issue so far, Shelby's opposition from the right, and a variety of other factors, the Democrats have significant leverage right now, more than I thought they would. I say, don't take the easy road and go for the symbolism, go for the teeth. Be bold. Don't be afraid. Lead.