Trust of the government is near an all time low. The obvious reasons include the financial meltdown, the election of a new, "change" administration which appears unable or unwilling to control the banks in their bonuses, their lobbying or their refusal to support mortgage adjustments.
The anger and distrust also reflect a failure of the Obama Administration to differentiate itself from its failed predecessor, and to lay out a clearly different program to resolve the nation’s problems. Most importantly, the administration has not taken a clear leadership role on the financial bill now coming to the floor of the Senate. It has taken varying positions and the bill as now presented does not include important safeguards which the President sought.
The speaking tour to support the bill is late. We hope the bill will be improved and passed, but it is late to effectively educate the country on what is needed and earn their trust.
On this 15th Anniversary of the Oklahoma City bombing of the Murrah Federal Building, trust of the government is near the record lows of 1995 when the bombing occurred, according to a Pew Research Poll released yesterday. The report begins
By almost every conceivable measure Americans are less positive and more critical of government these days. A new Pew Research Center survey finds a perfect storm of conditions associated with distrust of government – a dismal economy, an unhappy public, bitter partisan-based backlash, and epic discontent with Congress and elected officials.
What is the reason for the distrust? And what can be done about it?
The reasons for the distrust are obvious. The country suffered a financial meltdown; it voted for change and elected a new administration, but the bailed out financial institutions and their management are now rolling in money while the rest of the country is still having a very hard time. The new administration has been unable or unwilling to stop multi-million dollar bank bonuses to the very people who caused the meltdown and received the bailouts, perhaps using government money for the bonuses. And the same banks which were bailed out are spending $1.4 million per day on lobbying against a financial reform bill, with roughly four lobbyists for each member of the 535 person Congress.
The anger and distrust reflect a failure of the Obama Administration to differentiate itself from its failed predecessor, and to lay out a clearly different program to resolve the nation’s problems. Defining a program and educating the public on that program is part of the basic job of the President and his administration. It is a crucial part of the leadership of the nation. This is especially true when the issues are critical and complex, as with the financial reform bill.
Franklin Roosevelt was known for his Fireside Chats, in which he explained complex legislation in simple, persuasive terms. Ronald Reagan was known as the Great Communicator for his ability to lay out his program in simple, defensible terms, and to build public support for his program.
The Obama Administration has not undertaken this basic job. By appointing Tim Geithner and reappointing Ben Bernanke, both closely associated with the bailouts of the Bush Administration, it invited public confusion over whether anything has changed. The President’s meeting with the 13 biggest bankers in the nation and telling them “We’re all in this together” sent a signal of friendship to the banks which the public might well mistrust.
Most importantly, the administration has not taken a clear leadership role on the financial bill now coming to the floor of the Senate. It is an extremely critical issue, both economically and politically; the vast majority of the public agree that reform is needed; the most simple, crucial agreement is -- no more bailouts, no more “too big to fail.”
But the Administration has not defined clearly want it wants in the bill and why. It has not defined a clear program to do what everyone agrees needs to be done. Initially, it left the House and Senate to define and pass their own bills, but announced that caps on the size of big banks were not under consideration and did nothing to support reinstatement of the Glass-Steagall Act prohibitions against commercial banks engaging in financial speculation.
Then, in January, the President changed directions and announced support for the Volcker Rules which would update and reinstate Glass-Steagall:
Volcker has devised two simple rules to defang our financial system. First, no bank would be allowed to engage in “proprietary trading,” in which it takes risks using its own capital in ways that are completely separate from services provided to clients. Second, there would be a cap on the size of our largest banks, relative to the size of total liabilities in the banking system.
Yet, the bill as now offered By Sen. Dodd does not include a cap on size. Moreover, the bill does not include clear, statutory divisions between commercial and investment banking and its procedures for handling failed banks do not effectively prevent bailouts. The problems with the bill were clearly pointed out a month ago by Democratic Senator Ted Kaufman of Delaware (now holding Joe Biden’s seat), including the fact that Moody’s analysis of the bill concluded that
‘…the proposed regulatory framework doesn't appear to be significantly different from what exists today.’
The President did issue an early call for an independent consumer regulatory agency; although one is included in the bill, it is not independent but would become a part of the Federal Reserve, which is widely perceived as having been too soft on the banks. The bill also does not include clear, statutory capital requirements which many experts consider essential to bank solvency.
Kaufman as well as noted economists who are supporters of the president and of financial reform have called for specific improvements in the bill. Yet nothing has happened.
The first person to clearly define the bill in the public mind was Republican Senate Minority Leader Mitch McConnell, who attacked the bill as allowing continued bailouts of failed institutions. Unfortunately, this echoes Democratic criticisms of the bill. McConnell then jumps to exactly the wrong conclusion -- do nothing. Kaufman has responded that the McConnell approach is “dangerous and irresponsible,” and has explained why.
The public can be forgiven for being distrustful, dissatisfied and sometimes angry. It is up to any administration to earn public trust with a clear plan. The banks, the Republicans and their tea party allies can be expected to sow doubt and mistrust, as they have done. But the Administration should have long ago set a course which differentiated itself from the Bush Administration and its policies. It should been able to present a bill which incorporated a clear program to fix the problem, and which the administration and its allies could resolutely advance and clearly defend.
The President is now hitting the road, to begin a speaking tour to sell the bill. We hope he is successful. We hope the bill will be improved and we hope it will pass. Equally important, we hope the President can present the bill to the American people in a clear way, for long enough for people to understand and support it. A last minute speaking tour does not bode well for that task.
david.perry@fourfreedomstoday.com
www.fourfreedomstoday.com