Frank Rich on Obama's "Katrina moment"

By Michael J.W. Stickings

Frank Rich, yesterday:

A CHARMING visit with Jay Leno won't fix it. A 90 percent tax on bankers' bonuses won't fix it. Firing Timothy Geithner won't fix it. Unless and until Barack Obama addresses the full depth of Americans' anger with his full arsenal of policy smarts and political gifts, his presidency and, worse, our economy will be paralyzed. It would be foolish to dismiss as hyperbole the stark warning delivered by Paulette Altmaier of Cupertino, Calif., in a letter to the editor published by The Times last week: "President Obama may not realize it yet, but his Katrina moment has arrived."

Point taken, but Ms. Altmaier's assessment of the current situation is hyperbole. And misrepresentation. Katrina was a different sort of crisis, a natural disaster that required swift and decisive action. Bush failed to provide any such action, and his failure came to define his presidency, alongside the Iraq War and Occupation -- but at least, looking back, it was pretty clear what needed to be done and what wasn't. As horrific as Katrina was, and who was not horrified, it was, relatively speaking, a fairly limited crisis, to take nothing away from the suffering of the people of New Orleans and surroundings. In contrast, what we're talking about here is a global economic crisis, a historic economic crisis, perhaps a Great Depression II, an existential crisis that is rocking the very foundations of our capitalist way of life at a time of paradigmatic economic change around the world.

And, at home, what we're talking about is mass populist anger, a far more challenging surge to contain than even the devastating floodwaters of the Gulf. "Six weeks ago I wrote in this space that the country's surge of populist rage could devour the president's best-laid plans," writes Rich, who is right that Obama and even more his team, notably Geithner and Summers, do not quite seem to grasp the enormity of that rage, nor the justification for it. I would rather not lump Obama in with Geithner and Summers, for I do think Obama understands, but there have been moments of inadequacy on his part, too, and, of course, the buck stops with him. (For more on this, see John Judis's piece "The Geithner Disaster" at TNR.)

What made Jon Stewart's takedown of Jim Cramer resonate was less his specific brief against CNBC's cheerleading for bad stocks than his larger indictment of the gaping economic inequality that defined the bubble. As Stewart said, there were "two markets" -- the long-term market that Americans earnestly thought would sustain their 401(k)'s, and the fast-moving, short-term "real market" in the back room where high-rolling insiders wagered "giant piles of money" and brought down everyone with them.

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As the nation's anger rose last week, the president took responsibility for what's happening on his watch -- more than he needed to, given the disaster he inherited. But in the credit mess, action must match words. To fall short would be to deliver us into the catastrophic hands of a Republican opposition whose only known economic program is to reject job-creating stimulus spending and root for Obama and, by extension, the country to fail. With all due deference to Ponzi schemers from Madoff to A.I.G., this would be the biggest outrage of them all.

The problem isn't so much Geithner and Summers (though both have long been part of the problem -- see here for my pre-confirmation take on the former) as it is the very system, the American capitalist system (and I am a capitalist, one who understands, though, that capitalism must be effectively regulated if it is to survive, and if it is to be beneficial to a free and democratic people), that allowed all this to happen for so long: "The 'dirty little secret,' Obama told Leno on Thursday, is that 'most of the stuff that got us into trouble was perfectly legal.'"

To succeed, to respond effectively to a massive global and historical crisis that is not of his own making and that did not begin on his watch, Obama must not just stimulate the economy and keep the banks afloat but delve into the very heart of the system, reforming it so as to protect it from itself.

And, with Republicans recklessly sniping at him with ideological extremism from behind their partisan barricades, he must do so at a time of massive populist rage directed against the system (and its two markets) and even more so against the abusers of the system. The think about populist rage, though, is that it is often indisciminate in terms of its focus. So far, the rage has not been directed at him personally, as he remains remarkably popular, but some of it has been directed at him indirectly, notably at Geithner and his economic team, and if things do not improve -- or, more accurately, if public perceptions of the state of things do not improve -- Obama may soon find himself to be one of the targets. Whether he deserve to be or not is another, and separate, matter. Populist rage is usually directed at the powers-that-be without much in the way of context or nuance, and, well, Obama is the power that is, or at least the most prominent one. At the moment, most of the rage is being directed at the likes of AIG for its bonuses, and rightly so, but Obama will be subjected to it as well if it is perceived that he is not doing enough, or, worse, if it is perceived that he and his team are part of the problem, real or perceived.

(Let me be clear about something: While I am generally critical of populism, I do not think that the rage has been misplaced here. Indeed, while populism can often take the form of a mob uprising, a raging of the masses without much in the way of intelligence (that is, when it's right-wing populism), it has often served the useful and necessary purpose of bringing down the corrupt and the unjust and stimulating long-term reform for the better. This, I think, is one of those times. What worries me, though, is not Jon Stewart, whom I love and who has become one of the country's leading spokesmen against corruption and injustice, but the more indiscriminate rage that has taken hold in some parts and that could ultimately be Obama's undoing. For more on this, see Walter Shapiro's piece "Long Shadow" at TNR.)

So is this Obama's "Katrina moment"? Again, no. The current crisis -- which, remember, Obama inherited -- is simply too complex to be reduced to a "Katrina" construct. Furthermore, Obama has already passed a sizable, if not nearly sizable enough, economic stimulus package over and against Republican opposition. While there is no doubt that there has been, and is, much room for improvement (notably with respect to Geithner's deeply flawed bank bailout plan (an effective plan would include temporary nationalization), while Obama and his team need to do a better job of showing they "get it" (which is more a communications effort than anything else), and while, as Rich puts it, there is a need for much greater transparency and accountability, Obama hasn't exactly been fiddling away his time and energy.

Bush failed his "Katrina moment" by failing to respond effectively to Hurricane Katrina. Obama's response to the economic crisis hasn't been perfect, to be sure, but he's no Bush.