Last March 27, when President Obama met with CEOs from the battered financial industry, he told them, “The anger gentlemen, is real.” Of course, Obama was referring to public outrage over “excessive compensation” received by many business executives whose companies are now receiving public funds. That sentiment certainly exists, but there is a more fundamental source of peoples’ disgust. And given what followed in that meeting, it seems Obama is far more in touch with business inside the Beltway than with the frustrations of average Americans.
When the President opened the floor for comments from the bank executives, JPMorgan CEO Jamie Dimon sprinkled him with some platitudes and then said that JPMorgan would seek to return public funds as soon as possible. Good news for the taxpayers, right? Apparently not, because Obama immediately challenged Dimon, saying “This is like a patient who’s on antibiotics. Maybe the patient starts feeling better after a couple of days, but you don’t stop taking the medicine until you’ve finished the bottle.”
Other executives agreed with Dimon, explaining that it was their duty to return the money as soon as possible and would send a positive sign to the markets. Obama disagreed, saying it would send the wrong signal. The signal to which Obama refers has nothing to do with the health of our financial system, job creation, credit markets, or the recession. Instead, Obama wants private enterprises to know that they have a new partner for life: good old Uncle Sam.
In fact, Obama has threatened banks that insist upon returning public funds with “adverse consequences.”
Obviously there is an element of self-interest in banks seeking to return taxpayer dollars. Doing so would free them from certain government conditions and mandated pay scales. But self-interest is what drives our capitalist system, which ultimately benefits everyone. And who knows better when it’s the appropriate time to return public money? The banks themselves or the federal government? Jamie Dimon or Barack Obama?
President Obama has repeatedly said that the government has no interest in running private businesses. He has expressed that sentiment when it comes to both the financial and automobile industries. But apparently his administration is perfectly comfortable telling GM what cars they must make or who should run the company. Obama has no problem telling banks how much public money they need, when they can give it back, and how much they can pay their employees.
And for all of the discussion about accountability and responsibility, the administration is completely oblivious to the federal government’s role in creating the financial crisis. It was, after all, the federal government that dictated to banks how to issue home mortgages, planting the seeds of the sub-prime disaster. This should not be interpreted as a total exoneration of the banks, nor does the blame lie completely with Obama. The financial institutions ran their businesses pitifully and they brokered a deal with the Devil when they went seeking taxpayer dollars. And it was the Bush administration that basically forced the top banks to accept public funds in exchange for equity back in October.
But now, mindful of the opportunities that come with this crisis, Obama is seeking to expand even further the government’s role in private enterprise and in peoples’ lives. His antibiotic analogy in last week’s meeting was particularly instructive, given his plan for massive health care reform. Obama said it himself. The patient should not decide when to stop taking medication. It is part of a mentality that believes people need government to make decisions for them, including how and where to spend their money. And in the case of private enterprises, Obama evidently envisions the federal government as the system’s physician, with the power to let certain companies die and certain survive.
Free societies depend on a degree of skepticism towards government power. Increasingly, the federal government is starting to play God in America. If you are not yet frightened by that prospect, you should at least get outraged. The Obama administration may not realize why yet, but many Americans are already there.