The “dirty little secret,” Obama told Leno on Thursday, is that “most of the stuff that got us into trouble was perfectly legal.” An even dirtier secret is that a prime mover in keeping that stuff legal was Summers, who helped torpedo the regulation of derivatives while in the Clinton administration. His mentor Robert Rubin, no less, wrote in his 2003 memoir that Summers underestimated how the risk of derivatives might multiply “under extraordinary circumstances.”
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.
This is truly an astonishing opinion piece from one of the stalwarts of the reflexive left appearing on Sunday, no less, in the New York Times. One hardly knows where to start to identify the most startling admissions in it.
Reflecting on the piece seems to me that the motivation for it comes in the last paragraph. Here Rich says, "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." In other words, Rich thinks that the only solution for the financial crisis is a Keynesian solution. He believes the federal government must spend our way out of a recession. This is, of course, is repugnant to Reagan's historic solution to the recession he inherited and Bush's successful solution for the recession he inherited. The conservative solution is to cut taxes to stimulate the economy. Essentially, Rich wants us to try socialism.
Rich is saying here that it is immaterial if history teaches that socialism has failed every time it's tried. He is saying that it has only failed because the wrong socialists were in charge. The program that Obama is undertaking is not wrong but it's implementation by Obama and especially by Obama's appointees has failed. So in the face of the evidence to the contrary the underlying Obama/Keynesian thesis is correct. Only it's implementation has failed. In fact, the problem is not wholly implementation but largely perception. Obama and his administration must realize they have a perception problem and get out in front of it.
Rich senses that the economy is spinning out of control as is the perception of the Obama administration and its thesis for dealing with the financial crisis is spinning out of control. He wants the blame where it belongs, on the Bush administration. But he admits in one of the most damning admissions seen recently in the New York Times that the derivatives-the real cause of all our plight, and this was torpedoed by the Clinton administration. He knows that none of this can withstand scrutiny. Rich is telling us that Obama has put the wrong socialists in charge of socialism
Frank Rich is terrified that the collapse of the economy will prove to be a collapse of the Keyes/Obama plan. If the country believes that the plan failed, it means that socialism failed. This is precisely the opposite of the fundamental premise of the Obama administration: capitalism failed and the government must save us.
