Obama's Bailout Double Standard and the Revival of Reaganism

I appeared on Rachel Maddow's MSNBC show last night to discuss the seeming double standard between the Obama administration's treatment of car companies and Wall Street firms. You can watch it here [1].

There is clearly a double standard at work: Just a few days ago, Wall Street executives were hosted at the White House for a cheery photo op and reassurance that they will be getting hundreds of billions more in no-strings-attached bailout cash. Then this week, Obama demanded the firing of GM's CEO, and said he may withhold the mere $30 billion or so that the automakers are requesting.

I'm not saying that automakers don't deserve to be pushed around, nor am I saying even that GM's CEO shouldn't have been fired. What I am saying, however, is that there are two different standards at work here.

Why? Shockingly, the Politico quotes "a Democratic official close to the White House" as saying the president has "more confidence in the leadership on the banking side - that there are people in place who understand what went wrong and the steps necessary to deal with this disaster." How anyone could have confidence in banking executives at a time like this is, as I said, shocking. But, then, this is a White House chock full of longtime Wall Street allies - a White House that appointed corporate raider Steve Rattner [2] to head the auto bailout, a White House who the Wall Street Journal [2] today reports is aiming to use the bailout to force autoworkers to accept cuts to their health care benefits.

What's fascinating about all this is the surprising revival of tactics first pioneered under Ronald Reagan.

Last year [3], you may recall that Obama took some flack for seeming to idealize The Gipper. I didn't think those comments were controversial - in fact, I agreed with Obama in his insistence that Reagan was a transformational president. Nonetheless, however you felt about those comments, I think we're learning that they previewed an effort to emulate Reagan's tactics - in particular, when it comes to bailouts.

Reagan famously backed a massive increase in the defense budget and corporate welfare while pretending to be a budget hawk by bemoaning the supposed wastefulness of programs like welfare - programs whose expenditures were tiny in comparison to those on the Pentagon and corporate welfare.

Likewise, we've seen Obama support giving away hundreds of billions of dollars - no strings attached - to Wall Street banks while simultaneously presenting himself as getting tough on Corporate America with his promise to hold the auto industry accountable for its failures. Of course, the automakers are asking for a tiny fraction of what Wall Street has already gotten.

It's the same paradigm. Hand out huge sums of cash to powerful political constituencies (for Reagan, defense contractors; for Obama, Wall Street), withhold a relatively small amount of cash from disempowered political constituencies (for Reagan, welfare recipients; for Obama, struggling automakers) - then cite the latter action as proof of "toughness," and hope nobody remembers the former largesse.

Again, I'm not saying the auto industry doesn't deserve to be pushed around - but I am saying that in embracing this brazen double standard, the Obama administration (at least when it comes to the issue of bailouts) is resurrecting the fundamentally dishonest tenets of Reaganism, and that's not a good sign.