To The Crooks, The Spoils

Matt Taibbi's take down of Rubinites in control Obama's economic agenda is getting tough criticism from the usual suspects, which serves as a great lesson on how to mount a political counter attack: first, attempt to discredit the journalist and his article, then shift blame. But from my reading of Taibbi's article and the fairly weak critiques from administration apologists it looks like they've failed to discredit a fairly obvious charge: That Obama is beholden to the people who bear direct responsibility for the financial crisis.

While defending his piece, Taibbi makes a couple crucial points that illustrate just how top-down the economic thinking is in this country:

We could have paid off every subprime mortgage in America for about $1.4 trillion and instead shelled out at least ten times that to Wall Street, primarily to pay off derivative bets made by bankers on those assets.

Most of the bailouts came in the form of very cheap money lent out to the same banks that caused the crisis, who then took that money and lent it out at market rates, pocketing the difference. That’s where all these billions in bonuses for the major banks are coming from this year. It’s almost impossible to not make mountains of money when your cost of capital is next to nothing because you’re borrowing your money from the government basically for free.

Sure, Bush is responsible for the bailouts and Tarp program, but the Obama team has done little to deviate from that course, with the choreographed anger over bonuses being little more than political theater.

The upshot of all of this is that the co-optation of regulatory reform by Wall Street is a crucial story that deserves more attention. And Taibbi--because he's a great writer who can break down a complicated story into an accessible article--delivers big time. My only issue stemming from Taibbi's article (besides calling Obama's actions a "sellout" when really he's not deviating from the norm) is with liberal bloggers intent on shifting blame onto the left's favorite bogeymen: Ben Nelson and Joe Lieberman (please don't read this to mean those two aren't completely insufferable tools). Sure, those two centrist yahoos have enjoyed garnering plenty of Sunday morning talk show attention for rear-ending the White House's agenda. But this scarecrow building doesn't work with regulatory reform. Taibbi is talking about Obama's economic team. That team has been in office for 10 months and hasn't done a damn thing to address the most glaring problem this country faced when it took office. And the inaction isn't to assuage the moderate tendencies of Ben Nelson.

-- Update --

For more bomb throwing check out the work of Dylan Ratigan.