Obama Helps the Fat Cats

Obama Helps the Fat Cats

By Jack Kelly - December 20, 2009

Dana Milbank of The Washington Post is the latest to notice President Barack Obama often has done the opposite of what he promised to do when he was seeking the job.

"On the campaign trail, Barack Obama vowed to take on the drug industry by allowing Americans to import cheaper prescription medicine," Mr. Milbank recalled Wednesday. " 'We'll tell the pharmaceutical companies thanks but no thanks for the overpriced drugs,' he said back then."

The Senate voted Tuesday on an amendment to the health-care bill that would have permitted the reimportation of drugs.

"Siding with the pharmaceutical lobby, the administration successfully fought against the very idea Obama had championed," Mr. Milbank said.

If the flip-flop on drug importation was the most recent example of hypocrisy, the kabuki in the White House the day before was the most blatant.

On CBS' "Sixty Minutes" last Sunday, the president excoriated Wall Street bankers who had received bailouts for not lending more money.

"I didn't run for office to help out a bunch of fat cat bankers on Wall Street," Mr. Obama said. He called bankers to the White House for a meeting Monday, presumably to chew them out in person.

But that isn't what happened.

"I expected to be taken to the woodshed, but the tone was quite the opposite," one CEO told Charles Gasparino of CNBC.

"The whole thing was so telegraphed that not much was accomplished, other than giving Obama a PR stunt," said another.

Actions speak louder than words. On Tuesday, the administration "quietly agreed to forgo billions of dollars in potential tax payments from Citigroup as part of the deal announced this week to wean the company from the massive taxpayer bailout that helped it survive the financial crisis," The Washington Post reported Wednesday.

Thanks to the Troubled Asset Relief Program, the big banks made substantial profits in the year since the meltdown. The banks did this not by loaning money to private businesses, but by investing what were essentially interest-free loans mostly in government bonds.

The banks are "taking free money from the government (taxpayers) and lending it back to the government (taxpayers) at a phenomenal markup of 3 full percentage points," said Henry Blodget of the Business Insider. "And they're taking almost no risk, to boot!"

With the repayment of TARP funds, the administration lost most of its leverage over the "excessive" compensation against which Mr. Obama railed on "Sixty Minutes."

Since bank lending has declined sharply in the last year, it appears that administration policies are benefiting only "fat cat bankers on Wall Street."

Mr. Obama switched sides on drug reimportation to get the pharmaceutical industry to support his health-care bill. Mr. Gasparino suspects a similar motive when it comes to the banks.

"Maybe Obama's softened tone was recognition of Wall Street's election help," Mr. Gasparino said. "Firms like Goldman [Sachs] -- now getting ready to dish out $20 billion in bonuses after nearly imploding last year -- favored Obama over John McCain by a fairly wide margin. Nearly all the major Wall Street CEOs -- including [Jamie] Dimon [JP Morgan], [Lloyd] Blankfein [Goldman] and [John] Mack [Morgan Stanley] have told people that they voted for Obama."

"The president has packed his economic team with Wall Street insiders intent on turning the bailout into an all-out giveaway," charged Rolling Stone magazine in an article Dec. 9 by lefty writer Matt Taibbi.

The coziness between the president and Wall Street fat cats reminds us that little is more dangerous to the public interest than crony capitalism. Businesses want subsidies, restrictions on competitors and provisions like the insurance companies got in the health-care bill that Americans be required to buy their products.

Crony capitalism couldn't exist if businesses couldn't buy these favors with campaign contributions, or politicians couldn't extort them by threats of punitive laws.

"With Washington leading the way, it makes sense for the big boys to redirect their resources to their lobbying shop and government affairs office," said Rep. Paul Ryan, R-Wis. "They're far less interested in expanding the economic pie than with making certain that they get their slice."

Jack Kelly is a columnist for the Pittsburgh Post-Gazette and The Blade of Toledo, Ohio.

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