President Barack Obama reading The New York Times aboard Marine One, May 22, 2009
Where President Obama was previously infuriated when large Wall Street firms once again distributed multimillion dollar rewards, he now says that he doesn’t “begrudge” the $17 and $9 million bonuses awarded to the CEOs of JPMorgan Chase and Goldman Sachs respectively. “There are some baseball players who are making more than.”
In an interview with Bloomberg BusinessWeek, which will appear on newsstands next Friday, the president said that he, “like most of the American people,” doesn’t begrudge people success or wealth. “That is part of the free-market system.”
It is, although, as critics point out, these banks received many billions of dollars in government aid. Extraordinarily high bonuses don’t go well with the public right now and Obama, they argue, must consider that.
The president is however. After most of the financial institutions that were bailed out paid back what they owed the US Government, Obama belatedly announced a Financial Crisis Responsibility Fee to get back “every single dime” that was spent to shore up the financial system.
Such largely symbolic, business-bashing measures aren’t enough for the more ardent of anti-capitalists though. The Huffington Post‘s Simon Johnson complains that Obama “still doesn’t get it.” He recognizes that bailing out Wall Street wasn’t a good idea because “the incentives for the people running these megabanks is now to take on reckless amounts of risk” but he wrongly identifies the root of the problem. Johnson blames the “Reagan Revolution” and claims that the situation “became much worse during the last administration.” This is an odd statement because where President Reagan favored deregulation, George W. Bush further promoted a long trend of government interference in the housing market—which, after all, is where the recession began.
Economist Paul Krugman agrees with Johnson and uttered “Oh. My. God.” as he read the news. According to Krugman, “not only has the financial industry been bailed out with taxpayer commitments; it continues to rely on a taxpayer backstop for its stability.”
The point is that these bank executives are not free agents who are earning big bucks in fair competition; they run companies that are essentially wards of the state.
That so? JPMorgan Chase received $25 billion of US funds under the Troubled Assets Relief Program (TARP) which it repaid in June 2009 along with almost $800 million in dividends. Goldman Sachs received $10 billion preferred stock investment from the Treasury under TARP and paid it back in June of last year also, with 23% interest.
These banks aren’t “wards of the state” anymore but in the end, that doesn’t matter as far as Krugman is concerned. At the very least, he writes, “you would think that Obama would understand the importance of acknowledging public anger over what’s happening.” No matter what is actually happening, the president should apparently let peoples’ misguided interpretation of events dictate policy.
The same Krugman who reveled when Obama was elected president now believes that, “We’re doomed,” because the president isn’t angry about bonuses for once? Get a grip!
Obama is right. Bonuses are part of a free market economy. Regardless of whether one might think of them as excessive, it is not the government’s place to determine how much money people can make.
