Economic Policy Could Scuttle Obama's Good Start

Only a week into the new administration,
and yet there is this nagging thought that Barack Obama's legacy
already hangs in the balance. Sounds absurd, I know, given the brief
time, but his early response to the financial meltdown is just that
important. Despite a terrific start in so many directions, Obama is up
against an economic crisis that, although not of his making, will, if
handled improperly, spell his-and the nation's-undoing.

Obama is in these early weeks making
trillion-dollar decisions that will cast the die for the rest of his
promising agenda. Unfortunately, while the new president has already
proved to be a brilliant and super-competent agent of change in so many
ways, in matters of economic policy he has relied excessively on the
financial "experts" who helped get America into this mess.

Treasury Secretary Timothy Geithner and
top White House economic adviser Lawrence Summers are retreads from the
Clinton years who sided with congressional Republicans in unraveling
the regulatory regime created by Franklin Roosevelt that had served the
nation so well. Perhaps they have now come to their senses, given the
financial horrors that their deregulatory mania unleashed, but it gives
one pause to see these folks back on center stage performing with the
same arrogant aplomb as they did when they had it all wrong.

We can only hope they are now prepared to
make amends, although Geithner and Summers often seem to be pushing for
more of the same: bankers first, women and children later. The good
news is that the message coming from the mouth of the new president is
that he intends to make a significant departure from the Bush bailout,
by placing emphasis on preventing foreclosures, curtailing bank
lobbying and holding the recipients of federal funds responsible for
opening the tap of loans to the public. The structure of the stimulus
package is also reassuring, with its emphasis on spending money in ways
that will improve the quality of life for ordinary Americans and its
ban on bonuses for corporate execs who utterly failed in their
responsibilities. Imagine how much better off we would be if we had
just taken the first $350 billion of TARP funds and used it to help
teachers, cops, nurses and firemen buy homes in the communities they
serve.

We certainly should give Obama the benefit
of the doubt. In every other area his early performance has been
stellar. Certainly so with respect to human rights and protection of
civil liberties; in his first week in office, he reversed many of the
atrocious Bush-era policies. With an urgency unmatched by any other
modern president, Obama has sharply countered America's tainted image
by acting to close the Guantanamo Bay detention center, ban the CIA's
"enhanced" interrogation tactics and restore the power of the Freedom
of Information Act to ensure public access to the information required
for an informed democracy.

In other important instances, Obama has
been refreshingly true to the promises of his campaign by taking the
first steps toward ending the U.S. occupation of Iraq, by moving toward
energy conservation and by ending punishment of international health
organizations that have been severely undermined by the dictates of
anti-abortion zealots. His early actions on global warming and the
Mideast show a clarity of commitment absent from the executive office
over the past eight years.

In these areas, Obama has acted with an
informed confidence not always evidenced in his initial moves on the
economy. Why, in the management of the economy, do we hear so little
from the Chicago community organizer concerned with the pain of the
average person and instead perceive so much of the sensibility of the
Harvard business and law school elite, preoccupied with the well-being
of the denizens of Wall Street?

As Obama stated in his inauguration
speech, "A nation cannot prosper long when it favors only the
prosperous." That is the problem with the Bush bailout, which Obama
asked to be extended and which has resulted in little more than a
rearranging of the chairs, not to mention the commodes, of the
first-class passengers on a sinking ship. It has been the biggest
corporate welfare program in history, enabling Wall Street hustlers to
cut themselves lucrative deals while so many millions lose their jobs
and homes. I'm betting that Obama will try to put a stop to all of
this, but he needs to hear from ordinary folks who are hurting and
outraged.