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Wednesday, April 15, 2009 08:05 pm

Pusillanimity plus stupidity equals Wall Street greed

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Republican Sen. Chuck Grassley proposed a Japanese solution.

Once again, we are faced with the question that has long bedeviled political analysts and barstool pundits everywhere: Is the pusillanimity of Democrats worse than the stupidity of Republicans?

The question arises because of a curious vote last week in the House of Representatives to restrict the bonus money going to those nimble-fingered financial whizzes at Wall Street firms being bailed out by you and me.

It was curious because there had already been a vote to do this in March. Back then, after we commoners learned that Merrill Lynch, AIG and others were merrily tossing million-dollar bonus checks to their top executives (even as they pleaded for Washington to rescue their sorry butts), a genuine populist furor swept across the country, sales of pitchforks spiked and Washington simply had to act.

We will “do everything we can to get those bonuses back,” promised President Barack Obama, who coolly explained that he was seething inside. Republican Sen. Chuck Grassley went further, barking that AIG’s bonus-grabbers should do the honorable thing. Return the money? No, fumed the senator, they should commit hari-kari. So, last month, the House voted overwhelmingly to reclaim the bonus money by putting a near total tax on it.

Then, however, pusillanimity and stupidity settled over Washington like a blinding fog. Let’s start with the Democrats.

They had put on a good show, denouncing the Wall Street bankers with righteous rhetoric, then pushing a properly populist reform through the House — but suddenly, they went wussy. It seems that lobbyists for the finance industry, which is a major funder of the party’s candidates, had been working behind the scenes, applying soothing cold presses to the fevered brows of Democrats and cooing softly about the need to show restraint.

Also, such White House “Friends of the Street” as chief economic advisor Larry Summers were urging a kinder, gentler approach to executives’ compensation. (Coincidentally, Larry was paid $5 million last year to be an advisor to one of the biggest hedge funds on Wall Street and drew another $2.7 million in speaking fees from various financial giants now getting taxpayer dollars.)

Next thing you know, Obama himself changed his scolding tone, urging the public not to vilify bankers. Then, Senate leaders quietly deep-sixed the House “bonus tax,” and House leaders substituted the revised bill that passed last week.

This version had all the populism boiled out of it. Rather than yanking back the undeserved bonuses, the bill explicitly authorizes such payments — as long as the treasury secretary does not consider them “unreasonable or excessive.” Ahhh, sighed Wall Street with a collective smile, that’s more like the Democrats we love.

Enter the Republicans. They were furious at the Democrats! Was it because the Dems weaseled, essentially saying “thbtttttt” to the public’s sense of moral outrage? No, no, that would have been smart. Instead, House Republican leaders came up with the one and only political strategy that could make them look worse than the Democrats: They rose on their hind legs and loudly, ardently, stupidly defended the “right” of Wall Streeters to shower any excesses they want on their management elite.

They yowled that the effort to limit pay is outrageous governmental interference in the sacrosanct private sector. “Would our forefathers ever have considered giving the government a say on how much a private citizen earns, a so-called say-on-pay?” yelped Rep. Spencer Baucus of Alabama.

Apparently, no one has told the Repubs that AIG, Citigroup and others are now almost wholly owned by taxpayers, so, like any majority owner, we do indeed get a say. Also, has Spencer forgotten that only four months ago, his party was in full howl against Detroit autoworkers, demanding that government power be used to slash their pay?

The Democrats are appallingly timorous about taking a firm populist stand on the side of a riled-up public — but the Republicans? They put the “dumb” in dumbfounding. As a result, Wall Street hucksters skate by, thumbing their noses at you and me.

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