The excerpts that Bloomberg published Wednesday from its interview with Barack Obama provoked some indignation from Simon Johnson, Paul Krugman, and others, but the full interview, published yesterday morning by Bloomberg BusinessWeek, deserves a few additional howls. It shows the degree to which Obama not only doesn’t understand but, on a deeper level, also doesn’t share the outrage many Americans—from left-wing bloggers to right-wing tea-partiers—feel toward the Wall Street CEOs and traders who have made off like bandits during the financial crisis they helped bring about.
It’s not the substance of what Obama says—he doesn’t back off on financial regulation or health care reform. It’s his tone, his emphases, and where he allows his sympathies to fall. Let’s start with what Obama says about executive bonuses. The exchange begins:
BBW: Let’s talk bonuses for a minute. Lloyd Blankfein: $9 million. Jamie Dimon: $17 million. Now, those were in stock and less than what some had expected. But are those numbers O.K.?
Obama: First of all, I know both those guys. They are very savvy businessmen. And I, like most of the American people, don’t begrudge people success or wealth. That is part of the free-market system. I do think that the compensation packages that we have seen over the last decade, at least, have not matched up always to performance...
“Have not matched up always to performance”?! That’s like saying Rod Blagojevich’s conduct did not always measure up to what Illinois voters expected from their governor. It’s an understatement that betrays a lack of identification with the rage people feel about these CEO salaries and bonuses.
Then Obama is asked about Dimon’s bonus:
BBW: Seventeen million is a lot for Main Street to stomach.
Obama: Listen. $17 million is an extraordinary amount of money. Of course, there are some baseball players who are making more than that and don’t get to the World Series either, so I am shocked by that as well.
If you have ever had an argument about excessive executive salaries with a rich Republican—I can recall one, for instance, with a downtown corporate tax lawyer—he will invariably compare CEO salaries to those that athletes and entertainers make. And here we have a Democratic president using this spurious ploy.
Is it necessary to make the obvious points? That the athletes who make $17 million have spent most of their waking life since they were four years old practicing their sport (if you don’t believe it, read Andre Agassi’s autobiography, Open); that they possess unusual skill at what they do; that in some cases—like those among professional football players or prize fighters—they risk life and longevity; that their earning cycle, often only a few years, is very sharply limited compared to that of a banker; and that what they contribute to society—after all, athletics and entertainment have been an essential part of human life for thousands of years—is as valuable as, and probably more valuable than, what many a banker or trader contributes.
Obama had a lot of other opportunities during the interview to make clear that he was outraged, and not merely discomfited, by the huge disparities of wealth that have emerged; but he framed his responses primarily in terms of economic efficiency rather than injustice. We need to change the fact, Obama declared, that “businesses are making record profits but employees are seeing their wages flatline” because “we are going to be better off if everybody feels like they have got a stake in growth and innovation moving forward.” Yes, there’s nothing like cooptation to boost profits. Or we need financial regulation because, he said, having “financial instruments that drive huge profits but leave consumers unprotected … is not good for the system overall.”
You can say that Obama was directing these comments specifically at a business audience that wouldn’t have wanted him to talk about the injustice that the system has bred, but as Obama well knows, in this age of cable and Internet, anything a president says to anyone he says to everyone. And I’d go further: Making a few sharp points about injustice to a business audience would have helped to allay public fears that Obama isn’t really on their side.
Finally, here’s what Obama says when he is asked to name a CEO he respects:
BBW: Do you want to weigh in on a specific CEO you admire?
Obama: There are a bunch of them. You know who I really enjoyed talking to at our last lunch was Fred Smith of FedEx (FDX). Very thoughtful. He’s an example of somebody who is thinking long-term. His industry is deeply sensitive to energy prices, and he’s the first one to say that if we don’t start getting an energy policy that’s smart, we’re going to lose. He’s also very thoughtful about trade and talks about the difficulties they’ve had in some cases with partners around the world...
What’s wrong with this? Well, Fred Smith is an odd choice for a Democratic president to make. He’s a well-known Republican, one of John McCain’s chief backers and a member of his kitchen cabinet. Between June 2006 and July 2009, he gave $82,100 to the National Republican Senatorial Committee. Moreover, he has a longtime record and reputation as an anti-union executive.
Most recently, Smith’s company threatened to cancel an order of planes from Boeing if Congress voted to include his company under the National Labor Relations Act, which would allow unions to organize individual FedEx plants, rather than the Railway Labor Act, which requires a union to organize all FedEx workers across the country at once—a near-impossible task. FedEx’s unionized rival, UPS, falls under the NLRA. When McCain was rumored to be considering Smith to be his running mate, Change to Win issued a statement about Smith that pretty much sums up labor’s attitude toward him:
In the 35 years that Fred Smith has been the CEO of FedEx he has repeatedly fought against workers joining together to have a voice on the job, openly stating that he 'doesn't intend to recognize any unions at Federal Express.' Less than 2% of the 200,000 American workers at FedEx are in a union. In contrast, UPS unionized workers make nearly 30 percent more than they non-union counterparts at FedEx. Despite organizing efforts, FedEx has filed appeal after appeal to deny their workers the right to bargain collectively, and has sought national legislation to thwart union organizing.
Is this a guy a Democratic president should hold up as a model CEO? Again, if you were talking to a class at Harvard Business School, and pointing out which CEOs had brought a good return to their stockholders, then Smith would be high on the list. But for a Democratic president to hold him up as a model reveals a shocking ignorance of what the party, and one of its most important constituencies, has stood for.
Overall, the impression the interview leaves is of a president surprisingly oblivious to the fury that is sweeping the nation. Obama has occasionally attempted to speak to it, or read speeches that address it. But this interview shows that, in the choice between Main Street and Wall Street, his natural inclinations lie more toward one side—and it ain’t Main Street.