The shrill critics of President Obama's attempt to reverse the recession and end the breakdown of major financial institutions have one characteristic in common: They do not offer a workable alternate road map to recovery.
It is to the credit of the President and his treasury secretary that they took resolute steps to stem the ongoing recession by helping the failing industries financially, creating new jobs, and making affordable loans available again. Obama’s measures may not be perfect but they offer widely recommended correctives. Most of the President’s critics arbitrarily assume that his proposed measures will not work and that therefore they ought to be opposed.
Those who disparage government bail-outs for faltering private industries tend to ignore that it was the greed and incompetence of private operators that caused the crash of the market. Those who reject stronger regulation of free enterprise forget that it was the excesses perpetrated by corporate executives that led to the financial chaos that now government is left to correct. Who but government has the means to restore order and sanity in a relatively free market after its operators have failed so miserably?
There is no need to nationalize America’s banks, as such alleged free-market defenders as Alan Greenspan and Senator Chris Dodd have suggested. Our society does, however, lack the rules to prevent financial institutions from recklessly gambling with the funds entrusted to them. A clear line needs to be drawn between permissible smart investing and impermissible unwise wagering--when derivative traders increase their leverage with borrowed money out of the sight of regulators.
It is not enough to give shareholders a vote in electing boards of directors. Conscientious investors want to know how financial institutions manage their money, what remuneration and benefits their officers receive, and what expenditures go for political contributions and lobbying. Even democratic societies have a long way to go to achieve transparency in the market. Neither government nor corporate executives ought to be permitted to keep their financial operations hidden from their shareholders.
In preserving as much free enterprise as possible, we need to abide by the basic rule of law that those who cause damage pay for it. Certainly the businesses that failed will have to remunerate the government as much as they can for the cost of their bail-outs. It is indeed in the national interest to rescue America’s crucial industries, but not their executives and stakeholders. After all, the United States is not a welfare state for losers.
It was a daring move by Congress and the President to increase the national debt by a very large amount in order to reverse the recession and rebuild the ailing economy. Ironically, most of the critics who offer no credible alternative to the Obama administration’s trillion-dollar bailouts were largely silent when the national debt soared from $5.7 trillion to more than $10 trillion during the Bush administration. Its expensive Troubled Assets Relief Program (TARP) has so far been a depressing failure. While it facilitated the consolidation of the banks that allegedly were “to big to fail,” TARP did not sufficiently rekindle the lending required to rekindle the housing market.
In the meantime, the President will have to suffer more detractors and wait in vain for alternative policies more promising than his own.