President Obama And The Proper Role Of Government

In 1980 I wrote a letter to my hometown paper during the presidential election as Ronald Reagan was scolding the nation about the size of government.   My words reflected the need society has for an effective government that provides services that people require.    I also mentioned that without a strong government to protect the average citizen the large corporations would run rough-shod over the nation.

In 2010 we are witnessing another showdown between those who want to marshal government power for the people, and those who wish to protect corporate greed and mismanagement.  The Gulf of Mexico and the BP oil gusher is ground zero for this civics lesson that never seems to get resolved.

To Mr. Obama, this is all about rebalancing the books after two decades in which multinationals sometimes acted like mini-states beyond government reach, abetted by a faith in markets that, as Mr. Obama put it at Carnegie Mellon University a few weeks ago, “gutted regulations and put industry insiders in charge of industry oversight.”

When Representative Joe L. Barton, the Texas Republican, opened hearings Thursday about the gulf oil gusher by accusing Mr. Obama of an unconstitutional “shakedown” of BP to create a “slush fund,” he was giving voice to an alternative narrative, a bubbling certainty in corporate suites that Mr. Obama, whenever faced with crisis that involves private-sector players, reveals himself to be viscerally antibusiness.

The reality, not surprisingly, is more complex.

Mr. Obama clearly sees his presidency as far more than a bully pulpit — he has cast himself as a last line of defense against market excesses that take many different forms. “In the past, corporate America was not only at the table, they owned the table and the chairs around it,” Mr. Obama’s combative chief of staff, Rahm Emanuel, said in an interview Thursday. “Obama doesn’t start off confrontational, but he will be confrontational if there is resistance to the notion that there are other equities.”

But at the same moment, as his critics on the left have pointed out, Mr. Obama has been warding off calls for far more stringent regulations of the banks, hoping to win at least a modicum of business support — and to defuse the notion that he is at war with American-style capitalism.

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Against that backdrop, forcing BP to take a $20 billion bath — even before the inevitable lawsuits are filed — seemed an easy decision. Mr. Obama had no legal basis for the demand, but concluded he did not need one. “He had a power other presidents have used — you call it jawboning,” Mr. Emanuel said. 

“He’s walking a very fine line here,” said Jeffrey Garten, a professor of trade and international finance at the Yale School of Management and a former top official in the Clinton administration’s Commerce Department. “He is taking each case on the merits as he sees it, but he runs the risk of sowing a level of mistrust about all big companies. And it’s those companies — not small businesses — that he will need to invest and innovate for the kind of recovery he wants.”

Mr. Obama is betting that Republicans are also walking a fine line. That became evident Thursday as Republican leaders distanced themselves from Representative Barton’s outburst, which included the charge that Mr. Obama was acting illegally by applying “some sort of political pressure that in my words amounts to a shakedown.”

Mr. Obama’s aides clearly relished the idea of a Texas Republican dependent on donors from the energy industry who was actually apologizing to BP. As a political strategy, they appear to be adapting the course taken by Franklin D. Roosevelt, who seized on a mood of distrust when, in the closing days of the 1936 campaign, he said: ”I should like to have it said of my first administration that in it the forces of selfishness and of lust for power met their match.” When the applause subsided, he added: “I should like to have it said of my second administration that in it these forces met their master.”