Obama’s rich bu­reau­crats

The Washington Times Weekly - - Editorials -

Pres­i­dent Obama doesn’t like bankers. Sound­ing like the com­mu­nity or­ga­nizer he was back in the 1990s, Mr. Obama told the na­tion dur­ing his Dec. 13 ap­pear­ance on CBS’ “60 Min­utes”: “I did not run for of­fice to be help­ing out a bunch of, you know, fat-cat bankers on Wall Street. Noth­ing has been more frus­trat­ing to me this year than hav­ing to sal­vage a fi­nan­cial sys­tem at great ex­pense to tax­pay­ers that was pre­cip­i­tated, that was caused in part by com­pletely ir­re­spon­si­ble ac­tions on Wall Street.”

Hmm . . . ir­re­spon­si­ble ac­tions on Wall Street? Fat cats spending more than they have in rev­enue? We have heard this some­place else re­cently. With the fed­eral gov­ern­ment, how­ever, we are not talk­ing about mere bil­lions of dol­lars. The Demo­cratic pres­i­dent and the Demo­cratic Congress are plan­ning to add at least $9 tril­lion to the na­tional debt over the next 10 years. In the con­text of this orgy of gov­ern­ment ex­cess, Mr. Obama has the gall to crit­i­cize oth­ers for spending more than what they are tak­ing in rev­enue.

It’s pure chutz­pah for the pres­i­dent to move to reg­u­late busi­ness salaries while the av­er­age fed­eral bu­reau­crat earns $30,000 more per year than the av­er­age worker in the pri­vate sec­tor. While un­em­ploy­ment has soared over the past 18 months and pri­vate-sec­tor salaries re­main stagnant, USA To­day re­ports that salaries of pub­lic ser­vants have in­creased, and the high­est-paid civil ser­vants have had the big­gest in­creases in salary. Fed­eral em­ploy­ees mak­ing more than $100,000 per year rose from 14 per­cent to 19 per­cent of the gov­ern­ment work force dur­ing the first 18 months of the re­ces­sion. Over the same pe­riod, the Depart­ment of Trans­porta­tion went from hav­ing only one em­ployee mak­ing more than $170,000 to 1,690 tak­ing home that princely sum.

Per­verse in­cen­tives are be­ing in­serted into la­bor mar­kets by glut­tonous gov­ern­ment. Mr. Obama ap­par­ently un­der­stands the im­por­tance of high salaries to at­tract­ing and re­tain­ing work­ers in gov­ern­ment. He just doesn’t ac­cept that the same logic ap­plies in pri­vate in­dus­try and that in a healthy cap­i­tal­ist so­ci­ety, it is ap­pro­pri­ate that work­ers are paid more in pri­vate busi­ness than by bu­reau­cra­cies.

It’s also disin­gen­u­ous to pre­dom­i­nantly scape­goat banks for the na­tion’s fi­nan­cial mess. Gov­ern­ment had a big hand in cre­at­ing the fi­nan­cial cri­sis through bizarre reg­u­la­tions that forced banks to make risky loans. Gov­ern­ment agen­cies such as Fan­nie Mae and Fred­die Mac gave fa­vor­able treat­ment to banks that made risky loans to peo­ple who were un­likely to be able to pay them off.

The Fed­eral Re­serve pro­duced a man­ual for mort­gage lenders with some strange rules: “lis­crim­i­na­tion may be ob­served when a lender’s un­der­writ­ing poli­cies con­tain ar­bi­trary or outdated cri­te­ria that ef­fec­tively dis­qual­ify many ur­ban or lower-in­come mi­nor­ity ap­pli­cants.” Those pur­port­edly outdated cri­te­ria in­cluded not count­ing wel­fare pay­ments and un­em­ploy­ment ben­e­fits as re­li­able in­come sources. “Pay­ing off past bad debts or es­tab­lish­ing a reg­u­lar re­pay­ment sched­ule with cred­i­tors” were other passe con­sid­er­a­tions.

There are nu­mer­ous other ex­am­ples of gov­ern­ment com­plic­ity in the fi­nan­cial cri­sis, but the point is, Mr. Obama and his team see noth­ing wrong with the gov­ern­ment’s be­hav­ior. In­deed, they are an­gry that banks are re­luc­tant to con­tinue mak­ing such risky loans. Mr. Obama tries to make the gov­ern­ment seem like the res­cuer of a weak cap­i­tal­ist sys­tem. In re­al­ity, our cur­rent prob­lems were made by gov­ern­ment. The so­lu­tion isn’t even more gov­ern­ment.

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