Obama’s rich bureaucrats
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.