Struggling to be heard above the din

Knocked off balance by the bonuses brouhaha, President Barack Obama is relying on direct appeals to the public to refocus attention on his ambitious agenda and drive the debate.

The President has shouldered responsibility for the mess and, in his radio and web address yesterday, sought to put the financial finger-pointing behind in favour of his policy pillars - deficit cutting, overhauling health care and energy, and improving education.

He will use a flurry of events to make his case, including a network television interview airing today and a prime-time news conference on Wednesday. The Administration also is expected, as early as tomorrow, to roll out its plan to rid banks of their toxic assets and speed the flow of loans.

Being heard above the din may prove difficult.

Legislators are wrangling over taxing people who got big bonuses and worrying the President's budget could generate US$9.3 trillion ($16.6 trillion) in red ink over the next decade.

"I realise there are those who say these plans are too ambitious to enact," Obama said in his weekend address. "To that I say that the challenges we face are too large to ignore. I didn't come here to pass on our problems to the next President or the next generation - I came here to solve them."

But Obama had to yesterday step up his weeklong defence of much-criticised Treasury Secretary Timothy Geithner, saying he would not accept his resignation even if it was tendered.

It came ahead of a critical week for Geithner, who is within days expected to unveil his much-anticipated bank bailout plan and outline broad financial regulatory reforms to better police Wall Street.

Geithner has been under fire over his failure to block at least US$165 million, and possibly as much as US$218 million, in bonuses paid out to employees of insurer American International Group, which has received billions in Government aid.

With public outrage over the AIG bonus scandal mounting, and several legislators calling for Geithner's resignation, Obama was forced last week to repeatedly defend his Treasury Secretary. While Obama has said Geithner's job is safe, some Washington pundits note it is not a good sign that the President has had to say it, and so often.

Ultimately, the bonus fury is about much more than a gross payday for an undeserving crew.
In the near-term, it has created a huge and unwelcome distraction for political leaders desperately trying to manage the financial crisis.

In the medium term, it threatens to undermine Obama's future flexibility to save the US economy.

Above all, it has fuelled a rising populist tide that threatens to swamp Obama's presidency altogether.

The notion that Obama was cavalier about giving taxpayer dollars to corporate villains is potential political cyanide for a President who, as a candidate last year, was viewed by some working-class voters as an aloof academic.

"It's a pretty critical moment," says Stan Greenberg, former pollster to President Bill Clinton. "Voters are trying to make a judgment about Obama and, to some extent, about the new, mostly Democratic political class now in control of the Government.

"And I think they're trying to decide 'Whose side are they on?"'

But with the global economy slowly burning down, the current obsession over this lone injustice - just one of countless others that define and explain the current crisis - has become a destructive force of its own.

"Constituents are sending Congress a clear message: it's torch-and-pitchfork time," says a senior Democratic congressional aide, invoking the image of angry mobs storming Washington. That has members of Congress scrambling for scapegoats. "We need perp walks [a police suspect parade], CEO scalps, trophies to mount on the wall. The country needs villains to focus its rage on," the aide said.

Over the past week, Obama sought to spread his message unfiltered to people, tapping his massive email list to promote his agenda one on one and speaking to enthusiastic supporters at town hall meetings in California. But the AIG wrangle has dominated.

Later, the President scrambled to say he was sorry for an offhand remark on NBC's Tonight Show in which he compared his inept bowling with "the Special Olympics or something".

By Saturday, the White House was fending off the new dismal deficit estimates from congressional auditors.

Republicans seized on the missteps and used their Sunday address to condemn Obama's budget as a breathtaking spending spree. As states and families are struggling to cut spending, the President's budget "spends too much, taxes too much and borrows too much", said Governor Haley Barbour.

"Absolutely it was a bad week for the President," said Thomas Mann, a Brookings Institution congressional scholar. "But, he's not someone to shy away from an ambitious agenda. He's aiming very high and he's not going to trim his ambitions in response to this."

It's also not the first time a President has been knocked off course soon after taking office.

Clinton won the White House with this campaign mantra: It's the economy, stupid. But he stumbled early on as he tried to fulfil a pledge to lift the ban on gays serving openly in the military. His compromise, "don't ask, don't tell" policy still draws criticism from all sides.

It's important for Obama to understand the public's anger over the bonuses and channel it, using his leadership skills and high approval ratings to regain people's confidence, Mann said.

That anger could become directed at Obama and the Democrats who control Congress. For now, however, the good news for Democrats is that no strong opposition leader has emerged to harness that public rage.

Republicans are hamstrung by their own corporate ties and, in the case of AIG, the fact that they opposed earlier (Democratic) attempts to limit bonuses for corporations getting federal assistance.

The best way for Obama to avoid being consumed by the public's free-form anger is to put Americans back to work, ensure a rising stock market and, if he can accomplish it, easy access to affordable health care. But the populist threat itself impedes Obama's ability to turn the country around.

That's because such a turnaround will require political capital, a commodity Obama and the Democrats are now haemorrhaging.

The AIG fiasco is sure to leave the Congress gun-shy about supporting more assistance to Wall Street. A pending effort in Congress to impose 90 per cent tax rates on big bonuses at companies that have taken taxpayer dollars could make things worse. It threatens to undermine support in the financial world for nationalisation of America's most dysfunctional banks.

Obama said yesterday that people are more concerned about having a pay cheque and being able to pay university or medical bills than they are about "the news of the day in Washington".

Those are the concerns, he said, that he addresses in his budget, which he calls an economic blueprint for the future. It is "a vision of America where growth is not based on real estate bubbles or over-leveraged banks, but on a firm foundation of investments in energy, education and health care that will lead to a real and lasting prosperity," Obama said.

He said in the end his four priorities must be met. Those are plans to boost investments in clean energy technologies, including wind and solar power; more money for childhood education programmes, affordable college costs and higher standards for schools; a health care overhaul that will lower costs, including Medicare and Medicaid; and a scrutiny on domestic spending that will lead to cuts in the deficit.

"The American people sent us here to get things done, and at this moment of great challenge, they are watching and waiting for us to lead," Obama said.

Obama told Congress in February: "[In] a time of crisis, we cannot afford to govern out of anger." Thus far, America's political system has not responded well to his call.

- OBSERVER, AP, AGENCIES