The Shirley Sherrod affair showed how the Obama administration makes decisions–haphazardly–and, most worrisome, how easily it can be duped into acting in a foolish manner. The administration was so eager to protect President Barack Obama’s image from a claim of reverse racism that it responded to this situation with no knowledge of the facts. A litany of events suggests this is the administration’s mindset.
In Ms. Sherrod’s case, the administration firedher—a long-time federal employee at the Department of Agriculture—for comments made at a March NAACP event. A part of her speech was posted on Big Government by conservative blogger Andrew Breitbart, apparently revealing Ms. Sherrod's anti-white bias; the comments were out of context and misconstrued as racist. She was not given the opportunity to explain. In lynch-mob fashion, the Obama administration summarily executed her character and career. Surprisingly, Ms. Sherrod was denied presumption of innocence by a president who once taught constitutional law. Once it was revealed that Ms. Sherrod's statements were made out of context, the Obama administration publicly apologized and offered her another job.
A year earlier, Mr. Obama declared from the presidential podium, that the Cambridge police “acted stupidly” in the case of Harvard Professor Henry Louis Gates Jr. Mr. Gates, one of the nation's pre-eminent African-American scholars, was arrested at his home by Cambridge police investigating a possible break-in after he was seen trying to pry open the lock, which was already damaged, to his own home. Mr. Gates was already in his home when police arrived. He showed his driver’s license and Harvard identification card, but was handcuffed and taken into police custody for several hours. The incident raised concerns that Mr. Gates was a victim of racial profiling. The president later realized that he spoke without knowledge of the facts and arranged a laughable “beer summit,” in which he had a 40-minute chat on the Rose Garden patio with Mr. Gates and Cambridge police Sgt. James Crowley, who had arrested him for disorderly conduct, to diffuse the embarrassing situation.
The administration does not make decisions based on facts; at times, it does not even look for them. This immature and unprofessional mindset seems pervasive.
Earlier this year, Attorney General Eric Holder, the most senior lawyer in the Obama administration, spoke against the Arizona immigration law which he admitted to not having read. Mr. Holder “acted stupidly.” He was not alone. At about the same time, Homeland Security Secretary Janet Napolitano also expressed her opposition to the Arizona immigration law and then admitted she had not read it. Clearly, speaking or acting “stupidly” is not the prerogative of Vice President Joe Biden.
The administration acts on the premise that protecting the president’s image is paramount and trumps the facts. This mindset breeds incompetence. This mindset prevailed at the time of the stimulus debate, as the administration made false projections. Not coincidentally, the stimulus turned out pretty much the same way as Ms. Sherrod’s story did–in abject failure.
In early 2009, the administration emphatically assured Americans that the stimulus would keep unemployment at or below 8 percent. Currently, unemployment stands at 9.5 percent after exceeding 10 percent a few months ago. In addition, underemployment, a key measure of economic stagnation, stands at 16 percent.
As for the 3.5 million jobs the Obama administration said the stimulus would “save or create,” they are fictitious. The administration has an economic model that shows they were created but there are no hard numbers. And even if the jobs were created, the stimulus was still bad policy as each one of those phony jobs costs $225,000. At that price per job, Mr. Obama ought to stop “saving or creating” jobs otherwise he will bankrupt the United States. The stimulus was a “banana republic” economic policy–akin to former leftist Argentinian President Juan Peron’s tactics–to make things look momentarily better for Mr. Obama.
The recently passed Wall Street financial reform bill will prove as phony as the stimulus jobs. It is a 2000-plus page bill that few have read and that nobody really understands. Its foundation is an anti-business assessment of the causes of the 2008 financial crisis. Mr. Obama blames the financial crisis on the “failed policies of the past.” That is code for the policies of President George W. Bush. In fact, those “failed policies of the past” have little to do with Mr. Bush, they are policies inspired by Franklin Delano Roosevelt’s New Deal.
Despite Mr. Obama’s barrage of insipid statements about the toxic securities that deregulation enabled nefarious Wall Street firms to create, it is neither deregulation nor Wall Street firms that created the bad mortgages at the root of the problem. Wall Street did package mortgages into securities but Wall Street did not create the mortgages. The U.S. government did, directly and through its agencies.
It is lost on the Obama administration that the financial crisis resulted from bad mortgages made possible by federal laws–to subsidize low-income home-ownership – and by trillions of dollars in funding from Fannie Mae and Freddie Mac, two agencies of the U.S. government.
Mr. Obama talked of market failures to justify Wall Street reform. Yet again, he chose to ignore the facts. The U.S. home mortgage business has not been a free market for some time. It is essentially a socialist banking system. Fannie and Freddie Mae guarantee or own over 90 percent of mortgages originated since the financial crisis. Yet, there is nothing in the financial reform bill about Fannie and Freddie although it estimated that bailing them out may cost as much as $1 trillion.
The Wall Street reform bill is a financial “Sherrod case”– it attacks the wrong party because in doing so it purportedly makes the president look good. The continued existence of Fannie and Freddie Mae also illustrates a liberal paradox. While liberals do not want the government in the nation’s bedrooms, they have no qualms about the government being involved in home financing.
The Sherrod affair reminds us that the Obama administration is concerned with image not substance. A particular policy is adopted and pushed through if, on the surface, it makes Mr. Obama look good, regardless of how little understanding the administration has of the facts. That is simplistic and dangerous. And it will leave America rudderless.
As Americans face substantive threats to their security and prosperity at home and abroad, Mr. Obama recklessly just wants to look good.
-Joseph Beaudoin holds degrees in Economics and Finance, and worked in the banking and investment industries for 20 years. He is a contributor to Reflections.
