The federal charges against Illinois Gov. Rod Blagojevich are only the most recent and prominent episode in a series of events which are building toward a bigtime populist backlash.
Corruption in Illinois, as in Louisiana, New Jersey, Nevada, Rhode Island, oldtime Boston, and other notorious political venues, should come as no big shock. Yet Blagojevich's pattern of conduct, as revealed in the charges, was so blatant and reckless that you wonder why it took so many years to be found out.
A couple Illinois-related jokes come to mind: The first, in a cartoon, portrays convicts in a prison chow line. One turns to the other: "The food was much better here when you were governor." The second related to the discovery, after his death, of shoe boxes containing millions in cash in the bedroom closet of Illinois State Treasurer Paul Powell. Sen. Adlai Stevenson, when asked to comment on Powell's death and the bedroom discovery, remarked that "Paul Powell left big shoe boxes to fill."
We can laugh about such matters, but these recent abuses of public trust are nonetheless disgusting. They are contributing to a public backlash which could be both angry and vengeful. President-elect Barack Obama has not been implicated in the Illinois scandals and is unlikely to be. His unifying temperament should help us get us through a difficult period of at least a couple years. But it will not be easy. Below are some of my concerns about the coming backlash.
One of the reasons for backlash is the way Master of Universe types took reckless risks that weakened our financial system and economy. Yet many of them have walked away with personal fortunes and remain in line for seven-figure holiday bonuses this month. The price has been paid by investors, taxpayers, retirees, ordinary working families, and a growing army of unemployed.
Meanwhile, the Federal Reserve and Treasury have put huge sums into major financial houses, few questions asked. The federal government has taken over Fannie Mae and Freddie Mac, has a major equity position in AIG, and appears about to become a partner of the Detroit Big Three while extending an initial $15 billion bailout which will be burned for operating expenses. The industry will be back for much more. Bottom-up help has been slower in coming.
A final reason: the Masters, federal regulators, Fannie Mae/Freddie Mac and auto executives, relevant Members of Congress, and others have characteristically responded with "Who could have known?" statements about the crisis, presenting themselves as victims rather than perpetrators.
Add these factors up and the times are ripe for a populist George Wallace or Ross Perot. (Perot, remember, got a surprising 19 percent of the national popular vote for president in 1992, despite running an ineffectual, mistake-filled campaign). As a result of all this, mountains of public and private debt have been accumulated. Social Security and Medicare reform and national health and energy schemes will have to be pushed to the back burner.
There are several unintended consequences of all these rapid changes. For instance, American financial and economic systems have been moved in an unprecedented direction toward European models, where government is an active and often intrusive partner of private business and finance. U.S. presidents, over 40 years, have tried to maintain an American competitive edge by moving in the other direction.
As he should, Obama early in 2009 will institute major infrastructure spending (on roads, highways, bridges, water and electric facilities, ports, public buildings, etc.) to bring jobs and economic activity to the local level. But there is a big peril in having this spending turn into an irresponsible porkfest tailored to suit the political priorities of state and local officials. Do you have any doubt, for instance, that Mayor Greg Nickels will try to channel these monies to his Mercer Project and Seattle streetcar public-works boondoggles and to Sound Transit, which he chairs, at the expense of work having far higher public priority?
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