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A Different Kind of "Bully Pulpit" By: Steven M. Cohen
FrontPageMagazine.com | Monday, May 18, 2009


With the country’s jubilation over the historic moment of electing its first black president, Mr. Obama’s political origins were largely (perhaps by design) ignored by most of the mainstream media. Nevertheless, his conduct over the early months of his administration perhaps sheds some light on how he succeeded in advancing through the cutthroat ranks of Chicago politics, not exactly a forum for shrinking violets. Some reporters had a momentary flirtation with issues raised by Tony Rezko’s touching generosity in the matter of purchasing a house, but by and large Mr. Obama’s political path has escaped comprehensive scrutiny, unless you count the president’s two literary exercises in self-hagiography.

Evidently a lesson well-learned by the political neophyte Obama was the effectiveness of raw intimidation, a tactic that has been liberally applied by the president a number of times to blunt opposition to his expansive and radical agenda. This intimidation consists of singling out a particular group and subjecting it to a very public tongue-lashing, harsh criticism, and occasionally humiliation and condemnation. Corporate executives, Wall Street chieftains, bank presidents, bondholders -- each of these groups has been strong-armed into submission by the Obama White House as a means to achieve its goals by sometimes circumventing the established rule of law. Apparently credit card company executives and certain kinds of healthcare providers are scheduled for similar abuse in the dock of the Obama court of public opinion, where they are all sure to receive a good old populist whacking.   

While behavior of this sort might be expected from veteran Chicago pols, one would think that such thuggish methods would be abandoned by someone who has reached the highest office in the land, regardless of his political origins. But Mr. Obama’s experience in such matters may go even deeper than electoral politics. Recall that he spent years “in the field” as a “community organizer,” a venue in which shakedowns and intimidation are not unknown. Notorious community organizers would include Al Sharpton, whose tactics included inciting riots against Jews and Koreans, and the Reverend Jesse Jackson, whose PUSH/Rainbow Coalition for years extorted millions from banks and other financial institutions through political threats and intimidation, notwithstanding his soothing guidance to President Clinton as “spiritual advisor.” Between his Chicago political tutorial and his community organizer roots, it’s no surprise that such tactics seem to flow naturally from the new Chief Executive. 

Part of this may actually stem from the president’s fundamental misunderstanding of what was originally meant by the “bully pulpit” now at his disposal. As defined by Wikipedia, the bully pulpit “is a public office of sufficiently high rank that provides the holder with an opportunity to speak out and be listened to on any matter.” But perhaps Mr. Obama is not familiar with what follows: 

    This term was coined by President Theodore Roosevelt, who referred to the American presidency as a “bully pulpit” by which he meant a terrific platform from which to advocate an agenda.  Roosevelt famously used the word bully as an adjective meaning “superb” or “wonderful” (a more common expression in his time than it is today); the term has no relationship to the noun bully, i.e. a harasser or someone who intimidates. 

So perhaps it’s all just a misunderstanding of the old Rough Rider’s now-arcane nomenclature that has inspired the president to apply bullying tactics—in the contemporary meaning of the word—to the Chrysler bondholders who simply sought to exercise rights as secured lenders that have been confirmed by bankruptcy courts for decades.  James B. Lee, the vice chairman of J.P. Morgan Chase, the largest lender to Chrysler, got a taste of this recently when he informed the Obama auto task force don, Steven Rattner, that his bank would accept “not a penny less” than the face amount of its bonds. In a scenario more befitting a “Godfather” movie than a debt negotiation, a suddenly repentant Mr. Lee called Rattner back just a few hours later, according to the Wall Street Journal on May 11, and said “we have to talk.”   

What happened during those few intervening hours was a White House public relations onslaught whereby the president himself stepped up to the pulpit -- in this case literally and not figuratively -- and proceeded to assert that Chrysler would be forced into bankruptcy, with the ensuing loss of jobs, because the secured lenders would not accept less than they were owed.  Mr. Lee’s bank, already smarting from the president’s earlier censure, caved quickly, followed by most of the others. The last few holdouts required an additional dose of public condemnation by the president as “speculators” before they too threw in the towel. Thus did the secured lenders agree to accept 29 cents on the dollar, a deal far inferior to the UAW’s, even though the lenders were first in line under conventional bankruptcy rules.    

These lessons were not lost on a diversified group of health care providers, including hospitals, health insurance companies, doctors, and pharmaceutical companies, who obediently fell in line to deliver a “pledge” last week to the administration that they would seek to cut costs. In offering this tribute to the White House, this group evidently hopes it will spare them from public denunciation. Interestingly, the administration thus far has offered only wonkish solutions like payment “bundling” and common insurance-claim forms. Conspicuous by its absence is any pressure applied to the plaintiffs’ bar, which has played an enormous role in exploding healthcare costs by making personal injury suits inevitable for every practitioner, and causing malpractice insurance premiums to skyrocket to the point where many are abandoning the profession..Plaintiffs’ lawyers, of course, occupy a special place in the hearts of Democrats as one of their most important, and thus influential, contributors, along with the teachers’ union and—lo and behold—the UAW. 

And now underway are discussions within the administration of ways it can curtail compensation practices in the financial-services industry—including companies that have not received a single federal bailout dollar. Evidently the White House intends to enlist the Federal Reserve and the SEC in this effort to manage matters formerly within the purview of the boards of directors of private companies.  Most ominously for financial honchos is the administration’s intention to use “moral suasion” to get its way, meaning that Mr. Obama will likely vilify them as he pounds on his bully pulpit until the pay of these avaricious scoundrels is reined in to levels more to the administration’s liking.  

And speaking of contributors, it was highly amusing to see a number of hedge fund managers complaining about the brutal treatment some of their brethren received directly from President Obama in the course of the Chrysler dispute. Singling them out as “a group of investment firms and hedge funds that hoped to hold out for a taxpayer-funded bailout,” the president made it clear that he squarely opposed their greedy efforts and instead chose to “stand with Chrysler’s employees and their families and communities.”  In light of a report from the Center for Responsive Politics that fund managers funneled 70 percent of their 2008 campaign contributions to Democrats, their sense of outrage and betrayal was palpable.

Steven M. Cohen has spent more than 25 years in the hedge fund business. His articles appear on Frontpagemagazine.com. as well as on his own blog site, buyselljump.com.


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