The Obama administration's bailout plan is only just being rolled out this morning, but quite a few liberals are already unhappy with major elements of the proposal.
The New York Times has the details of the controversial parts of the plan:
The $500,000 pay cap for executives at companies receiving assistance, for instance, applies only to very senior executives. Some officials argued for caps that applied to every employee at institutions that received taxpayer money.
Abandoning any pretense about limiting the moral hazards at companies that made foolhardy investments, the plan also will not require shareholders of companies receiving significant assistance to lose most or all of their investment... Nor will the government announce any plans to replace the management of virtually any of the troubled institutions...
Finally, while the administration will urge banks to increase their lending, and possibly provide some incentives, it will not dictate to the banks how they should spend the billions of dollars in new government money... [T]he plan largely repeats the Bush administration’s approach of deferring to many of the same companies and executives who had peddled risky loans and investments at the heart of the crisis and failed to foresee many of the problems plaguing the markets.
(Salon's Andrew Leonard has has more over at How the World Works.)
Part of the anger in the liberal blogosphere over the administration's proposal stems from the way in which it was conceived. According to the Times, Treasury Secretary Timothy Geithner won several arguments with members of the president's political team, like Senior Advisor David Axelrod.
The plan is "all about bailing out Tim's friends," Atrios writes. "There's nothing wrong with President Obama taking in competing ideas from his top aides," Steve Benen says in a post at his blog. "It's discouraging, though, when he considers the discussion, and sides with Tim Geithner over David Axelrod on the issue of financial institution accountability."
There's another way of looking at this though, one I think is pretty important. Whether the administration's decision was right or wrong, at least the right person was responsible. Political leanings aside, Geithner's the one who should prevail in these kinds of arguments. He's the Treasury secretary, and this is his bailiwick. Axelrod, by contrast, specializes in politics -- he shouldn't be winning policy debates over the policy people.
If you need a reminder of why this is the case, pick up a copy of Ron Suskind's book "The Price of Loyalty," which is about the experiences of former Treasury Secretary Paul O'Neill during George W. Bush's administration. In chapter eight, there's a section about a meeting at which a new package of tax cuts was discussed. In that meeting, the political team won the argument over the people who actually knew something about economics. We know how that turned out.