Timothy Geithner's "great job"

Originally published in Socialist Worker.

DURING HIS State of the Union Address, Barack Obama stated that the U.S. government faces a "deficit of trust...deep and corrosive doubts about how Washington works," and that closing this "credibility gap" is what he "came to Washington to do."

That caught me by surprise, because, just minutes before, while he was walking to the podium, Obama warmly embraced Treasury Secretary Timothy Geithner, and could be heard on CNN telling Geithner that he "did a great job today."

I had flashbacks to Hurricane Katrina when George W. Bush told Federal Emergency Management Agency Director Michael Brown that he was doing "a heck of a job" while thousands of mostly low-income and African American New Orleans residents had drowned or were stranded without adequate supplies or relief, hunted by racist vigilantes, police, the National Guard and Blackwater mercenaries.

What Obama was no doubt referring to was Geithner's testimony that day before the House Oversight Committee, where he defended his role in the bailout of the insurance company AIG--which ended up totaling over $170 billion, over 1,700 times the $100 million the Obama administration initially pledged to Haiti in the wake of the recent earthquake.

Incidentally, this would be the time to make a joke about how Obama's appointment and continued employment of Geithner--who served under Robert Rubin and Lawrence Summers at Treasury during the end of Bill Clinton's second term, when they passed financial deregulation that contributed to the recent crisis--would be like tapping Bush to help coordinate Haiti relief, but Obama actually did that already.

Geithner testified that he was not involved in or aware of the New York Federal Reserve's decision to advise AIG to conceal the identity of AIG's counterparties (banks owed money by AIG), who ended up receiving $62.1 billion in taxpayer dollars that was funneled to 16 banks, with AIG as the conduit and the impact of AIG's collapse on the world financial system as the pretext.

This "backdoor bailout" included some $14 billion to Goldman Sachs, which then-Treasury Secretary "Big Bank" Hank Paulson used to lead, and was especially controversial because AIG's creditors were given 100 percent of what they owed. Generally, when a company goes bankrupt, its creditors take a "haircut": they receive a fraction of what they are owed, like the stockholders at Bear Stearns when it was sold off under Geithner's watch just months before.

Geithner's excuse for not being involved--given that he was the head of the New York Fed at the time and the AIG bailout at that point was the most-significant government bailout of a financial institution in the history of the world--was that he had recused himself because Obama had announced his intention to appoint Geithner as Treasury secretary.

This would be like Peyton Manning saying that he was planning to skip the Super Bowl this year in order to prepare for his job next season as head quarterback of the Colts.

- - - - - - - - - - - - - - - -

SO OBAMA said that Geithner "did a great job," and went on to give a speech where he proposed a freeze on spending, except for the military, which will get record funding for its growing list of wars and occupations. No matter which party, Democrat or Republican, holds power in Washington, there is always enough money for Wall Street and the war machine and never enough for education, jobs for the unemployed, housing for the homeless, or food for the hungry.

Then I realized that there was no contradiction between Obama coming to Washington to close the "credibility gap" and attempt to restore the people's trust in the government, and, in a whisper in Geithner's ear that happened to be caught by CNN's microphones, applauding his defense of his handling of the AIG bailout.

It's all about image. Obama is not attempting to change the way Washington works; he's fine with that, which is why he has staffed his administration with Wall Street lackeys and Washington insiders, veterans from the neoliberal Clinton years, and even kept on Robert Gates, Bush's defense secretary.

What he wants to change is perception--to restore confidence in the U.S. government on the part of the majority of people in this country who pay for the bailouts and the wars, the benefits of which go to a tiny elite--and to rehabilitate the image of U.S. imperialism abroad in order to enable the U.S. to recover from setbacks in Iraq and Afghanistan, and restore and expand its power in the face of increased challenges to global U.S. hegemony.

But, as always, the ruling class underestimates the intelligence of ordinary people. The latter, unlike the former, actually experience the impact of Washington's disastrous policies, and our day-to-day experience over the past year has revealed Obama's "audacity of hope" to be in reality the "mendacity of hype," as a Brooklyn man put it recently.

Hence, the large percentage of working-class people and people of color who rallied for Obama in 2008, yet stayed home rather than vote for a Democrat in the Massachusetts special election this month.

But let's not give up on "hope" or our demands for "change." Working-class people are right not to trust the politicians in Washington, because they represent interests opposite ours--those of our oppressors and exploiters. We should have "hope," with a small "h," in our ability to change society when we stand on principle and take action in our own interests.

As the late, great Howard Zinn said, "It's not who's sitting in the White House, it's who's sitting in." Let's honor his memory and get to it.