Obama's chief aim last night was to get ahead of the populist fury over the AIG bonuses, which, despite being less than one-tenth of one percent of the total federal payout to the company, have nevertheless become a symbol of Wall Street's general piracy and the government's inability thus far to police it. Obama wants to ensure that he's leading the citizen protests, as opposed to being trampled by them. Step one, of course, is to channel that anger and thus protect his political standing.
So, for starters, he told Leno: "I do think, though, that the American people are all in a place where they understand it took us a while to get into this mess, it's going to take a while for us to get out of it. And if they have confidence that I'm making steps to deal with issues like health care and energy and education, that matter deeply to their daily lives, then I think they're going to give us some time."
Cue the applause. Leno, of course, failed to ask the obvious follow-up questions: How much time does Obama believe the public is willing to give him, before the ire is directed at him? The polls say that a majority of Americans will give him 18 months to two years; does he see that as realistic?
No wonder Obama looked so relaxed. He used the format to frame his priorities in simple language that everyone could understand. For instance, this is how he made his pitch for tough federal regulation of the financial industry: "When you buy a toaster, if it explodes in your face there's a law that says your toasters need to be safe. But when you get a credit card, or you get a mortgage, there's no law on the books that says if that explodes in your face financially, somehow you're going to be protected."
That was reminiscent of how Franklin Roosevelt used simple language on radio to convince Americans that neutral America should send battleships to the Nazi-imperiled British: "Suppose my neighbor's home catches fire, and I have a length of garden hose four or five hundred feet away. If he can take my garden hose and connect it up with his hydrant, I may help him to put out his fire."
Obama also went into folksy mode right after Leno asked him about the House decision yesterday to slap a 90 percent retroactive tax on the AIG bonus recipients. Leno actually framed his question very well: "It (is) frightening to me as an American that Congress could decide, 'I don't like that group, let's pass a law and tax them at 90 percent.'"
Obama replied: "Well, look, I understand Congress' frustrations, and they're responding to, I think, everybody's anger. But I think that the best way to handle this is to make sure that you've closed the door before the horse gets out of the barn."
Obama rode away, leaving the substance of that question behind. This is what I meant earlier when I said that the chat show is not particularly conducive to policy nuance. Leno was actually referring to a constitutional issue; retroactive "bills of attainder" are banned by the Constitution, and although the House's 90 percent levy might be legally OK (since it targets a lot of companies besides AIG, and targets future bonuses as well as past bonuses), any such levy that ultimately passes the Senate and gains Obama's signature could be challenged in court by corporate lawyers.
None of this was addressed last night. Nor, amid the jokes about Hollywood and (ouch) the Special Olympics, did Obama or Leno mention the dicey issue of whether a tax on bonuses would dissuade private financial institutions from working with the government to mop up the economic mess. Would they want to pitch in if they thought that Washington might decide later to slap new restrictions on their pay? As one hedge-fund leader, a prominent Obama fundraiser, warned The New York Times yesterday, "You will drive people away from being willing to do business with the government."
Nuance was also lacking at another point on the show. Leno brandished his pitchfork and spoke for many outraged Americans when he suggested that, since AIG is now 80 percent owned by the taxpayers, we should break those contracts, take back the bonuses, and simply dare the employees to sue us for the money. "I mean," said Leno, "the federal government is in debt a trillion dollars. We're broke - sue us!"
Obama never answered that question; in response, simply restated his general themes: "There's a moral and an ethical aspect to this...we're going to do everything we can to see if we can get these bonuses back. But I think the most important thing that we can do is make sure that we put in a bunch of financial regulatory mechanisms to prevent companies like an AIG holding the rest of us hostage."
What Obama didn't mention - and this would not have been a good applause line - was that Leno's populist outburst ("sue us!") would translate into bad policy. As several financial experts have pointed out lately, any lawsuits filed by bonus-deprived executives would drag on for a long time, and it's even possible that taxpayers would wind up paying for AIG's legal defense - since, after all, we own the company now. And, in the future, what companies would want to sign contracts with AIG, having learned that AIG didn't honor contracts with its own people?
Does your head hurt from this stuff? Mine, too. Fortunately, it was only a matter of minutes before Leno asked Obama: "Now, how cool is it to fly in Air Force One?" And Obama replied, "Now, let me tell you, I personally think it's pretty cool." And, while flying on Marine One, his kids ate Starbursts, "so they got a whole 'nother level of cool." Cue laughter.
Ah, back in the TV comfort zone. That's the kind of stuff that works best on late night.