After Obama’s same sex marriage fundraising appeal dropped him back in the polls, the president is using J.P. Morgan’s $2 billion hedge implosion as an opportunity to hone in on a single message and gain campaign momentum beyond his liberal base. Obama is confident that the lingering bitterness toward Wall Street will blind the electorate to the irony of a president, running $1.4 trillion annual deficits, lecturing J.P. Morgan over one $2 billion mistake. Hoping the media play along, Obama will try to benefit from J.P. Morgan’s loss in at least four ways.
First, it gives him an opportunity to shape the economic message in a way that avoids his disastrous economic record. While the Occupy movement has devolved into roving bands of anarchists like the movie Fight Club’s Project Mayhem, the original sentiment, which drove people to protest at the homes of AIG executives in 2009 and occupy Zuccotti Park in 2011, remains intact. Three years after the collapse of Lehman, these “too big to fail” institutions continue to benefit from billions of dollars in government bailouts while the average citizen’s home is still “too small to notice.” People’s homes linger underwater or fall into foreclosure. Economic reality isn’t the issue here. Perception is, and perception wins votes.
Second, the J.P. Morgan debacle will function as a symbol of the dysfunctional “1%” propped up by taxpayer money and existing at the expense of everyone else. This fits with Obama’s recent pivot from a donation-motivated campaign on social issues to an all-out assault on Mitt Romney’s Bain Capital tenure. The Obama campaign has made no secret of its intent to paint Romney as an out of touch one-percenter while the president claims to go to war for the middle class. The months leading up to the election won’t be about gay marriage but about Mitt Romney the “job destroyer.”
Third, this provides a means of leveraging the threat of more federal interference to make Wall Street corporations more pliable, preferably in the form of campaign contributions, a riverbed drying up after three years of class warfare and Wall Street demonization. On the same day he pushed Wall Street reform on The View, Obama attended a fundraiser with Wall Street donors. He reportedly told these donors that Congress wouldn’t provide another bailout and that they would have to play nice with Dodd/Frank’s regulatory reforms. Message delivered.
Finally, it gives him the ‘flexibility’ to justify increased interference in financial markets. Keynesian acolytes such as Paul Krugman are already injecting the conversation with the great liberal rallying cry: Onward regulation! Every new regulation is an accrual of power in the executive branch, its legal source a seed planted by Congress that then blossoms into a suffocating jungle. People that are unhappy with crony capitalism and are tempted to support further intrusion into the financial sector should keep in mind the blank check that Congress handed via Obamacare to the Department of Health and Human Services. Secretary Sebelius used this power to ride into town square, unroll her parchment, and issue the monarchy’s latest edict declaring free contraception throughout the land.
These lines of attack tap into what Obama hopes is a volatile reservoir of public resentment that will prove an effective campaign tool for the president. Obama may have recently handed Romney a lead in the polls, but he has yet to deploy a focused message through massive ad buys and dawn-to-dusk campaign stops in battleground states. Just as Obama is portraying a solid and profitable J.P. Morgan as a pending disaster, you can be sure he will do the same to Romney’s past at Bain Capital and then extrapolate this message to Romney’s future as president. The success of this shell game all depends on whether or not the electorate plays.