by Kenneth T. Walsh

President Obama State of the Union Address
President Obama

Obama's spending freeze, critiques of Wall Street, and proposals to help middle-class families signal a change in his strategy

Enter Barack Obama, born-again populist. Reacting to his political setbacks and the rising distress of Middle America, the president has begun to shift from projecting reasonableness and accommodation in favor of a more confrontational stance toward special interests.

All this has been accelerated by the special election in Massachusetts to fill the seat of the late Democratic Sen. Edward Kennedy. Republican candidate Scott Brown scored a stunning upset last week as he rode a wave of anti-Washington resentment to victory. Assessing the defeat, President Obama told ABC News, "People are angry and they're frustrated, not just because of what's happened in the last year or two years but because of what's happened for the last eight years." Americans think the country's problems are getting worse and that Washington seems unable to fix what ails us, White House officials say.

Obama's answer so far has been to sharpen his criticism of the big financial institutions and Wall Street, and to declare himself an unrelenting advocate of Middle America. He was unusually bellicose in attacking them as he proposed new legislation to limit the large banks' size and what he considers their harmful trading practices, and he warned the financial giants not to continue opposing him. "If these folks want a fight, it's a fight I'm ready to have," the president said. In addition, White House aides say he plans to get out of Washington more to better connect with everyday people and spread his new populist message, starting with a visit last weekto northeastern Ohio.

This week, Obama responded to voter outrage over soaring federal deficits by proposing a three-year freeze on non-security spending. And he announced several proposals to reduce the financial strain on middle-class families, including an expansion of the child-care tax credit, limiting payments on federal student loans, expanding funding for families caring for elderly relatives, and requiring more employers to set up individual retirement accounts unless workers chose not to participate. Critics say all of these measures are too modest to do much good.

Overall, the problem for Obama is that turning populist may not be a good fit for him personally or ideologically. As a graduate of the elite Harvard Law School and a former law professor, he is very much at home as an educator and genial persuader, not as a fighter or a confrontationalist. His cool demeanor and willingness to compromise, at least within the Democratic Party, seem at odds with the fiery temperament and anger that have propelled many populist leaders of the left and the right in the past.

Being a populist also runs counter to the way Obama has governed during his first year as president. He has rarely, until recently, taken on rich and powerful elites, the approach that is the essence of populism. Instead of taking on the system, in fact, Obama has surrounded himself with Washington insiders such as White House Chief of Staff Rahm Emanuel and brought in top officials linked to the financial industry, including Treasury Secretary Tim Geithner and White House economic adviser Larry Summers, to direct the administration's economic policy. And he has poured money into saving the big banks and financial institutions, arguing that they were teetering toward collapse and that only the federal government and the taxpayers' money could rescue them.

Middle America felt left out. And everyday Americans are reacting negatively to the bailouts, the government activism, the big deficits, and the massive compensation packages for corporate executives. Half of all Americans say that Obama is not delivering on his major campaign promises, and only 53 percent approve of his job performance, down from 69 percent in April, according to the latest Washington Post/ABC News poll.

White House Press Secretary Robert Gibbs told reporters last week that Obama will be asking voters "whether the people they have in Washington are on the side of protecting the big banks, whether they're on the side of protecting the big oil companies, whether they're on the side of protecting insurance companies, or whether they're on the people's side."

During the final days of the Massachusetts campaign, Obama's rhetoric turned especially harsh. In his weekly radio address last Saturday, he attacked some of the nation's largest banks, arguing that they are selfish to fight new regulations that Obama and the Democrats are proposing and because they oppose a new fee that Obama wants to levy on them. The Financial Crisis Responsibility Fee would raise $90 billion over the next decade, the same amount that the bank bailout is expected to cost.

Obama's next big test will be his State of the Union address on Wednesday, when he will announce his 2010 agenda and try to recapture the initiative. Americans will be paying close attention to how he adapts to today's harsher climate compared with the sunny environment of goodwill that he enjoyed a year ago at his inauguration. His problem could be that if he leans too far in the angry-populist direction, he might look phony, unnatural, and not true to himself.

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Obama's Policies are Becoming More Populist | Kenneth T. Walsh

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