(financial market article 2)
Posted by: Liwin Troy Lee
By Julian E. Zelizer
Editor's note: Julian E. Zelizer is a professor of history and public affairs at Princeton University's Woodrow Wilson School. His new book, "Arsenal of Democracy: The Politics of National Security -- From World War II to the War on Terrorism," will be published this fall by Basic Books. Zelizer writes widely on current events
PRINCETON, New Jersey (CNN) -- In the explosion of outrage over the AIG executive bonus scandal, each party has hurled charges at the other. Both parties are blaming each other for rejecting measures that would have limited executive bonuses.
A few Republicans have called for the resignation of Treasury Secretary Tim Geithner -- with efforts to paint him as the Michael Brown of this administration -- and President Obama is promising that this week he will outline more stringent requirements for the financial world.
These partisan accusations miss a bigger factor behind last's week's revelations -- America's middle-way in dealing with business-government relations. In many ways, the bonus scandal was utterly predictable and would likely have happened regardless of which party was in power. And if history is a guide, the populist outrage over the bonuses may not fundamentally change the federal government's relationship to private business.
Traditionally, American politicians in times of crisis have resisted aggressive interventions by government into business which would tamper with managerial prerogatives and profits.
The political value of this strategy has been clear: It helps elected officials in the White House and Congress sell federal programs in a country stubbornly resistant to many kinds of government interventions in the private sector (though often happy with the interventions after they receive the benefits). It also dampens corporate opposition to government programs in moments when such programs are urgently needed.
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