Borger: Where's the White House's tipping point?

Story Highlights
Gloria Borger: Revelations about AIG bonuses puts White House in difficult position

Borger: Cynicism and outrage over banks could transfer to President Obama

Obama has to make convincing case for rescuing the bad guys, analyst says

Obama needs track record if he has to go to Congress for more money, she says

By Gloria Borger
CNN Senior Political Analyst
   
WASHINGTON (CNN) -- When the White House first got wind of the executive bonuses at American International Group, the disbelief was palpable.

"You smack your head and you say 'You've gotta be kidding me,' " senior presidential adviser David Axelrod tells me. "It put another brick on the load we're carrying."

Or a concrete block.

Just as the White House readies its long-awaited plan to bail out the banks -- having presented its plans for housing and small business -- a new wave of anger is precisely what it doesn't need. And to make matters worse, it's a widespread anger that is not grounded in the more ordinary resentments between economic classes.

In fact, this new populism is almost unanimous: The banks were greedy and reckless. They took us down with them. So why do the bad guys deserve a government cushion?

President Obama now has his economic team on the hunt for a way to scale back those egregious bonuses. But the president's problem goes beyond that: He has to make a convincing case for bailing out the bad guys. He has to take the long view -- explaining why it would hurt us to allow the banks to fail.

"People would call it a bailout; I would call it a ransom," the American Enterprise Institute's Vincent Reinhart told CNN. "Because Wall Street is holding the great economy hostage. As long as the financial institutions need funds, they won't make loans ... so what we have to do is pay them to get beyond this."

But it may not be enough to say, "If we don't do this, we will face an economic Armageddon." Why?

"The model in people's heads right now is extortion," Robert Reich, President Clinton's former labor secretary, tells me. "In order to reduce that anxiety and paranoia, the president has to assure the public that the benefit is not going to the bankers." -- that, in the end, it's going to benefit us.

But, given the AIG bonuses, the public might well ask: "Why should we believe you? You lectured Wall Street before the first bailout -- and you told us you were going to hold them accountable."

Reich says, "It makes them [the administration] look clueless. So not only does the administration have to explain exactly why this money is necessary, but also explain what is in place to keep the banks from doing this again."

If that doesn't happen, the cynicism, skepticism, outrage and anger toward the banks will remain -- and could potentially transfer to the White House itself.

In a new CNN /Opinion Research Corp. poll, Obama remains very popular (64 percent approval rating), but most of the public said it disapproves of how he is handling the banks (by 52 percent to 47 percent).

"At some tipping point in the future," warns Reich, "the administration could be seen as part of the problem."

That's the last thing the White House wants -- or needs. "We need the financial community to understand that the days of Gordon Gekko are over," presidential adviser Axelrod says, referring to Michael Douglas' greedy tycoon in the 1987 movie "Wall Street."

How? "We need transparency and accountability and regulatory reform. ... And we have always said that. It's frustrating to be in this position."

You bet it is. Particularly as the world literally awaits the banking bailout. And if Obama needs to go to Congress again for more money, he needs to have a track record.

"We have to establish a level of credibility on this issue," Axelrod says. "People are outraged, and they have a reason to be."

Sure, the president needs to feel our pain and anxiety. The trick is to avoid becoming a new outlet for it.