Yesterday President Obama gave an interview with reporters from Bloomberg BusinessWeek. The full story will hit newsstands Friday, but excerpts are trickling out and causing a stir. This afternoon, Bloomberg and the Huffington Post both led their sites with comments Obama made in the interview, and Simon Johnson and Paul Krugman are already blowing a gasket. But what's striking to me is how reckless Bloomberg, HuffPo, Johnson, and Krugman are all being with the quotes they've seen so far (and the full story they, except presumably Bloomberg, still haven't seen).
Specifically, Johnson and Krugman are referring to headlines that Bloomberg and HuffPo both ran, but those headlines are highly inaccurate. Bloomberg's headline (which HuffPo parroted) claims "Obama Doesn't 'Begrudge' Bonuses for Blankfein, Dimon." Except that according to the quotes Bloomberg cites, Obama said no such thing. The specific quote was: "I, like most of the American people, don't begrudge people success or wealth. That is part of the free-market system."
There is a huge difference between not begrudging "success or wealth"—which Johnson and Krugman surely do not begrudge either—and not begrudging these insane bonuses, which Obama in the same portions of the interview called "extraordinary" and "shock[ing]." And in fact, while Johnson and Krugman have gone righteously nuts over out-of-context quotes and misleading headlines, I haven't seen a word from them about the full transcript. Which, as usual, is far more reasoned and innocuous than the Bloomberg / Huffington Post headlines suggested:
Q. Let's talk bonuses for a minute: Lloyd Blankfein, $9 million; Jamie Dimon, $17 million. Now, granted, those were in stock and less than what some had expected. But are those numbers okay?
THE PRESIDENT: Well, look, first of all, I know both those guys. They're very savvy businessmen. And I, like most of the American people, don't begrudge people success or wealth. That's part of the free- market system. I do think that the compensation packages that we've seen over the last decade at least have not matched up always to performance. I think that shareholders oftentimes have not had any significant say in the pay structures for CEOs.
Q. Seventeen million dollars is a lot for Main Street to stomach.
THE PRESIDENT: Listen, $17 million is an extraordinary amount of money. Of course, there are some baseball players who are making more than that who don't get to the World Series either. So I'm shocked by that as well. I guess the main principle we want to promote is a simple principle of "say on pay," that shareholders have a chance to actually scrutinize what CEOs are getting paid. And I think that serves as a restraint and helps align performance with pay. The other thing we do think is the more that pay comes in the form of stock that requires proven performance over a certain period of time as opposed to quarterly earnings is a fairer way of measuring CEOs' success and ultimately will make the performance of American businesses better.