Earlier this month, Larry Summers and David Axelrod delivered a message to 15 of the top bank executives in the country, including Jamie Dimon of JPMorgan Chase, Lloyd Blankfein of Goldman Sachs and Brian Moynihan of Bank of America.
As Bloomberg News reported, citing someone who attended the meeting in Washington, Summers responded to the executives' concerns about pending financial-regulation reform "by calling on the industry to cease running ads against the bill and to stop its lobbyists from trying to insert loopholes in the legislation."
In other words, shut up and do as you're told.
With all the concentration of power in Washington that has occurred over the past few months, this should come as no surprise. What might be noteworthy is how the meeting signals a sea change for wonks such as Summers, the White House economic adviser, who typically have chosen to avoid the proverbial smoke-filled room.
In the past, this practice has served the country well. Professional and unbiased policy analysis, like a free press, historically has been a restraint on the worst tendencies of politicians. It's a good thing that Americans expect their leaders to be able to cite credible studies backing up their policy proposals.
We have been blessed that important policy insiders in both parties have, at substantial personal cost, resisted the temptation to put politics ahead of policy. I'm thinking about people like Herb Stein (my former colleague at the American Enterprise Institute) and Greg Mankiw, who served in Republican administrations, and Alan Blinder and Alice Rivlin, who served in Democratic ones.
Rivlin, for example, risked her standing in Bill Clinton's White House by publicly questioning whether funds devoted to domestic programs might better be used to reduce the deficit. She has stuck to the same policy views whether she has been inside or outside government.
In Barack Obama's administration, by contrast, the economists don't seem willing to fight the politicians. However reluctantly, the economists have become the politicians.
So with economics taking a back seat to politics, Democrats find themselves navigating without the rudder that a sensible philosophy could provide. Fifteen months into the Obama presidency, its economic Weltanschauung--its guiding world view--has become: do whatever today's politics demand.
The transition to full-fledged political players has required a certain intellectual nimbleness on the part of those rooted in economics.
Since the early days of Clinton's administration, Democrats have proudly worn the Rubinesque--Robert Rubin, that is--mantle of deficit hawk. Whenever Republicans propose a tax reduction, Democrats oppose it on the grounds that higher deficits lead to skyrocketing interest rates and accompanying economic harm.
Now that the political bosses want to expand health care and otherwise increase government's role, the Obama economic team provides us with silence, or worse, lip service.
The political sellout has given the Democratic Party economic tunnel vision. Democrats believe that incentives they like matter, while those they don't like, don't.
Hence their inconsistent views that you can increase marginal tax rates and not cause economic harm, but you can enact a tax subsidy for hybrid automobiles and save the environment. Or that you can increase minimum wages without worsening unemployment, even during a recession.
They want you to believe that firms respond when interest rates drive up the cost of capital, but not when corporate tax changes do the same thing. Or that lengthening the duration of unemployment insurance will not cause people to stay unemployed longer.
Their policies were never meant to make sense. What's absent is an economic conscience.
From proposed union-organizing changes to "Buy American" provisions to the bailout of automakers, a primary motivation of Democrats has been to reward the unions and other political supporters that elected Obama.
It seemed that a line had been crossed when the administration's economic team rolled out exaggerated job- creation claims for the economic stimulus. The meeting involving Summers and the bankers suggests that line is now in the rear- view mirror.
Such a track record might be politics as usual. It isn't economics as usual. Perhaps we will see soon some high-profile resignations by economists who understand what has been lost.
Kevin A. Hassett is a senior fellow and the director of economic policy studies at AEI.