‘Twas a great inauguration characterized by a release of national frustration and fear, coupled with a ‘contact high’ from Obama’s personal sense of determined, calm, serious-minded confidence. So far, so good.

But now, as the dust begins to settle, I’m getting a tingle of anxiety about the forthcoming stimulus package and the question beginning to form in my mind is how will Obama respond? Truly, this will be the first great test of his leadership and the long-term implications---perhaps even whether he’ll get a second term---are embedded in his response.

What’s going on? Well, sounds like voices on both the enlightened left and right (disregard the uninformed bluster from the bar-room bullies on Fox) are raising warning flags on what’s going on in the House (where finance packages originate). As conservative David Brooks (New York Times columnist, Friday night commentator on PBS Newshour) notes: “There is a strong case to be made for a short, sharp stimulus package to restrain the collapse of the American economy …. There’s also a versy strong case to be made for long-term government reform (think: infrastructure) …. But the stimulus bill emerging in the House of Representatives does neither of these things.”

What’s wrong? The proposals are all over the place, the strategy undisciplined. According to one estimate, each actual job being generated will cost $223,000.

And much of the infrastructure work so desperately needed---highways, renewable energy---will have barely in by 2011. 

From the progressive left, Nobel Prize economist Paul Krugman (for a superb primer on how we got in this mess, see his book The Return of Depression Economics) is disappointed that Obama’s yet to publicly identify the fundamental culprit in this unprecedented crisis---a runaway financial industry. Instead, he notes, we’re getting the rhetoric of collective blame. “One wishes his speechwriters had come up with something more inspiring than a call for an ‘era of responsibility’”, notes Krugman.

The hot button here is that the Democratic Party has become, to an underappreciated extent by most of the public, the party of finance. The old Wall Street may have been Republican fat cats smoking cigars on their yachts;   the ‘new’ Wall Street is more likely to be Harvard-educated financial engineers propagating their derivatives all over the world. Bob Rubin is their patron saint and significantly, virtually every senior Obama economic policy-type, starting with Larry Summers, traces a connection back to him. And for this new breed of Democratic financier, the fundamental article of faith is in (mostly) unregulated financial markets. 

So what’s a President to do?

Does he dare assert a veto if the economic stimulus legislation is contrary to his call for meaningful action? If it wastes billions of dollars is less-than-optimally productive expenditures?

Does he dare wade into the political white-water of seriously taking on Wall Street?

If the answer to either of these questions turns out to be ‘no’, for all the President’s rhetorical pep-talks there may be less economic and social reform here than meets the ear. 

Stay tuned!