Why Elizabeth Warren is Dr. Phil’s Go-To Economist

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Elizabeth Warren, the Harvard law professor charged with monitoring the Treasury Department's bank bailout, has spent a lifetime defending what she calls "play-by-the-rules families," or "play-by-the-rules, heart of middle class" Americans who happen to be in debt. Her best-selling books on personal finance are populated by good people, frequently described as "ordinary," and bad people, frequently described as "predatory." In speeches, congressional testimony, and talk-show appearances, Warren tells and retells the same woeful tale of "respectable and dependable" families who suffer unforeseeable tragedies, only to be pounced upon by scheming creditors.

So when Sen. Majority Leader Harry Reid called Warren last fall and asked her to oversee the $700 billion bailout of ailing financial institutions, it was something like asking Sinclair Lewis to oversee the plant. Indeed, Warren's Congressional Oversight Panel reports sound a lot like her books. Asked to assess the health of American banks, she delivers a sweeping history of financial crises worldwide. Asked to assess the efficacy of TARP disbursements, she declares that American families are "awash in debt." Her fellow panel members tend to react with puzzlement: "The central part of the April report... is consumed with discussion which, although interesting to many readers, is at the edge of-and outside the core mission of the Panel," writes panel member and former Republican Sen, John Sununu.

But it would be a mistake to conclude that Elizabeth Warren is an ineffective watchdog; her ability to frame the economic issues in terms of right and wrong can make things very awkward for a treasury department trying to quietly transfer billions of taxpayer dollars. Timothy Geithner's tepid guarantees of accountability aren't reassuring. It's comforting to have someone on the inside attacking the treasury for its failure to explain itself or to convey even the most basic information to the taxpayers whose money it is giving away. (What, for instance is the justification for attaching different conditions to the money earmarked for various financial institutions?) Plenty of educated Americans suspect that banks and government are colluding against them. Warren is a woman capable of explaining, in precise and uncompromising terms, how severely they are getting screwed.

Washington is full of monitors-cubicle-bound bureaucrats at the Government Accountability Office and the Office of Management and Budget-who spend their days writing reports even their bosses won't read. Elizabeth Warren, on the other hand, is a regular on Dr. Phil. She has taken a potentially dreary job-explaining the complexities of the Troubled Asset Relief Program (TARP), and turned it into a platform for sexy media appearances on The Daily Show, Squawkbox, and NPR. She cultivates the image of a scholar-sensible hair, collared shirts, utilitarian glasses-and uses it to establish herself as resident star professor, working hard for You.

The unifying theme of Warren's popular work is the "collapse of the middle class," and she is capable of casting nearly any economic indicator in support of her core thesis. The entry of married women into the workforce massively increased household incomes, and would seem to therefore increase economic stability. Warren argues that it left families more insecure because they now lack an "extra" worker who could, in theory, fill the gap if dad's hours were cut or he fell ill. The fact that clothes, food, and appliances have gotten far less expensive, and therefore eat up smaller percentage of any given families budget, would seem to be good news. But Warren sees only more insecurity; families could once salvage their budgets in tough times by making relatively painless cuts in these expenditures. Cutting back on clothes and food won't help much anymore, because so little of the total budget is devoted to such things.