On the subject of the latest round of Wall Street bonuses, President Obama recently told Business Week that he, “like most of the American people, [doesn’t] begrudge people success or wealth.”

“That is part of the free-market system,” the president said.

Perhaps the president’s softening toward capitalism has something to do with the fact that fewer Wall Street CEOs are flocking to his $30,000-a-head steak and lobster dinners ever since the phrase “fat cat” gained currency in Washington. But in any event, the president’s praise of the free market is about as bland and uncontroversial as it gets, and even so, the White House is already starting to walk them back.

But the ever-understated Paul Krugman, responding to the Obama interview on his blog, is not pleased. Borrowing the mantle of our own John Derbyshire, he says: “Oh. My. God. . . . We’re doomed.”

UPDATE: The original Bloomberg item with the comments is here. Greg Sargent runs a transcript of the relevant bit from the interview that the White House is reportedly circulating as damage-control, and indeed it shows that Obama’s comments came awkwardly paired with more familiar populist sentiments:

QUESTION: 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.
QUESTION: 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.