Politics: September 2008 Archives

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Myth vs Fact on bailout compromise

If John McCain had not used his presidential campaign to shine a media spotlight on the process, the Dodd version would probably have been passed over the objections of House Republicans. Once the spotlight hit, Pelosi knew she needed political cover in the form of large numbers of Republicans voting for it (She claimed she wasn't bringing it to a vote unless a minimum of 100 Republicans agreed to vote for it).

If the House Republicans had not come to the bargaining table, to force anti-pork concessions in return for that political cover, the Dodd version would have passed over their objections.

Wall Street Journal has a history of who tried to fix it and when.

Q and O has a list of differences between the three plans - original Paulson, Democratic Congress, and current, after the House Republicans came to the table. Now, the bill is mostly insurance rather than a direct bail-out.

Ladies and Gentlemen, it looks to me like the House Republicans with assistance from John McCain just saved the taxpayers at least $150 billion dollars just by eliminating the ACORN slush fund. Possibly as much as $500 billion. On a $700 billion allocation.

UPDATE before publishing: Oh, hell: House defeats $700B financial markets bailout

Stocks plummeted on Wall Street even before the 228-205 vote to reject the bill was announced on the House floor.

Unpopular with the voters. Unpopular with a Congress that's facing re-election in five weeks. They really want to delay it until a "lame duck" session, but the markets can't wait.

However unpopular it may be, something is necessary, and necessary now. Three observations:

1) If Congress can't get something through in the next week, it will have done in one week what it took Hoover the rest of his term to do: Cause Widespread Banking Panic. We could see the bank runs of 1933-1935 all over again.

2) By being unwilling to support the bill en masse, the House Republicans shot themselves in the head. They came to the table, and used their minority influence and Nancy Pelosi needing political cover to the utmost. They stripped a lot of pork out of it, and got the main thrust redirected to insurance, rather than a direct buyout, and in stages as necessary. I am pretty sure that this bill was the best bill the taxpayers could have hoped for, and now the only proposal on the table currently is the Dodd monstrosity.

3) The House Democrats also shot themselves in the head. They also needed to support it en masse, in order to keep the House republicans on the hook. Now they're on the horns of a dilemma: Force an unpopular bill through on a party line vote, assuming all political responsibility, or do nothing, and be observed to do nothing, while the markets melt down. It doesn't get any stupider than that.

One minor question: Why is Chris Dodd still leading the Senate Finance Committee, rather than in jail? The answer is because Democrats are in the majority, and he is powerful among them.

One very major question: Is Congress going to act to fix this while the situation is still repairable, or are they going to wait until after the election, permanently driving a stake through the heart of the notion that when the issue is important enough, Congress can act responsibly in the best interests of the country.

There is no doubt. The markets are down five percent in the last hour since it happened. Congress needs to get together and fix this - because the crisis in financial liquidity is hitting us right in the spot that underlies the development and improvement of the entire economy. Every day they delay is going to mean more wealth wiped out - which will make the recovery that much harder. Nor are the bond or even government securities market going to be spared. We don't have five weeks for this. We may not have one.

I have just emailed all three members representing me (Filner, Boxer and Feinstein). I'm giving them an ultimatum, and a chance. If there is not a working, acceptable bailout plan in place before the markets melt down, my vote will go to the opposition - but if there is, and they support it, I will vote for them for the first time ever. I urge literally everyone to do the same.

This is that important that I am willing to vote for three of the worst voting records in Congress if they can get this one thing right.

I don't like this. I hate the thought of bailing out these incompetent, shortsighted assholes on Wall Street. It's just that if we don't, we're looking at hurting everyone a lot more that they will be if we approve this. It may be a "crap sandwich", but I'd rather eat a crap sandwich than what will happen if we don't eat that crap sandwich. At least what we had was about the least putrid crap sandwich we could have hoped for.

UPDATE: Michelle Malkin has been being a complete and unmitigated idiot on this, but she's got the complete roll-call vote. Find what your representative did.

UDATE 2: Hot Air has the update on why it failed: Pelosi couldn't suck it up and not make it a partisan political issue. Despicable, but the Republican response was just as stupid.

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Republicans respond

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The good news is Boehner still wants to be part of the solution, if only Ms. Pelosi will stop stabbing him and his caucus in the back for the sake of political posturing.

UPDATE 3: Investors swarm T-bills as House rejects bailout . Not just T-Bills, but bonds of all sorts.

As the Dow Jones industrial average plunged nearly 780 points, the yield on the 3-month Treasury bill fell to 0.46 percent from 0.87 percent late Friday, after dropping as low as 0.32 percent. Low yields show that investors are prepared to get meager returns on an investment as long as it is secure.

However, expect any dip in rates to be short term (If you're in California and are thinking about a refinance, contact me right now:

LIBOR, or London Interbank Offered Rate, for 3-month dollar loans had risen to 3.88 percent from 3.76 percent on Friday, suggesting that banks have grown increasingly unwilling to lend to each other. LIBOR for 3-month euro loans, meanwhile, soared to 5.22 percent, the highest rate ever.

Now let me ask: What happens if the folks putting out those bonds cannot repay them? This is a credit crisis, which means that the standard refinance out of personal, government, or corporate debt is going to be both expensive and problematical if Congress cannot get on the stick about stabilizing the lending markets.

"Right now, banks don't trust one another," said Axel Merk, portfolio manager at Merk Funds. Even if the rescue package does get approved eventually, it "is a tool that the Treasury can use, but it's not the solution to all the problems out there."

If the banks don't trust one another, how the heck are they going to trust anyone else?

UPDATE 4: More on Pelosi's speech at Volokh Conspiracy

Speaker Pelosi's speech before the House today was remarkable, but not in a good way. She was trying to round up votes for a bailout package that shes claims to believe is essential for the stability of the American economy. She can't, and doesn't want to, pass the bill without a substantial number of Republican votes. So what does she do? You would think she would say, "let's pass this emergency measure now, in the best interests of the country, and talk about who is to blame later." Instead, Pelosi began her speech with a highly partisan tirade against "Bush" and "Republican" economic policies, which were allegedly to blame for this situation. She focused on an attack on the growth of federal deficits, which clearly are at best tangential to the current crisis. That, to me, is the sort of irresponsible thing you do when (a) you're not claiming there is a vast emergency; and (b) you are in the minority, and not claiming to exercise leadership. [Commenters point out that Republican Housemember were acting equally irresponsibly to the extent they rose to Pelosi's bait and voted against the bailout out of pique at Pelosi. True. But the Speaker of the House is a leader, not just a random member of the House, and her actions inevitably and justifiably get more scrutiny than those of her colleagues.

In the comments:

I have no idea why any particular member, or group of members, of the House, voted for or against the bill. All I'm saying is that if you are trying to rally the House to pass an emergency bill, you make it seem like there is AN ACTUAL EMERGENCY, which more or less precludes partisan attacks. E.g., after Pearl Harbor, no one was giving speeches in the House talking about how FDR's reckless provocations of the Japanese invited their attack, even if they believed it.

Daniel Drezner:

There have been two problems from the beginning with the proposed rescue plan. First, it was labeled a bailout, which is a really, really bad public opinion frame. (Let me add that neither presidential candidate has helped. McCain's interventions seem to have bolstered the House Republicans who said no; Obama's frame of Wall Street vs. Main Street made it easy for voters to believe that a financial meltdown would not affect them in the slightest.

Second, the idea of the package was to prevent a financial mewltdown. But here's the thing -- no one gets credit for stopping a meltdown if it doesn't happen. To use a security analogy, think about what would have happened if either the Bush or Clinton administrations had killed the leadership of Al Qaeda and the Taliban prior to June of 2001. Even if they had claimed that they were foiling a terrorist plot against the United States, no one would have known about it, and it would have been pretty easy to attack either administration for belligerent unilateralism. In other words, it was only after 9/11 that the American public was ready to take the actions that would have prevented 9/11.

Read the whole thing

UPDATE 5: Without a Bailout Plan, What Will the Cost Be?

But there's a catch: taxpayers are already on the hook for the failures of financial institutions, and it's possible that the bill will actually be larger without bailout legislation than with it. That's because the regulators who mind the financial industry -- the Federal Reserve, Treasury and FDIC -- will keep doing what they've been doing: stepping in to prevent the chaotic failure of banks and other large financial institutions. This means continuing to put hundreds of billions of taxpayer dollars at risk, but in a way that adheres to no clear plan of action and doesn't require members of Congress to explicitly approve their actions.

In other words, the costs will still be there, but the likelihood is that the economy will crash completely.

Where will congress go from here

UPDATE 6: via Hot Air, Rep. Paul Ryan

The Statement of Sen. Coburn, probably the most principled fiscal conservative in Congress:

Taxpayers deserve to know that there is no guarantee this plan will work, but there is a guarantee that we will face a financial catastrophe if we do nothing. If banks continue to fail and stop lending the average American could lose their job, be unable to secure a loan for a car, home or college education, and find their life savings and retirement in jeopardy. Our economy depends on having liquid assets available for credit and lending just as an automobile engine needs oil. If those liquid assets stop flowing, our economy will be seriously damaged and will require far more costly and lengthy repairs."

Karl Rove explains the politics of the failure of the bail out (audio). When the Democrats are promising the persecute the Republicans for approving it, but giving their own members carte blanche to vote against (and he names names), you shouldn't be surprised when the Republicans decide to bail on the agreement.

In other words, the Democrats are asking the Republicans to give them the election by voting for it, while they play partisan political games by allowing their vulnerable members it's okay to vote against this the unpopular bill, and stab those Republicans in the back with the electorate by demogoguing the issue. And they were surprised the Republicans bailed en masse?

Let's put this in more familiar terms. You and your co-worker are facing a review, at which point one of you is going to be let go. The problem is that there's a really big important job both of you have to get done together, or both of you will be let go. You manage to work together to find a way to get it done. Then you find out that your co-worker has enlisted a third party to slander your work with the boss and blame it all on you. Sure, you could be the mature adult, but that's a no-win situation for you, and your company isn't likely to give you a good review for your next prospective employer. So you decide to roll the dice and let your jerk of a co-worker's tactics be seen to have sabotaged the project. The outcome for the company isn't optimal, but the outcome for you can't get any worse, and you're preventing the co-worker from reaping gains for their tactics.

There are limits to how selfless you can expect even the most mature adults to be for your benefit when you're acting like a spoiled child. And the bulk of the blame for the fall-apart goes squarely on the shoulders of the jerk co-worker who played office politics when you both needed to cooperate. In this case, Nancy Pelosi and the Democratic leadership.

Quotes of the day

Diogenes spent a lifetime searching for one honest man. Where are we supposed to find 12? - Megan McArdle

Well, I hate it that we have to start looking in Congress - Glenn Reynolds, in response.

The one I keep remembering, even more than usual, is this one:

"I knew water runs downhill. I didn't dream how terribly soon it would reach bottom."
-Professor Bernardo de la Paz, The Moon Is A Harsh Mistress by Robert A Heinlein.

When I set the poll last night, I said I'd hold off on my comments until later. Here they are.

I can see why some people are saying Obama won. He sounded good. He seemed to make sense on a certain level. Unfortunately for him, this is the level of the people who pay attention to politics when there's something that twinges their conscience that they don't pay more attention. Because for the people who understand the facts and the history and how it all fits together, he got stomped.

He spent the whole debate running a very convincing bluff, that when you come right down to it, boiled down to his stump speech talking points. Senator Obama, your opponent is named "John McCain," not "George Bush," who is never running for anything else again. Furthermore, while trying to tie your opponent to a president that your party has been demonizing since the election of 2000 may be a winning strategy in certain instances (it did help George Bush in 2000, but not John Kerry in 2004), John McCain has separated himself very well from George Bush, at least to anyone who's been paying attention. Immigration, the surge in Iraq, fiscal policy on all levels, even the role of government (he being more of a conservative than George Bush ever was)

Senator Obama was woefully short not only on facts, but on truth, as well. Dr. Kissinger refuted Mr. Obama's contention about his position on talks with Iran before the talking heads were done. It wasn't George Bush's policies that caused the housing crisis, it was Bill Clinton's. When George Bush tried to reform the problem areas back in 2003, and John McCain in 2005, it was the Democratic party who made it clear they would kill the legislation in the Senate, making the whole thing pointless. The Democrats (including Barack Obama) demogogued the issue, claiming it was racial prejudice and class warfare, that those attempting reform didn't want poor people and minorities to be homeowners, using these as cover issues to prevent the change needed, which was simply to tighten the rules up so that there was some reason to believe that the folks buying and refinancing could really afford the payments. (This is remarkably similar to the way they have demogogued Social Security and Medicare reform). In short, George Bush inherited a system that he tried to change when he saw these problems five years ago, and he was prevented from changing it by the Democrats. Sure, he could have tried harder, but he only had so much political capital to spend, and the War on Terror has to be a higher priority for that. But this was not in any way, shape, or form George Bush's problem. It was Bill Clinton's, and George Bush tried to fix it and was prevented by the party that has been demonizing him for failing to fix it.

For those who pay attention (sadly, not as many as there should be, particularly among the young), John McCain more than held his own in the economic policy debate. He proposed specific ideas and concrete proposals. When Jim Lehrer asked Barack Obama what he would cut because of the bail-out, he segued into new program proposals straight off his stump speech. That's like being told it's a subtraction problem, and adding instead.

Senator McCain blew Senator Obama out of the water on foreign policy. From Georgia to Iran and Iraq and Afghanistan and North Korea, it was obvious who was used to handling this stuff, and who wasn't. Who understands what is still The Great Game, and who does not. The difference in their grasp of international politics should have embarrassed Senator Obama. I'll give him credit for acting ability, though. He kept running a good bluff, and even had the grace to agree with Senator McCain in about half a dozen instances when he knew anything else he said would get him stomped so badly it would destroy his bluff.

Senator McCain did manage to partially call Obama's bluff on energy policy. You can't have nuclear power without storing spent fuel and reprocessing it. But if Yucca Mountain (which Obama has repeatedly opposed), which all of the experts have agreed is the best possible available location for those, is not a good site, then there are no sites available, which reduces to being against nuclear energy.

John McCain does need to work on delivery, and he did let several opportunities to further tear apart Obama. Thinking about it, though, it's probably just as well he let most of the opportunities pass that he did. He was so far ahead that anything more would have been piling on.

The more I know about Barack Obama and his policies, the less impressive his substance becomes. He's got style, he's smooth, and he's got beautiful oration - a lot like Ronald Reagan in those respects. But underneath all that, Ronald Reagan had substance - more substance in a hangnail than Barack Obama has in his whole body. Last night, Barack Obama ran a good, coherent bluff - but John McCain had the winning hand, and didn't fold. It may not be obvious now, especially to committed Obamaphiles (When I visited the conservative websites last night, they were talking specifics, and the comments were jubilant. When I visited progressive ones, they were directing their audience to the polls they had to manipulate, and the comments were bitter), but Obama gave the McCain campaign so much ammunition for campaign commercials that those quotes which are going to come back to haunt him all the way through November 4th. There is material for about fifty ads on a theme of, "What does Barack Obama really stand for?" What he said in the debate, versus what he said in front of partisan audiences. Put about fifty of them out there, and even some of the nutroots will start to wonder.

Okay, here's the crucial question: How did it influence your vote?

Influencing your vote is, after all, what this whole campaign season is about

If you have a comment, keep it civil. The more logical, the better. I'll hold off on my own comments.

PS We're playing enlightened democracy rules here. One person, one vote, period. No stuffing the ballot box.

Regarding treatment of Sarah Palin over the weekend, I was going to write something excoriating the Leftist press over this, but Megan McArdle beat me to it. I'm not going to bother with the idiots who accused Sarah Palin of faking her most recent pregnancy to cover for her daughter - that was so mind bogglingly stupid I couldn't believe people were wasting pixels on it.

The dragging through the mud of a 17 year old girl who has not campaigned, not given any speeches, not sought or been pushed into the limelight by her mother is slimy. I said this when it was Chelsea Clinton (before she started campaigning). I believe once they voluntarily step onto the campaign trail (e.g. Laura Bush and Cindy McCain, Michelle Obama) they make themselves fair game, but until that happens, leave them the heck alone. They didn't choose for their famous relative to run for office. They have a life of their own. Let them live it.

I see nothing wrong - and plenty that's praiseworthy - in how Sarah Palin has handled her family. Yeah, it'd be better if her daughter hadn't gotten pregnant, but short of locking her her up 24/7 - something I'd suggest would be evidence of character shortcomings - the girl is going to make her own choices, and 17 year olds are not as level-headed as thirty year olds. But in both the case of her own fifth child (born with Down's Syndrome) and her oldest daughter's pregnancy, she has done exactly the right thing. I've seen the phrase "shotgun wedding" applied more than once to the daughter's upcoming nuptials - but no evidence presented that the young man in question is in any wise being coerced into the marriage. Throughout most of human history, girls of fifteen to eighteen and boys of similar ages have been getting married and starting families. Yeah, it's probably smarter from a standpoint of the young folks not to start quite so early in our modern society, but it's still the right thing to do for the baby. They're accepting a lot of extra problems they don't have to in order to preserve an innocent life and care for it. Isn't that the sort of things those leftists praise working mothers for doing? I agree - it's heroic, not in the military risk your life sense, but in the sense of people who are going to do an awful lot of work they don't have to, over a period of time at least two decades in length, to make certain that child has the family life it deserves. And Sarah Palin, who taught her daughter well enough to take responsibility for the mistake that resulted in the pregnancy, even when they could get out of all of it in several ways? That's the sort of person I want to vote for, a sort of leader who is in far too short a supply in our government at any level.

I've also seen leftists telling Gov. Palin she should become a stay-at-home mom and give up her career, because she's got a special needs child. Say what? NOW may have gone overboard in the last twenty years ago, but that was one thing they accomplished that I agreed with even as young kid whose mother worked. A woman is not a life support system for her ovaries and womb, nor should she be expected to do more in the way of child care than men. Biology already forces her to spend nine months carrying the baby and she's the only parent who can lactate. Sarah Palin is the sort of person the feminist movement was all about in the beginning, the mother who wanted a career as well, and if the leftists who've been criticizing her for having and continuing her career had any conscience whatsoever, they'd appear before her to apologize, metaphorical hat in hand. Or is it that they just can't believe the Republicans have gotten past the 1950s, so they're hoping to peel off some Republican supporters? And for the left to sell out its supposed principles of female economic liberation in order to peel off a few votes in one election should have honest feminsits crossing party lines to vote McCain/Palin, because their own side has certainly demonstrated more than once in the past couple of weeks that when it comes to actually doing the things they say are praiseworthy, the Democrats have not come as far as the Republicans.

As for troopergate, where Gov. Palin tried to get her ex-brother in law fired from his job as a state trooper, that began well before she was elected governor, and if your governor was personally aware of a rogue, out-of-control law enforcement officer, wouldn't you want them to try to do something about it? This clown was guilty of abuse of authority, using it to harass non-police, tasering an 11 year old boy, poaching major game animals, and several other offenses that should cause a law enforcement official to lose his job. I'd prefer the louse was in prison, but having his ability to abuse the law removed might be sufficient for some people.

If this is all the leftist media has on the lady (and it appears to be) than the "revelations" we've seen thus far, then yes, I'd have to agree that the McCain campaign vetted her well, and there's nothing here that should be harmful. It has been reported that McCain himself knew of everything true that's been reported thus far, and chose Governor Palin anyway - something that says quite a bit in favor of his judgment. I'd say that if some people think there was anything wrong in the above actions, that's more a commentary on those particular people than on the Palins. Just because I think abortion should be an available option, and women should have the ability to choose to terminate their pregnancy, does not mean I think that doing so is in any way admirable, nor that doing so should be something anyone should encourage. In fact, if you've got the personal fortitude to deal with an unwanted pregnancy, an unplanned child, or a special needs child by keeping that child and bringing it up in the best way of which you are capable, that is what says something very admirable about you.