New U.S. President

[ewmayer]

Funny exchange spotted on a message board:

User: when_opps_knock

Obama did not feel it was necessary to show up for the bailout vote. He abstained from voting because he is afraid it may hurt his chances for President.

Please, vote for someone with a backbone!! Not a wimp of a guy who is afraid to take a stand.

Which elicits this reply:

User: giant_ignoramus

smart comment. did you know that obama is a senator? not a rep? just askin'

The political spin

While I am disappointed with Obama for supporting the bailout without asking some really tough questions of its proposers, I was especially interested in what kind of tortured logic the McCain camp would use to try to spin this as something other than the egg-on-their-face which it really is. Predictably, they did not disappoint:

Obama blasts Congress for failing to pass bailout bill: Sen. Barack Obama blasted Congress for not passing a financial rescue package Monday, while Sen. John McCain's campaign accused Obama and Democrats of putting "politics ahead of country."

Also after the vote, McCain touted his role in last week's negotiations on the bailout bill.

"I laid out principles" including "responsible oversight," transparency and a cap on so-called golden parachutes --the big bonuses Wall Street CEOs would receive despite their involvement in the economic crisis, he said from Des Moines, Iowa. "I worked hard to play a constructive role."

He said he was satisfied with the way the bill was written, though "it wasn't perfect."

Earlier, McCain's campaign accused Obama and Democrats of injecting politics into the American economy.

"From the minute John McCain suspended his campaign and arrived in Washington to address this crisis, he was attacked by the Democratic leadership: Sens. Obama and [Senate Majority Leader Harry] Reid, Speaker Pelosi and others.

"Their partisan attacks were an effort to gain political advantage during a national economic crisis. By doing so, they put at risk the homes, livelihoods and savings of millions of American families," Doug Holtz-Eakin, a senior policy adviser for McCain and his running mate, Alaska Gov. Sarah Palin, said in a statement.

"Barack Obama failed to lead, phoned it in, attacked John McCain and refused to even say if he supported the final bill. ... This bill failed because Barack Obama and the Democrats put politics ahead of country," Holtz-Eakin said.

Pardon my apparent ignorance, but wasn't it House *Republicans* who voted overwhelmingly against the bill? How does work, exactly? Oh, wait, this is part and parcel of the whole "it's all Nancy Pelosi's fault for placing the blame where it belongs, on the doorstep of the Bush administration" canard. Nice try - now be a good bunch of Bush clones and go down in flames on election day like you deserve to do, willya?


The New York Times` Paul Krugman has a nice op-ed today on McCain's aggressive economic cluelessness:

The 3 A.M. Call: The next president will likely have to deal with some major financial emergencies. Barack Obama seems well informed. John McCain, on the other hand, scares me.

The real revelation of the last few weeks, however, has been just how erratic Mr. McCain’s views on economics are. At any given moment, he seems to have very strong opinions — but a few days later, he goes off in a completely different direction.

Thus on Sept. 15 he declared — for at least the 18th time this year — that “the fundamentals of our economy are strong.” This was the day after Lehman failed and Merrill Lynch was taken over, and the financial crisis entered a new, even more dangerous stage.

But three days later he declared that America’s financial markets have become a “casino,” and said that he’d fire the head of the Securities and Exchange Commission — which, by the way, isn’t in the president’s power.

And then he found a new set of villains — Fannie Mae and Freddie Mac, the government-sponsored lenders. (Despite some real scandals at Fannie and Freddie, they played little role in causing the crisis: most of the really bad lending came from private loan originators.) And he moralistically accused other politicians, including Mr. Obama, of being under Fannie’s and Freddie’s financial influence; it turns out that a firm owned by his own campaign manager was being paid by Freddie until just last month.

Then Mr. Paulson released his plan, and Mr. McCain weighed vehemently into the debate. But he admitted, several days after the Paulson plan was released, that he hadn’t actually read the plan, which was only three pages long.

[rogue]

Since the bailout is so politically unpopular, I'm surprised that more challengers to incumbents aren't taking advantage of it. We have 435 (inept) members of the House and another 33 (inept) members of the Senate that are up for re-election. If I were running against an incumbent, I would take them on regarding this bailout.

I was hoping that someone could explain to me why the bailout is so huge. It sounds more like a means to cover all of Wall Street's losses and not just those companies that are in serious financial trouble.

IMO, the government should have forced AIG to sell assets to raise the cash they needed for operations. So they take a loss, so what. It is better than being given an $85B loan from Uncle Sham, er, Sam.

What is scaring me more is that the continued buyouts of banks. It means that Citi and BofA get larger. Doesn't it put them at risk too? Part of the problems today are a result of so many mega-mergers with banks in the past 20 years. It takes risk from many small players and puts it all into one big player. If the big player has a problem, then it shakes up the industry. I suspect that if many smaller players had problems, that the pain would be spread a little more evenly.

What we need now (more than a bailout) is a president that leads and inspires. Bush can't do that. A good leader would be trying to solve the problem by telling Americans how they as individuals can solve the problem, not tell them that they have to fund a ridiculously expensive bailout that might not even solve the problem.

[ewmayer]

Originally Posted by rogue

IMO, the government should have forced AIG to sell assets to raise the cash they needed for operations. So they take a loss, so what. It is better than being given an $85B loan from Uncle Sham, er, Sam.

Actually, the deal the government got with AIG was far better than anything in [even the heavily revised version of] the Paulson $700B bailout proposal - with AIG, the govt got an 80% equity stake, and is first in line to benefit from any future AIG turnaround. And they are getting near-usury rates of interest - a massive 8% above LIBOR - on their loan, which is in effect forcing AIG to unwind assets in an effort to reduce the loan principal as wuickly as reasonably possible. That's the kind of deal Warren Buffett would be proud of. In contrast, the just-rejected blanket bailout had only very vague provisions about equity stakes and asset valuations.

[cheesehead]

Originally Posted by rogue

Since the bailout is so politically unpopular, I'm surprised that more challengers to incumbents aren't taking advantage of it.

How do you know they aren't? Has someone already done a survey?

We have 435 (inept) members of the House and another 33 (inept) members of the Senate that are up for re-election.

But it's been well-established for decades that in each election the majority of House races are "safe" districts where the incumbent faces no significant challenge. (See salon.com quote, below.)

If I were running against an incumbent, I would take them on regarding this bailout.

Yes, but it's far too late to enter state primary elections by now, so only those challengers who had already been running could do so. (Maybe that's what you meant.)

I was hoping that someone could explain to me why the bailout is so huge.

The problem is so huge.

It sounds more like a means to cover all of Wall Street's losses and not just those companies that are in serious financial trouble.

I've seen reports that the $700 billion figure was _not_ the result of any analysis (this is basically an unprecedented situation, after all), but was, actually, picked out for its psychological impact as an amount likely to signal the size of the problem to the general public.

What we need now (more than a bailout) is a president that leads and inspires. Bush can't do that.

Memo to future: please schedule all financial crises early in a president's term rather than waiting until he's in the final months of lame-duckism.

Addendum to future: delete "financial" in preceding memo.

:-)

A good leader would be trying to solve the problem by telling Americans how they as individuals can solve the problem

Here's my try at good-leaderism:

Vote for middle-of-the-road politicians who understand how to craft reasonable compromises rather than cater to either extreme of the political spectrum.

Originally Posted by ewmayer

Nice try - now be a good bunch of Bush clones and go down in flames on election day like you deserve to do, willya?

Apparently, House members who face a tough reelection race voted more heavily against the "bailout" than those in safe districts.

http://www.salon.com/politics/war_ro...source=refresh

Bailout was kryptonite for vulnerable House members

. . .

A very useful analysis by Nate Silver's very useful blog FiveThirtyEight.com confirmed my hunch after a quick scan of the House vote against the bailout this afternoon -- almost everyone facing a tough reelection race voted no.

Only eight of the 38 members in competitive races Silver looked at backed the bailout -- or 21 percent. (Some observers would say there are more competitive races -- the Cook Political Report counts 54 -- but Silver used the races tracked by the Swing State Project blog.) That's even lower than the 32 percent support the plan got among House Republicans (or the 59 percent it got among Democrats). Five out of 18 vulnerable Democrats voted for the bill -- Jerry McNerney of California, Tim Mahoney of Florida, Jim Marshall of Georgia, Bill Foster of Illinois and Paul Kanjorski of Pennsylvania. Among vulnerable Republicans, only Chris Shays of Connecticut, Mark Kirk of Illinois and Jon Porter of Nevada voted yes.

. . .

Update: The Swing State Project folks point out that they list 38 incumbent members in competitive races, but 57 competitive races -- the Cook Report's tally of 54 includes open seats.

[Spherical Cow]

Pardon my apparent ignorance, but wasn't it House *Republicans* who voted overwhelmingly against the bill?

On NPR, I heard McCain blame Obama and his helpers for the failure of the vote, and literally in the next sentence, state that it is time to set partisan fighting aside and fix the problem. He apparently wants to end the partisan bickering immediately after he blames the other party.

Hours later, on the evening news, they showed a film clip only of him pleading to set partisanship aside- no mention that he had blamed the Democrats 5 seconds earlier (the Democrats being the ones who brought more votes for the measure to the table than they had agreed on).

I'm not sure if the bail-out (rescue?) is the right thing, but the way the government is handling it is sure discouraging.

Norm

[ewmayer]

Originally Posted by cheesehead

Apparently, House members who face a tough reelection race voted more heavily against the "bailout" than those in safe districts.

Cheesehead, just by way of clarification, my "go down in flames" comment was aimed at McCain't and his cabal of Bush-clones-R-us advisors. Regarding the "tough re-election" note - apparently not having one's seat more or less in the bag makes one more inclined to actually LISTEN TO ONE'S CONSTITUENTS. A shocking display of "representative democracy", wasn't it?

Originally Posted by Spherical Cow

On NPR, I heard McCain blame Obama and his helpers for the failure of the vote, and literally in the next sentence, state that it is time to set partisan fighting aside and fix the problem. He apparently wants to end the partisan bickering immediately after he blames the other party.

Yep - see my "go down in flames" comment. As the NYT op-ed I quoted a couple weeks ago put it so well, I believe the way a candidate runs his campaign is generally quite indicative of the way he would govern. For McCain, "signs point to 'abysmal'."

[cheesehead]

Originally Posted by ewmayer

Regarding the "tough re-election" note - apparently not having one's seat more or less in the bag makes one more inclined to actually LISTEN TO ONE'S CONSTITUENTS. A shocking display of "representative democracy", wasn't it?

OTOH, in his book Profiles In Courage then-Senator John F. Kennedy argued that after L. T. O. C., voting according to one's constituents' preference is not always the right thing to do in exceptional circumstances.

[masser]

I believe Edmund Burke said something similar about 200 years prior...

EDIT: Found the quote - it's one of my favorites:

Your representative owes you, not his industry only, but his judgment; and he betrays instead of serving you if he sacrifices it to your opinion

[Spherical Cow]

The Christian Science Monitor's article on whether or not the moderator of the VP debate is biased has one of the best cartoon/illustrations of the whole campaign.

And if Sarah Palin is a GIMPSter, maybe she'll do OK...

Norm

[ewmayer]

... is this delightful Classic of Economics. It is alas out-of-print, but used copies can still be obtained surprisingly cheaply.

Aside: One of the authors [Hassett] is an economic advisor for one of the two major-party presidential candidates. Three guesses as to which candidate that would be.*



*[Hint: Think of Tom Cruise wooing Kelly McGillis in the 1986 hit movie, Top Gun. Better still, print out a color movie still of Tom sitting astride his motorcycle, wearing that manly leather jacket of his. Now cut out a proportionally-scaled headshot of both of the two major-party candidates and lay each in turn on top of Tom’s head – sorry, Tom! No disrespect intended - in the picture, perhaps imagining some typical campaign-speech dialog by each candidate as you do so. Which is the better fit?]

[99.94]

http://au.news.yahoo.com/a/-/mp/5061...ama-president/