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Wednesday, September 24, 2008
What exactly is McCain up to?
The Atlanta Journal-Constitution
John McCain isn’t going back to Washington to negotiate a deal. As President Bush laid it out in his short speech Wednesday night, the very broad outlines of a deal have already been agreed upon, thanks in large part to the fact that the administration has been laudably open to compromise.
Speaker Nancy Pelosi and House Minority Leader John Boehner also issued a joint statement Wednesday in which they “agree that key changes should be made to the administration’s initial proposal. It must include basic good-government principles, including rigorous and independent oversight, strong executive compensation standards and protections for taxpayers.”
The details may yet get sticky, but McCain has no expertise in the details on this issue and no real role to play in hammering them out. There is no deadlock he needs to break. Injecting presidential politics into that situation is dangerous.
Nor is McCain going back to Washington to reach across the aisle to Democrats. The Democratic leadership and membership as a whole is already more accepting of the need for a bailout package than their GOP counterparts. They don’t need to be wooed.
McCain’s sole usefulness in Washington — and it’s not minor — would be to rally House members of his own party to support the package that emerges. In other words, his effort would be within his own party, not bipartisan. Unfortunately, his usefulness in that regard is questionable given his relative lack of support within the GOP House caucus, and there’s no reason he has to suspend his campaign to perform that role. Certainly, it’s no reason to postpone a presidential debate.
His announcement still smacks of pure political grandstanding, and no one has yet articulated a convincing reason why a debate would not be appropriate.
We ran political campaigns during major wars; we ran them through the Depression. Campaigns are the means by which democracies decide and debate issues, and we don’t close them down in times of stress. That’s when they are most important.
Interestingly, Sen. Lindsey Graham, a top McCain ally, is now suggesting that the first presidential debate be rescheduled to Oct. 2, which is supposed to be the date of the vice presidential debate. That would conveniently knock the debate between Sarah Palin and Joe Biden back at least a week or more.
The cocoon around Palin is being woven ever tighter.
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McCain suspending campaign, seeks to delay debate
The Atlanta Journal-Constitution
John McCain has announced that he is suspending his campaign pending resolution of the debate in Congress over the $700 billion bailout, and he wants to postpone Friday’s scheduled presidential debate as well.
This is a bizarre turn of events.
Neither McCain nor Barack Obama plays a critical role in the congressional process on this issue, so it’s hard to see why their presence in Washington would be so important. In fact, Congress and the administration have been moving toward resolution pretty quickly under the circumstances, with broad areas of agreement emerging on most of the major issues.
President Bush, for example, has signaled a willingness to accept some sort of limits on executive compensation in the package. They’re not close to a final deal, but the outlines of a deal are there.
So far, I’ve seen no reaction from the Obama camp.
UPDATE I:
The unilateral basis of this announcement makes it look like a political decision. With the polls turning against him — down nine points in an ABC/Washington Post poll, down six in a new Fox poll — it’s possible that McCain wants off the campaign trail until he can figure out where the public is on this issue.
That may sound cynical, but again, it’s hard to see how McCain and Obama are needed for a deal, nor is it clear how suspending the presidential campaign will bring the process to a close any sooner.
UPDATE II:
I just saw Sen. Lindsay Graham, a close McCain ally, try to explain this strange decision. If anything, his rhetoric and spin confirmed the sense that they are just trying to squeeze political advantage out of this. The Obama camp is said to be leaning against suspending his campaign, but no final word or decision yet.
UPDATE III:
Obama has now gone on air to explain his position. He acknowledges the seriousness of the issue and the importance of acting on a bipartisan basis. But he believes the debate should occur so that the American people can hear about this issue from the two candidates who want to become their leader in 120 days. And he notes that a president can often be required to deal with more than one thing at a time.
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Why can’t Sarah come out to play, Mr. McCain?
The Atlanta Journal-Constitution
Last night, CNN anchor Campbell Brown called out the McCain campaign for its condescending treatment of Sarah Palin:
“Tonight I call on the McCain campaign to stop treating Sarah Palin like she is a delicate flower that will wilt at any moment. This woman is from Alaska for crying out loud. She is strong. She is tough. She is confident. And you claim she is ready to be one heartbeat away from the presidency.
“If that is the case, then end this chauvinistic treatment of her now. Allow her to show her stuff. Allow her to face down those pesky reporters…. Let her have a real news conference with real questions. By treating Sarah Palin different from the other candidates in this race, you are not showing her the respect she deserves.
“Free Sarah Palin. Free her from the chauvinistic chains you are binding her with. Sexism in this campaign must come to an end. Sarah Palin has just as much a right to be a real candidate in this race as the men do. So let her act like one.”
But that mean ol’ Mr. McCain won’t let Sarah come out and play.
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Paulson plan is Wall Street-centric
The Atlanta Journal-Constitution
Nobody knows if a huge taxpayer-funded bailout of Wall Street will stave off financial disaster. But without it, the odds of a collapse rise significantly.
So it’s not a question of whether to do it, but how to do it. And unfortunately, the proposal initially advanced by the Bush administration is seriously flawed, in large part because it reflects the same mind-set and attitude that helped cause the crisis.
For example, in his initial three-page proposal, Treasury Secretary Henry Paulson advocated giving himself unchecked authority to spend $700 billion in taxpayers’ money without any oversight or review whatsoever. The language of the proposal was stark:
“The Secretary is authorized to purchase … on such terms and conditions as determined by the Secretary …”
“The Secretary is authorized to take such actions as the Secretary deems necessary …”
“Decisions by the Secretary pursuant to the authority of this Act are nonreviewable … and may not be reviewed by any court of law or any administrative agency.”
In other words, to cure a situation worsened or caused by a failure to exercise oversight, the Bush administration proposed a solution in which oversight would be abandoned altogether. Reaction against that power grab was harsh and bipartisan, and in comments to a Senate committee Tuesday, Paulson denied he had ever contemplated taking such powers without oversight.
So that issue is settled.
Paulson and others have also tried to block attempts to limit executive compensation in firms that take advantage of the bailout fund. Paulson, for example, warned that such limits might discourage CEOs from taking advantage of the bailout.
“If we design it so it’s punitive and so institutions aren’t going to participate, this won’t work the way we need it to work,” Paulson said.
If you think about it, that’s a pretty incredible statement. The Treasury secretary — himself the former chairman and CEO of Goldman Sachs — is admitting that to preserve their exorbitant pay packages, corporate CEOs might bar their companies from participating in the bailout, even if doing so would endanger their companies’ continued existence and the nation as a whole.
Whatever the source, that is a damning indictment of the Wall Street culture. But it is particularly striking coming from an insider such as Paulson, and it reflects Wall Street’s belief that finance-industry executives have some God-granted right to extremely lucrative bonuses regardless of performance.
Just last year, Wall Street’s top five financial firms — including names such as Lehman Brothers and Bear Stearns — awarded $39 billion in bonuses at a time when stockholder value in those companies fell by $74 billion.
And amazingly, this current crisis hasn’t chastened the industry a bit. Over the weekend, news broke that eight former Lehman Brothers executives, along with 200 other “key” former Lehman employees, would be given $2.5 billion in bonuses from Barclay’s in a deal to purchase part of the bankrupt Lehmans. So while Lehman stockholders get little or nothing, the executives who helped run the company into the ground get a whole new round of bonuses.
Even some conservatives now agree that compensation must be addressed in the bailout. “Severance packages should be at risk,” the Heritage Foundation advises in its analysis of the bailout. “In order to ensure that incompetent executives do not benefit from their criminal mismanagement, the new RTC should be allowed to refer cases to the Justice Department for civil suits to recover bonuses or termination compensation received by those individuals.”
With his opposition to compensation limits, it’s clear that Paulson is seeing the crisis through the eyes of a Wall Street financier, which is only natural given his background. It was telling that in his prepared comments Tuesday, the Treasury secretary blamed the crisis on banks making bad loans and homeowners buying more house than they could afford, while saying nothing about the very considerable role that he and his former colleagues on Wall Street played.
That world view extends to Paulson’s argument that taxpayers should not be allowed to share in any benefits that the bailout produces for financial firms. To Paulson’s mind, that requirement might discourage firms from participating in the bailout.
However, if companies are healthy enough to decide not to participate, they didn’t really need the bailout in the first place. Once again, Paulson’s instincts betray him. As with the compensation question, he wants to protect Wall Street first, out of the mistaken if honest belief that by protecting Wall Street he protects the best interests of the country.
That is simply not true. If taxpayers are being required to cough up $2,300 for every man, woman and child in the country to finance this bailout, basic fairness requires that their direct interests be protected first. Fairness also requires that Wall Street be required to share in the pain.
In fact, we already have a useful and longstanding precedent for that approach. Under federal law, if you carelessly start a forest fire or range fire, the government has the right to bill you for the cost of bringing that fire under control. There’s no reason that same logic shouldn’t apply to those on Wall Street who have also been playing with fire for far too long.
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