McCain Gets Remedial Economics Lesson

On Tuesday, John McCain attempted to address the economy by promising he would only do what makes sense and never be dogmatic. He then repeated standard Republican dogma by excusing the Fed's massive bailout of Wall Street investment bankers while offering nothing to its Mainstreet victims. The problem was a few bad actors (including irresponsible homeowers) but surely didn't require a fundamental overhaul of regulatory oversight.

"It is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers," McCain declared, giving only scant attention to "deserving" homeowners while using the same tone he uses when promising never to surrender in Iraq.

But then he got hammered in speeches by Senators Clinton and Obama.

By Thursday, faced with Democratic criticism, McCain's advisers had to explain he really did want to help deserving homeowners and really would consider regulatory remedies.
In a speech Tuesday, McCain pointedly stopped short of offering the kind of wholesale measures to stem the subprime mortgage and bankruptcy crises that Obama and Clinton are tossing about, suggesting that to do so would only reward bad behavior at taxpayer expense. Instead, McCain repeated his call for the lending industry to do all it could to help struggling homeowners with a legitimate claim to assistance. . . .
So the McCain campaign revisited the issue today, issuing a statement saying that he would not be opposed to all attempts to help struggling homeowners, as long as speculators were not bailed out. . . .
McCain's economic adviser, Doug Holtz-Eakin, chimed in by seeking to associate McCain with Obama's call for more effective financial regulation in a Wall Street speech today.
On Tuesday, McCain had warned that undue new regulations would threaten economic recovery, but Holtz-Eakin argued that Obama's proposals were in essence little different than what McCain was talking about. " They are wonderful words and they are words that you could hear out of a Republican or a Democrat," he said of the Obama speech. "I don't think there is any grand disagreement about the need for effective regulation. The bottom line that Senator Obama came up with is what Senator John McCain said on Tuesday."


Hillary Wants to Let Greenspan Decide Whether to Rescue Home Owners

I wonder what Paul Krugman, who has pointed to Alan Greenspan's role in fostering the current financial crisis, would think of asking Greenspan to help decide if the US should help rescue home owners, and not just the Wall Street financial giants. From Reuters:
WHITE PLAINS, New York (Reuters) - Former Federal Reserve Chairman Alan Greenspan and other economic experts should determine whether the U.S. government needs to buy up homes to stem the country's housing crisis, Democratic presidential candidate Hillary Clinton will propose on Monday.
Clinton, a presidential candidate and senator from New York, said the Federal Housing Administration should "stand ready" to buy, restructure and resell failed mortgages to strengthen the ailing U.S. economy. . . .
Clinton threw her weight behind legislation proposed by Democrats Rep. Barney Frank of Massachusetts and Senator Chris Dodd of Connecticut that would "expand the government's capacity to stand behind mortgages that are reworked on affordable terms."
But she said a bipartisan group should determine whether that approach was sufficient or whether the U.S. government should step in as a temporary purchaser.
The working group could be led by bipartisan economic heavyweights such as Republican Greenspan, Democratic former Fed Chairman Paul Volcker and Robert Rubin, the treasury secretary under President Bill Clinton.
Under the Frank plan, the government would take failing mortgages off the hands of investors and write new terms that would prevent foreclosure. It would see lenders write down the mortgage amount in exchange for a government guarantee.

Krugman has been beating the drums for more closely regulating the financial industry, which has taken over much of the mortgage market once held by regulated banks and savings and loans. Greenspan has opposed such regulation, and Rubin I suspect is only a recent convert.
Over time, however, many of the roles traditionally filled by regulated banks were taken over by unregulated institutions -- the "shadow banking system," which relied on complex financial arrangements to bypass those safety regulations.
Now, the shadow banking system is facing the 21st-century equivalent of the wave of bank runs that swept America in the early 1930s. And the government is rushing in to help, with hundreds of billions from the Federal Reserve, and hundreds of billions more from government-sponsored institutions like Fannie Mae, Freddie Mac and the Federal Home Loan Banks.

Did DC Media Applaud Bush After Approving Waterboarding?

As he warned, on Saturday President Bush sanctioned future torture by vetoing an intelligence bill that would have restricted the CIA's interrogation practices to those sanctioned by Congress via the Army Field Manual. As the Times article notes, Bush's veto, which seems highly unlikely to be overridden (e.g. McCain voted against this Bill, so an override will get no Republican support), seals Bush's legacy as the President responsible for authorizing violations of the Geneval Conventions and damaging America's honor and reputation throughout the civilized world.

There have been innumerable media stories of the damage Bush's pro-torture policies have done to the US image, the dubious efficacy of "enhanced interrogation techniques" that amount to torture, and the danger such policies pose to our own troops as confirmed by General Petraeus.

Never mind the overriding moral problem that sanctioning/conducting torture is simply evil. A consistent majority of Americans say we as a nation should just not do it.

The media knows that our President first denied he authorized torture, while his administration systematically lied and withheld evidence that it had used torture which it later had to admit, even after it destroyed some evidence. Even now the White House spokesperson, Dana Perino, makes up ludicrous rationales that the only reason we don't allow the Army to engage in torture via the Army Field Manual is that, unlike the CIA's professional interrogators (but see here), our Army volunteers are simply too young and inexperienced to be able to handle torture techniques. Is there any responsible journalist who takes this gibberish seriously and who is not appalled by the White House arguments and what they imply?

So why did Washington's elite press corps reportedly rise to applaud this President Saturday night? What were they thinking?
WASHINGTON - President Bush said an early farewell to political Washington on Saturday night, making his first appearance on the stage of the Gridiron Club of Washington journalists.
Bush surprised the white-tie audience of more than 600, including Supreme Court justices, Cabinet members and lawmakers, by appearing as the final act of the club's annual revue. To the tune of "Green Green Grass of Home," he sang about looking forward to his return to Texas.

McCain Humiliates Himself at CPAC

It is conventional wisdom that any Republican hoping to become President must obtain the backing of the most discredited and extremist elements within the Republican Party. And so we saw Mitt Romney and John McCain dutifully humiliate themselves in front of those whose catastrophic policies as implemented by the Bush/Cheney regime have earned the contempt of a large majority of Americans and the hatred of much of the world. Why would anyone do this?

Romney's pandering exodus statement could not have been more insulting to the American people. He essentially argued that if he did not withdraw and leave a clear field to McCain, the American people would elect a Democrat and thus give the terrorists a victory over the United States. Never mind that nearly 80 percent of the country believes the conservatives have set the country on the wrong course, and a large majority believe the country would be better led by Democrats on virtually every issue including war and terrorism. Is the man really that delusional, or is this just more pandering?

Even more astonishing was the weeping and chorus of "No! No!" that greeted the chameleon Romney's withdrawal. It was as though the CPAC delegates had no clue that the man who had pandered to them for months and laid claim to Reagan's legacy had conveniently acquired his conservative views only yesterday, it having been inconvenient to espouse such notions in his prior habitat.

But the award for delusion must go to McCain's appearance. McCain was greeted first with enforced manners as he promised to consult with these faux conservatives, but that devolved into boos as soon as he spoke the words "illegal immigration."

What must John McCain have been thinking, as he stood there, smiling, waiting for the booing to end? The man is and always has been one of the most extreme and pure "conservatives" in the Senate, yet there he was being booed by people who claimed to be extreme conservatives but who were in truth only extremely radical.

Economic Panic Makes GOP Bipartisan

All last year, Republicans obstructed and defeated virtually every progressive initiative the Democrats proposed, even going so far as to uphold Bush's veto of health insurance for 4 million uninsured children. But yesterday, the Republicans began to line up behind a progressive economic stimulus approach, and the only way to explain it is near panic.

To be sure, it helped greatly that the current Chairman of the Federal Reserve Board, Ben Bernanke, appears to be an intelligent, non-ideological adult -- in stark contrast to the disingenuous ideologue he replaced. Bernanke, appearing before a House Budget Committee that has been considering possible elements of an economic stimulus plan, essentially endorsed the key components of the Democratic view:

(1) An economic stimulus plan was needed/worthwhile, and somewhere in the neighborhood of $100-150 billion is okay;

(2) It should be designed to get cash quickly into the hands of those most likely to spend it immediately to boost the economy; and

(3) It should be temporary and not have some permanent ("structural") adverse impact on the national debt.

The last two points appeared to deflate the hopes of Bush Republicans who had hoped to make a permanent extension of the Bush era tax cuts the center piece of the stimulus plan. Democrats would have strongly opposed that condition, and had they tried to get a stimulus plan through without them, we'd have been back to the obstruction and stalemate of last year.

Bernanke claimed he was taking no position on whether any of the Republicans' dream proposals should be pursued in the long run, but his insistence that the stimulus be immediate and focused on those who need cash now pretty much doomed the Republican hopes. Extending the Bush tax cuts would have no effect until 2010, when they are set to expire.

The Surge in Delusions Is Working

On the anniversary of President Bush's decision to send an additional 30,000 US combat soldiers to Iraq, the President's neocon backers, led by Senators McCain and Lieberman, are proclaiming the surge a success (C&L has the story). And from their perspective it is a success, even though the surge achieved none of the President's stated goals. But I doubt those were ever the real goals.

It seems more likely that the strategic goal -- apart from not wanting to be perceived as having "lost" Iraq -- was to prolong the US military occupation in the heart of the Middle East as a counter to Iran. Whatever their effect on the Iraq front, the 30,000 additional combat troops would be positioned forward as a means of putting pressure on Iran. By sheer luck, however, the forward strategy got an unexpected boost when the Sunni tribes in Anbar and elsewhere turned on their more radical allies -- those the Administration wants us to call "al Qaeda" -- and stopped fighting Americans.

General Petraeus then bet that by bankrolling the Sunni Awakening Councils, he could essentially create and arm a counterforce to the Iranian influence without instigating a massive civil war with the Shia government. We've essentially bought and armed an 80,000 man Sunni militia ready to do war with the Iranian-backed Shia, and perhaps the Iranians themselves. It's crazy and reckless, but the recklessly crazy neocons are thrilled at the prospects.

Even Petraeus doesn't know whether his bet was wise or foolhardy. Bush and Petraeus created conditions that require us to remain there, perhaps indefinitely, to make sure our bought and paid for Sunni militia doesn't turn on the Shia government that refuses to include them.

Did Bush Risk Bhutto To Save Musharraf?

With the assassination of Benazir Bhutto, the general consensus seems to be that the Bush Administration's policies in Pakistan and central Asia are in a shambles, but that has not stopped the Administration's least credible agency from leaking stories blaming the murder on al Qaeda. Even if that's true, responsibility is a broader concept.

Dropped right in the middle of the New York Times lead story on yesterday's tragic killings is this:

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State Health Care Reforms Need National Leadership

Several states are trying to extend health coverage to the growing number of uninsured, but all of them are struggling with where to find the revenues to pay for subsidizing health insurance for those least able to afford rapidly rising insurance premiums. So far, however, the states appear to be looking in all the wrong places, and it's not clear how they can solve this without progressively raising income taxes and challenging the role and costs of insurance companies.

This post Monday discussed the effect of using mandates to force companies to offer or individuals to purchase health insurance. I noted the incentives companies and individuals have to move to the state subsidized insurance pools, creating much higher state funding requirements than states anticipated.

As Tuesday's New York Times article also explains, Massachusetts is facing an additional $150 million in costs for subsidized insurance coverage, and it's not clear where the Legislature will find the funds. In California, Governor Schwarzenegger and Assembly Speaker Nunez are proposing a much larger version of Massachusetts's mandatory insurance approach, while seeking approval for a variety of funding sources:

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Disappearing In Secret Pakistani and US Prisons

US reporting on General Musharraf's suspension of Pakistan's Constitution and displacement of its Supreme Court focused on Musharraf's desire to remain in office. Musharraf also claimed the Court had undermined his fight against terrorism. But today's New York Times reveals that Musharraf also had the same motives the Bush Administration has in preventing their respective illegal detention programs from seeing the light of day or facing judicial scrutiny.

Today's article by reporter Carlotta Gall reveals that in apparent cooperation with US CIA and other officials, Musharraf had, long before his recent emergency actions, arrested hundreds, perhaps thousands of Pakistanis and detained them in secret prisons without charges. Some of the detainees were then rendered by US agents into Afghanistan, other countries, or Guantanamo, where some still languish without charges.

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Who Will Stand with Chris Dodd for the Constitution?

Sometime today, Chris Dodd will take the floor in the US Senate and begin talking -- a filibuster -- and what he has to say touches on the most important issues facing this country. The immediate topic will be a bill to provide retroactive immunity to telecom companies who violated the law by helping the Bush Administration illegally spy on Americans. But the larger issue is whether Congress will ever hold a lawless executive branch responsible for its criminal behavior.

Senator Dodd will not be alone; a handful of Democratic Senators -- including Russ Feingold and Ted Kennedy -- will be there to support him, and for those who promised to help, this is the time. They have to help him because their party's so-called leadership has failed, again, in an all too familiar pattern of ineptitude and enabling.

Dodd and friends know how important it is to stop the atrocious Intelligence Committee bill, a bill that in addition to granting the telecoms immunity, does far too little to repair the damage Congress did last August to the 4th Amendment, individual liberty and privacy when they passed the dishonestly named Protect America Act (PAA).

But these few Democrats will not be enough to stop this travesty, and the question is: who will be there to help them? They need help, our help, the media's help and the help of every Senator and Representative who still believes in the Constitution's principles of accountable government and civil liberties. Those principles have been gravely damaged by a lawless Administration and a cowardly Congress, and it is long past time to stand up to this withering, unending assault on the Constitution.


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