|
September 25, 2008 By: Hilzoy NYT: "The day began with an agreement that Washington hoped would end the financial crisis that has gripped the nation. It dissolved into a verbal brawl in the Cabinet Room of the White House, urgent warnings from the president and pleas from a Treasury secretary who knelt before the House speaker and appealed for her support.
"If money isn't loosened up, this sucker could go down," President Bush declared Thursday as he watched the $700 billion bailout package fall apart before his eyes, according to one person in the room.
It was an implosion that spilled out from behind closed doors into public view in a way rarely seen in Washington.
By 10:30 p.m., after another round of talks, Congressional negotiators gave up for the night and said they would try again on Friday. Left uncertain was the fate of the bailout, which the White House says is urgently needed to fix broken financial and credit markets, as well as whether the first presidential debate would go forward as planned Friday night in Mississippi. (...)
"We're in a serious economic crisis," Mr. Bush told reporters as the meeting began shortly before 4 p.m. in the Cabinet Room, adding, "My hope is we can reach an agreement very shortly."
But once the doors closed, the smooth-talking House Republican leader, John A. Boehner of Ohio, surprised many in the room by declaring that his caucus could not support the plan to allow the government to buy distressed mortgage assets from ailing financial companies.
Mr. Boehner pressed an alternative that involved a smaller role for the government, and Mr. McCain, whose support of the deal is critical if fellow Republicans are to sign on, declined to take a stand.
The talks broke up in angry recriminations, according to accounts provided by a participant and others who were briefed on the session, and were followed by dueling press conferences and interviews rife with partisan finger-pointing.
In the Roosevelt Room after the session, the Treasury secretary, Henry M. Paulson Jr. literally bent down on one knee as he pleaded with Nancy Pelosi, the House Speaker, not to "blow it up" by withdrawing her party's support for the package over what Ms. Pelosi derided as a Republican betrayal.
"I didn't know you were Catholic," Ms. Pelosi said, a wry reference to Mr. Paulson's kneeling, according to someone who observed the exchange. She went on: 'It's not me blowing this up, it's the Republicans."
Mr. Paulson sighed. "I know. I know."" David Kurtz notes that McCain had spoken to the House Republicans before they staged their revolt, and that a number of them reported that he seemed sympathetic to their ideas. McCain's campaign, however, issued a statement saying that he "did not attack any proposal, or endorse any plan." That's what I call real leadership: parachute in after other people have been in complicated negotiations for days, trailing the entire national press corps behind you, on the grounds that you are urgently needed, in person -- and then undermine the deal behind the scenes without being willing to publicly take any position at all. John Cole writes: "If this is not a big enough crisis that McCain and the GOP can play games with it, it is not a crisis at all." Why he thinks the Republicans would not be willing to play political games if it were a real crisis, I have no idea. I think a lot of them are more than capable of bringing the country down around them to score political points. Until this year, I did not count John McCain among them: the Republicans without a shred of honor or decency, unwilling to put their own interests aside when their country required it. link
Krugman:
How did we get to this point? It’s the culmination of many past betrayals.
First of all, we have the Republican Study Committee blowing things up with a complete nonsense proposal — solving the crisis with a holiday on capital gains taxes. How is that possible? Well, if a party runs on economic nonsense for 25 years, eventually many of its foot soldiers will be people who actually believe the nonsense.
More specifically, though, the failure to get a deal reflects the betrayals of the Bush years. Democrats weren’t going to trust Henry Paulson, because behind him they see the ghost of Colin Powell (and Paulson’s “all your bailout are belong to me” proposal, aside from being bad economics, showed an incredible tone-deafness.)
And after the way the Bushies and their allies double-crossed the Democrats again and again in the aftermath of 9/11 — demand national unity, then accuse you of being soft on terrorists anyway — there’s no way Pelosi and Reed will do the responsible but unpopular thing unless the Republicans agree to share ownership.
So what we now have is non-functional government in the face of a major crisis, because Congress includes a quorum of crazies and nobody trusts the White House an inch.
As a friend said last night, we’ve become a banana republic with nukes.
Jamie Galbraith says we don’t need this bailout. Instead, he proposes: With banks, runs occur only when depositors panic, because they fear the loan book is bad. Deposit insurance takes care of that. So why not eliminate the pointless $100,000 cap on federal deposit insurance and go take inventory? If a bank is solvent, money market funds would flow in, eliminating the need to insure those separately. If it isn’t, the FDIC has the bridge bank facility to take care of that. Next, put half a trillion dollars into the Federal Deposit Insurance Corp. fund — a cosmetic gesture — and as much money into that agency and the FBI as is needed for examiners, auditors and investigators. Keep $200 billion or more in reserve, so the Treasury can recapitalize banks by buying preferred shares if necessary — as Warren Buffett did this week with Goldman Sachs. Review the situation in three months, when Congress comes back. Hedge funds should be left on their own. You can’t save everyone, and those investors aren’t poor.
(emphasis added)
It looks like John McCain and the House GOP decided to swoop in at the least minute and scuttle a kinda sorta okay bailout package in favor of a counterproposal of tax cuts for rich people and corporations. Read your Krugman. If conservatives won’t play ball, I think the smart move for progressives on the Hill is to come back to Bush and Paulson with a much less palatable plan — huge stimulus, big tax hikes on super-high earners, mortgage cramdowns, etc. Let Bush either cave 100 percent to a Nancy Pelosi dream deal or else let Bush bring McCain and John Boehner to the table. There’s no reason for progressives to be making concessions to the Bush administration and the financial industry if they can’t even get their lackeys to back their own plan.
(emphasis added)
|
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
