Corn has broken stories on presidents, politicians, and other Washington players. He's written for numerous publications and is a talk show regular. His best-selling books include Hubris: The Inside Story of Spin, Scandal, and the Selling of the Iraq War.
Kevin urges readers to call members of Congress and tell them to vote for the $700 billion bailout bill. In an earlier posting, he explained why he favors the plan. But before readers pick up the phone, they might want to read what Mother Jones contributor Nomi Prims says about the bailout. Or what Mother Jones contributor James Galbraith has to say. Or what economist Dean Baker has to say.
Almost every economist I know rejects the Paulson approach and argues instead for directly injecting capital into the banks. The taxpayers give them the money and then we own some, or all, of the bank. (That's what Warren Buffet did with Goldman Sachs.)
This isn't about begging for a sliver of equity as a concession for a $700 billion bailout, this is about constructing a bank rescue the way that business people would do it. We have an interest in a well-operating financial system. There is zero public interest in giving away taxpayer dollars to the Wall Street banks and their executives.
If Secretary Paulson constructed a package that was centered around buying direct equity stakes in the banks, he could quickly garner large majority support in both houses. Better yet, Congress could just construct its own package centered on buying equity stakes and send it to President Bush. If he balks, we can just threaten him with stories about the Great Depression.
It took only a few minutes for the blame game to begin. Moments after the House failed to pass the $700 billion bailout plan, the Republican leaders--who could not produce the expected number of Republican votes for the legislation--came before the cameras with an explanation for the bill's collapse: a speech Nancy Pelosi gave.
House minority leader John Boehner (R-Ohio) told reporters that prior to the 228-to-205 vote everything was hunky-dory. Then the House Speaker delivered a "partisan speech" before the floor vote began. This, Boehner said, "poisoned our conference and caused a number of members we thought we could get to go south." Representative Eric Cantor, a member of the Republican leadership, held up a transcript of Pelosi's speech and decried her "failure to lead."
What did Pelosi say that was so heinous? Here are some portions from the text that was issued by her office:
John McCain put the choice rather directly during a campaign rally on Monday afternoon when he declared, "Country first or Obama first." In other words, there is only one way a true patriot can vote--and Obama does not love his country as much as McCain does. Anyone care to argue that such an argument is not a scoundrel's refuge?
No memorable exchanges. No historic zingers. No gotchas. The much-anticipated first face-off between Barack Obama and John McCain resolved little. Neither candidate strayed from their usual briefing books. The talking points were recycled. McCain blasted Obama for being a rookie in the ways of national security. Obama questioned McCain's judgment, notably his initial support for the Iraq war.
They both played it safe. Especially when it came to the hot topic of the night: the $700 billion bailout plan for Wall Street. It was no surprise that moderator Jim Lehrer would lead off with the issue, even though the focus of this debate was supposed to be foreign policy. And in his first question, Lehrer asked each candidate to state where he stands on the "financial recovery plan." Neither would get specific. Obama cited the need to move "swiftly" and "wisely." He called for effective oversight of the plan, taxpayer protections, and guarantees the money spent would not reach the pockets of CEOs. He pointed to the current meltdown as evidence of the failure of economic policies supported these past eight years by George W. Bush and McCain. It was standard fare.
McCain noted he was heartened by the bipartisan negotiations under way in Washington. He, too, cited the need for accountability. He mentioned the possibility of adding a provision to the package that would allow the federal government to offer loans to troubled institutions rather than buy their bad paper. Neither one, though, fully endorsed the plan--or raised any objections. Asked if he would vote for it, McCain said, "I hope so." It was a strong signal he would not be mounting any from-the-right populist crusade against the proposal.
But each candidate exploited the bailout queries. Obama tried to tie McCain to Bushonomics. McCain hailed his own efforts to curtail pork-barrel spending on Capitol Hill. Obama slapped him for focusing on $18 billion in earmarks while supporting $300 billion in tax breaks for corporations and wealthy individuals. McCain accused Obama of being a tax-hiker. Obama countered--correctly--that his tax plan provides far more relief for taxpayers making less than $250,000 a year than does McCain's proposal.
It was as if they were eager to talk about any economic issue other than the details of a gargantuan bailout that may or may not work and that may or may not be popular come Election Day.
As Capitol Hill negotiations on the Wall Street bailout proceeded on Friday afternoon, Representative Brad Sherman, a Democrat who has questioned the under-construction plan, sent out this brief message to his fellow House Democrats:
Skeptical about the Administration's $700 Billion Bailout Plan?
Dear Democratic Colleague:
Please come to a meeting of the Skeptics Caucus to discuss President Bush's $700 billion bailout bill. One staffer may attend with you.
The main story today about the bailout is that House Republicans are raising objections to the proposal and blocking a deal. But there are House Democrats worried that the deal-which would let the federal government buy up $700 billion of bad paper from Big Finance firms-- is moving too fast and is too problematic. How many? Let's see who shows.