2008 - %3, October

Selling the Bailout

| Wed Oct. 1, 2008 1:26 PM EDT

SELLING THE BAILOUT....One of the ongoing mysteries of the bailout plan is why the Bush administration did such a lousy job of selling it. As Ezra Klein points out, if this were the first term crew, the plan would have been rolled out with some kind of snazzy, disingenuous name (how about the Financial Reconstruction and Emergency Employment Act, or FREE?) and accompanied by a blizzard of fact sheets that completely misrepresented what the Act would cost and what it would do. Opponents would have been demagogued, talk radio would have been harnessed, and Bush would have been giving speeches and press conferences daily. So what happened?

Well, who knows? But I'll take a few guesses:

  • This is no longer the White House of Karl Rove, Andy Card, and Dan Bartlett, and it shows.

  • Bush's heart was never in this. He didn't want to sponsor a bailout and only signed on under extreme duress when Paulson and Bernanke convinced him we were facing a genuine emergency. (This is ironic, of course, since some of the opposition to the bill has compared the administration's "fearmongering" of the financial crisis to the runup of the Iraq war. This is 180 degrees backward. Bush has spent the last year desperately trying to ignore the financial crisis, not selling the country on a solution. If anything, distrust of Bush ought to convince you that maybe this bill is necessary after all.)

  • The main impetus behind the bailout bill was Henry Paulson and Ben Bernanke, who may be conservative but who aren't hacks. A typical Bushian razzle-dazzle sales campaign just isn't their style.

  • The events of the week of September 19th were so catastrophic that Paulson honestly didn't think there would be any serious opposition to the bill. He figured it was like the Pearl Harbor Resolution: just draft up something short and simple, hand it over to Congress, and it would be approved 434-1 the next day. He and Bernanke simply had no idea that it would get the reception it did.

  • On a political note, Democrats are now in charge of Congress, which means the bailout bill had to pass through the Democratic leadership. The Bushies just aren't used to that and didn't really know what to do. So they flailed.

  • Bush and his staff still have no clue about just how low their political capital has fallen. They simply didn't realize that even their own party would laugh in their faces even when faced with a genuine emergency. (On the other hand, I'll bet they know now. This has been a very rude wakeup call for them.)

One way or another, this has been a monumental cockup. For more, check out David Colker and Tom Hamburger's piece in the LA Times today. Nickel summary: they just totally screwed the pooch on this.

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Debate Preview

| Wed Oct. 1, 2008 12:54 PM EDT

DEBATE PREVIEW....The LA Times heads to Alaska to find out how Sarah Palin is likely to do in tomorrow's debate:

As she began her run for governor of Alaska, Palin repeatedly proved difficult to prep for a debate, recalled her two former political aides, who had pivotal roles during her campaign but declined to be identified because of their continuing involvement in Alaska politics.

Palin, the former aides said, had a sharply limited attention span for absorbing the facts and policy angles required for all-topics debate preparation. Staffers were rarely able to get her to sit for more than half an hour of background work at a time before her concentration waned, hindered by cellphone calls and family affairs. "We were always fighting for her attention," said one of the aides.

But — you knew there was a but coming, didn't you? — apparently she's a fast learner:

By the final key televised debate in late October, Palin had grown used to the format, her aides and rivals recalled. Still using index cards, she was breezily confident in her back-and-forth with Halcro and former Alaska Gov. Tony Knowles.

....Larry Persily, a panelist questioner in the campaign's final televised debate, said Palin flummoxed her rivals "like Muhammad Ali dancing around the ring." She avoided statements and tough questions that could have impaled her and repeatedly stung her opponents. And Palin, a former sportscaster, was easily the most comfortable in front of the camera. "She knows television," said Persily, who participated in other debates and has watched Palin closely for years. "She knows how to look at her interviewer."

The good news for Joe Biden, then is (a) she doesn't prep very well, and (b) she doesn't get a series of debates this time, just the one. So if she stumbles out of the gate there's no time for her to improve. The bad news is that she might just wow everyone with her index cards anyway.

Bottom line: Tomorrow we'll either see Dr. Jekyll or Mrs. Hyde. Should be an edge-of-your-seat performance either way.

The Upside of Sarah Palin's Invisibility in the Press

| Wed Oct. 1, 2008 12:47 PM EDT

One good thing about the McCain campaign's refusal to grant press access to Sarah Palin? No one takes it seriously when staffers play the why-doesn't-the-press-report-the-good-news card. For example, a couple days ago, this appeared in the Wall Street Journal:

From her campaign's perspective, Gov. Palin isn't getting media attention for her contributions. For example, with foreign leaders last week, she had detailed conversations about the national-security and global implications of the energy crisis, one adviser said.

This got no pick-up whatsoever. Why? Probably because the campaign didn't allow reporters to observe those meetings for longer than 29 seconds.

(Via TNR)

Iraq's Sunni Militias Placed Under Control of Baghdad's Shiite-Led Government

| Wed Oct. 1, 2008 12:35 PM EDT

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According to a Pentagon report delivered to members of Congress yesterday, violence in Iraq is down 77 percent from this time last year. The reasons are varied and complex. There's the much-lauded "surge," of course. There's Moqtada al-Sadr's decision to call a ceasefire. There's the natural combat fatigue that follows years of intense violence. And, perhaps most importantly, there's the decision by local Sunni tribesman to stop killing Americans and start killing Islamic extremists. Thanks to their change of heart (however temporary and politically calculated it may be) violence in Anbar has waned and for the first time in years its villages are secure and its roads passable.

All of this is great news. But forgive me for expressing some trepidation at this morning's reports that the U.S. military, as part of its plan to disengage from Iraq, has agreed to transfer control of the Sunni militias to the Shiite-dominated government of Nouri al-Malaki. Until now, Sunni tribesmen have received stipends... a little extra encouragement, if you will... from the U.S. government. But beginning October 31, the 54,000 Sunni militiamen in the Baghdad area will be on Baghdad's payroll to the tune of $15 million a month.

Former CIA Director Porter Goss's Dusty Foggo Problem

| Wed Oct. 1, 2008 12:01 PM EDT

On Monday, the CIA's former number three official, a former logistics officer named Dusty Foggo, pled guilty in a Virginia courtroom to one count of federal wire fraud. I reported on the case at Mother Jones overnight, and how relieved CIA executives must have been to see the case go away with a quiet plea agreement, since Foggo was threatening to spill every Agency operational program and the identity of every CIA asset he knew about, which was a lot. But a little history on this story is in order.

Back in 2005, thanks in large part to the extraordinary investigative journalism work of a team of reporters at the San Diego Union-Tribune/Copley News Service (Marcus Stern, Dean Calbreath, Jerry Kammer and George Condon Jr.), Congressman Randy "Duke" Cunningham (R-CA), agreed to plead guilty to corruption charges. Among his co-conspirators, two defense contractors, Brent Wilkes, and Mitchell Wade, who had plied Cunningham with antiques, meals, travel, hookers, and bought his old home at a profit, in exchange for more than a few hundred million dollars worth of federal earmarks to their companies.

Around the time of Cunningham's agreement to plead guilty to federal authorities back in November 2005, I began hearing from intelligence sources that there was an as yet unreported and unexplored CIA connection to the case. Namely, that Brent Wilkes' best friend was the number three guy at the CIA, Dusty Foggo, and he had also been throwing CIA contracts at his friend Wilkes. So, beginning in November 2005, I first broke several CIA-related aspects of the wider Cunningham case: the name of the Wilkes' front company to get the secret CIA contracts, Archer Logistics, discussions about a covert CIA plane network contract between Foggo and Wilkes, Foggo's connection to Wilkes and the CIA water contract, a magazine piece that raised potential counterintelligence questions about the case. Other journalists -- Calbreath, Jason Vest, Ken Silverstein, Mark Hosenball among others -- were also reporting on aspects of Foggo's long relationship with Wilkes dating back to their days in Chula Vista, CA and running through Central America during the 1980s until more recent reports of a high-tech gadget-filled "playpen" Wilkes set aside for Dusty, along with the prospect of a job, in his ADCS corporate offices outside of San Diego.

Thinking back, I had some rather unpleasant conversations with a CIA spokesman at the time who screamed that I was wrong, that he had marched to Foggo's office and Foggo totally denied what I was saying, and they couldn't find any Wilkes' company that had gotten a CIA contract, etc. And then, after I informed them that one firm, Archer Logistics, was a Wilkes' front company, nominally headed by Wilkes' nephew Joel Combs, the CIA public affairs official stopped yelling. It must have registered as a hit on some database of CIA contractors or something. After that, the conversation returned to polite ordinary civil discourse and the spokesman saying that as a rule the CIA doesn't ordinarily comment on who does or does not get CIA contracts. But the tone was utterly different. And as the evidence accumulated, the CIA was starting to realize that it had a Dusty Foggo problem. (The later 28-count indictment <.pdf> of Foggo revealed just how big a Dusty Foggo problem the CIA had on its hands).

Palin: This Election Is About Change Versus More of the Same

| Wed Oct. 1, 2008 11:44 AM EDT

In what has to be seen as a testament to his foresight, Barack Obama has framed his campaign perfectly from the beginning of this election season. He has forced every one he's faced (Clinton, McCain, now Palin) to try and make the case for their candidacies using his verbiage. And that's a losing proposition.

The latest example comes from the now-infamous Palin-Couric interview (which CBS has somehow turned into two weeks worth of news):

COURIC: I know you're heading to Sedona to work on your debate. What is your coach advising you?
Gov. PALIN: I don't have a debate coach.
COURIC: Well, what are your coaches?
Gov. PALIN: I have quite a few people who are giving us information about the record of Obama and Biden, and at the end of the day, though, it is -- it's so clear, again, what those choices are. Either new ideas, new energy and reform of Washington, DC, or more of the same.

That talking point is... shall we say, an underdog.

Katie Couric, by the way? MVP of the last two weeks.

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New Voters to Push Obama Over the Top?

| Wed Oct. 1, 2008 11:38 AM EDT

Something to chew on from MSNBC's First Read:

According to [a new NBC/WSJ/MySpace poll], new and lapsed voters (those who didn't vote in 2004) back Obama over McCain by a 2-to-1 margin, 61%-30%. If you take the Bush (62 million) and Kerry (59 million) vote totals from 2004, assume turnout increases by 20 million additional voters (about what it did in 2004), and assume Obama wins these additional voters 2-to-1, then Obama would best McCain nationally by more than three million voters, 72.4 million to 68.7 million. But if turnout increases by just 10 million, then the numbers become Obama 65.7 million, McCain 65.3 million -- a virtual tie. "An Obama victory could very well depend on getting these folks to the polls," says NBC/WSJ co-pollster Neil Newhouse (R).

Update: Another quirk from new polls, which all show Obama trending up: Obama is opening up a huge lead among women.

The Next Step on the Bailout

| Wed Oct. 1, 2008 1:40 AM EDT

THE NEXT STEP ON THE BAILOUT....It looks like the Senate will be taking up the bailout bill on Wednesday. How can they do this when revenue bills are required to originate from the House? Easy!

Apparently Harry Reid found some ancient mental health bill that the Senate had never acted on, dusted it off, and grafted the bailout legislation on top of it. Then he tossed in an increase in FDIC insurance limits to $250,000 (a bipartisan winner), loaded up a bunch of tax cuts that had already been approved by the Senate but hadn't yet passed in the House, and voilà. Instant bailout bill.

So will it pass? Maybe so. After Wall Street's reaction to the failure of Monday's bill, public sentiment seems to be shifting:

On the morning after the sell-off, Congressional offices reported a shift in angry calls from constituents, with some demanding that lawmakers take some corrective action — a distinct change from the outpouring of public opposition that contributed to the defeat of the plan.

"I started hearing from a lot of people who lost money on their investments thanks to the big drop on Wall Street yesterday," said Representative Steven C. LaTourette, Republican of Ohio, who voted against the plan.

This is not entirely unexpected. The original opposition, after all, probably didn't reflect widespread sentiment so much as it did a narrow slice of highly motivated talk radio and Lou Dobbs fans. Nor is it unjustified. It's true that the stock market isn't a good proxy for the economy as a whole, but a plunging market does have an effect on the real economy. First, since corporations finance their operations partly through share offerings, dropping stock prices make it harder for companies to raise money. Second, although lots of rich people own stock, two-thirds of all stock is held in mutual funds and pension funds, which means a stock market plunge hurts a lot of very ordinary people too. Third, even though the market may not be a great proxy for the entire economy, it's a pretty good proxy for the panic level among bankers.

And the current panic is hardly unwarranted. Our real problem is in the credit markets, and the credit markets are blinking fire engine red right now. Overnight bank lending rates have skyrocketed. Municipal bond markets have cratered. The two biggest providers of short-term credit to restaurant franchises, GE Capital and Bank of America, have exited the market. Rates on overnight commercial paper are up two points. This stuff doesn't hit you or me in the pocketbook immediately, but it does eventually as spending drops, companies can't get financing, and jobs get cut. You wouldn't ignore a speeding truck just because it was still a few hundred yards away, and you shouldn't ignore this either.

So sure: we should all hope that after the election we can pass legislation that attacks the roots of the financial crisis. This includes financial market regulatory reforms, macroeconomic stimulus, and broad relief measures. Maybe it even includes a better bailout program if this one isn't enough. But right now, we have what we have, and complaining about it is like refusing to turn a fire hose on a burning building because you're afraid the water is flouridated. It's time to pass the bill.

Acid Oceans Also Noisier

| Wed Oct. 1, 2008 12:25 AM EDT

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Increasing atmospheric CO2 increases the acidity of seawater, which allows sounds, like whale calls, to travel farther. Image: (c) 2008 MBARI (Base image courtesy of David Fierstein)

The acidification of seawater due to absorption of atmospheric CO2 is also enabling sound waves to travel farther. That's bad news for marine life, including whales and dolphins, who rely on sound for hunting and communication and who are already stressed by noisy ship traffic and military sonar.

A team from the Monterey Bay Aquarium Research Institute predicts that underwater sounds will travel up to 70 percent farther in some areas in 2050 than they do today. Whales could be heavily impacted. Military sonar already disrupt whale behavior more than 300 miles away. Dolphins and fish that use sound to locate prey, to avoid predators, and to defend their territories, will also be affected.