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September 26, 2008

The First Obama-McCain Debate: Not as Telling as Real Life

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.

On foreign policy, the candidates dished out the expected lines. McCain touted the surge in Iraq and slammed Obama for having ever doubted the wisdom of the wonderful General David Petraeus. Asked for the lesson of Iraq, McCain said, rather inelegantly, "You cannot have a failed strategy that will then cause you to nearly lose a conflict." Obama assailed McCain for supporting Bush's grand distraction and having failed to recognize that the job in Afghanistan ought to have been finished first. He connected the ongoing Iraq war bill--$10 billion a month--to the nation's current economic woes.

On Iran, McCain derided Obama for wanting to hold talks with President Ahmadinejad (whose name he mispronounced a few times before getting it right), claiming such a move would practically send a signal that the United States approves of a second Holocaust. Obama defended his policy of engagement, noting that there were other Iranians to speak to besides Ahmadinejad and that the Bush administration has recently broadened its diplomatic approach when it comes to the ol' Axis of Evil. McCain claimed Obama had been indecisive at first in reacting to the conflict in Georgia. Obama echoed McCain's tough stance against Russia, but cautioned that the United States could not revive a Cold War approach because it still has to deal with Russia on the pressing matter of loose nukes.

In talking policy, both men came across as knowledgeable. McCain truly perked up when he got the chance to discuss the strategic importance (as he sees it) of the Caucasus region. Obama demonstrated confidence in his ability to challenge McCain on the strategic importance of the Iraq war. But, indubitably, many viewers of the debate would score these exchanges in accordance with their preexisting opinions of the two candidates. As for those knotty undecideds, there was no specific assertion that an analyst could point to and say, "This is going to stir them."

Once the debate ended, the television commentators immediately tried to assess the impression each conveyed. McCain did come across as somewhat condescending. He barely looked at Obama and almost seemed annoyed to have to be talking foreign policy with that other guy. He tried to put Obama down by charging that Obama did not know the difference between a tactic and a strategy. He slapped him for not supporting funding for the troops. (Obama voted against an Iraq war funding bill that did not have a timetable for withdrawal--just as McCain voted against a funding bill that did.) And McCain sent one straight shot at Obama, saying, "I don't believe that Senator Obama has the knowledge or the experience" to be commander in chief.

That was no knockout punch. And Obama kept his now-famous cool. He did not swing too hard at McCain. Several times during the debate, Obama said that McCain was "absolutely right" about the point under discussion. Obama did question McCain's temperament, noting that McCain had threatened extinction for North Korea and had once jokingly sung a song about bombing Iran. But McCain, in response, pointed to his opposition to Ronald Reagan's deployment of Marines in Lebanon as proof he can be trusted to make prudent decisions about war. (That is, he's no warmonger.) McCain noted he wears a bracelet honoring a U.S. soldier killed in Iraq as a reminder of his pledge to that soldier's mother to do all he can to insure her son's death was not for naught. Obama replied that he, too, wears a bracelet--given to him by the mother of another fallen soldier who asked him to make sure no other parent loses a son in vain. He was calm; McCain was pugnacious. How that plays is hard to assess. It's truly a matter of taste.

There was much buildup for this debate. For weeks, members of the politerati looked forward to it as a defining moment in the campaign. The big question: would Obama be able to display commander-in-chief cred? Then McCain's shenanigans--pulling out, jumping back in--added to the drama. The big question: would he be prepared? And would Obama be able to take advantage of the last-minute shift to economic matters? But the debate ended up a straightforward affair, with no twists, no turns. Commentators could score it any way they wanted. Obama held his own on national security affairs, so give him the nod. McCain did the same on economic matters, so maybe he won over the 27 American voters who have yet to decide. You can look at it this way: given that Obama has been ahead in the recent polls, McCain lost by failing to beat him to a bloody pulp. Or this way: McCain survived what many analysts considered to be a bad week for him.

In any event, it's on to the next main attraction: the Biden-Palin duel on Thursday. Then there will be two more Obama-McCain debates. But who knows what other crises will hit between now and November 4 that will force the candidates to react to the real world? In fact, this past week demonstrates that the candidates' responses to events beyond their control may be more important in determining the outcome of this election than the debates. Fancy that: reality trumping political theater. It happened this past week. And in the next six weeks, it could do so again.

Photo by flickr user Barack Obama used under a Creative Commons license.

Five Alternative Bailout Plans

The Bush administration is pushing its bailout plan by claiming the only way to save the economy is by having the federal government buy $700 billion worth of bad paper from big financial firms that screwed up. Conservatives should hate this because it is a massive federal intervention in the market. Liberals should hate this because it’s a handout to the richest people and companies in America. But the Bush administration and Wall Street are insisting it's the end of the world and this is the only choice. Well, is it this or nothing? Many on Capitol Hill—especially Democrats—are buying the general premise of the White House plan but insisting on lipstick-on-a-pig modifications involving CEO compensation, taxpayer protection, and oversight and transparency. But are there other approaches to the problem besides putting the Treasury in charge of a $700 billion fire sale? Yup. Here's a quick roundup.

(1) The Planners: The Republican Study Committee, a group of some of the most conservative Republicans in Congress. The Plan: Two-year suspension of the capital gains and dividend taxes to "encourag[e] corporations to sell unwanted assets." The Problem: It won't work. Over at Time, Justin Fox says the RSC plan "seems to be a joke," and explains that it would just make matters worse by actually discouraging banks from unloading bad mortgage-backed securities.

(2) The Planners: Eric Cantor (R-Va.) and some House Republicans. The Plan: Instead of having the Treasury buy mortgage-backed securities outright, insure them and charge premiums, paid to the government. The Problem: It almost certainly won't work. Marc Ambinder has a great explanation of why, but a commenter at Time sums most of it up in a sentence: "Writing insurance requires either a long history of past events or, at a minimum, knowledge of present market prices." There is neither a long history of past events nor a knowledge of present market prices in this case. In fact, as Ambinder points out, there's not even a market for the products that would be insured. That's the fundamental problem, and insuring them wouldn't fix it.

(3) The Planner: Our own James K. Galbraith, an economist. The Plan: Prop up the FDIC. Eliminate the "pointless" $100,000 cap on deposit insurance, put a half-trillion dollars in the FDIC fund, give it extra funding for more employees, and keep another $200 billion in reserve. (There's more in Jamie's article, but the FDIC part is the heart of the plan.) The Problem: It may good policy, but so far, there are few takers in Washington. And there's no major political constituency advocating for it in the way that Wall Street is calling for a buy-me-out bailout.

(4) The Planner: Senator Bernie Sanders (I-Ver.). The Plan: Make the rich pay for the bailout. Impose a temporary surtax on incomes over $1 million. Pass an economic recovery package that puts people back to work. Then re-regulate and break up any companies that are "too big to fail." The Problem: See #3.

(5) The Planner: Hedge Fund Gazillionaire John Paulson. The Plan: Buy Wall Street. No, seriously: Paulson thinks taxpayers (or, more specifically, the Treasury) should buy huge amounts of senior preferred stock in banks. Kevin has more on this, which he points out essentially means nationalizing troubled banks. The Problem: This plan essentially means nationalizing troubled banks. Conservatives will be queasy about it; even Kevin Drum, a liberal, is queasy about it.

Have you come across any other alternative plans? Do you have any suggestions of your own? Leave them in the comments.

Lehman Brothers Records Discarded?

Rep. Henry Waxman (D-Calif.) just sent a letter to Lehman Brothers CEO Richard Fuld, who's scheduled to testify before the House Oversight Committee on October 6, to follow up on a previous document request. Among other things, the committee had sought e-mails and other documents that had been sent or received by Fuld over the past six months. According to Waxman, Lehman blew [PDF] Thursday's deadline to produce the records. And Fuld's counsel has apparently told the committee that he doesn't expect to have much to turn over.

In conversations with Committee staff, your counsel stated that he and his team are working on collecting your e-mails from this time period, but they expect to produce relatively few to the Committee because you were an infrequent user of e-mail.

Your counsel and his team have also informed Committee staff that they do not currently plan to produce any documents sent, received, or reviewed by you during the past six months that are nonelectronic, such as internal memoranda from company officials, assessments of the company’s potential liabilities, or warnings of the company’s impending collapse. According to your counsel, although these documents did exist at one time, they were typically “discarded.”

Discarded? Sarbanes-Oxley, signed into law after the Enron debacle, forced publicly traded companies—such as Lehman Brothers, before it was delisted by the New York Stock Exchange—to comply with heightened record-retention procedures. And it imposes strict criminal penalties on anyone who tampers with company records:

Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States or any case filed under title 11, or in relation to or contemplation of any such matter or case, shall be fined under this title, imprisoned not more than 20 years, or both.

It's unclear whether the documents in question are covered under Sarbanes, but, just the same, "discarded" doesn't seem like it's going to fly, particularly since congressional scrutiny is the least of Lehman's problems. The failed investment bank is currently under investigation by the FBI, as well as the subject of multiple lawsuits, including a class action that was filed earlier this week.

And Waxman is growing testy with Lehman's lack of cooperation, too.

It is difficult to understand how Lehman Brothers is unable to produce a single internal document that went to or from the CEO’s office over the past six months. It is also difficult to understand why there is no log, file, or other record documenting where these internal documents went.

For these reasons, I request that you inform the Committee by the close of business today whether you will agree to expand your search of documents to include company officials and employees outside the office of the CEO. If we do not receive such a commitment, the Committee will begin the process of seeking these documents by compulsory means.

Have a nice weekend, Mr. Fuld.

Ad Addressing McCain Health Issues Banned by CNN, MSNBC

The ad below was created by Brave New PAC and Democracy for America. CNN refused to run it and MSNBC is pulling it off air after one day, claiming it has received viewer complaints. Bill O'Reilly was slamming NBC for running it, which may have added motivation. What say you? Outside the bounds?

Mission Creep Dispatch: John Feffer

As part of our special investigation "Mission Creep: US Military Presence Worldwide," we asked a host of military thinkers to contribute their two cents on topics relating to global Pentagon strategy. (You can access the archive here.)

The following dispatch comes from John Feffer, codirector of Foreign Policy In Focus at the Institute for Policy Studies in Washington, DC.

Surrounding China's String of Pearls

In 1919, the English geographer Halford Mackinder argued that control of the "Eurasian heartland" was the key to world domination. Mackinder believed that Eastern Europe was the gateway to controlling this huge landmass stretching from his home country to the far shores of Asia. And indeed, Eastern Europe proved pivotal in the next conflagration, World War II, as well as in the US policy of containing the Soviet Union in the Cold War era.

This Heartland strategy remains central to US plans, as NATO's expansion into Eastern Europe to the very borders of Russia demonstrates. But in Asia, a different theorist of geopolitics applies. US political scientist Nicholas Spykman focused not on Eastern Europe but what he called the "rimland," namely the coastal regions that lie between the land powers and the naval powers.

The map of US military presence reveals this rimland strategy of the United States. There are large concentrations of American troops in South Korea and Japan. The United States maintains basing agreements with the Philippines and Thailand. And in the last decade, closer ties have been secured with Australia, Bangladesh, India, and Pakistan.

Connect the dots, and the rimland strategy emerges: containment of China not by stationing bases directly on its borders but by controlling the in-between regions along its coast, and the areas that block its access to the coast. Except for Taiwan, where the US objective is to deter Beijing from invading. Washington has focused on controlling waterways (to safeguard Middle East energy flows to Asian allies), establishing nodal points in a missile defense system, and protecting US trade interests.

China has its own plan for controlling these pivotal coastal areas. Dubbed the "string of pearls," this strategy involves building or upgrading its military and commercial facilities along the Asian littoral from its own Hainan Island to a shipping facility in Bangladesh to a new naval base in Gwadar, Pakistan. Importantly, though, this strategy is largely economic. China has wooed and won its neighbors in Asia through a mixture of trade and aid, not by building up strong bilateral military alliances.

China is no Soviet Union. It is a major American trade partner and it holds a sizable portion of US debt. Washington and Beijing cooperate on counterterrorism and on reining in North Korea's nuclear ambitions. So containment of China is not going to look like the old-style containment of the Soviet Union, which depended on hard-power confrontation. In the post-Cold War era, US basing strategy in Asia has shifted accordingly: away from fixed sites toward a rapid-response capability.

The US relationship with China is ambiguous, a mixture of containment and engagement. The containment policy is equally ambiguous, with US forces capable of responding to a variety of threats, only one of which might come from the direction of China.

More Dispatches

Robert Kaplan
Katherine McCaffrey
Winslow Wheeler
Steven Metz
C. Douglas Lummis
Douglas Macgregor
John Nagl
William Hartung
John Lindsay-Poland
Catherine Lutz
Peter Beck
Nick Turse
John Pike
Mark Selden

Posted by Mother Jones on 09/26/08 at 11:15 AM | | Comments (0) | E-mail | Print | Digg | Del.icio.us | Reddit | Yahoo MyWeb | StumbleUpon | Newsvine | Netscape | Google |

As Wall Street Bailout Talks Continue, House Democrats Form a Skeptics Caucus

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.

Posted by David Corn on 09/26/08 at 10:49 AM | | Comments (14) | E-mail | Print | Digg | Del.icio.us | Reddit | Yahoo MyWeb | StumbleUpon | Newsvine | Netscape | Google |

Debate Prediction: Nothing Major Will Happen. Nothing Ever Does

So the debate is on. What's going to happen?

Well, if you believe the McCain campaign, their man has it in the bag. The ad at right is already running on the web. It was spotted by Chris Cillizza.

For my part, I actually don't think candidates ever really win or lose these things. Following the debate there will be approximately one zillion mouth-hours spent by TV pundits and campaign surrogates talking about how candidate A delivered a commanding performance or how candidate B convinced America that he is presidential enough for the job, but historically the best a candidate can expect to get coming out of a debate is a 2.25 point bounce. When Bush lost 2.26 points coming out of the first 2004 debate with Kerry, it was the largest single-debate swing since 1988.

The best a candidate has ever done over the course of an entire debate season (there are, as you almost certainly know, two or three debates every campaign), is a 3.5 point bounce, which Bush got in 2000 after his three debates with Gore. The average swing after a debate season, dating back to 1988, is a paltry two points. And there's nothing to say that that two point bounce isn't wiped out by the events of the campaign's homestretch.

Analysis of the debate is of course welcome. But when the talking heads reach into their bag of sports analogies and tell you that one of the candidates "landed a knockout punch" or "hit a home run," don't believe them. It's a safe bet that both candidates did well enough to reassure their supporters but not well enough to swing an appreciable number of undecideds. Journalists would spend their time better by fact-checking the candidates, searching for hypocrisies or panders, and examining the candidate's answers for reflections of character, readiness, and future policy decisions.

(Much love to fivethirtyeight.com for help with the numbers.)

Update: Really good video on the history of presidential and vice-presidential debates over at PBS.

Posted by Jonathan Stein on 09/26/08 at 10:37 AM | | Comments (1) | E-mail | Print | Digg | Del.icio.us | Reddit | Yahoo MyWeb | StumbleUpon | Newsvine | Netscape | Google |

GOP Consultant on Bailout Politics and McCain

I asked Republican political consultant Marty Youssefiani what he thinks of the politics of the House GOP ploy to blow up at the last minute the bailout deal worked out between the Republican White House and Congressional leadership. Youssefiani responded:

Well, there should be no surprise that politics is in the mix here, but at the core there are legitimate philosophical diffrences. Don't forget, laissez fair is cooked before our eyes. At the end though we will have a deal otherwise the country will tank, take down the global market and with it directly heighten the prospects of flash conflicts worldwide.

The big issue here is a failure in communication with the public: Main Street simply does not fully grasp what this crisis means and how quickly it will be affected if Wall Street is not bailed out.

As for McCain, it's no secret that economics was not what he learned on the "flight deck," but can he get creative and turn the issue in his favor? My sense is that this mess puts the election away, unless he leads in shaping a creative alternative plan that includes immediate direct aid to Main Street. One way he can get on the offense is to throw some of this funny money to the people (i.e. stimulus checks, one-time retroactive tax credits per household, and government mortgage guarantees, etc.). Can't bail out the fat cats without throwing something to the people! It would be popular, change the narrative and provide evidence his "suspension"/ 24-hour Washington stop was more than bad theater.

I'd [advise McCain to] use the stage at Old Miss tonight to pitch the offense. With 90 million Main Streeters watching, show what it means to shake things up!

In case you hadn't already predicted that McCain will play the populist looking out for the interests of Main Street, now you've been warned.

Posted by Laura Rozen on 09/26/08 at 9:41 AM | | Comments (2) | E-mail | Print | Digg | Del.icio.us | Reddit | Yahoo MyWeb | StumbleUpon | Newsvine | Netscape | Google |

Bringing New Meaning to The Phrase "Golden Parachute"

From the New York Times article on the largest bank collapse in American history:

But the seizure and the deal with JPMorgan came as a shock to Washington Mutual’s board, which was kept completely in the dark: the company’s new chief executive, Alan H. Fishman, was in midair, flying from New York to Seattle at the time the deal was finally brokered, according to people briefed on the situation. Mr. Fishman, who has been on the job for less than three weeks, is eligible for $11.6 million in cash severance and will get to keep his $7.5 million signing bonus, according to an analysis by James F. Reda and Associates.

That's right. The chief executive of WaMu is getting $19.1 million for three weeks of work. Natch. And these are the people taxpayers are supposed to be bailing out?

Posted by Nick Baumann on 09/26/08 at 9:31 AM | | Comments (6) | E-mail | Print | Digg | Del.icio.us | Reddit | Yahoo MyWeb | StumbleUpon | Newsvine | Netscape | Google |

Somali Pirates Capture Shipment of Russian Tanks

In the market for a T-72 battle tank? Well, there are some folks in Somalia who are standing by to take your order. Yesterday, a band of pirates in speedboats, armed with AK-47s and RPGs, attacked a Ukrainian cargo ship passing through the Gulf of Aden. The ship carried a crew of 21, bound for Mombasa, Kenya. It also carried—to the pirates' surprise and delight, one should think—a cargo of 33 Russian battle tanks, large amounts of ammunition, and assorted parts for armored personnel carriers.

The shipment's intended final destination remains unknown (reports indicate Kenya or South Sudan), but it has probably been secreted to Eyl, a town in Somalia's Puntland region, a haven for pirates that has, says the BBC, "a flourishing local industry" based on ransoming stolen ships and cargoes back to their rightful owners.

Somalia has surpassed the Philippines and Indonesia as the world's most active piracy zone. There have been 61 attacks in the Gulf of Aden so far this year, and pirates are now holding 14 ships and more than 300 people for ransom. And not without reason. In Somalia, which has been without a functioning government since 1991, warlords rule the day and the black market is virtually the only market. Ships full of expensive merchant goods are constantly floating past on their way to or from Red Sea ports, and pirates recognize the opportunity. The UN estimates that their take exceeds $100 million a year.

Such large hauls have only grown larger in the last few months. Pirates, emboldened by their success, have raised their ransom prices. Whereas in the past they might have been happy with a few hundred thousand dollars, they now regularly demand in excess of $1 million, this after negotiations that typically last up to three months—costing shipping companies considerably more for days their vessels remain inactive. It's not surprising then that insurance premiums for sending ships through the Gulf of Aden has ballooned from $900 a year ago to $9,000 today.

The international community doesn't seem to know what to do about the problem. France, which has already twice deployed its special forces to combat pirates (even capturing a pirate crew, which it is now preparing to prosecute in a French court), has urged that nations deploy warships to the Gulf of Aden to bring things under control. There have been few takers. Russia, though, appears to have seen the light: it deployed a warship this morning to protect future shipments from attack.

Photo used under a Creative Commons license from cell105.

Posted by Bruce Falconer on 09/26/08 at 8:58 AM | | Comments (0) | E-mail | Print | Digg | Del.icio.us | Reddit | Yahoo MyWeb | StumbleUpon | Newsvine | Netscape | Google |

McCain's Adjustable Debate Standard

"We must meet as Americans, not as Democrats or Republicans, and we must meet until this crisis is resolved," John McCain said on Wednesday, explaining his decision to suspend his campaign and not participate in the first presidential debate. A McCain aide told Reuters, "If the package is reached and the country is saved, there will be a debate. But if there's no deal, how can you get on a plane...for a debate?"

On Friday morning, McCain's campaign released this statement:

He is optimistic that there has been significant progress toward a bipartisan agreement now that there is a framework for all parties to be represented in negotiations, including Representative Blunt as a designated negotiator for House Republicans. The McCain campaign is resuming all activities and the Senator will travel to the debate this afternoon.

Note the adjustment in standards. First, the McCain camp said deal or no debate. Two days later, the position was, negotiations are under way so let's debate. Was this change an act of decisive leadership or a necessary political flip-flop? Maybe Jim Lehrer, the moderator of Friday night's debate, can ask him that.

Posted by David Corn on 09/26/08 at 8:56 AM | | Comments (21) | E-mail | Print | Digg | Del.icio.us | Reddit | Yahoo MyWeb | StumbleUpon | Newsvine | Netscape | Google |

What Should John McCain's Next Campaign Stunt Be?

Barney Frank said of John McCain's campaign (non-)suspension, "It's the longest Hail Mary pass in the history of either football or Marys." Should the suspension and these bailout shenanigans not lift his poll numbers — just like Sarah Palin, the ultimate campaign Hail Mary, ultimately failed to — what stunt does John McCain turn to next? Slate has 10 guesses, a couple I'll reproduce here:

- Returns to Vietnam and jails himself.
- Offers the post of "vice vice president" to Warren Buffett.
- Challenges Obama to suspend campaign so they both can go and personally drill for oil offshore.
- Learns to use computer.

Slate wants to know if you have any good ones to add. And speaking of play-along-at-home Slate features, they recently created a list of Bush Administration executive orders that need to go — they highlighted the worst nine out of Bush's 262 EOs and want to know if you can think of a tenth.

Posted by Jonathan Stein on 09/26/08 at 8:34 AM | | Comments (11) | E-mail | Print | Digg | Del.icio.us | Reddit | Yahoo MyWeb | StumbleUpon | Newsvine | Netscape | Google |

Question re: Debate & Bailout

Question. Now that House Republicans, with the quasi-backing of John McCain, have derailed the bailout's progress, can't Democrats in both chambers intentionally stall a final solution until tomorrow, thereby forcing McCain into a corner with respect to the debate? He would have to decide if he is going to make good on his claim that he won't show if a deal isn't done. Consensus opinion says that Barack Obama on stage by himself tonight for 90 minutes (in primetime!) is a disaster for McCain. Do Democrats have the power to make that happen? Sure looks like it.

Posted by Jonathan Stein on 09/26/08 at 7:12 AM | | Comments (3) | E-mail | Print | Digg | Del.icio.us | Reddit | Yahoo MyWeb | StumbleUpon | Newsvine | Netscape | Google |

Bailout Blowup

More from my Hill friend about what happened last night:

Let's be clear about what happened. I heard David Wessel on NPR talking about typical "Congressional gridlock." That is not it at all. The most conservative faction of Republicans - the faction whose extreme ideology helped get us here and that dominates the party - blew up the deal at the last moment, with the help of their equally irresponsible presidential candidate. I thought House speaker Nancy Pelosi was in for a nasty surprise when she tried to take the plan to a vote with the Democratic caucus. But Democratic opponents had no seat at the table in crafting the plan, and have made their dissatisfaction well known. The conservatives have captured the Republican party and were represented in the negotiations. Yet they waited until the last moment and then blew it up. In the name of a ridiculous sketchy alternative that doubles down on their discredited "ideas." ... The Republican Study Group (Hensarling, Cantor, Ryan, the lot of em) are clowns. They had a seat at the table and they conducted themselves in the most irresponsible manner possible. Let their beloved market give them all the credit that is due them.

More along these lines from John Judis: "Putting Country Last."

Posted by Laura Rozen on 09/26/08 at 5:58 AM | | Comments (9) | E-mail | Print | Digg | Del.icio.us | Reddit | Yahoo MyWeb | StumbleUpon | Newsvine | Netscape | Google |

September 25, 2008

Bush: "This Sucker Could Go Down"

Some things have to be read in the Gray Lady to be believed.

And by "this sucker," Mr. President, you mean... the economy? The country? The last smidgen of a remnant of a chance that someone who's been under a rock these past eight years might not consider this the Worst. Administration. Ever? But really, it's a measure of how cracked the world seems right now that I'm almost prepared to believe that the president has a point on this one. It sure would be a first.

Posted by Monika Bauerlein on 09/25/08 at 9:59 PM | | Comments (5) | E-mail | Print | Digg | Del.icio.us | Reddit | Yahoo MyWeb | StumbleUpon | Newsvine | Netscape | Google |

So Here's What We Know About the Status of the Bailout...

The Senate Democrats, Senate Republicans, and House Democrats spent the week negotiating with Treasury Secretary Hank Paulson and the White House. Senate Democrats and Senate Republicans announced this morning that they had agreed on key principles. In a White House meeting this afternoon with all parties, including Barack Obama and John McCain, House Republicans hijacked the process by submitting an entirely new plan that no one had seen before. John McCain hasn't made his position clear, but has reportedly been huddling with House Republicans and places his sympathies with their plan, which can be found here.

It actually says, "Instead of injecting taxpayer capital into the market to produce liquidity, private capital can be drawn into the market by removing regulatory and tax barriers that are currently blocking private capital formation." That is, more deregulation.

While Democrats and Republicans are fighting about whether or not House Republicans stalled the bailout's progress so John McCain could be seen as a key player in a solution tomorrow or over the weekend, no one seems to be disputing that House Republicans are the reason a week's worth of work is in jeopardy. Here's an ABC report of a frantic Paulson after the unsuccessful White House meeting:

Paulson walked into the room where Democrats were caucusing after today's meeting at the White House and pleaded with them, "Please don't blow this up."

Rep. Barney Frank, D-Mass., chair of the House Financial Services Committee was livid saying, "Don't say that to us after all we've been through!"

House Speaker Nancy Pelosi said, "We're not the ones trying to blow this up; it's the House Republicans."

"I know, I know," Paulson replied.

Really interesting theorizing in Laura's post below, and you can get Kevin's take here.

Posted by Jonathan Stein on 09/25/08 at 7:35 PM | | Comments (8) | E-mail | Print | Digg | Del.icio.us | Reddit | Yahoo MyWeb | StumbleUpon | Newsvine | Netscape | Google |

Bailout Still in Trouble

As my Hill friend said yesterday, the bailout seems to be in more trouble than some earlier reports indicated. My two cent summary of his take, which is worth reading, was that there is a seriously underestimated gap between the White House and Congressional leadership on one side, and the Congressional rank and file on the other; and that the media reports suggesting a deal was imminent by and large were being informed by the former, who are more committed to a quick deal; while the Congressional rank and file is more informed by being overwhelmed with thousands of calls from screaming constituents who are truly outraged over the prospect of a bailout of Wall Street fat cats. Vulnerable incumbents may not feel they can vote for anything resembling a bailout until after the election.

Here's his latest:

My take is that the politics are way more scrambled than anyone can get a handle on. Basically, Bush and the congressional Democratic leaders have a straightforward objective and agenda - getting a modified Paulson plan cobbled together and then, via consensus, passed and made law. Apart from that, though, there are many actors with many different objectives - both policy-wise and purely politically - and these cannot be arrayed along any single dimension, or even in any easy way at all. There are just many cross-cutting objectives, forces and circumstances, so the whole situation is probably too complex to strategize about, apart from the first group who have a strategy for achieving their objective. I don't think McCain has a clear sense of what his strategy is, and he is not trying to manipulate the situation - or not successfully - because he does not have any mastery of it (not because he doesn't want to). (Probably worth adding in that it is doubtful McCain has any policy convictions at all on this set of issues, at least in this context, since his historical positions are simply unacceptable in the current debate.).

Let me add that yet another peculiarity of the situation is that while, on the one hand, the House Republicans' alternative plan is laughable as a matter of policy - just laughable - they are alone in tapping into the widespread rage out there at the very idea of a gigantic bailout for Wall Street malefactors. Many House Democrats are feeling the same, but they have no representation at the table. So the House Republicans are, in some funny sense, sitting pretty politically.

And finally, watching the coverage remains quite weird, because there is this enduring assumption that a deal is going to be done, that it will be, fundamentally, Paulson's plan with modifications, and that that is the right thing. That may partly reflect the fact that everyone realizes we are at a dangerous moment. But I can't help but think it also reflects the fact that by and large the class of people in and driving the press coverage is completely disconnected from the perspective of people who are overwhelming, in a completely uncoordinated way, virtually every congressional office.

So it is a very very weird moment.

Posted by Laura Rozen on 09/25/08 at 7:27 PM | | Comments (11) | E-mail | Print | Digg | Del.icio.us | Reddit | Yahoo MyWeb | StumbleUpon | Newsvine | Netscape | Google |

Remember the S&L Bailout? John McCain Hopes You Don't

This afternoon, John McCain joined in a summit with his rival Barack Obama and President George W. Bush, after “suspending” his campaign and rushing back to Washington to help rescue the American economy. As pundits and the public argue over whether this is the patriotic act of a true statesman or the desperate stunt of a political operator, McCain hopes they will forget what it really is for him: pure deja vu. McCain has already been here and done this, back in the roaring eighties, when he was in the thick of another financial meltdown that yielded a huge government bailout—and the worst scandal of his own political career.

The savings and loan crisis developed along lines remarkably similar to the current sub-prime crisis: A flurry of deregulation gave S&Ls the capabilities of major commercial banks without the corresponding oversight and regulation. S&Ls proceeded to make high-risk investments, including thousands of unsound mortgages during a housing boom. The government looked away—until the bottom fell out and the S&Ls started to fall like dominoes. Then it stepped in with a bailout of then-unprecedented levels, which added to ballooning deficits and ushered in years of recession.

When the S&L scandal unfolded, Barack Obama was working as a community organizer in Chicago, and George W. Bush was busy running a series of failed oil ventures and managing his baseball team in Texas. But John McCain was already in Congress—and in the S&L mess up to his neck.

The story of McCain's hinky financial dealings is told by Stephen Pizzo, Mary Fricker, and Paul Muolo, in their excellent book on the scandal, Inside Job. As they describe it, one day in 1987, Senator Dennis DeConcini (D-Ariz.) asked Ed Gray, head of the Federal Home Loan Bank Board (and a former press aide to Ronald Reagan) to stop by his Washington office. When Gray arrived he was unexpectedly was ushered into a meeting attended not only by DeConcini but also by Senators John McCain, John Glenn (D-Ohio), and Alan Cranston (D-Calif.).

All of these men had received substantial campaign contributions from Charles Keating, the colorful California developer (and anti-porn crusader) who owned American Continental Corporation and its subsidiary, Lincoln Savings and Loan. From 1982 through 1987, McCain had received $112,000. All four could also claim Keating as a constituent: Lincoln Savings was headquartered in California, and ACC was incorporated in Ohio and headquartered in Phoenix.

At the time, Keating’s operations were under investigation for questionable dealings and there was widespread suspicion in Congress that Gray’s Home Loan Bank Board might end up seizing them.

The four got right to the point: Why were Gray's examiners in San Francisco giving Keating such a hard time? It was noted that Lincoln, which had 24 branches, had started off making a lot of home loans—then suddenly stopped making them. “What do you want?'' Gray asked.

DeConcini offered a deal: We’ll assure you that they'll make more home loans and get into the basic business of home lending if you do something —you have to withdraw the equity risk regulations. These regulations required S&Ls involved in direct lending to set aside additional cash reserves in case there were big losses.

Gray was taken aback. Here he was facing four senators trying to negotiate business with him on behalf of a savings and loan that was in a regulatory procedure. Everyone in and out of government in Washington knows that politicians are not permitted to interfere with the regulatory process—though of course, they often do.

Gray refused to make deals, telling the senators if they had more questions to talk to the president of the San Francisco Federal Home Loan Bank Board. And sure enough, a few days later DeConcini asked the San Francisco officials to come to Washington to discuss “the Lincoln problem.” Gathered at DeConcini's office were McCain, Glenn, Cranston, and Michigan Democrat Don Riegle from the Senate Banking Committee. At this meeting, Jim Cirona, the San Francisco FHLBB president, was confronted by DeConcini, who said the federal bank regulators were out to get Keating. Then McCain, apparently trying to be cute, said, “ACC is a big employer and important to the local economy....I wouldn’t want any special favors for them…I don't want any part of our conversation to be improper.”

But since the whole thing was improper, McCain proceeded in his unctuous way to suggest the regulators’ examination of Keating’s operations was taking too long. Maybe things would work better if there were “voluntary” instead of mandatory guidelines, he suggested.

At first incredulous at being put in this position by the senators, Cirona's team finally lost it, and told them they were sending a criminal referral on Lincoln to the Justice Department. This appeared to have a sobering effect, and the meeting ended. The San Francisco officials recommended that the government take control of Lincoln to stop its unsound lending practices, but it stayed in business for two more years—long enough to push high-risk investments on thousands of elderly investors, who lost their life savings when ACC finally went under in 1989. One member of the House Banking Committee, which investigated Lincoln, called it “a legal bank robbery.”

After the scandal broke, Keating said to reporters: “One question, among many raised in recent weeks, had to do with whether my financial support in any way influenced several political figures to take up my cause. I want to say in the most forceful way I can: I certainly hope so.”

But McCain initially insisted, ''I have done this kind of thing many, many times'' for various constituents, and compared what he’d done for Keating’s firms to ''helping the little lady who didn't get her Social Security.'' Later--echoing the language, but not the tone, of his coy quips in the meeting with the FHLBB--he would admit that “The appearance of it was wrong. It's a wrong appearance when a group of senators appear in a meeting with a group of regulators, because it conveys the impression of undue and improper influence. And it was the wrong thing to do.”

The senators who had defended the miscreants became briefly notorious as the “Keating Five,” implicated in influence peddling as part of one of the most crooked ripoffs in modern history. Three of them ended their political careers, but McCain and Glenn escaped with a scolding from the Senate Ethics Committee for “poor judgment,” and emerged relatively unscathed.

The scandal, never well understood by the public, seems to have been quickly forgotten. And astonishingly, it has thus far failed to gain much traction in the presidential election, in spite of the striking parallels between then and now. So twenty years later, a once scandal-ridden John McCain leads the charge up Capitol Hill to defend the American public from what he calls the “villains” of Wall Street.

Posted by James Ridgeway on 09/25/08 at 5:31 PM | | Comments (19) | E-mail | Print | Digg | Del.icio.us | Reddit | Yahoo MyWeb | StumbleUpon | Newsvine | Netscape | Google |

IAEA's Syrian Contact Assassinated, Stalling Nuclear Probe

At a closed door meeting in Vienna today, UN International Atomic Energy Agency director general Mohamed ElBaradei revealed that the reason the group's investigation into whether Syria was pursuing a nuclear program has been delayed is that its main Syrian contact has turned up assassinated.

"The reason that Syria has been late in providing additional information (is) that our interlocutor has been assassinated in Syria," ElBaradei told a closed-door session of the International Atomic Energy Agency's 35-member board. A recording of his remarks was obtained by AFP.

ElBaradei apparently did not provide any details on the circumstances of the murder of the group's liaison, nor on his identity. But the AFP cites various Arab media reports noting the assassination of Brig. Gen. Mohammed Sleiman (or Mohamed Suleiman) in the northern port town of Tartus in early August, describing him as a military advisor to Syrian president Bashar al Assad and Syria's liaison to Hezbollah. The LAT says intelligence experts have long suspected Suleiman was in charge of Syria's alleged nuclear and chemical weapons programs.

ElBaradei has apparently been pushed by some dozen IAEA members, including the US, to complete his report on the Syria investigation by November. He insisted to the closed door meeting today that he was not being evasive.

"We have not provided a report and we will provide a report as and when we have enough facts assessment to provide a report," he said. "Our decision on the report will be based, not on politics, but on when we are ready with assessment and facting. ...I'm just telling you how difficult, how complex the situation has become, particularly after the evidence has been eliminated and if we were not to find nuclear material."

"We are in a very awkward situation, because the corpse has gone, and we are now at a stage when we have to reconstruct a facility that is not there," ElBaradei concluded, referring apparently not to the corpse of the group's Syrian liaison, but the corpse of the building struck last September by the Israeli Air Force, in a hush-hush operation dubbed Operation Orchard.

It's not hard to understand why ElBaradei, who has been a target of US hardliners' wrath for his insistence that the absence of evidence does not necessarily prove that various rogue regimes are hiding banned weapons programs, recently announced that he plans to retire when his IAEA term is up in November.

Posted by Laura Rozen on 09/25/08 at 2:44 PM | | Comments (0) | E-mail | Print | Digg | Del.icio.us | Reddit | Yahoo MyWeb | StumbleUpon | Newsvine | Netscape | Google |

Sarah Palin and the Russians

Andrew Sullivan posted this gem from CBS News regarding Palin's foreign policy credentials: Some things you just have to see to believe.

Posted by Michael Mechanic on 09/25/08 at 12:34 PM | | Comments (9) | E-mail | Print | Digg | Del.icio.us | Reddit | Yahoo MyWeb | StumbleUpon | Newsvine | Netscape | Google |

Is Bob Barr A Spoiler?

Chris Kromm over at Facing South thinks he might be. After looking at polling data in North Carolina, Kromm realized that that when the Libertarian candidate is included in polls, John McCain's double-digit lead in the state narrows to just six percent or even a dead heat with Obama, depending on the poll. Kromm thinks the Barr factor might explain why both candidates are now pouring money into a state not previously thought to be a close battleground. He writes:

"the fact that the Tarheel State is turning into a fierce battleground, with both sides investing precious time, energy and resources, is historic alone. And the result might be closer than any of us thought."

Posted by Stephanie Mencimer on 09/25/08 at 12:28 PM | | Comments (2) | E-mail | Print | Digg | Del.icio.us | Reddit | Yahoo MyWeb | StumbleUpon | Newsvine | Netscape | Google |

The Tippin Point: Congress Caves to Big Oil, Newt Gingrich, John McCain, and Country Music

All the energy-policy watchers who are shaking their heads in disbelief over Congress' capitulation on offshore drilling can blame Newt Gingrich, John McCain, and Aaron Tippin.

Aaron who?

Ah. Well, remember Willie Nelson's character from Wag the Dog, the 1997 film wherein a presidential administration concocts a phony war to distract the public from its domestic scandals? Nelson plays a political operative who creates and circulates a stirring song to rally public emotion behind the president's stage-managed war effort.

In "realityville," that songwriter is Aaron Tippin, a country & western singer who is contributing his talents to the public relations cause of American Solutions for Winning the Future, Gingrich's new 527 organization.

Released on September 11, Tippin's new anthem, "Drill Here, Drill Now," is a folksy call for Congress to do more or less what it just agreed to do: let the offshore drilling moratorium expire. The singer's home page, where you can hear the song and download it for 99 cents, also features its lyrics:

Hello…. Well, is anybody out there listenin’ in Washington, DC
This is the suffering voice of America crying out for relief
Now I don’t know what a gallon of gas costs up on Capitol Hill
But we sure know what it cost down here in realityville
And the damage already done has been a mighty heavy toll
And if we’re gonna fix it we gotta start right here at home

CHORUS:
Drill here, drill now
How ‘bout some oil from our own soil that belongs to us anyhow
No more debatin’ we’re tired of waitin’ everybody shout out loud
Drill here, drill now

Every time a foreign tanker pulls up to our shore
They got us over a barrel while they bleed us a little more
And think how much it costs just to bring it all that way
And how many American jobs that’d make if we were drillin’ in the USA
Oh and God forbid if our oily friends should decide to cut us off
We’d be standin’ around with our britches down now listen to me ya’ll

And so on.

I've got a call in to American Solutions to ask whether it paid Tippin to write "Drill Here, Drill Now." The singer's press release doesn't answer that question, noting only that Tippin put out the song "in direct alignment with" Gingrich's group, whose "Drill Here, Drill Now, Pay Less" campaign has collected nearly 1.5 million signatures on a petition urging legislators to "act immediately" to lower gas prices and reduce dependence on foreign energy sources by expanding domestic production. The group also has been running ads to that effect. So far in the 2008 election cycle, according to OpenSecrets.org, American Solutions has raised close to $15 million—including more then $2 million from right-wing casino magnate Sheldon Adelson.

Newt Gingrich, the release notes, "has always been a country music fan," and "Tippin understands and has experienced first-hand the importance of energy independence."

The claims of Gingrich's group are dubious, however. According to the Energy Information Administration, opening the outer continental shelf to further oil and gas drilling could eventually provide an additional 18 billion barrels of crude, and possibly more. But to quote an EIA report regarding the likely result, the agency's projections "indicate that access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030."

At which time, the EIA predicts, America will be importing more than 11 billion barrels of crude annually, almost one billion barrels per year more than we do currently.

As far as lowering US gas prices, even the American Petroleum Institute isn't prepared to make that claim directly. "Economic fundamentals suggest that more supplies put downward pressure on prices," the API notes vaguely in its online FAQ. "Concerns over future oil and natural gas supplies have added volatility in global oil markets so if the US begins to develop its own domestic resources it would send a powerful signal to these markets."

None of this has stopped John McCain from embracing Gingrich's slogan whole-hog. "Last month, the president finally lifted the executive ban on offshore oil and gas exploration, and called on Congress to lift its ban as well," McCain told the National Urban League on August 1. "Lifting that ban could seriously lower the price of oil, and Congress should get it done immediately. We need to drill more, drill now, and pay less at the pump."

And the rest, as they say, is history.

This wouldn't be the first time Aaron Tippin has cashed in on a patriotic ditty. Shortly after 9/11, he released "Where the Stars and Stripes and the Eagle Fly," which became his most successful crossover single. According to his website, the singer has made guest appearances on Hannity & Colmes, "Fox & Friends," Larry King Live, the G. Gordon Liddy Show, MSNBC, the Bill Bennett Show, Fox News with Colonel Bill Cowan, the Pentagon Channel, the Martha Zoller Show, and the Neal Boortz Radio Show.

On Saturday night, swing-state voters in Clyde, Ohio, can catch Tippin live at the Clyde High School auditorium. The next night, he'll appear at the Jamestown Savings Bank Ice Arena in Jamestown, New York. And come December 8, you can catch "the hardest-working man in country music" on McCain's home turf, regaling the crowd at the Marine Corps Air Station in Yuma, Arizona.

Everybody shout out loud.

Posted by Michael Mechanic on 09/25/08 at 10:08 AM | | Comments (5) | E-mail | Print | Digg | Del.icio.us | Reddit | Yahoo MyWeb | StumbleUpon | Newsvine | Netscape | Google |

Mission Creep Dispatch: John Lindsay-Poland

As part of our special investigation "Mission Creep: US Military Presence Worldwide," we asked a host of military thinkers to contribute their two cents on topics relating to global Pentagon strategy. (You can access the archive here.)

The following dispatch comes from John Lindsay-Poland, author of Emperors in the Jungle: The Hidden History of the US in Panama and the Latin America program director for the Fellowship of Reconciliation in Oakland, California.

Transforming Unaccountable Force

What impresses about the sprawl of US bases and its reconstitution since 2001 is the lack of accountability. The US military presence overseas serves as an implicit threat of intervention to host countries and neighbors, and so enables the United States to defy international law and other obligations to the global community. The bases are also themselves unaccountable, especially