You Can't Regulate The Bush Administration

by: Chris Bowers

Mon Sep 29, 2008 at 17:15


Here is, as succinctly as possible, my rationale for opposing the bailout:

Politically speaking, any bailout bill passed between now and January 19th will require Bush's signature, and siding with Bush will do Democrats more political harm than good. Economically speaking, any bill that gives the Bush administration this much money and power will cause more economic harm than waiting 113 days to allow Obama to deal with the problem. As such, it is not just politically sensible, but it is also economically sensible to wait until the next administration in order to act.

My solution is simple: stop negotiating with Bush altogether and make the election a referendum on what sort of economic plan to pass. The public would overwhelmingly back such a move, as polling shows (more in the extended entry):

USA Today/Gallup Poll. Sept. 24, 2008. N=1,019 adults nationwide. MoE � 3.

"As you may know, the Bush administration has proposed a plan that would allow the Treasury Department to buy and re-sell up to $700 billion of distressed assets from financial companies. What would you like to see Congress do: pass a plan similar to what the Bush administration has proposed, take action but pass something different from what the Bush administration has proposed, or not take any action on this matter?"

Similar to Bush Proposal: 22%
Different from Bush Proposal: 56%
Not Take Any Action: 11%

Not only does the public support ending negotiations over the Bush plan, the polling trends over the last two weeks make it clear that keeping this issue front and center is really, really helping Democrats. We will win a huge trifecta if this is the news for the next five weeks. And with a huge trifecta, we can pass a plan that will actually solve the crisis, rather than handing over even more money and power to the Bush administration.

It is more politically irresponsible and damaging to the economy to hand over that much money and power to the Bush administration than it is to wait another 113 days. And don't even talk to me about the regulations and oversight in the bill. People like Bush and Paulson caused this problem, ignoring regulations and oversight the entire way. They will ignore the regulations we tack on, just like they threatened to do so with any Iraq timeline, and just as the Treasury department is already admitting in public conference calls on this bill. And then, when Democrats in Congress get mad, the administration will ignore their subpoenas, just as they have done all along. The regulations and add-ons don't mean anything. You can't regulate the Bush administration.

So that's my argument. I think it is a good one. And, unlike Paul Krugman, I don't think that it makes us a banana republic to have so little trust in the White House that we refuse to give them more power. I think, after the last eight years, that it makes us eminently sensible, and starts moving us back on the road to becoming a better functioning republic.

Chris Bowers :: You Can't Regulate The Bush Administration

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You Can't Regulate The Bush Administration | 25 comments
So Do you Like What Ian Walsh is Suggesting? (4.00 / 1)
It's here.
Looks good to me (0.00 / 0)
There are some provisions I wouldn't like but nothing like the Paulson plan. Political negotiations with the Repubs would knock off everything I dislike and more besides.
[ Parent ]
Can we wait that long? (4.00 / 2)
If the fact that Bush will have to sign any bailout plan is your only reason for opposing it, then we could have a major problem.

What happens if you're wrong and we need something before November 4th?  Before January 20th?

If Bush is really the problem, then he (and Cheney) need to step down now and let someone else put pen on paper.  The only problem is, this will never happen.  So instead, people like us may need to instead get over our Bush-aversion for this bill.

We have to (0.00 / 0)
The Paulson plan would make things worse. By bidding up the value of toxic mortgage-based securities, it would divert scarce capital back into mortgage speculation and away from productive use.

In the meantime we could bump up the debt limit and deposit treasuries with the Fed for emergency lending.

[ Parent ]
Bingo!! (4.00 / 2)
It is more politically irresponsible and damaging to the economy to hand over that much money and power to the Bush administration than it is to wait another 115 days. And don't even talk to me about the regulations and oversight in the bill. People like Bush and Paulson caused this problem, ignoring regulations and oversight the entire way. They will ignore the regulations we tack-on, just like they threatened to do so with any Iraq timeline, and just as the Treasury department is already admitting in public conference calls on this bill. And then, when Democrats in Congress get mad, the administration will ignore their subpoenas, just as they have done all along. The regulations and add-ons don't mean anything. You can't regulate the Bush administration.

You summed it up well.  The Dems won't do real oversight as you have said(You obviously read everything Marcy writes).  The other thing is, I have been watching CNBC this afternoon.  Bartiromo is almost beside herself that the bill did not pass.  Of course she has a conflict of interest(GE), but CNBC has been Republican heaven(See Kudlow and Gasparino for starters).  Everyone knew the market was going to go down if the bill was defeated.  At what point will Boner(Yes I know it isn't spelled right) get an extra 10 or 15 votes?  How will Paulson/Bush cojole them?  Even the Republicans don't want to be seen with Bush on this issue.

Awesome CNN story on this (4.00 / 2)
http://money.cnn.com/2008/09/2...

I mean awesome as absurd.  My favorite quote, near the top of the piece:

"The stock market was definitely taken by surprise," said Drew Kanaly, chairman and CEO of Kanaly Trust Company, referring to the House vote. "If you watched the news stream over the weekend, it seemed like it was a done deal. But the money is being held hostage to the political process."

Yep, that's right - it's a "hostage" crisis.  The evil known as "accountability to voters" (sometimes called "democracy" also) is holding your and my tax dollars "hostage," preventing them from going to their rightful owners on Wall Street.  Damn political process, it would be so much better if we could just get rid of it like Bush once proposed, then the bankers would just be able to take our (I mean their) money without having to woo Congress and voters.  

CNN continues by showcasing the tragic disappointment of a marginalized member of America's downtrodden Wall Street elite:

"It's a huge disappointment," said Jack Ablin, chief investment officer at Harris Private Bank. ...

CNN goes on: "Although another version of the plan will likely go before Congress, investors are concerned that passing the bill could be a more drawn-out process. And they are worried about how effective the proposed plan would be anyway, said Alan Gayle, senior investment strategist at RidgeWorth Investments. "We are charting new territory in policy tools and implementation with this program and there's no guarantee that it will work," Gayle said. "

Yep, it may not work.  Maybe it's not enough money.  But remember, it's vital and urgent to pass the bill right now, before you even think about it. Thinking about it means you hate America.  You dirty hostage-taker, you.

Awesome.

tone deaf (4.00 / 1)
Chris,

I am generally a fan of yours in part because you strike me as level-headed and thoughtful. That said, I have been surprised by your seemingly naive take on the bailout. In particular, how did you come up with this: "Economically speaking, any bill that gives the Bush administration this much money and power will cause more economic harm than waiting 113 days to allow Obama to deal with the problem."

Is there any actual substance behind that claim? Just because you don't like Bush (trust me, I don't either)? You may be right, but who knows? If the credit markets seize and we enter another depression, can you really stand by that statement? I don't pretend to know what will happen, and I'm not saying that you should, but the extent that you have been belligerently clamping down on your political analyst hat while being completely tone deaf to any sort of economic analysis of the problem, when clearly the problem may have economic repercussions that, even if they don't trump the political considerations (and they may), at least deserve a spot at the table, is astounding. (sorry for the long sentence!)

I don't mean to single you out, Matt and David are doing the same thing, but color me surprised.

Great blog overall.  

If this crisis is REALLY that bad... (4.00 / 4)

 ...I would think that the House GOP, Paulson, Bush, and the other right-wing actors would not so strenuously object to strong oversight provisions and things like transaction taxes.

 That they "warn" Democrats not to put such things in the bailout bill suggests that either (a) this crisis is overblown, or (b) they're such evil and craven people that they'd rather crash the economy than even-so-slightly compromise their treasured right-wing principles.

  Wall Street doesn't get to dictate the terms of its bailout. Beggars can't be choosers. Should a convicted murderer sit on his own parole board?  

"We judge ourselves by our ideals; others by their actions. It is a great convenience." -- Howard Zinn

[ Parent ]
Of course (0.00 / 0)
Of course they're going to object to those things. They're still right wingers after all. Right wingers have demanded ridiculous things in the face of genuine crises before. I don't disagree that Wall Street shouldn't get to dictate the terms of the bailout. But statements like we can just wait and see until Obama is in office and that is on its face better than passing something now, however imperfect, are just much too confident, and honestly sound foolish. I don't like the politics of the bailout either, but that doesn't mean I can assert that if it doesn't pass there will be truly catastrophic consequences. Maybe there will maybe there won't. I don't know since I'm not an economist. And neither is Chris.

I don't mean to say Chris should be quiet or politics (and the healthy skepticism that comes from living through the Bush years) are out of place. But you could approach these same points with a little bit of subtlety, and maybe an admission that you may not know the economic repercussions. Instead, Chris comes with a sledgehammer, silently declaring himself some sort of expert on the economy. It looks silly and arrogant. It doesn't seem like the front pagers are thinking this through well. I would take more stock in their opinions if they had. Paul has been silent, what's his take?

[ Parent ]
I agree. (4.00 / 1)
Chris and Matt are the people I read most, but man, this sentence is a real doozy:  
Economically speaking, any bill that gives the Bush administration this much money and power will cause more economic harm than waiting 113 days to allow Obama to deal with the problem.

Um, Chris, having read you for several years now, I didn't know you knew enough economics to make a statement like that so confidently.

You know a lot of politics, and you know that Bush is a faithless actor with whom nothing constructive can be done.  Great.  But, respectfully, you don't know shit about the economics of this crisis, or if you do, you haven't revealed it in any of your writing the last four years.

When Roubini and Krugman and DeLong and the others are running around with their hair on fire, with Krugman saying that even this terrible bill was probably better than nothing at all, then I think I would hesitate before proclaiming that it's best to do nothing until January 20th.  You can't just take a four month timeout on the global financial markets, sadly.

Now, I do agree that nothing constructive can be done with Bush, which is why my alternative, politically speaking, is this: find the ideas that Democrats actually believe are the best, put them into a package, pass it with 200 Democratic votes and 15 or so Republican moderates, then dare McConnell to filibuster it, and dare Bush to veto it.  The bipartisan bill was tried, and it failed because Senate Rs, Bush, and McCain couldn't make the House Rs go along.  We tried doing the "everybody team up so no one can be blamed by the voters" act, and the Rs blew it up, with Bush and McCain failing utterly to whip them.  So now try the "Democrats pass what they believe is the best policy" strategy, and once it lands on Bush's desk, dare him to veto any plausibly workable plan.  He'll hate it, but he'll be too scared to veto.  Once it's clear that he can't deliver his own caucus, then all he can do is obstruct the Dems from solving the problem, or not.  I think he'll choose to sign, hoping to 1) save himself from the do-nothing legacy of Hoover, and 2) set up the Rs to run against the Ds in the future, should the plan fail or be remotely demagogueable, even in success.

The politics of that move are good enough that I think Bush would take it.  It's time to pass a Dem bill.  A silent death in the Senate is the only real danger, one that I admit I don't know how to beat.  I can only hope that the momentum of "BILL PASSES HOUSE" forces the Senate to capitulate on the cloture vote, then just vote against final passage.

If it makes it, it will be because Rs think they can run against Ds on it in 2 years.  That's ok.  Ds pass what they think will work, Rs bet that it will fail, Bush afraid to veto and also bets that it will hurt Dems, equals a Democratic bill signed into law.

Do it.

[ Parent ]
Addenda: (0.00 / 0)
1) Of course I forgot that in that scenario, Obama is forced to be clearly for the bill, and McCain would be clearly against.  It may not be possible to write a bill that would be good, effective, and also not an irrecoverable weight around Obama's neck.  That is a pretty big problem.  Hopefully Obama helps craft a bill that he himself feels capable of running on.  It would be leaderly.  It would be risky too, but, we really are electing him to lead, aren't we?  He may have to step up to the plate early.  

2) I probably should have toned down my comment a little more in preview.  "Don't know shit about economics" was a little strong for the point I was trying to make.  Sorry.

[ Parent ]
And further, (0.00 / 0)
The poll Chris cites actually doesn't back up his argument very well.  Only 11% of people want Congress to "take no action."  56% want it to pass a plan substantially different from the Bush proposal.

Now, given that Bush has a veto pen, that may be 56% of the public wishing for a pony.  But I think it's actually an open question whether Bush would be willing to use that veto pen, after the events of today.  If the decision to force a four month delay, with unknown consequences, comes down entirely to him, is he really willing to make it?

If he is, then we know the crisis wasn't really that serious.  But I'll bet he'd sign the bill -- because I think the crisis is that serious, and something has to get done, and in the end whatever makes it out of Congress he'll sign.

[ Parent ]
Good plan (0.00 / 0)
I agree completely with you that this is what the Dems should do. But I am much less optimistic that Bush would sign a good bill. I think this is what Chris is saying.

Bush has demonstrated that he cares nothing about his legacy, nothing about helping the Republican party avoid becoming a failed disaster and losing in a landslide. He cares only about helping his rich friends and keeping his personal power. It seems most likely that he would veto a progressive Democratic bill unless the people on Wall Street were sufficiently scared that they pressured him to do it.

Of course, maybe Wall Street would pressure him. It might be the only way to save capitalism. So just like FDR was able to act in a pretty progressive way, Democrats/Obama may too. It is certainly worth a try.

[ Parent ]
If he does veto, which in the depths of GOP cynicism he might do, (4.00 / 1)
it would still be good for Dems politically, even if bad for the country economically.  If Bush blocks a Dem bailout, then he owns the entire failure afterwards.  It becomes truly the Bush recession/depression, not just born on his watch but helped into adulthood by him too.

In fact, I think the politics of a Bush veto might be so bad, that he wouldn't do it.  If he goes along, it won't be because he wants to, but because he fears not going along more.  He could do a lot more damage to the GOP on the way out the door.

On the other hand, the risks in the Obama-McCain race are pretty high.  Obama would have to be very involved in crafting the plan, because he'd have to run on it amid much incoming fire.

[ Parent ]
Paulson plan probably wouldn't work (4.00 / 1)
Paulson could not coherently explain how his plan would work. And lots of mainstream economists and Wall Street executives are skeptical it would work.

If the economy falls into a depression it may be because this bailout was not passed. But it is also because all of the suggestions that progressives have been making for the past 8 years -- to tighten up or stop subprime loans, to regulate the speculation on these loans, to investigate the bond rating agencies and hedge funds and massive CEO bonuses, etc, etc, etc. -- have been ignored. And right now, progressives are proposing lots of alternative rescue plans that are also being ignored. The fault does not lie with progressives.

Bush and Paulson have made it very clear that they will not support any plan with progressive elements. They will oppose anything except a bailout for their rich friends, even if it doesn't work and leads to a depression. In these circumstances, giving in is folly.

I completely agree with Chris that we must fight for a good plan and if it fails then blame the Republicans for hindering our good work. This is good policy and good politics. We may not be able to avoid a depression, but at least we can avoid engaging in lousy policies and politics.

[ Parent ]
I agree (0.00 / 0)
I think I agree with this, though I don't feel like I am knowledgable enough to have a strong opinion. But I am all for Chris taking this approach, if he believes in it. But I think he can do it without sounding ridiculous, which hurts his credibility, that's all. You do a much better job of convincing me.
[ Parent ]
The Dems are in a strong position now (but do they know it?) (4.00 / 3)

 The bailout bill failed because Republicans wouldn't vote for it, and the Dow dropped 777 points.

 I would think that the Dow's performance today should significantly soften public opposition to SOME sort of bailout.

 Which means that the (majority) Dems can now craft a  bailout bill with some REAL teeth. And they don't need Republicans to pass it. Given what happened on Wall Street today, I doubt it would hurt much politically anymore -- it might even HELP. Get this thing right, put some referees on the football field, and don't indiscriminately throw money at Wall Street bankers who've stolen and squandered enough already as it is.

 The Democrats have been the adults in this drama. The public has picked up on that. Let's reinforce the perception. (I just saw the Pelosi speech that had Boehner in such a tizzy. Boehner's skin is so thin his it must be all one big eyelid.)

  And if Bush vetoes it, or the Republicans in the Senate obstruct it, the Republicans own the consequences.

 Let's hope the Dems understand how much power they have RIGHT NOW.

"We judge ourselves by our ideals; others by their actions. It is a great convenience." -- Howard Zinn

We've Been A Banana Republic Since Florida, 2000 (0.00 / 0)
And Krugman just now noticed?

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3
that's what happens when you pass for a "radical" or something (0.00 / 0)
but you're really an economist :)
[ Parent ]
This only makes sense if (4.00 / 1)
the markets don't crash between now and 1/20 (or maybe 11/5).

I hope you're right and we're about to find out...

If he's not (0.00 / 0)
will Chris pay are bills and replenish our retirement accounts.  Maybe Open Left can hire all of the unemployed.
[ Parent ]
113 days? (0.00 / 0)
So...we just lost 777 points in 1 day, and you want to wait 113 days because you want to spite Bush?  What if the market drops 1000 points tomorrow?  What if it loses half its value in the upcoming weeks?  
One day of panic does not make a trend (0.00 / 0)
The market does not rise or decline in smooth lines. It has sharp peaks and troughs, because it is based on confidence and that is a fickle thing.

Give it a few more days. If this kind of drop continues, a bailout will be passed within six hours. But can we at least wait for evidence before signing away $700bn on a plan that very possibly won't even work?

Forgotten Countries - a foreign policy-focused blog

[ Parent ]
you answer the question (0.00 / 0)
what happens if the market drops 1000 points tomorrow?
[ Parent ]
this is an excellent plan (0.00 / 0)
because it will force a much broader debate about economics and get rid of all the bs about earmarks and we can start talking about reversing tax cuts.  it's not an unreasonnable period of time  (50 days or so) and it helps obama win the election while simulatenously forcing him to be more progressive economically or potentially lose votes.

Moreover, if there are problems in the market before that, they can continue to be dealt with on an adhoc basis and if it arises that things REALLY are severe, well, more thinking would have been done and more credibility would have been gained by approaches like Roubini's.  People, in other words, would have a better sense of where they stand and Democratic "leadership" could more comfortably rely on opinions besides whoever the f@#k is advising them now.  Paulsen?

So what do we do?  Action steps?

You Can't Regulate The Bush Administration | 25 comments





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