I'm listening to Dick Durbin and Chris Dodd, Senators who I want to believe get this political moment, plead in favor of this bailout. All day, Senators have been railing against the need to vote on this bill, deeming themselves 'angry' at the mess we're in, and then discussing why it is the most important patriotic vote possible to vote 'yes' on this $700 billion bill. I'm seeing progressive economist Dean Baker call this a $700 billion give-away to Wall Street, and Paul Krugman arguing it won't cost the taxpayer anything. This is a complex situation, and I am not a financial expert. But I don't think analyzing this situation requires financial expertise, it requires common sense, a willingness to see through elite bullshit, and a skeptical eye towards wealthy strongmen who argue that politics is hijacking our economy. In fact, it's not clear to me that financial expertise is particularly useful in determining whether this bailout should go forward. For instance, it doesn't take financial expertise to understand that the Senate's choice to make a millionaires tax to pay for the bailout a voice vote, so no Senator would have to go on record, is evidence that this is a rotten deal put forward by those in thrall to a rotten ideology. But there are financial experts on our side. David Cay Johnston, the Pulitzer prize winning author of Perfectly Legal and Free Lunch, notes:
There's a new study out by two economists with the International Monetary Fund. IMF policy. They published a study, in which they study 42 banking crises around the world over the last 37 years. And they concluded essentially this: bail-outs don't usually work; they often make things worse; and they are fundamentally a transfer of wealth from everybody to bankers and their customers.
This bailout is a really bad idea, and it's one that's going to cost us a lot for a very long time. There are various groups of people who have pushed this bailout; the most corrupt are the Bush faction, followed closely by the Wall Street kleptocrats, and of course, the wealthy Democratic donor class (who cut the $50k and over checks to the party). But people like Barack Obama, and yes, progressive economists Paul Krugman, James Galbraith, Robert Kuttner, Joseph Stiglitz, and Jared Bernstein have decided that it is on balance more worth it to get this done than not. And like it or not, that's where we're going.
How many economists have you read or watched on television in recent years that claimed the economy was performing well while you struggled to make ends meat and keep up with the cost of living? Indeed, until recently a happy talk virus had infected a cabal of conservative plutocrats who preached the virtues of limited regulation, market forces and free trade as wages declined and predatory lenders had a party. It seemed we were hearing conservative politicians and their mouthpieces at the Heritage Foundation or Fox news refer to the economy as "the greatest story never told" at every opportunity.
Now that the housing and credit crisis has metastasized, conservative apparatchiks are fighting to minimize government intervention on behalf of regular folks while preserving corporate welfare. They accuse anyone who raises a fuss of waging class warfare. Instead these agents of the status quo prefer we erroneously obsess about Social Security going bust and agree to privatize it for Wall Street's benefit.
Today, the minimum wage goes up for the first time in a decade. As liberals, we're by our very nature concerned with what it means to live in a just and equitable society. As a Drinking Liberally host who has spent the last few days preparing to host a discussion with Jared Bernstein on his book All Together Now: Common Sense for a Fair Economy, I think Bernstein (of the Economic Policy Institute) largely hits the nail on the head on this point, and I'd like to discuss that here.
We're living in historical times, perhaps unprecedented in my lifetime. We're engaged in a terrible and unnecessary war in Iraq, the Executive Branch has evidently become severely politicized, and the compact that holds our society together economically has eroded.
I'd like to focus on that last point. There appears to be little dispute that a new social compact is needed. President Clinton used just those terms when he said, in a 1995 speech (Washington Post):
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