Late last night, House leaders announced that a deal had been struck between Congress and the White House to spend $700 billion to bail out Wall Street. Barack Obama has given his “tentative” support for it. By offering that support, just five weeks before the election, he’s missing an opportunity to stand up for the very working class people he needs to win. He ought to withdraw that support and announce his opposition.
Chairman of the House Financial Services Committee Barney Frank said on CNN today that the House “accepted [Henry Paulson's] view” that if Congress didn’t act, the economy would melt down. I don’t know whether Paulson is right or wrong; by all accounts, he’s an extraordinarily well-qualified Treasury Secretary.
But Paulson works for George W. Bush. For the most part, Congress took the Bush Administration at its word when it said Iraq had weapons of mass destruction. Congress also responded — understandably at the time — in the wake of 9/11when the White House demanded immediate action on the Patriot Act.
There is, no doubt, a crisis at hand. But if we’ve learned anything in the last 7 1/2 years, it’s that when the Bush Administration says “emergency,” its claims have to be carefully scrutinized to determine whether the Administration’s hair or pants are on fire.
And just as with Iraq, there’s a question of the credibility of the intelligence on which Congress and the White House are relying. Paulson is also former CEO of Goldman Sachs. This is CNN’s lead paragraph on the bailout:
Billionaire Warren Buffett told congressional negotiators that if they can’t agree on a proposed financial bailout, the nation will face “its biggest financial meltdown in American history,” two sources familiar with the talks said.
What CNN’s story doesn’t doesn’t say is that just four days ago,
Goldman Sachs Group announced Tuesday that it will receive a $5 billion infusion from Warren Buffett’s Berkshire Hathaway, an investment that could also raise confidence in the venerable Wall Street firm and the financial markets in general. . .
the legendary investor said his faith in the financial markets’ recovery is contingent on Congress passing the $700 billion bailout, which would buy troubled mortgage assets from banks.
“If I didn’t think the government was going to act, I would not be doing anything this week,” Buffett told CNBC Wednesday morning. “It would be a mistake to be buying anything now if the government was going to walk away from the Paulson proposal. Last week will look like Nirvana if they don’t do something.”
I have a lot of respect for Warren Buffett, but if my mother was investing $5 billion in an institution which, by her own admission, stood to benefit from dramatic Congressional action, her motive would be clear. There’s no evidence that Congress has taken that motive into account.
By margins of 55% and greater, Americans are opposed to the bailout:
Most Americans don’t believe the government has responsibility for bailing out financial firms with taxpayer money, a core part of the rescue plan Congress is considering to halt the near-meltdown of the nation’s financial markets, a Times/Bloomberg poll has found.
Reluctance to use public money to rescue private firms runs across the population, the poll found: Democrats and Republicans, high-income and low-income families alike.
People are paying $4 for a gallon of gas, the price of groceries is going up and Congress has done little to alleviate the suffering of ordinary people. The Wall Street bailout is a perceived as a giveaway to big business at the expense of not only American taxpayers, but our nation’s credit. We simply have no way to pay for this: China will fund it.
Having an oversight board, preventing golden parachutes and other protections apparently contained in the bill are simply unpersuasive details of a an overall proposal that people do not and will not support before November 4.
John McCain spends a lot of time on the campaign trail saying that Barack Obama has “never stood up to his party,” while he (McCain) is a Maverick who regularly takes on Republicans.
Barack Obama and Joe Biden both have an opportunity here to buck their own party and stand up for the little guy — the same white, working class dude who lives in Scranton we’re always hearing about. There may be a complicated explanation why that Lackawanna County family ought to spend the rest of their lives paying back Communist China for saving our capitalist system, but when they’re spending $300 per week to put food on their family, it rings hollow. There’s just no way the polls are going to turn around in five weeks and create a wave of public support for the plan.
The plan is going to pass regardless of what the candidates do. This is Obama’s chance to immediately say that he’s not going to be part of socialism for the rich. He can offer an alternative proposal that does not look like a giveaway to the very big businesses that created this mess. He can look like a leader who isn’t beholden to either his party or Wall Street. If McCain ends up also opposing the bailout, that will be Obama’s chance to say that he’s pleased that his rival has followed his lead. He ought to take it.
UPDATE:
A couple of readers have said that if Obama opposes the bailout and it passes anyway (with his own party’s support), he’ll look weak. I admit that that’s possible, but believe if he plays it right, he can look like a president, not a senator. He can take this opportunity to rise above Congress and partisan politics to look like a real leader — and by the way, a leader who stands with the majority of Americans in opposition to an unpopular plan which is about to pass. Isn’t that the kind of champion of the working man that deserves a promotion?
