The Lady or the Tiger, 2008

In a televised address on Wednesday evening, President Bush explained why the $700 billion bailout of major financial institutions had to be implemented quickly to preserve "America's overall economy." The President said that:

The government's top economic experts warn that, without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold.

He explained the administration's plan:

It would remove the risk posed by the troubled assets, including mortgage-backed securities, now clogging the financial system. This would free banks to resume the flow of credit to American families and businesses.

Any rescue plan should also be designed to ensure that taxpayers are protected. It should welcome the participation of financial institutions, large and small. It should make certain that failed executives do not receive a windfall from your tax dollars.

[…]

First, the plan is big enough to solve a serious problem. Under our proposal, the federal government would put up to $700 billion taxpayer dollars on the line to purchase troubled assets that are clogging the financial system.

In the short term, this will free up banks to resume the flow of credit to American families and businesses, and this will help our economy grow.

Second, as markets have lost confidence in mortgage-backed securities, their prices have dropped sharply, yet the value of many of these assets will likely be higher than their current price, because the vast majority of Americans will ultimately pay off their mortgages.

The government is the one institution with the patience and resources to buy these assets at their current low prices and hold them until markets return to normal.

And when that happens, money will flow back to the Treasury as these assets are sold, and we expect that much, if not all, of the tax dollars we invest will be paid back.

The final question is, what does this mean for your economic future? Well, the primary steps -- purpose of the steps I've outlined tonight is to safeguard the financial security of American workers, and families, and small businesses. The federal government also continues to enforce laws and regulations protecting your money.

Earlier Wednesday, a letter signed by 166 economists was sent to the Speaker of the House of Representatives and the President pro tempore of the Senate. The economists, who represent nearly every political viewpoint in the country, are urging hearings and contemplation. The text of their letter:

As economists, we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan:

1) Its fairness. The plan is a subsidy to investors at taxpayers’ expense. Investors who took risks to earn profits must also bear the losses. Not every business failure carries systemic risk. The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.

2) Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.

3) Its long-term effects. If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America's dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.

For these reasons we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come.

The Lady or the Tiger? Which door would you choose?

Senator McCain Requests Debate Delay

"A stage, an audience, a moderator, and at least one presidential candidate."
Robert Gibbs, Obama campaign spokesman, quoted in The Washington Post, on what to expect at Friday's scheduled debate.

Senator John McCain, who has missed voting on 412 bills in the current session of the Senate, wants to delay Friday's presidential debate and meet, along with Senator Obama, with leaders of both Houses of Congress to work on a solution to the financial crisis. Among the 64.1% of floor votes Sen. McCain missed were the F.I.S.A. Amendments Act, 2 energy development funding amendments, and a bill to fund military operations in Iraq and Afghanistan, as well as increase education benefits for certain veterans who served after September 11, 2001 (G.I. Bill).

Senator Barack Obama, who missed 295 votes, many of them during a prolonged primary contest with Sen. Hillary Clinton, has rejected the proposal to delay the debate.

The Trail, A Daily Diary of Campaign 2008 in The Washington Post also reports that the Commission on Presidential Debates said that it is "moving forward with its plan for the first presidential debate at the University of Mississippi in Oxford, MS, this Friday, September 26," despite the McCain announcement. "We believe the public will be well served by having all of the debates go forward as scheduled," the Commission said.


Update: Marc Ambinder of The Atlantic reports that "A senior (McCain) campaign official says that McCain will NOT debate -- no matter what -- if Congress hasn't reached an agreement on a bailout package."

Chris Cillizza opines in The Washington Post that "The move is an obvious attempt by McCain and his campaign to paint the Arizona senator as above politics, willing to put aside his campaign for the good of the country."

Rip Van Washington

The financial crisis did not sneak up on us. As I noted in the last paragraph of Uncomfortably Numb, Gretchen Morgenson wrote a New York Times column in 2002 that concluded with an implicit warning: "Perhaps the housing bubble has helped consumers take the stock market's carnage so stoically. If so, what bubble will emerge to calm them when housing prices fall?"

In 2006, did Washington policymakers think that the foreclosure rate in Ohio was an aberration? Earlier this year, did they notice Matthew Yglesias' article, There Goes The Neighborhood (The Atlantic, January/February 2008), where he writes about Three Lakes, Florida?

It’s a pretty typical piece of aspirational America: two cars (or more) in every driveway. The driveways, that is, that aren’t empty. On a rainy day in November, two houses on the cul-de-sac had for sale signs out front (though it turns out more were in fact for sale). In front of another, a pile of furniture sat soaking in the downpour. According to data provided by RealtyTrac, a business that tracks foreclosures for real-estate professionals and investors, 10 of the 45 homes on the street received foreclosure filings in the third quarter of 2007 alone. (Such filings range from notices that a loan is in substantial default to notices of auction or repossession by the lender.) Three of the 10 had just been purchased—two in February, one in July. On average, the 10 homes had been owned for just 22 months before foreclosure.

Did everyone in Washington overlook Christopher B. Leinberger's quote in The Next Slum (The Atlantic, March 2008), that "Signs of physical and social disorder are spreading." He wasn't talking about the inner city. Mr. Leinberger was reporting on suburbs like "Windy Ridge, a recently built starter-home development seven miles Northwest of Charlotte, North Carolina," and "the Franklin Reserve neighborhood of Elk Grove California, south of Sacramento, (where) the houses are nicer than those at Windy Ridge -- many once sold for well over $500,000."

Why are these reports relevant to the current financial crisis? Are you confused about the whole mess? Yesterday, on NPR's Fresh Air, Terry Gross interviewed Gretchen Morgenson, a New York Times financial reporter and columnist, who won a Pulitzer Prize for her reporting on Wall Street. The interview lasts 39 minutes and is an excellent update on who, what, when, where, why, and what's probably next. Learn more and listen here.


Update: Roll Call reported this morning that the $700 billion mortgage bailout plan has been in the works for some time. Quoting White House Deputy Press Secretary Tony Fratto:

Fratto insisted that the plan was not slapped together and had been drawn up as a contingency over previous months and weeks by administration officials. He acknowledged lawmakers were getting only days to peruse it, but he said this should be enough.

In spite of what Fratto says, this effort was still late. A skeptic might wonder if the administration was hoping to avoid dealing with this until after the presidential election. Why wait until a week before the House is scheduled to adjourn for the year? Did they really think that passing a $700 billion Wall Street bailout was going to be easy?

Fact-Checking the Candidates

More than 20 years ago, the veteran columnist and author Phil Musick made a timely observation on his radio show. He believed that any politician who would just speak the truth would have a clear advantage with the voters.

Nowadays, "the truth" comes at us from many angles. It can be pre-packaged to reinforce beliefs, values and prejudices. It can be taken in or out of context. It comes at us 24/7. If you see truth that you don't like, you can sample another. Where are the credible journalists? Many of them have been here all the time, hidden in the media glut. Others are finding their way. If fact-based truth matters to you, there's good news.

Samuel Chamberlain, of the newspaper trade journal, Editor & Publisher, has written a special report about how fact-checking became prominent for the current presidential campaign. He quotes Bill Adair, Washington bureau chief of the St. Petersburg Times, about the genesis of Politifact:

We felt that we had done a disservice to voters [in 2000 and 2004] where we were passing along claims about candidates that were not true, and feeling that it was up to the voters to decide, he says. So, about a year ago, my editors came up with the idea of a Web site that would be a sort of daily journal and archive where voters could look things up and see if these claims were true.

Politifact, with it's features, the Truth-O-Meter and the Flip-O-Meter, has a concise purpose:

Each election year we hear this lament from our readers suffering the barrage of campaign rhetoric: “just gimme the truth.”

That’s the mission of PolitiFact. The St. Petersburg Times of Florida and Congressional Quarterly of Washington, D.C. – two of America’s most trusted, independent newsrooms – have created the site to help voters separate fact from falsehood in the 2008 presidential campaign.

Fact-Check Sites Are Not New.

In the 2004 vice-presidential debate, Dick Cheney referenced FactCheck.com, a misnomer for FactCheck.org, a pioneer veracity site. The FactCheck Wire provides "Faster than the Speed of Spin" updates in support of its mission:

We are a nonpartisan, nonprofit, "consumer advocate" for voters that aims to reduce the level of deception and confusion in U.S. politics. We monitor the factual accuracy of what is said by major U.S. political players in the form of TV ads, debates, speeches, interviews, and news releases. Our goal is to apply the best practices of both journalism and scholarship, and to increase public knowledge and understanding.

Other sites aiding voters are USA Today's Candidate Match Game, and The Washington Post's The Fact Checker blog.

Phil Musick might not have found a candidate that would just tell us the truth, but politicians that prevaricate in 2008 are being recorded and checked for their misstatements. I hope that voters aren't too cynical to notice.

Uncomfortably Numb Update: Feingold Fights

Yesterday, Sen. Russ Feingold (D-WI), and Rep. Brad Miller (D-NC) introduced The OLC Reporting Act of 2008.

From Sen. Feingold's press release:

This bill represents an important step toward curbing secret law and restoring the balance of power between the White House and Congress.

The OLC Reporting Act would:

• Require the Attorney General to notify Congress within 30 days when the Justice Department issues a legal opinion that:

◦concludes that a federal statute is unconstitutional;
◦relies on the “doctrine of constitutional avoidance,” a doctrine used by Yoo and his colleagues to justify strained interpretations of the law;
◦relies on other interpretive tools to avoid applying the law to the executive branch; or
◦decides that a federal law has been repealed by a later statute, when the later statute does not say so explicitly.

• Retain existing statutory protections for privileged information, while ensuring that Congress receives the information necessary to perform its legislative and oversight functions.

• Protect national security through special procedures for the submission of classified information.

With the current House session scheduled to end on September 26, and a lame duck session after the November election highly unlikely, Feingold and Miller's bill probably won't move until next year.

Uncomfortably Numb

Today, the news focused on the bankruptcy of Lehman Brothers, the Federal Reserve's likely bailout of American International Group (AIG), and the ramifications for Wall Street and the world financial markets. Meanwhile, a Senate subcommittee was listening to recommendations for the next President to restore a constitutional balance of power.

"Restoring the Rule of Law" was the subject of testimony before the Senate Judiciary Subcommittee on the Constitution. In his opening statement, Chairman Russ Feingold (D-WI), said he called the hearing to "tackle the wreckage that this President (Bush) will leave." Feingold began:

Tomorrow, September 17, is the 221st anniversary of the day in 1787 when 39 members of the Constitutional Convention signed the Constitution in Philadelphia. It is a sad fact as we approach that anniversary that for the past seven and a half years, and especially since 9/11, the Bush Administration has treated the Constitution and the rule of law with a disrespect never before seen in the history of this country. By now, the public can be excused for being almost numb to new revelations of government wrongdoing and overreaching. The catalogue is breathtaking, even when immensely complicated and far reaching programs and events are reduced to simple catch phrases: torture, Guantanamo, ignoring the Geneva Conventions, warrantless wiretapping, data mining, destruction of emails, U.S. Attorney firings, stonewalling of congressional oversight, abuse of the state secrets doctrine and executive privilege, secret abrogation of executive orders, signing statements. This is a shameful legacy that will haunt our country for years to come.

Mickey Edwards, Former Chairman of the House Republican Policy Committee, gave testimony that went beyond Presidential abuses of power to outline Congress's neglect of the checks and balances specified in the Constitution.

For most of the past eight years, and for many years before that, the Congress has failed to lived up to its assigned role as the principal representative of the people. Congress's constitutional role includes primary authority over spending priorities, tax policies, and the choice over whether or not to go to war. All of these decisions require the gathering of the information necessary to act judiciously. All of these decisions require a willingness to see to it that those decisions are complied with. But in recent years, instead of fulfilling this important trust, Congress has too often been silent.

[…]

Every member of Congress takes an oath of office to uphold and defend the Constitution. Republican members do not take an oath to defend a Republican president and Democratic members do not take an oath to defend a Democratic president. Once that oath of office is taken, loyalty to the Constitution takes primacy over loyalty to party or individual. But that is not what has happened in recent years.

Here is the challenge, stated as candidly as I can state it. Each year the presidency grows farther beyond the bounds the Constitution permits; each year the Congress fades farther into irrelevance. As it does, the voice of the people is silenced. This cannot be permitted to stand. The Congress is not without power. It can refuse to confirm people the President suggests for important offices; it can refuse to provide money for the carrying out of Executive Branch activities; it can use its subpoena power and its power to hold hearings and above all, it can use its power to write the laws of the country.

In closing, Mickey Edwards reminded Congress of its essential purpose:

Do not let it be said that what the Founders created, you have destroyed. Do not let it be said that on your watch, the Constitution of the United States became not the law of the land but a suggestion. You are not a parliament; you are a Congress – separate, independent, and equal. And because of that you are the principal means by which the people maintain control of their government. Defend that right, and that obligation, or you lose all purpose in holding these high offices. That is how you preserve and defend the rule of law in the United States.

It is easy to cite President George W. Bush for a litany of arrogant, misinformed abuses of power, if not outright violations of law. His abuse of the Constitution requires, at least, an investigation into articles of impeachment. That may be the most glaring failure of Congress, specifically the Speaker of the House of Representatives.

I applaud Senator Feingold for holding this hearing, and find it particularly notable that Mr. Edwards found it necessary to remind Congress of the purpose of its existence. If Congress had been doing its job the last several years, it would have seen the warning signs of the current financial crisis and acted to preempt it. I'll let you find the irony in that.

Defining Citizenship

"Are we so lost we have to be sold our own democratic right?"
Craig Ferguson

John McCain's campaign manager, former lobbyist Rick Davis, insists that "this election is not about issues."

Davis forgot to tell Craig Ferguson, who became a naturalized U.S. citizen a few months ago. In this video, Ferguson riffs about lipstick on a pig, show-business style campaign coverage, and your duty to be informed and vote.


Thanks to Fred F.

If you believe that the media (formerly called the news media), is often derelict in their coverage of the presidential race, you'll appreciate Glenn Greenwald's dissection of the vacuous lipstick on a pig story.

Seven Years Later: A WMD Report Card

The Partnership for a Secure America, a bipartisan group that includes former leaders of the 9/11 Commission, has released a report that states that "We are still dangerously vulnerable" to a WMD attack.

The independent group's evaluation of the U.S. Government's efforts to prevent WMD terrorism is an overall grade of C. The analysis covers the 3 years since the conclusion of the 9/11 Public Discourse Project.

WMD Report Card excerpt:

Here is what the U.S. Government must do next:

• Put someone in charge. There is a critical need for a top-level official with the authority to make government-wide decisions on funding and programs. Someone needs to be responsible for turning our resolve into results.

• Build the blueprint. We need a strategic plan that links all existing programs together, prioritizes funding across the Federal Government, and coordinates implementation. We can no longer afford to hope that our patchwork of programs and initiatives will naturally cohere into an effective whole.

• Strengthen international cooperation. The United States cannot be safe working alone. Terrorism does not respect borders. We must utilize multilateral institutions, regional organizations and bilateral ties. We must be firm in our goals, but flexible in our approach.
  

Compare those recommendations to the mission of the 5 year old Department of Homeland Security:

We will lead the unified national effort to secure America. We will prevent and deter terrorist attacks and protect against and respond to threats and hazards to the nation. We will ensure safe and secure borders, welcome lawful immigrants and visitors, and promote the free flow of commerce.

The WMD Report Card reveals a failure of leadership. After 7 years of Republican control of the security of the U.S., it is time for a change. I agree wholeheartedly with the Partnership for a Secure America; it is time to put someone in charge.

McCain Campaign Runs Huge Deficit

Less than 60 days before the Presidential election, the campaign of John McCain and Sarah Palin is running a huge integrity deficit. Reprising the swift-boating tactics Republican proxies used against John Kerry four years ago, McCain and Palin are repeatedly using lies in an attempt to discredit Senator Barack Obama.

Washington observers are wondering why McCain isn't more careful spending his credibility, particularly since his ally, President George W. Bush lost his passbook years ago.

Update: Conservative Andrew Sullivan has a more stern take on McCain's integrity deficit.

Four Women

Many have acknowledged Sen. Hillary Clinton's epic achievement of inspiring 18 million cracks in the glass ceiling. One could make a case for her being better qualified for the oval office than her husband was in 2000.

Decades before Sen. Clinton, 3 successful women made national political history. They were Sen. Margaret Chase Smith (R-ME), Rep. Shirley Chisholm (D-NY), and Rep. Barbara Jordan (D-TX).

In 1964, Sen. Chase Smith was the first woman to have her name placed in nomination for the U.S. Presidency at a major party's convention.
(Wikipedia)

Rep. Chisholm was the first black woman elected to Congress. In 1972, she became the first major party African-American candidate for President of the United States.
(Wikipedia)

Four years later, Rep. Jordan's keynote address to the Democratic National Convention defined eloquence for me. Her House Judiciary Committee Speech advocating the impeachment of President Richard Nixon is a lesson on a grave congressional process. Barbara Jordan was the first African-American woman to represent a southern state in the U.S. House. She was mentioned as a possible running mate to Jimmy Carter in 1976.
(Wikipedia)

Whether you agree with their politics or not, these women set a lofty standard for competence and qualifications for higher office. We can't afford to accept anything less in the upcoming election.

Post-Convention Wisdom

Was the volume of journalists covering the recent Democratic and Republican party conventions the best use of news gathering resources? If the objective was to provide citizens with information they need to cast an informed vote, they could have put their time to better use. That's the position of Jeff Jarvis, director of the interactive journalism program at the City University of New York's Graduate School of Journalism.

Jarvis recently wrote that "Politics is the opiate of journalism and it's time to go to rehab." Excerpt:

The attention given to the conventions and campaigns is symptomatic of a worse journalistic disease: we over-cover politics and under-cover the actions of our governments. We over-cover politicians and under-cover the lives and needs of citizens. . . .

Four years ago, the Poynter Institute's Al Tompkins asked PBS News anchor Jim Lehrer "why, in these days of few surprises at national conventions, it is still worthwhile to cover them." Lehrer's answer might be summed up in this paragraph from his response:

The political conventions are among the few "shared" national political events left. The others are the debates. Journalism organizations that say the conventions are not important are essentially saying the election of a president is not important. We are not in the business of making events, only in covering them.

More people watched the speeches by presidential candidates Obama and McCain, and vice presidential candidate Palin, than the finale of American Idol. Those numbers were swelled by low-information voters of both parties. The conventions told them who to cheer for, but many don't know enough about the candidates' policies to cast an informed vote.

The second of the "few 'shared' national political events" Jim Lehrer mentioned is the debates. It is crucial that the moderators elevate their game above the will you pledge tonight silliness that diminished the primary debates. If they don't, the candidates should assert themselves to make their positions clear.

Obama and McCain each have website pages that address many important issues. But, television is likely to guide more voters than the internet. Either way, I agree with Jeff Jarvis that journalists should invest more time covering the actions of our government. That would be one step towards making this the last most critical presidential election of our lifetime.