John McCain and the Snake-Oil Express Take Wall Street by Storm
Or, 10 Reasons Why Dr. McCain’s Economical Cures Could Very Well Kill the Patient
Settling on just the 10 was a bit tricky. I’m sure some of you will wonder why I left some out and put others in. My approach was much like playing a game of 52-card pickup. These were the first ten cards I found.
More than a few economists were taken aback when John McCain made his January 2008 prognostication: “I don’t believe we’re headed into a recession. I believe the fundamentals of this economy are strong and I believe they will remain strong.” The economists were taken aback because McCain’s words sharply contradicted on-the-ground reality: America had just seen an unprecedented year of tragedy for many American homeowners, with 1.3 million homes in various stages of foreclosure during 2007 — up 75% from 2006.
To McCain’s credit, he’d also recently said, “The issue of economics is not something I’ve understood as well as I should,” but then added, as if this made everything all right, “I’ve got Greenspan’s book.” Greenspan is, of course, the Federal Reserve Chairman who bull-headedly refused to regulate sub-prime lending — a system designed to “grow” the economy by putting money into the pockets of realtors, developers, lenders, and all the businesses who feed off these hosts — but at the eventual expense of the millions of homeowners who have, since, lived to see the tragic folly of buying homes they couldn’t afford to pay for. Congratulations if you live in Nevada, Florida, Michigan, California, Colorado, Ohio, Georgia, Arizona, Illinois or Indiana. You made the top ten list for the highest number of home foreclosures, leaving your states to enjoy double the catastrophe of trickle-down Republican economics.
Early this week, the aforementioned Federal Reserve Chairman, Alan Greenspan (still a staunch McCain supporter) gave McCain’s economic tax plan an emphatic thumbs-down. Ouch. Greenspan says the U.S. cannot afford the big tax cuts proposed by John McCain — that we cannot affort to finance “tax cuts with borrowed money.” Greenspan went on to describe our current economic crisis, in the wake of the sub-prime mortgage collapse, to be a “once in a half-century, once in a century crisis,” that will lead to the failure of more firms.
This is a marked contrast with the statement of McCain’s other economic mentor and (now former) financial adviser, Phil Gramm, who just 2 months ago described our economic troubles and recession as being only in our minds, saying that we’d become “a nation of whiners.” It is also a marked contrast with McCain’s own words this week (see more on this in #8, below) when he said that despite “fears” over the “turmoil” on Wall Street, “the fundamentals of our economy are strong.” This is, in turn, a marked contrast between Obama’s words yesterday, when he described the upheaval on Wall Street as “the most serious financial crisis since the Great Depression.” **
In August 2007, the non-profit tax advocacy group, Citizens for Tax Justice, released their report, titled, “The Presidential Candidates on Taxes,” which assessed the candidates’ tax proposals, breaking them down into two lists: “bad ideas” and “better ideas.” McCain scored 5 out of 7 on the “bad ideas” list, and scored zero on the “better ideas” list. Among McCain’s “bad ideas” were (1) making Bush’s tax cuts for the wealthiest Americans pemanent, (2) sharp cuts in corporate taxes to “grow” the economy, (3) repealing the estate tax, (4) a national sales tax, which many say would benefit the wealthy and hit lower income families hardest, (5) healthcare tax breaks that, again, many say would disproportionately benefit the wealthy, while doing nothing, at best, to help lower income families.
In April 2008, McCain jumped on board with the gas-tax holiday, a plan to suspend the federal excise tax for the summer to give Americans a break at the pumps. Sounded great, until economists pointed out that, by summer’s end, the plan would have added billions to our already staggering debt to China and transferred more wealth to Saudi Arabia, for a mere 3-month savings total of $35 for the average family. Worse, still, it would have caused a $10 billion dollar deficit to the Federal Highway Trust Fund, which pays for roads and bridges throughout the country. Most economists called the gas tax holiday, in so many words, a bad idea, with Thomas Friedman describing it as “so ridiculous, so unworthy of the people aspiring to lead our nation, it takes your breath away.” Most understood it for what it was — election year pandering, since there was nearly a zero chance for actual approval for such a plan. Good political play, bad economics. While this was minor, as economic infractions go, it did open a window into the motives of a politician who would propose such a reckless plan.
McCain is apparently confused over the duties of the Senate Commerce Committee, on which he once served. This week, he offered his experience as chairman on this committee as credentials for knowing “how to fix this economy.” McCain said in an interview, while discussing the crisis on Wall Street. “I understand the economy. I was chairman of the Commerce Committee that oversights every part of our economy.” (listen, below)
The fact is, the Senate Commerce Committee does NOT oversee every part of our economy, nor does it oversee the specific areas in crisis. (Perhaps McCain was confused with the Senate Banking Committee, which DOES oversee these duties — a committe on which McCain never served.) The committee on which McCain served oversaw 13 areas, beginning with the Coast Guard and continuing through regulation of consumer products and services — EXCEPT for credit, financial serices and housing (the very areas in crisis).
Another entry in the “your slip is showing” department…. Yesterday, McCain made a double-gaffe when speaking about the Securities Investor Protection Corporation (SIPC), a corporation that returns customers’ cash, stock and other securities in the event of a brokerage firm bankruptcy. For one thing, McCain repeatedly referred the company as SPIC, which is, if you’ll recall, a racial epithet. For another thing, McCain called this corporation a regulatory agency, which was heard among economic know-hows as an unintentional admission that economics are indeed foreign to McCain. This is the risk taken when memorizing talking points vs. owing a true understanding of what those talking points actually mean. (listen, below)
During one of the Republican presidential debates this year, in a Q & A segment between candidates, Ron Paul asked John McCain about the President’s Working Group on Financial Markets. Anyone running for president should know this group, as it works directly under the president, its stated role to prevent a stock market crash. To anyone who knows even the most rudimentary economic terms, the Working Group is a staple item. Its activities controversial in some circles, the Working Group is the economic equivalent of the war room. Specifically, the Working Group’s role is to gather it members (the President, the Secretary of Treasury, Federal Reserve chairmen, the Securities & Exchange Commission and the Commodity Futures Trading Commission) in the event of a “sudden, stomach churning drop in stock prices,” such as the one we saw earlier this week. The Working Group’s role is to keep the markets operating and to avoid the sort of panic-run that would lead to a full market collapse.
In the presidential debate, Ron Paul asked McCain (1) his opinion on the group, (2) whether he would keep it in place or get rid of it, and (3) if he did decide to retain the group, would he be in favor of making their activities transparent. McCain’s answer only made transparent that he was without a boat and paddle to offer any knowledge of this group. His answer — a loosely strung recitation of whatever economic terms (tax cuts) and names (Gramm, Rudman, et al) he could conjure — sounded more like Miss Teen USA South Carolina’s infamously embarassing speech of last year, than a presidential candidate with an inkling of the duties of the job for which he is applying, much less on economics. (listen, below, starting at 0:45)
Worst Financial Crisis Since ’30s, with No End Yet in Sight –– Wall Street Journal Headline, Sept. 18, 2008
This has been the worst financial crisis since the Great Depression, no doubt about it. – Mark Gertler, NYU Economist, Sept. 17, 2008
This is the most serious financial crisis since the Great Depression — Barack Obama, Sept. 15, 2008
The fundamentals of our economy are strong — John McCain, Sept. 15, 2008
Just this week, McCain again asserted that “the fundamentals of our economy are strong,” a claim he has repeatedly made througout this campaign — even as the most recent figures show bank repossessions have jumped 184% from last year, and even as unemployment rates have jumped to the highest rate in five years at 6.1%, and even as our countries oldest and most enduring financial institutions are falling like giant dominoes. It only makes sense that McCain would continue adhering to this claim, as he also continues to adhere to the economic architects (Greenspan and Gramm) of the very policies that caused the economic crisis we are in.
Yesterday, after receiving repeated criticisms for his claim that our economy is strong, and with demands to explain his rationale, McCain attempted to defend his position. Rather than speaking on the topic, however, he evaded the topic entirely by giving a pep talk on American workers — a non-answer disguised as an answer. Here’s what he said: “The economic crisis is not the fault of the American people. Our workers are the most innovative, the hardest working, the best skilled, the most productive, most competitive in the world. That’s the American worker. And my opponents may disagree, but those fundamentals, the America worker, their innovation, their entrepreneurship, the small business, those are the fundamentals of America, and I think they’re strong. But they are being threatened today, those fundamentals are being threatened today because of the greed and corruption that some engaged in in Wall Street, and we have got to fix it.” (see the video here)
No one, to my knowledge, has blamed the American worker for our economic crisis, nor has anyone criticized the integrity of the American worker — most especially in conjunction with our economic crisis. Nonetheless, McCain used this pep talk as an opportunity to smear the Democrats, by suggesting that they somehow “disagree” on the integrity of the American workers, and somehow “disagree” that the American worker is a fundamental part of our economy.
McCain’s speech was designed not to answer the question, but to stir patriotic fervor over the America worker, while simultaneously calling into question the Democrats’ loyalty to the American worker (a false flag if ever I saw one). That this is a devious tactic is not the point. The point is that McCain continues to be just as out-of-touch with the daily reality of these hardworking Americans, as he is of the bigger economic picture that has plunged so many of these hardworking Americans into hard times. Here, McCain seems to be showing a greater deference for self-serving his political campaign than engaging in the straight talk necessary to addressing the real issues and real solutions to our economic crisis.
Unions all over the country are calling McCain out on his record — a record which utterly and deplorably contradicts the campaign promise he is making: specifically, a promise to put the interests of American working families ahead of special interests. For some real straight talk on these issues from the perspective of hardworking Americans, see the 8-minute video, below, produced by the AFL-CIO Building & Constructions Trades.
Sarah Palin. Why Sarah Palin? Because McCain is offering up Sarah Palin”s executive experience as a maverick Alaskan politician, ready to charge Washington and clean up corruption, cut out wasteful spending and bring transparency back to our government. Just like she did in Alaska. To be fair, it appears that Palin has been a shrewd manager of the Alaska oil coffers. Whether her methods were above-board, whether her policies fairly represented all the citizens of Alaska, and just what were the costs of these to the citizens of Alaska and the lower 48, are points that continue to be debated. That being said, it would be foolish to not take both her record and her integrity/honesty into account, when considering the economic credentials of the McCain-Palin ticket. Her record on both counts is well-documented:
Washington Post: Palin Billed State for Nights Spent at Home
Jack Bog’s Blog: Governor Palin, your tax return, please (outlines the tax problems Palin faces as a result of the above-mentioned per-diem payments received for nights spent at home)
Anchorage Daily News: Palin denies Mat-Su bias in state budget
Daily Kos: Alaskanomics – How Palin’s State Sucks the Rest of the Country Dry
Gov. Sarah Palin’s September 2007 Press Release on the demise of the Bridge to Nowhere
The New York Observer: The Fairy Tale of Palin the Reformer
The Reality-Based Community: Evidence of Consciousness of Guilt
canarypapers: The Sarah Chronicles: A straight-poop compendium of questions & answers on Sarah Palin
LASTLY…. Shall our legal system also show “deference” to Madam Sarah?
Newsweek: Can He Stop Troopergate? A McCain lawyer scrambles to block a Palin ethics inquiry
John McCain’s economic policies have been shaped by lobbyists: the same lobbyists that are literally writing our laws on Capitol Hill, and the same lobbyists that are literally running McCain’s presidential campaign. Few would argue that the un-due influence of lobbyists on Capitol Hill has come to be a cancer on our politics and our politicians, the malignancy so infesting our economy, that we now find ourselves on the brink of economic collapse. When you think of McCain & lobbyists, think: Enron, home foreclosures, Jack Abramoff, Phil Gramm, Charlie Black, Tom Loeffler, Carlos Bonilla….
Rather than write an overlong exposition on this, it would be more clear-cut to simply link the many articles and op-eds written about the un-due influence of lobbyists on the McCain campaign’s economic policies and, by logical extension, the economic policies of a McCain presidency.
TPM: John McCain’s Lobbyist Universe
McCainSource: McCain Tapped a Lobbyist to Head His VP Search
McCainSource: McCain Has Had at Least 133 Lobbyists Running His Campaign and Raising Money for Him
McCainSource: John McCain’s Iraq Policy is Good for Lobbyists and Defense Contractors
McCainSource: Lobbyists at the Helm: Bush & McCain Tap Lobbyists to Run the Show
MSNBC: McCain economic policy shaped by lobbyists — Swiss bank paid McCain co-chair to push agenda on U.S. mortgage crisis
Lastly: About those foreign policy credentials, Senator McCain….
Huffington Post: McCain’s Top Foreign Policy Advisor Got Money from Georgia
Enough is enough! — Barack Obama, September 2008
by Mantis Katz, for the canarypapers
This has been the worst financial crisis since the great depression, no doubt about it. – Mark Gertler, NYU Economist
John McCain and the Snake-Oil Express Take Wall Street by Storm
(or, 10 Reasons Why Dr. McCain’s Economical Cures Could Very Well Kill the Patient)
For related reading, check out these links:
NPR: ‘It’s the Economy, Stupid’: Ask the Advisers
Washington Post: McCain Embraces Regulation After Many Years of Opposition
Wall Street Journal: Worst Crisis Since ’30s, with No End Yet in Sight
Financial Times: Modern History’s Greatest Regulatory Failure
Bloomburg McCain’s tax plan would block a democratic Katrina (note: this pro-McCain op-ed doesn’t exactly dispel the critics’ versions of the facts on McCain’s economic platform)
Tax Policy Center (Urban Institute and Brookings Institution): An Updated Analysis of the 2008 Presidential Candidates’ Tax Policies (pdf file)
Tax Policy Center (Urban Institute and Brookings Institution): overview of the above document from their website, with related topics
ABC News: Biden: McCain’s Economic stance a ‘political realization, not a policy conversion’
LA Times: John McCain tries to recover from comment on ‘strong’ economy
Economists for Obama: Got Questions on Obama’s stance on particular economic policy issues? The answers are here. If you don’t see your question, just ask, and they’ll find the answer for you.
** (Footnote from Item #2, above) Perhaps this is why Wall Street political donors favor Obama 56% vs. 44% for McCain — an almost perfect inverse to the 2000 Democratic vs. Republican figures. It took them a few years and a few notable collapses (most recently Lehman Brothers and Merrill Lynch) but Wall Street seems to be understanding what the economists have been warning: each day spent under Bush-McCain style economics is one day closer to a total collapse of the American economy. It’s doubtful that anyone but McCain, Bush et al will find Alan Greenspan and Phil Gramm on an A-list of economic advisers anytime soon. For his part, Obama claims an impressive list of economic supporters, including widely respected Former Federal Reserve Chairman, Paul Volcker, considered to be one of our greatest central bankers.