“The fundamentals of the economy are strong.”
– Sen. John McCain (R-AZ), 9/15/08
McCain uttered this phrase on the same day that the U.S. financial system was facing its “gravest crisis in modern times.” This weekend, the securities firm Lehman Brothers “filed for bankruptcy protection and hurtled toward liquidation,” “becoming the largest financial firm to fail in the global credit crisis,” while Bank of America “agreed to acquire Merrill Lynch & Co. for about $50 billion as the credit crisis claimed another of America’s oldest financial companies.” The insurance giant AIG is also asking the Federal Reserve for an infusion of cash, while the Dow Jones industrial average dropped 300 points in the first 15 minutes of trading this morning.
But it’s really no surprise that McCain is divorced from the reality of America’s faltering economic system. Just take note of who advises his campaign on economic matters. The Wonk Room has assembled a report on John McCain’s Econ Team — from those who helped spur the mortgage meltdown to those still blissfully unaware that anything is wrong with the economy:
Phil Gramm: McCain’s “Econ Brain,” who called America “a nation of whiners” in a “mental recession,” former Senator Gramm was behind the Commodity Futures Modernization Act and the Gramm-Leach-Bliley Act. The former made legal “the mortgage swaps distancing the originator of the loan from the ultimate collector,” while the latter “destroyed the Depression-era barrier to the merger of stockbrokers, banks and insurance companies.” As The Nation wrote, “those two acts effectively ended significant regulation of the financial community.”
Rick Davis: Before becoming McCain’s campaign manager, Davis “served as president of an advocacy group led by Fannie Mae and Freddie Mac that defended the two companies against increased regulation.” As noted in the Progress Report, “During his tenure, Davis moved to challenge even the smallest measures to make sure that Fannie Mae and Freddie Mac are be held more accountable for their actions.”
Donald Luskin: Like McCain, Luskin believes that “things today just aren’t that bad,” and everyone should “quit doling out that bad-economy line.” In a Washington Post Op-ed on Sunday, he wrote that “we have surely become a nation of exaggerators,” despite agreeing that “the foreclosure rate is the worst since the Great Depression.”
Douglas Holtz-Eakin: Though occasionally exhibiting an off-message honest streak (like admitting that McCain will have to raise taxes), this former director of the Congressional Budget Office now spends his time incorrectly claiming that McCain will balance the budget by the end of his first term, trying to justify the $2.8 trillion gap between McCain’s economic proposals and what he says on the stump, and saying “Main Street is hanging in there,” despite significant evidence to the contrary.
Carly Fiorina: As CEO of Hewlett-Packard (HP), Fiorina exploited a corporate loophole to hold more than $14 billion in profits overseas, a loophole that McCain is against closing. She was forced out of HP after a merger with Compaq “failed to bring Hewlett the profits that Ms. Fiorina had forecast,” resulting in “tumbling shares.”
Nancy Pfotenhauer: As the Wonk Room has previously noted, Pfotenhauer’s resume includes work for “Americans for Prosperity (founded by Koch), and the Independent Women’s Forum (funded by Koch).” On the IWF/AFP agenda, and one of the major facets of McCain’s economic plan, is a cut in the corporate tax rate, which will deliver $175 billion in tax breaks to America’s corporations.
William Timmons: A consummate Washington insider, Timmons, who McCain tapped to head his presidential transition team, was a lobbyist with Timmons and Co., and lobbied for, among others, Freddie Mac. According to Time, “He has registered to work on bills that deal with the regulations of troubled mortgage lenders Freddie Mac and Fannie Mae.”
In all, McCain has 159 lobbyists working for or raising money for his campaign, including representatives of Merrill Lynch, Fannie Mae, AIG, Bank of America, and Lehman Brothers. With a team like this whispering into his ear, it’s no wonder McCain still believes that the economy is strong.