In an essay to be presented tomorrow, former Assistant Secretary for Economic Policy Phillip Swagel outlined his experiences working for the Bush Treasury Department during the onset of the economic crisis. While claiming up front that the paper “will inevitably be seen as defensive,” Swagel wrote some serious critiques of Treasury’s actions in combating the rapidly failing economy.

Perhaps most telling was his claim that Treasury under then Secretary Henry Paulson was plagued by “chronic disorganization” that hampered the response to the crisis:

Other aspects of the decision-making were self-imposed hurdles rather than external constraints. Notable among these hurdles was chronic disorganization within the Treasury itself, and a broadly haphazard policy process within the Administration (and sometimes strained relations between Treasury and White House staff) that made it difficult to harness the full energies of the administration in a common direction.

With regard to Paulson’s now infamous TARP reversal, Swagel claimed that Paulson “truly intended to buy [toxic] assets,” but only because he believed it was politically unfeasible to suggest injecting capital into banks — which, of course, is what he eventually did:

The Secretary truly intended to buy assets—this was absolutely the plan; the TARP focused on asset purchases was not a bait and switch to inject capital. But Secretary Paulson would have gotten zero votes from Republican members of the House of Representatives for a proposal that would have been portrayed as having the government nationalize the banking system. And Democratic House members would not have voted for the proposal without the bipartisan cover of votes from Republicans.

At the time, we noted that Paulson seemed to be flailing about, with a series of misguided attempts to get a handle on the tumbling economy. This account from Swagel does little to dispel that notion.

According to a statement by British Prime Minister Gordon Brown, the G20 has agreed to boost funding to international institutions combating the global economic downturn — particularly the IMF — and to put an end to tax havens that don’t provide information to foreign tax authorities on request.

However, one item that the G20 didn’t seem to address is what to do about the toxic assets plaguing banks around the world. While this is undeniably a problem that began in the US, it is now shared by many European nations. As of now, only the US, UK, Germany and Switzerland have suggested plans for dealing with the assets, while the rest of Europe basically dithers. The G20 reportedly came to an agreement on “principles” regarding troubled assets, but little else.

Yesterday, International Monetary Fund managing director Dominique Strauss-Kahn challenged the G20 to step up to the plate on the toxic asset issue, saying that the fund’s experience suggested “that you never recover before the cleaning up of the banking sector has been done. The US . . . is rightly insisting on stimulus and the EU rightly insisting on regulation. They are not yet moving quickly enough in doing the cleaning up of the financial system.”

So what’s the problem? As Gillian Tett wrote in Financial Times, it could be that no one has worked out a good system for cleaning up the baks:

One dirty secret that hangs over Thursday’s meeting is that there is still precious little global consensus about how to tackle the toxic woes. Some countries (such as the US) are trying to persuade banks to sell their bad assets; others (such as the UK) are trying to “insure” the banks against losses instead. Meanwhile, several governments in continental Europe seem to be just holding their breath –- and praying that the problem will magically disappear.

Tett added that “this reluctance to debate the issue reflects a desperate attempt to avoid telling taxpayers how much it might really cost to remove the toxic rot.” There has also been a lot of noise made about the supposed disconnect between President Barack Obama’s desire for global stimulus and Europe’s wish for tightening financial regulation, so perhaps eschewing talk of toxic assets was an attempt to avoid further displays of disunity.

But whatever the reason, toxic assets are not simply going to disappear on their own, and everyone needs to get the ball rolling on cleaning them up. If Europe is so concerned with making sure financial institutions are regulated, then it should also be interested in ensuring that we have a functional banking system going forward. As for the US, global stimulus is great, but its not going to do much good if the banks are frozen. It’s in everyone’s interest to solve this problem, and no one benefits from continued inaction.

Congressional Republicans are getting their cake and eating it too.

Ryan Grim reported at The Huffington Post that, in order to calculate the projected deficits for their budget alternative, Republicans assumed that Americans would pay a higher tax rate even though they are offered the “simpler” tax rates of 10% and 25%. This allows the GOP to “offer the tax cut without factoring it into the budget’s revenue.”

In other words, they pretend they can cut taxes for free.

Economist Dean Baker, in a back of the envelope calculation, estimates these tax cuts actually cost approximately $300 billion every year, or $3 trillion over the ten year budget window.

If these real costs, in the form of gutted revenues, were tacked on to the Republicans’ distorted projections, their actual deficits would rise from around 3% of GDP from 2012-2019 to 4.5% of GDP from 2012 to 2019.

This puts their actual deficits in the same range as President Barack Obama’s budget, whose deficits the Congressional Budget Office estimates to be approximately 4%-5% of GDP over the next decade.

Here’s the difference: Obama’s budget would make vital investments in health care, education and energy that would transform our economy, get health care costs under control, and reform the tax code to lay the foundation for broadly shared long-term economic growth.

The April Fool’s budget of Congressional Republicans would double-down on the Bush economic strategy of budget-busting tax cuts for corporations and the wealthy.

Rep. Paul Ryan (R-WI), when releasing the budget, said, “the stakes of this budget debate could not be higher; and the choice for a stronger, more secure, and more prosperous future could not be more clear.” We agree. Maybe Ryan and Republicans in Congress should rise to the occasion and stop lying to the American people.