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Bush’s Legacy Of Squandering Taxpayer Money

By Ali Frick on Sep 21, 2008 at 2:32 pm

bush-paulson_phixr.jpgYesterday, President Bush announced his $700 billion plan to buy out troubled financial institutions. Demanding enormous faith in his administration’s stewardship, the plan “would place no restrictions on the administration other than requiring semiannual reports to Congress, granting the Treasury secretary unprecedented power to buy and resell mortgage debt,” and to hire outside firms “to help manage its purchases.” Further, the proposal provides no oversight mechanism:

Sec. 8. Review: Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Bush is demanding unprecedented control over billions of dollars — with no oversight. His history of mismanaging taxpayer dollars should make Americans skeptical of his buyout plan:

IRAQ RECONSTRUCTION

-$142 million wasted on reconstruction projects that were either terminated or canceled. [Special Inspector General for Iraq, 7/28/08]

-“Significant” amount of U.S. funds for Iraq funneled to Sunni and Shiite militias. [GAO Comptroller, 3/11/08]

-$180 million payed to construction company Bechtel for projects it never finished. [Federal audit, 7/25/07]

-$5.1 billion in expenses for Iraq reconstruction charged without documentation. [Special Inspector General for Iraq Reconstruction report, 3/19/07]

-$10 billion in spending on Iraq reconstruction was wasteful or poorly tracked. [GAO, 2/15/07]

-Halliburton overcharged the government $100 million for one day’s work in 2004. [Project on Government Oversight, 10/8/04]

KATRINA

-Millions wasted on four no-bid contracts, including paying $20 million for an unusable camp for evacuees. [Homeland Security Department Inspector General, 9/10/08]

-$2.4 billion in contracts doled out by FEMA that guaranteed profits for big companies. [Center for Public Integrity investigation, 6/25/07]

-An estimated $2 billion in fraud and waste — nearly 11 percent of the $19 billion spent by FEMA on Hurricanes Katrina and Rita as of mid-June. [New York Times tally, 6/27/06]

-“Widespread” waste and mismanagement on millions for Katrina recovery, including at least $3 million for 4,000 beds that were never used. [GAO, 3/16/06]

DEFENSE CONTRACTS

-A $50 million Air Force contract awarded to a company with close ties to senior Air Force officers, in a process “fraught with improper influence, irregular procedures, glaring conflicts of interest.” [Project on Government Oversight, 4/18/08]

-$1.7 billion in excessive fees and waste paid by the Pentagon to the Interior Department to manage federal lands. [Defense Department and Interior Department Inspectors General audit, 12/25/06]

-$1 trillion unaccounted for by the Pentagon, including 56 airplanes, 32 tanks, and 36 Javelin missile command launch-units. [GAO, 5/18/03]

Given Bush’s history of gross fiscal mismanagement — including an unprecedented number of no-bid contracts and Bush’s resistance to closing fraud loopholes or increasing oversight of contracts — why should Americans trust another $700 billion to his care? Paul Krugman writes, “Let’s not be railroaded into accepting an enormously expensive plan that doesn’t seem to address the real problem.”

Digg It!

Update

Matt Stoller has some reactions from anonymous Democratic members of Congress.

Yglesias

The Fierce Urgency of Now?

By Matthew Yglesias on Sep 21, 2008 at 2:08 pm

Paul Glastris on the need to avoid making decisions under pressure:

One of the classic mistakes we all make–and this is true of political leaders and average citizens alike–is to accept unquestioningly that the choices we’re being presented with are in fact the only choices we have. And so it was on Friday that Democratic leaders in Congress seemed to line up behind the Bush administration’s plan to have the federal government spend half a trillion dollars or more to buy up toxic mortgage securities held by banks and other institutions. It was a radical idea, suspiciously lacking in detail, and rife with taxpayer risk with moral hazard. But if it’s either that or the whole financial world melts down, the thinking went, what choice do we have?

As Paul observes, the crucial thing to note is that we do have options and alternatives — bailouts for homeowners rather than bankers is a possible scenario, it’s just not the one the bankers prefer.

Climate Progress

McCain facing tax vs. energy (non)dilemma

By Joe Romm on Sep 21, 2008 at 1:48 pm

Congressional Quarterly has been suckered by the Greenwasher from Arizona — just like pretty much everyone else, as recently noted.

CQ just ran an article, “McCain Facing Tax vs. Energy Dilemma,” about “The Energy Improvement and Extension Act of 2008″ (described here) that asserts:

Republican presidential nominee John McCain may have to pick between two of his campaign’s principles next week when the Senate takes up an energy tax bill that would help subsidize new and existing renewable energy incentives with relatively small tax hikes on oil companies.

Then again, maybe he won’t be there to choose.

McCain has campaigned in favor of federal investment in wind power, solar energy, low-emission cars and trucks, and “clean coal” technology, all of which are included in the energy measure. But he also has said repeatedly that he opposes increasing taxes on oil companies.

[With apologies to Jon Stewart] Oh, Congressional Quarterly, why do you mock me?

You might think that a publication with the word “Congressional” in its name would write articles about members of Congress that were based on their Congressional voting records. Well, you wouldn’t think that, because you are readers of Climate Progress and wise in the ways of the world. But some random visitor from outer space would think that. All I can say is, stupid alien.

This is an incredibly easy vote for John McCain, a man of no remaining principles, to go by the last month — he picked a friggin’ global warming denier for is running mate, after all (see “Turns out McCain doesn’t care about global warming“), and he was accused of lying too much by Karl Rove! McCain thinks renewables “dont’ work,” he hates government subsidies for renewables, and his Big Oil buddies who both manage and fund his campaign hate even the tiniest reduction in their pork.

CQ does understand very recent voting history of enough to know what McCain is probably going to do — skip the vote entirely.

Read more

Yglesias

Skeptics

By Matthew Yglesias on Sep 21, 2008 at 1:46 pm

Avi Zenilman rounds up the skepticism coming in over the weekend from economists who have growing doubts about the Bush/Paulson bailout plan.

Yglesias

Boehner: Bailouts for the Rich Only

By Matthew Yglesias on Sep 21, 2008 at 1:38 pm

Chris Dodd was mushier than I would like to see, but one’s appreciation for him skyrockets when juxtaposed against Rep. John Boehner’s strong stand against delivering help to average people — it’s Wall Street only for him:

Satyam Khanna observes that help is badly needed: “Foreclosure filings last month increased 27 percent compared to the same month a year ago. Homeless advocacy groups are ‘reporting the most visible rise in homeless encampments in a generation’ in part because of rising foreclosures.”

Yglesias

Rauchway on Reconstruction Finance Corporation

By Matthew Yglesias on Sep 21, 2008 at 1:22 pm

The bottom line: “In short, although the situation in January of 1932 was visibly more dire than it is now, Congress was less willing to hand over utter independent authority to the Hoover administration.”

That’s via Brad DeLong. Friends don’t let friends write $700 billion blank checks to the Bush administration.

Yglesias

Buy The Companies, Not the Assets

By Matthew Yglesias on Sep 21, 2008 at 12:22 pm

I said this yesterday citing Doug Elmendorf and now Paul Krugman’s saying the same thing. It seems that it’s genuinely necessary for the government to give a large sum of money to financial services firms in exchange for something. But the issue is: In exchange for what? Under the Paulson Plan, in exchange for public money the taxpayers will get distressed assets. In a better plan, in exchange for public money the taxpayers will get equity in the bailed out firms:

Or I should say, the [Paulson] plan does nothing to address the lack of capital unless the Treasury overpays for assets. And if that’s the real plan, Congress has every right to balk.

So what should be done? Well, let’s think about how, until Paulson hit the panic button, the private sector was supposed to work this out: financial firms were supposed to recapitalize, bringing in outside investors to bulk up their capital base. That is, the private sector was supposed to cut off the problem at stage 2.

It now appears that isn’t happening, and public intervention is needed. But in that case, shouldn’t the public intervention also be at stage 2 — that is, shouldn’t it take the form of public injections of capital, in return for a stake in the upside?

Let’s not be railroaded into accepting an enormously expensive plan that doesn’t seem to address the real problem.

Exactly.

Politics

Boehner: Treasury’s Bailout Package Should Help Only Wall Street, Not Main Street

By Satyam Khanna on Sep 21, 2008 at 12:21 pm

Congress and the administration are currently in negotiations over a $700 billion legislative package to relieve financial institutions of their bad mortgage-based assets. At issue is to what extent the package should also aid Americans facing foreclosures. “We must insulate Main Street from Wall Street and keep people in their homes by reducing mortgage foreclosures,” said House Speaker Nancy Pelosi (D-CA).

On ABC’s This Week today, House Minority Leader John Boehner (R-OH) rejected relief for Main Street, labeling it simply “partisan politics” and saying that it doesn’t “need to be part of this package”:

DODD: I think there’s going to be a strong interest to deal with the Main Street aspects of this.

BOEHNER: But we’ve already dealt with that, when we passed the housing bill last summer. I didn’t vote for it because of the $300 billion bailout for scam artists, and speculators, and others around the housing industry. But there are a lot of tools in there to help the Federal Housing Administration deal with the foreclosures problems that’s out there. We need to rise above partisan politics…and deal with this as adults.

Boehner suggested giving Treasury Secretary Paulson the “powers as quickly as possible.” “There are a lot of well-meaning, well-intentioned ideas out there, but they don’t need to be part of this package,” he said, referring to assistance for average working families. Watch it:

Boehner needs to wake up if he thinks help for Americans facing foreclosure is unnecessary because of last year’s housing bill. Foreclosure filings last month increased 27 percent compared to the same month a year ago. Homeless advocacy groups are “reporting the most visible rise in homeless encampments in a generation” in part because of rising foreclosures.

Direct relief for the middle-class and Americans struggling to stay in their homes should be a necessary part of the bailout package. Ed Paisely of the Center for American Progress explained:

The legislative package that moves rapidly through Congress to implement Paulson’s new plan should also include expanded unemployment benefits and heating assistance for low-income families, increased food stamps, and assistance for states in providing health coverage to families in need during these difficult times. … It would not be right if the rescue only rescues firms and not families.

President Bush also hinted at opposition to direct help for Main Street in a press conference yesterday, stating, “I think most leaders would understand we need to get this done quickly…the cleaner the better.”

Yglesias

The Real Victims

By Matthew Yglesias on Sep 21, 2008 at 12:16 pm

ABC News reports on the masters of the universe, not as rich as they used to be, still way richer than the people who didn’t destroy the economy:

“It’s going to be very hard psychologically for these people,” Frank said. “I talked to one guy who had to give up his private jet recently. And he said of all the trials in his life, giving that up was the hardest thing he’s ever done.” [...] The chairman of Lehman Brothers, Richard Fuld, still has his mansion in Greenwich, CT, his oceanfront estate on Jupiter Island in FL, and his Park Avenue co-op in Manhattan. Many at Lehman blame Fuld for dallying while his investment bank went bust, taking risks with other people’s money while he cleared over $40 million in salary and stock in the last year alone.

Of course it would hardly make a dent in the overall $700 billion cost of the bailout, but it seems to me that we should be seizing all the homes belonging to all the executives of companies in need of bailing out and selling them to raise some of the bailout funds. Maybe they could get real jobs and work for a living.

Media

Don’t Just Stand There

By Matthew Yglesias on Sep 21, 2008 at 12:01 pm

I was watching Meet The Press and at one point during the roundtable segment, everyone is observing that thus far the economic crisis on Wall Street hasn’t had a particularly large impact in the “real” economy. But soon, they all said, it would.

People kind of just left that out there like something that we have to accept. But while I suppose we do have to accept some form of dislocation, it’s not at all necessary for us to stand aside passively and just wait for downturn to come. There’s no reason why the government couldn’t be moving with as much alacrity to inject stimulus as they are to float Wall Street by with bailouts. I’ll link again to the CAP green recovery proposal. When this came out on September 9, I think you might have looked at it and said “well, this sounds good, but perhaps it’s a bit too expensive.” But put in the perspective of a $700 billion bailout the idea of spending $100 billion over two years to ensure that the ordinary people who are getting stuck with the bill for Wall Street’s screwups don’t all lose their jobs is small change:

peri_report_onpage_1.jpg

Now the alternative of letting the economy slip into severe recession would also, I suppose, reduce carbon emissions over the short run, but I’d rather do it my way.

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