ThinkProgress Logo

Economy

Paulson Flails About With His TARP

paulson2.jpgYesterday, Treasury Secretary Henry Paulson announced that the Treasury Department has altered the way in which it is going to implement the $700 billion Troubled Assets Relief Program (TARP). Paulson has now “officially abandoned his original plan to buy troubled assets from financial institutions,” and instead aims “to reinforce the stability of the financial system by providing sorely needed capital to banks, and even non-bank institutions that securitize credit card, auto and student loans.”

As Matthew Yglesias noted, “On the policy merits, I think Paulson’s shift into recapitalization was the right idea.” Indeed, this was the path recommended by many economists, including Nobel Laureate Paul Krugman.

But Paulson’s shift does lead to an important question, laid out at Economist’s View: “[W]hy are they still trying to figure out how to design the program? This program shouldn’t be in the design phase, it should already be in place.”

As Joshua Zumbrun wrote in the Financial Times:

Maybe it’s the right way to go, maybe not. But as the government’s efforts to shore up the nation’s economy and financial system continue to balloon, the man running those efforts is putting the most important asset he possesses right now–his credibility–at increasing risk. By changing tactics and communicating poorly, he may be inadvertently recreating the same failed ad-hoc approach to the crisis he’s been trying to escape.

Indeed, in September Paulson told Congress that the original bailout plan was “the single most effective thing we can do to help homeowners, the American people, and stimulate our economy.”

Furthermore, this plan, while potentially better than the original bailout plan, still does nothing to address the root cause of the financial crisis: the failure of the housing market. As Sen. Chris Dodd (D-CT) explained:

[I]t is becoming increasingly apparent that a robust and aggressive program to stem the tide of foreclosures sweeping across the nation is critical to any policy to put our economy back on track…it is my sincere hope that Secretary Paulson collaborates with [FDIC] Chairman Bair to get this program up and running as soon as possible. There is no legitimate reason why they would be unable to do so.

The Wonk Room noted yesterday that Fannie Mae and Freddie Mac took an important first step towards restructuring bad mortgages. Now, an across the board mortgage restructuring plan needs to be implemented, instead of Paulson throwing money at, seemingly, anything that moves.

Update

Dean Baker asks “where’s the ridicule?”

This was the bailout that Mr. Paulson said was absolutely essential for the economy’s survival back in September. The opponents of the TARP were widely derided in the media as ignorant economic know nothings…Even Secretary Paulson now acknowledges that the rescue plan that he presented to Congress was the wrong course of action. The media has an obligation to present these facts clearly to the public.

Yglesias

The Case for Susan Rice

Anyone who follows national security transition gossip will swiftly realize that Susan Rice has made a lot of enemies over the years. Maybe she deserves some of it. But to me, Michael O’Hanlon seems to be making a compelling case for Rice:

It is important that Senator Obama hear from centrists on Iraq, and Susan [Rice] may not be such a person on that subject. As such, given Iraq’s relative importance, it is crucial that in addition to military officers with responsibility for the operation there, at least one key member of the cabinet not be firmly wed to Senator Obama’s ill-advised proposal for a firm and rapid withdrawal schedule from Iraq over the coming 16 to 18 months.

Joking aside, at this point we’re way beyond the point of who’s wed to what or 16 months versus 18 months or whatever. What’s needed is an agreement with the Iraqi government with negotiations conducted by a US government that’s not irrationally committed to staying in Iraq as long as possible. The broad debate about timeline or no timeline has been closed by the Iraqis themselves.

Politics

Chambliss: My 2002 Attack Ad On Cleland Was ‘Truthful In Every Way’

During an interview with Sen. Saxby Chambliss (R-GA) on MSNBC this afternoon, host Andrea Mitchell noted that John McCain is campaigning for him in Georgia today even though McCain had strongly condemned one of his 2002 attack ads. That ad linked his opponent, Max Cleland, to Saddam Hussein and Osama bin Laden.

Earlier this week, Chambliss defended the ad, calling it “a lightweight ad” and “very fair.” Today, Mitchell gave him another opportunity to repent, but Chambliss wouldn’t bite:

MITCHELL: Do you have any regrets in retrospect?

CHAMBLISS: You know, Andrea, that ad is truthful in every way. [...] He voted against George Bush eleven times on the issue of homeland security. [...] You have to remember the two most notible terrorists in the world at that point in time were Saddam Hussein and Osama bin Laden. We were trying to protect the homeland. We were trying to create an agency that was going to protect Americans and in fact we did that, we did it without Cleland’s vote.

Watch it:

But the ad is not truthful. Chambliss claims that Cleland voted against vital homeland security efforts but in fact, Cleland was voting against a provision in a homeland security measure that would have stripped away the collective bargaining rights of federal employees — many of whom would form the new Department of Homeland Security (DHS). Of course, Cleland’s homeland security votes in no way linked him to either bin Laden or Saddam.

Cleland not only voted to authorize the use of military force in Afghanistan after Sept. 11, 2001, but he also co-sponsored legislation introduced in May 2002 that called for the creation of a cabinet-level DHS.

Thus, Chambliss’s claims that the attack ad was “very fair” and “truthful in every way” ring hollow. Even John McCain knows that.

Yglesias

Learning From Europe

hires_081104_f_0782r_014_1.jpg

Some nice points from Ilan Goldenberg:

But while Obama’s election carries dramatic symbolic value, we also need to demonstrate to our allies that the way we govern and conduct foreign policy will substantively change. That means not cramming a list of demands down their throats in the first 100 days. It means building on the goodwill and sending the right signals that we care about their priorities. We should listen to their priorities early on and do some relatively easy things that send the right message on issues such as international arms control treaties, global warming treaties, international law and development issues. The signal needs to be sent that we won’t be obstructionist on these issues every chance we get and that we’re even willing to engage aggressively on them – not because they are our top priority but because we respect the views and interests of our allies and are willing to listen.

Over time and even in the relatively short term, there is no question that we should ask the Europeans to provide more troops for Afghanistan and also ask them to remove the caveats that some countries have placed on their forces. But let’s not forget that they have just dealt with the Bush administration for eight years, and while the general population is easily swayed foreign officials will need more clear proof that there really is a new approach coming from Washington.

Since I’m here in Europe and have had some opportunity to discuss things with Swiss officials, and have had some other contracts with European politicians and diplomats over the past twelve months, I would add two more points to this. One is simply that most Americans don’t fully grasp the volume of petty bullshit that European foreign ministries have been putting up with for the past eight years. Donald Rumsfeld’s bizarre decision to casually dismiss a large set of crucial American military allies and trading partners (along with the whole of European public opinion) as “old Europe” was one high-profile example, but there’s lower level interactions in large set of state capitals and it’s important for the entire mindset to be changed and replaced with the common sense dictate that if you want people to cooperate with you, you ought to ask nicely.

The other thing is that even though the US progressive community has a lot of very smart people in it and a lot of very good ideas, it’s just in the nature of things that, having been out of power for the past eight years, we have somewhat limited practical experience coping with some of these issues. Nicholas Sarkozy, Angela Merkel, Jan Balkenende, and Silvio Berlusconi have all led governments with soldiers on the ground in Afghanistan for some time now; Barack Obama hasn’t and it would be basic courtesy as well as good practice to genuinely solicit their opinion of the situation and take what they say into account before presenting them with our view. Clearly, the US will be taking the lead one way or another in Afghanistan, but just as the transition process will involve listening to what Bush’s people have to say, we should listen to our partners as well. Similarly, if we’re going to initiate some kind of diplomatic dialogue with the Iranians, some of the Swiss officials who’ve been representing US interests in Iran in the absence of a formal American diplomatic presence may have something useful to say.

At the end of the day, I think this kind of approach will bear much more fruit in terms of European cooperation and will probably bear some fruit in terms of substantive knowledge. There’s no need for a brand-new president to treat veteran political leaders in longtime allied countries as if they’re unruly pets who need to be brought to heel — the hunger on this continent for a better relationship with the United States is quite evident and everyone understands that we’re a big important country whose views need to be taken very seriously. Under the circumstances, it makes a lot of sense to try to be polite and respectful.

Politics

Obama resigning Senate seat as of Sunday.

Today, President-elect Barack Obama announced that he will be giving up his Senate seat, effective on Sunday. “It has been one of the highest honors and privileges of my life to have served the people of Illinois in the United States Senate,” Obama said in a statement. The Chicago Tribune notes that the news puts added pressure on Gov. Rod Blagojevich (D) to name a replacement for Obama, who is currently the only African-American senator.

Security

Why No One Cares About Rahm’s ‘Extremist Associations’

rahm.jpgAli Abunimah is correct to say — in reference to the racist remarks by Benjamin Emanuel, Rahm’s father — that “sons are not responsible for the racism of their fathers.” But Abunimah is also correct to expect Emanuel to distance himself from those remarks, as he has been asked to do by the American-Arab Anti-Discrimination Committee.

As Abunimah notes, Benjamin Emanuel was a member of Irgun, “the pre-state Jewish militia that carried out terrorist attacks on Palestinians and the British in the 1940s.” You may have noticed that National Review and Commentary have not been digging into the extremist past of the Emanuel family the way that they obsessively scrutinized every bit of information about Barack Obama’s other “extremist associations.” This is because these conservative organs don’t really consider political violence on behalf of causes of which they approve to be terrorism.

I do not suggest that Rahm Emanuel deserves to be judged on anything other than his own words and accomplishments, but I don’t think many would disagree that, were he the son of a former Arab Palestinian extremist, rather than a former Jewish Israeli extremist, he simply wouldn’t have been considered for the position of White House chief of staff, or probably have been able to make much of a political career at all.

This is because of the double standard that applies to the discussion of the Israel-Palestine conflict in the U.S. Americans identify much more closely with Israel than they do with the Palestinians, and thus tend to treat negative information about the former as exceptional, and negative information about the latter as the rule. Leaving aside why this is the case, the fact is that it places certain strictures on U.S. policy options, and create serious consequences both for the U.S.’s reputation and for the situation on the ground for Palestinians. Read more

Politics

David Frum knocks ‘the Architect’: ‘Rove hasn’t had a great batting record.’

In the Wall Street Journal today, Karl “the Architect” Rove insisted, “History will favor Republicans in 2010.” Appearing on CSPAN’s Washington Journal today, conservative writer David Frum knocked Rove’s optimism, saying the Republican party is “badly disorganized”:

FRUM: Karl Rove has not had a great batting record recently. He predicted the Republicans would hold the House in 06, and was assuring Republicans they would win in 2008 so I’m afraid that this is a little over-optimistic about 2010.

Watch it:

Despite Rove’s reputation as a “political genius” and “mastermind,” he has consistently gotten it wrong when it comes to political predictions.

Media

Times Change

Nice catch from Brian Beutler who contrasts Michael Lind’s 5 August 2005 proclamation with his 7 November 2008 take on things.

First:

The Democratic Party is not a national party any more. It is an archipelago of inner cities and college towns, allied with the collapsing remnants of the labor-intensive manufacturing sector, embedded in a suburban/exurban nation-state. If a competitive Democratic Party emerges from the ruins of the 1968-2004 Democrats, it will be as unlike today’s Democratic Party as the New Deal Democrats of FDR and Truman were unlike the isolationist, agrarian populist Democrats of William Jennings Bryan.

Second:

The election of Barack Obama to the presidency may signal more than the end of an era of Republican presidential dominance and conservative ideology. It may mark the beginning of a Fourth Republic of the United States…. The election of 2004 was a fluke.

Clearly, the 2008 Democratic Party isn’t identical to the party circa 2004, but I don’t think anyone could seriously claim that there’s been a radical transformation. And of the transformations that have occurred, most have been primarily operational in nature, with the basic ideological and interest-group underpinnings remaining similar. Indeed, as we had occasion to observe the other day the Democratic coalition continues to have an archipelago structure:

countymapredbluer1024_1.png

Outside of New England, the Democratic-leaning counties tend to be the more densely populated areas. Consequently, the GOP has much more land mass and tends to surround and envelop relatively small (in a geographic sense) Democratic-leaning built-up areas. This was true in 2004 and remained true in 2008. But the archipelago got a bit bigger, so the Democrats won.

Economy

IRS: Loopholes Let Corporations Pay 25% Tax Rate, Not 35%

John McCain and other conservatives spent the last year railing against the United States’ 35 percent corporate tax rate.

What they never mentioned is that this 35 percent corporate rate is so riddled with loopholes and shelters that the United States collects less in corporate taxes as a percentage of GDP than most other industrialized countries.

Corporate Taxes

Now, new IRS data shows typical American companies paid only 25.3 percent of their U.S. book income in federal corporate taxes in 2005, despite a statutory corporate tax rate of 35 percent, by using loopholes and shelters.

U.S. companies “reported about $1.35 trillion in pretax U.S. book income to their investors in 2005, but about $1.03 trillion to the IRS — a difference of about 23%.”

A quick back of the envelope calculation shows that the difference between paying 35 percent on $1.03 trillion in income and $1.35 trillion in income is approximately $112 billion — enough to finance more than half of CAP’s ambitious “Green Recovery” plan to jumpstart a clean energy economy.

Some differences between book and reported income are legal and legitimate, but they can also be a sign of sheltering and abuse. Effective tax reform would first broaden the tax base by closing loopholes and eliminating shelters, before considering a lower statutory corporate rate.

Politics

GOP Governors Reluctant To Embrace Palin For 2012: She Is Not ‘The Future Of The Party’

The media haven’t been able to get enough Palin 2012 speculation in the run-up to her speech today at the Republican Governors Association (RGA) convention. In almost every interview with GOP governors over the past couple days, hosts have been asking them their thoughts on a future presidential run by Palin. These governors, however, have been less than enthusiastic to embrace Palin as their future candidate:

CNN: So let me ask you point blank, governor. Is she the future of the party?
MARK SANFORD (SC): I don’t think I’d define it that way. [11/13/08]

TIM PAWLENTY (MN): She [Palin] is going to be one of the voices that will help lead the party for months and years to come, clearly. … I also think it is too early to be talking about 2012. My goodness, we just had an election. People are sick of that. [MSNBC, 11/12/08]

FOX: What do you think her future is?
HALEY BARBOUR (MS): Well, I think the future she’s talking about is 2009 and 2010. [11/13/08]

MATT BLUNT (MO): I think Republican governors were surprised when she [Palin] was selected, but at the same time they were impressed. … There are a lot of great candidates out there for 2012. I don’t think the American people want to — want to hear much about that at this point.[Fox News, 11/13/08]

MSNBC: So broad hints there from Palin again today with reporters, certainly with Matt Lauer. Is that the solution?
JON HUNTSMAN (UT): The solutions are going to be many-fold. You can’t look to one personality in particular. [11/12/08]

Watch a compilation:

Yesterday at the RGA convention, many of these same governors and other top GOP figures were reluctant to say that they would have been comfortable with Palin as president.

Some leading conservatives may also be getting jealous of all the attention Palin is receiving. When Newt Gingrich — who is also rumored to be eyeing a 2012 run — was on Fox’s Hannity and Colmes last night, he listed the names of governors who have the potential to “rebuild” the GOP. Gingrich never once mentioned Palin’s name until Hannity pointed out that he had been one of her earliest backers. Gingrich simply replied, “Well, she’s now become, in many ways, a national figure. I’m curious to see what she’ll decide to do.”

Older

Newer

Switch to Mobile
ThinkProgress Signup Overlay Skip and Continue to ThinkProgress Skip and Continue to ThinkProgress

Sign Up