ThinkProgress Home
ThinkProgress
ThinkProgress Logo

Stories tagged with “Bailouts

Media

Sunday Show Panelists Claim That Obama Has Never ‘Opposed His Liberals’

Yesterday, panelists on both ABC’s This Week and Fox News Sunday uniformly asserted that President Obama never does anything to upset “his liberals.”  (Amusingly, ABC and Fox both forgot to include an actual liberal on their panels.)  ThinkProgress has compiled a brief montage of their claims. Watch it:

Such claims that Obama never defies progressives may accurately reflect the views of right-wing activists and Beltway pundits, but they have no basis in reality:

  • Stimulus: Progressive economists — including at least one Nobel Prize winner — warned that the President’s stimulus package was too small to lift the sinking economy.  Similarly, progressives consistently warned the President not to replace highly-stimulative spending with ineffectual tax cuts.  Nevertheless, the President rejected progressive pleas for a more substantial package and brokered a deal with made tax cuts almost one-third of the stimulus. Obama allowed much of its final form to be dictated by a handful of Senate Republicans.
  • Bank Nationalization: Many progressives unsuccessfully urged Obama to nationalize the failing banks, rather than risk making future bailout payments to an industry whose recklessness nearly destroyed the nation’s economy.
  • Cap and Trade: Many of President Obama’s campaign promises for a robust cap-and-trade system have been watered down by a coalition of so-called “Brown Dog” Democrats loyal to Big Coal.
  • Single-Payer: The House Progressive Caucus prefers a single-payer system to the almost-exclusively private insurance-driven system proposed by the President.
  • Judicial Nominations: President Bush stacked the federal courts with young right-wing ideologues — one of whom even compared Social Security to “cannibalism.”  President Obama’s nominees, however, have been older and far more moderate than President Bush’s, and at least one has been actively opposed by disability rights advocates.
  • Executive Power: President Obama embraced several Bush-era assertions of power, including signing statements and aggressive use of the state secrets doctrine to avoid disclosing information in court.
  • Torture: President Obama initially opposed a commission to investigate Bush-era torture policies. His Administration also opposes prosecuting Bush Administration officials guilty of torture.
  • GLBT Rights: Despite campaign promises to repeal bigoted laws like DOMA and Don’t Ask/Don’t Tell, President Obama is “moving slowly” in carrying out this promise.  This, despite the fact that Obama has the power to unilaterally suspend DADT.

None of this means that Obama is a bad president. To the contrary, his economic policies are beginning to pull the nation away from the brink of an economic collapse caused by decades of right-wing policy, and his health care plan will protect millions of Americans from the insurance industry’s tactics.

If anything, the Obama Administration teaches that even an effective President must constantly be pressured to keep his promises. Although Obama has yet to make a big push on GLBT rights, pressure from gay rights groups convinced him to grant benefits to the same-sex partners of federal employees and to pledge to overturn DADT by the end of his first term.  Similarly, under pressure from progressives, President Obama tacitly endorsed a torture commission and agreed that Attorney General Holder should have discretion to confront past abuses.  And the President backed off plans to nominate a CIA Director opposed by many progressives because of concerns about his views on torture.

Simply put, these Sunday show pundits have an axe to grind against “liberals.” But the reality of the Obama Administration’s actions thus far is one that defies such simple-minded criticisms.

Politics

Jindal Tours Louisiana Attacking ‘Washington Spending’ While Handing Out Jumbo-Sized Stimulus Checks

Gov. Bobby Jindal (R-LA) has been touring his home state of Louisiana for what he calls a “Louisiana Working” tour to promote “jobs, jobs and jobs. That must be our No. 1 priority.” On the tour, Jindal is giving stump speeches decrying “Washington, D.C. and other officials” for seeking to “spend more money” during an economic downturn.

Indeed, on Monday, Jindal declared the American Recovery and Reinvestment Act to be a failure, calling it a “stimulus that has not stimulated.” In local Louisiana newspapers, Jindal touted his administration’s intent to “not run things here in Louisiana the way they do in Washington.”

As he travels to each community, Jindal has been gaining many positive headlines by sponsoring press events where he gives out jumbo-sized checks to towns and parishes. Below is a picture compilation of checks Jindal has presented to Louisiana communities such as Lafayette, Terrebonne Parish, St. Landry Parish, and Vernon Parish:

Jindal presents stimulus checks

Despite the fact that the checks contain millions of dollars of Recovery Act funds for job training programs, housing assistance programs, homelessness prevention programs, police training, criminal justice technology upgrades, and community development block grants, Jindal has been printing his own name on the checks and taking credit for the money. For example, Jindal presented Lafayette with yet another jumbo-sized check that contained at least $2,125,584 in Recovery Act funds. Though the money came from spending policies authorized by the Recovery Act, Jindal did not appear to credit the Recovery Act at all. And although the state stands to gain nearly $8 billion in federal funding from the Recovery Act, Jindal was one of several GOP governors to try to block the measure earlier this year.

While Jindal knocks Washington spending as he builds his national profile, he is shoring up his local support by spending Washington money.

Media

TARP Inspector General Debunks His Own False $23 Trillion Bailout Estimate

Yesterday, TARP Inspector General Neil Barosky released a report which crudely tallied up the cost of every economic rescue program proposed during the current crisis — including those that have been discontinued or never even began — to state that the total scope of all financial rescue programs comes to about $23.7 trillion. Cable news hosts ran wild with the report, using it to claim that taxpayers will “ultimately” wind up paying $23 trillion in “bailouts.”

The number continued to be cited on cable last night and this morning, with Fox News even claiming that $23 trillion will be the final cost of TARP alone. But Barofsky himself appeared on CNN to explain that the actual outstanding amount for the financial rescues is closer to $3 trillion, including loans that have yet to be repaid. Watch a compilation:

Barofsky’s report clearly states that “these numbers may have some overlap, and have not been evaluated to provide an estimate of likely net costs to the taxpayer”:

[S]ome of the programs have been discontinued or even, in some cases, not utilized. As such, these total potential support figures do not represent a current total, but the sum total of all support programs announced since the onset of the financial crisis in 2007.

But this doesn’t go far enough in explaining how unlikely we are to ever come close to spending so much money. As Floyd Norris explained in the New York Times, Barofsky’s estimate “assumes that every home mortgage backed by Fannie Mae or Freddie Mac goes into default, and all the homes turn out to be worthless. It assumes that every bank in America fails, with not a single asset worth even a penny. And it assumes that all of the assets held by money market mutual funds, including Treasury bills, turn out to be worthless.” If this doomsday economic scenario were ever to occur, the American currency would be rendered worthless.

Media Matters pointed out that both USA Today and the CBS Evening News used the same misleading number. And as Norris put it, publishing such a meaningless number makes Barofsky seem like nothing more than “an irresponsible headline hunter.”

Cross-posted on The Wonk Room.

Politics

CNBC’s Larry Kudlow defends corporate greed in debate with TP’s Faiz Shakir.

Last night on CNBC, ThinkProgress editor-in-chief Faiz Shakir debated CNBC host Larry Kudlow about a front-page story in the Wall Street Journal which revealed that the CEOs of banks receiving government bailout money are expensing travel on private jets for personal vacations. “I think it’s great because I want to stimulate the economy,” Kudlow said of taxpayer-funded private jet trips by bank CEOs. “I want to help the resorts. … I’m glad the CEOs are going around. I just wish they’d take me with them.” Faiz responded:

I do have a problem when they’re taking taxpayer money. Larry, you hate paying taxes. I understand that. But if there’s one thing you hate more than paying taxes, it’s seeing those taxpayer dollars go to waste. And that’s what’s going on here.

Watch it:


Featured

House of Roberts says:

Taxpayer Assisted Recreational Plane travel, according to Paul Begala on Real Time.

Politics

Shelby tries to blame Obama for bank bailouts that happened ‘last fall.’

This morning on Fox News Sunday, host Chris Wallace asked Sen. Richard Shelby (R-AL) why he believes the Obama administration is “taking us down the road to socialism.” Shelby said it was “obviously” the case, and pointed to last fall’s bank bailouts as the prime example:

WALLACE: Sen. Shelby, you say that the Obama administration is taking us down the road to socialism. Explain.

SHELBY: Well, obviously. So, they intervene last fall in the bank crisis. No one has ever done it on that scale before. Now the automobile crisis.

Shelby seemed to catch himself moments later, saying, “you have to go back to the Bush administration. They started it.” Watch it:

Politics

ABC News: GM’s Rick Wagoner will receive a $20 million retirement plan.

ABC News reports that Rick Wagoner, outgoing CEO of General Motors, will be eligible to collect $20 million in retirement benefits from GM, the company that lost tens of billions of dollars under Wagoner’s leadership:

Upon his departure, Wagoner becomes eligible for both a “Salaried Retirement Plan” and an “Executive Retirement Plan” with General Motors. The combined value of the plans at the end of last year was $20.2 million, a GM spokesperson confirmed.

“Most of that will be paid out as an annuity over five years, the remainder is a small lifetime annuity,” said GM spokeswoman Julie M. Gibson.

However, the Washington Post reported this morning that Wagoner would not be leaving GM immediately, “because if he leaves the company he is entitled to a multimillion-dollar pension that the government does not want to pay.” Additionally, under the already-standing TARP agreement between GM and the Treasury Department, GM Is not allowed to pay severence fees to senior executives. “That ban does not appear to apply to retirement benefits, however.”

Politics

Republican Lawmakers Who Opposed Salary Caps Last Month Are Now Attacking AIG Bonuses, Part II

As ThinkProgress noted yesterday, Republicans who opposed Wall Street salary caps, such as Senate Minority Leader Mitch McConnell (R-KY) and Senate Banking Commitee ranking member Richard Shelby (R-AL), are now flipping their positions to condemn the bonuses paid by AIG. Last night, McConnell made the rounds on cable television to misleadingly suggest that he has always favored salary caps.

But McConnell and Shelby are not the only Republican lawmakers pushing this deception. Rep. Peter King (R-NY), Sen. Kit Bond (R-MO), and Sen. James Inhofe (R-OK) also are hypocritically altering their views:

inhofe.gifQ: “Should Congress, should the White House be getting a way for these contracts to be broken?”
KING: “Congress should find a way to do it or the administration should lean on them in a way to get – to have it done.” [MSNBC, 3/17/09]

BOND: “It’s unacceptable to pay bonuses after the American taxpayer was forced to bail out an institution without reforming it.” [KRCG, 3/18/09]

INHOFE: “The AIG situation is clear evidence of what happens when you shovel money out the door with no strings attached and no transparency.” [KTUL, 3/17/09]

Only a month ago, King argued against strong provisions to ensure executive salaries were capped:

KING: “No, I will say, I agree there should have been some caps. I think this went too far, and I think it can be counterproductive.” [ABC News, 2/15/09]

Last month, Bond sharply criticized a bill offered by Sen. Claire McCaskill to limit the salary of executives at companies receiving federal bailout money to no more than what the president of the United States makes — $400,000 a-year:

BOND: “The worst thing we can do is tell businesses how to run themselves. Congress has a pretty bad track record. If you you look at our collective judgment, all 535 of us in our wisdom can’t run government very well. (We) sure can’t run business.” [STL Today, 2/2/09]

While Inhofe today demands “strings attached” to federal bailout money, he expressed the opposite in February:

INHOFE: “I thought, is this still America? Do we really tell people how to run [a business], and who to pay and how much to pay?” [Huffington Post, 2/6/09]

Former Speaker Newt Gingrich today penned an op-ed venting his “outrage” at the “fat bonuses” paid to staffers at AIG. However in November, while speaking with Fox News’ Sean Hannity, he attacked Rep. Henry Waxman (D-CA) for having the audacity to send “off letters to every bank demanding to know all of their executive compensation policy.” Gingrich then scoffed at the idea of capping salaries specifically at AIG:

GINGRICH: “You have a level of micromanagement of AIG and others. You can’t apply Washington bureaucratic rules to a free market company without ultimately destroying the company.” [Fox News, 11/12/08]

Hypocrisy abounds.

Politics

Liddy: Bernanke and the Federal Reserve approved of bonuses in advance.

Testifying before Congress today, AIG CEO Gordon Edward Liddy said that the Federal Reserve was aware the bonuses would be paid out and “acquiesced in that decision.” In fact, Liddy claimed that Federal Reserve members were present at AIG’s “compensation committee meetings” with the ability to say “yea or nay”:

REP. KANJORSKI (D-PA): Am I to understand that you’re saying that Chairman Bernanke or his designated person at the Federal Reserve was informed that you were going to make these payments and acquiesced in that decision?

LIDDY: Yes, everything we do, we do in partnership with the Federal Reserve. The Federal Reserve is at our board meetings and our compensation committee meetings and our various meetings on strategy and they have the ability to weigh in — either yea or nay — on anything that we decide.

Watch it:

Rep. Mike Castle (R-DE) later asked for clarification on whether the Fed “did not say nay as far as the bonuses were concerned.” Liddy replied that “there was great angst over the payment of these bonuses,” but that the Fed and AIG ultimately decided that “the risk was too great that we would lose all the progress we made if we didn’t pay these bonuses.”

Yglesias

Structural Shifts and Bailouts

Richard Florida, sounding a skeptical note about bailouts, says we need to look to structural shifts:

img_1340_1.jpg

The bailouts and stimulus, while they may help at the margins, also pose an enormous opportunity costs. On the one hand, they impede necessary and long-deferred economic adjustments. The auto and auto-related industries suffer from massive over-capacity and must shrink. The housing bubble not only helped spur the financial crisis, it also produced an enormous mis-allocation of resources. Housing prices must come a lot further down before we can reset the economy – and consumer demand – for a new round of growth. The financial and banking sector grew massively bloated – in terms of employment, share of GDP and wages, as the detailed research of NYU’s Thomas Phillipon has shown – and likewise have to come back to earth.

I think we need to distinguish between the bailouts and the stimulus here. And then within bailouts, we need to distinguish between the auto bailout and the financial sector bailouts.

So, starting with bailouts. The problem comparing the two bailouts is that social justice considerations and economic considerations point in different directions here. The auto workers are sympathetic claimants in a way that nobody in the financial sector is. But Florida’s point about the need for structural shifts has a lot more force in the auto case. In principle, the funds spent (and to be spent in the future) on the auto bailout could have been put directly into auto workers’ pockets while Chrysler and GM were put into government-sponsored debtor-in-possession financing. That would have achieved similar social justice ends without retarding necessary sectoral adjustments toward a world in which somewhat fewer automobiles are made. That said, the total quantity of funds involved in the auto bailout has been relatively small compared to the financial bailouts.

On the financial bailouts, it’s true that the size of the financial sector needs to shrink. But the bailouts are not preventing that from occurring—it is shrinking. And hopefully it will continue to shrink, in relative terms, as we move into recovery. But the point I would make here is that it’s extremely difficult for the needed sectoral shifts to happen absent a functioning financial system. The point isn’t that we need looser credit card rules so that people can go back to spending money they don’t have on short-term consumption. But if we want there to be more employment in the future, people are going to need to start some new businesses. And some existing businesses that aren’t auto companies, banks, or homebuilders are going to have to expand. And it’s very hard to expand without the ability to access credit markets. When people say that we need to “get credit flowing again” I sometimes worry that they’re talking about re-inflating the housing bubble, or getting us back to households having negative savings. That’s credit. But credit that’s used to finance productive business activities is necessary for sustainable economic growth.

On stimulus, I think that how well this turns out will ultimately hinge to some extent on the success of the programs. In principle, the stimulus spending—which largely goes to infrastructure, to education, and to health care—ought to greatly facilitate economic transition to the kind of “creative” economy Florida’s envisioning. To the extent that that money winds up wasted on programs that are ineffective we will have bought short-term demand at the price of stalling on long-term adjustments. I’d still say that’s a price worth paying, all things considered, but obviously it’s a good deal worse than a scenario in which these investments turn out to pay off in the long-run in the form of a healthier, better educated population able to move on better transportation and take advantage of faster broadband.

Politics

McConnell misleadingly suggests he favored Wall Street salary caps.

This afternoon on CNN, Senate Minority Leader Mitch McConnell (R-KY) pretended as though he had favored capping the salaries of bankers whose firms accepted TARP funds, claiming that his position has been that bailed-out companies “are going to have to operate in a different sort of way.” When host Wolf Blitzer asked whether Congress should have passed salary caps on bailout recipients, McConnell acts as though he had been in favor of such a proposal:

BLITZER: Should the Congress — and you are the leader of the Republicans in the Senate — have passed salary caps on these bailed out companies?

McCONNELL: We certainly had a chance with the amendment by Senator Snowe to prevent this kind of bonuses from being paid. But look, the day-to-day responsibility of oversight of TARP funds is at the Treasury Department.

Watch it:

McConnell is certainly right: Congress did have a chance to pass salary caps. However, he opposed such a move at the time, telling ABC News, “I really don’t want the government to take over these businesses and start telling them everything about what they can do. … We have to resist the temptation to basically dictate to these businesses how to run every aspect of their operation.” On CNN today, McConnell accused AIG of “trying to have it both ways.” Pot, meet kettle.

Older

Newer

Switch to Mobile