First off, I'm walking back some of the cattiness about Chris Dodd in the last few posts. He has come back with a stronger plan (see Krugman and CR for more knowledegable commentary than I can provide) than I gave him crecit for doing, and has three key points that I think should be non-negotiable for the Democrats:
- Equity warrants if the assets purchased are bogus. Krugman thinks this is extremely important. Basically, the government gets it's money back through sales of the assets or equity in the company.
- Executive pay and benefits get slapped around by limiting the compensation of the companies that are taking public funds.
- What I think is the most significant because it will affect consumers directly, "grant[ing] bankruptcy judges the authority to modify the terms of primary mortgages, a step aimed at helping homeowners at risk of foreclosure." (NYT)
The last provision is the one the administration is shoving back on the most, of course. There are numerous points of oversight, reporting, and regulation in Dodd's proposal, though still probably not enough. Looking at Paulson's "plan", it seems pretty clear to me that it is little more than a bailout of Paulson's own buddies on Wall Street on the one hand, and another bald-faced power grab attempt by the Bush/Cheney administration on the other, making for a breathtakingly pure example of the motivation of the Movement Conservatives - grabbing it all for themselves.
But even Dodd's effort to beat back the demons of stupidity is still failing to redefine the issue on the Democrats' terms. They are not moving boldly, as Hillary has advocated, to redefine the power relationships of the priviliged few to the government and to the rest of us. The Democrats are getting suckered, once again, by the earnest entreaties of the High Borderists to be "bipartisan" and to "set aside politics" to address the crisis as quickly as possible. Shorter Broderism - give Hank what he wants and quit being obstructionist! The Democratic leadership is afraid to challenge Bush and the Republicans directly this close to the election, allowing their consent to be bought through "concessions" on a plan that was moronic on the face of it. The Dems are, as usual, trying to mitigate the shit sandwich presented by the Republicans instead of whipping up a tasty pastrami on rye with a side of jicama slaw in opposition. All they can do is drag the proposal slightly less to the right and get their hands covered in the effleunt oozing from the sandwich.
And they are screwed. If they have nothing significantly different of their own to offer (and Dodd's proposal is pedestrian, good mostly in comparison to Paulson's deposit on the great shitpile), then they have tied themselves to Bush's toxic administration in yet another way. Their partisanship can be priced - it is the revolving credit line on $700 billion less the depreciation of assets and a few mostly symbolic cuts to CEO pay. Compare this to the McCain strategy, as discussed by Ed Kilgore, "The GOP's Bottomless Crack Pipe":
The general expectation this week is that the Paulson Plan for avoiding a worldwide financial meltdown, with an uncertain number of modifications, is going to pass Congress overwhelmingly, and recede into the background in the presidential campaign.
I don't know about that.
Every Democrat should read Patrick Ruffini's post from yesterday at NextRight. He is, I strongly suspect, perfectly reflecting the game that Republicans, including Team McCain, want to play with the Paulson Plan:
Republican incumbents in close races have the easiest vote of their lives coming up this week: No on the Bush-Pelosi Wall Street bailout.
God Himself couldn't have given rank-and-file Republicans a better opportunity to create political space between themselves and the Administration. That's why I want to see 40 Republican No votes in the Senate, and 150+ in the House. If a bailout is to pass, let it be with Democratic votes. Let this be the political establishment (Bush Republicans in the White House + Democrats in Congress) saddling the taxpayers with hundreds of billions in debt (more than the Iraq War, conjured up in a single weekend, and enabled by Pelosi, btw), while principled Republicans say "No" and go to the country with a stinging indictment of the majority in Congress....
In an ideal world, McCain opposes this because of all the Democratic add-ons and shows up to vote Nay while Obama punts.
History has shown us that "inevitable" "emergency" legislation like the Patriot Act or Sarbanes-Oxley is never more popular than on the day it is passed -- and this isn't all that popular to begin with. All the upside comes with voting against it.
Ruffini is exactly right about the politics of this issue, especially for Republicans. Think of this as like one of those periodic votes on raising the public debt limit. It has to pass, of course, but there's zero percentage in supporting it for any one individual. The speculative costs of the legislation actually failing are completely intangible and ultimately irrelevant, while the costs it will impose are tangible and controversial from almost every point of view. For McCain and other Republicans, voting "no" on Paulson without accepting the consequences of that vote is the political equivalent of a bottomless crack pipe: it will please the conservative "base," distance them from both Bush and "Washington," and let them indulge in both anti-government and anti-corporate demagoguery, even as Democrats bail out their Wall Street friends and big investors generally. You simply can't imagine a better way for McCain to decisively reinforce his simultaneous efforts to pander to the "base" while posing as a "maverick."
Democrats are right to demand significant substantive concessions before offering their support for the Paulson Plan. But just as importantly, they need to demand Republican votes in Congress, including the vote of John McCain. If this is going to be a "bipartisan" relief plan, it has to be fully bipartisan, not an opportunity for McCain to count on Obama and other Democrats to save the economy while exploiting their sense of responsibility to win the election for the party that let this crisis occur in the first place.
What, get McCain to agree to be bipartisan and vote in a way that hurts his electoral chances? What do you think he is, a Democrat? Kilgore falls face first into the bullshit trap that is "bipartisanship", namely, that it means Democratic capitulation to Republican demands. For Republicans to refuse to concede shows that they are committed to principle, can't be bought, standing up for what is Right, and other gag-inducing cliches.
Pelosi-Bush Wall Street Bailout. Bingo. Bush drags us into the sewer, Democrats frantically try to drag the nation back to shore, and the Republicans get to both have their political obstructionist cake and eat their financial giveaway pie, too. But I think it is even more ugly than that.
- The Democrats labor away at patching the worst of the holes in the Paulson plan, to which Hank "reluctantly" agrees, secretly chortling away at how many goodies he gets to have. They get the few provisions Dodd has set out.
- Anti-Bush (yes, Bush is "too liberal" for these folks) Republicans refuse to vote for the pig (with or without lipstick), screaming about government bailouts. It allows them to look like they give a crap about ordinary people. Many people will object to the plan as too much money for the underserving Wall Street types.
- McCain distances himself from Bush and reinforces the "Maverick" brand. Spends the next few news cycles talking about the love affair Wall Streeet has with Obama. Says he wants (mumble, mumble, mumble) to help the ordinary citizen.
- The Democrats and a few Republicans pass the pig, and it hits Bush's desk.
- BUSH VETOS IT. Says that is is full of Democratic pork barrel politics, and that he can't sign it. Demands it get rewritten to take out the "special interest" "political" measures. Bemoans the Democrats' unwillingness to forego politics "for the good of the nation."
- Democrats lack the the votes in Congress to over-ride the veto.
- It is now October. They look weak, ineffectual. McCain rails against "buy outs" and "kissing up to Wall Street." Can't actually offer anything of his own, but that's not the point.
- The Village starts the bipartisan haka, terrified at the sight of their dwindling portfolios. Wall Streeet is threatening to withhold their checks from The Precious, screaming that won't they just please get this crisis resolved?
- The Democrats are left holding the bag, unable to pass something that will actually help people, unwilling to go down fighting for something that is unapologetically FDR Democratic.
- Just weeks before the election, they shamefacedly walk back their few partisan measures and agree to most of Paulson's original plan, reserving just a few of the oversight measures.
Thre's nothing besides the bankruptcy judge provision that Bush can't actually live with and it is not enough of an issue on which to hang an entire rejection of the plan - which, like GLBA, they don't actually object to all that much.
The key for me here in Kilgore's analysis is that McCain can play to his base with opposition to the bill, but the Democrats won't decide which of their bases they actually want to appeal to, the Whole Foods Nation (WFN) types and upper class technocrats populating the white collar world or the middle and working class Main Street folks who may have a crappy little 401(k) tucked away somewhere, but whose wealth is spiraling down the drain on depreciating home values. A real solution that does help the homeowners would also, in the long run, help the technocrats.
Both of these groups have speculated in markets, trying to make up for the economic ground lost under Reagan, Bush I and Bush II, and both made risky investments. For the Whole Foods shoppers, they are looking at a future earnings loss that they want their legislators to forestall with this intervention. For the IGA shoppers, they are now being thrown out of houses when the investment failed to appreciate, their losses very much of the moment. The line is not so neatly drawn, of course, many WFN people having made bad real estate purchases, more than a few IGA shoppers coldly intending just to skim cash from NINJA loans. But for many, this was a chance at real wealth, the kind they could not get through their 9-to-5 shifts and trying to raise three kids. The paper losses of the upper middle class may not be recovered (And the capitalist pigs will oink, oink their way to new wealth), but they are still that much higher up the ladder than those who have zero wealth outside of their property. Even a total FDR response to the crisis is going to hurt this group badly, but it should leave them with better prospects than what they face now.
This is a world historic moment. It is an opportunity for Democrats to get their mojo back and draw a bright clear line in the sand between restructuring for a more egalitarian and sustainable economy and limping along trying not to fall into the trough where the pigs are gobbling down the swill.
When the powers that be are trying to make you buy the farm, pitchforks are in order.