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McCain's Bold New Economic Plan

By TChris, Section Elections 2008
Posted on Tue Sep 16, 2008 at 10:24:55 AM EST
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Screw your head down tight. You don't want it to spin off as you try to understand what John McCain thinks about the economy.

Yesterday McCain assured us that "the fundamentals of our economy are strong" despite our "difficult times." Today he explained that by "fundamentals," he meant American workers are strong. Whether they have strong backs or strong stomachs, he didn't specify.

So the workers don't need fixing, but what about the economy? Yesterday McCain was all about reform. He was going to take care of the "greed, excess and corruption in Wall Street." But how? Today he explained: all we need is "a high-level commission to study the current economic crisis," kinda like the 9/11 commission. So maybe midway through his presidential term, he'll get some recommendations about what to do solve what he now acknowledges is a "crisis." Marvelous. Does this inspire your confidence in John McCain's ability to lead?

Who will he put in charge of the commission? Phil Gramm? Donald Luskin? Take a look at his economic team and try to find someone who cares about the strong workers McCain is trying to embrace.

< The Polls - 9/16 | Obama Gives A Barnburner Speech On The Economy >

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    The financial meltdown (5.00 / 1) (#1)
    by bocajeff on Tue Sep 16, 2008 at 10:32:46 AM EST
    The problem with the current financial meltdown is that there isn't one problem - it's multifaceted and NO ONE can fix it overnight. What we need is LONG TERM planning instead of quick fixes that look good but don't do anything for the LONG TERM.

    Maybe Obama can do it, but quite frankly there hasn't been long term thinking on the economy since Johnson and Nixon.

    Clinton was stronger economically than LBJ or RMN (5.00 / 2) (#8)
    by Don in Seattle on Tue Sep 16, 2008 at 10:43:15 AM EST
    Johnson was blamed for running a "guns and butter" economy that led to massive deficit spending (by the historical standards of the day). Nixon's policies continued led to the stagflation of the 70s.

    By any measure, our economy was much stronger in the 90's, under Clinton, than it was before or since.

    Parent

    Before I agree about Clinton, will someone (none / 0) (#70)
    by Christy1947 on Tue Sep 16, 2008 at 12:35:37 PM EST
    who's got the details kindly add to this thread the dot com bubble, which, as I recall, burst in 2000 or 2001 but had been building for awhile. If you want to be truthful and accurate about long term economic strength, you have to count the bubbles which grew under A and burst as soon as B came into office, against A and not just B.

    Parent
    McCain's comments about "fundamentals" (5.00 / 1) (#5)
    by Prof G on Tue Sep 16, 2008 at 10:40:57 AM EST
    are correct.  Productivity has continued to grow and there is no hard evidence as yet of a serious recession.  As McCain made clear, the importance of the crisis is the risk of undermining these fundamentals.

    In the very short term, management of a crisis such as this is the responsibility of the Federal Reserve and the Treasury Department.  Neither McCain nor Obama have offered any objections to their responses in the present case.  

    The two candidates have begun to spell out their views as to the origins and lessons of the crisis.  Both have discussed extensive regulatory overhaul.  No matter who wins the election, proposals along these lines would require a year or two at least to take effect.  McCain's "9/11 commission" idea is in keeping with this.  

    Gosh (5.00 / 2) (#14)
    by Steve M on Tue Sep 16, 2008 at 10:59:38 AM EST
    Let's think about why a serious crisis in the financial industry might not be reflected in the productivity statistics.  Hmmm........

    It's obvious that a serious liquidity crisis like this one can have repercussions throughout the economy, which is why everyone is trying their best to get ahead of the crisis.  Banks are failing and you're like, "Hey, Detroit is still building cars, so no problem!"  It's a silly argument.  It's "look over there!" economics of the type I normally see confined to the pages of National Review.

    Parent

    And hell, Detroit might be building cars (5.00 / 1) (#18)
    by tigercourse on Tue Sep 16, 2008 at 11:02:29 AM EST
    but pretty much nobody is buying them.

    Parent
    Please understand that (5.00 / 1) (#23)
    by Prof G on Tue Sep 16, 2008 at 11:11:45 AM EST
    output, employment and productivity are the key fundamentals.  Income distribution is also a key fundamental, in a somewhat different sense.  The current crisis becomes damaging to the extent that it undermines these fundamentals (e.g., too many bank failures lead to a wave of layoffs in Detroit).  I know as a fact that the Obama and McCain economic teams would fully concur with these statements.  

    As far as Obama's jibe on the use of the word "fundamantals", I think that he is stating McCain's view rather inaccurately, but it serves McCain right for being unclear.


    Parent

    Uh huh (5.00 / 1) (#28)
    by Steve M on Tue Sep 16, 2008 at 11:16:32 AM EST
    It's quite clear that you're an economist.  I've noticed that you guys have a real problem seeing two feet in front of you, although you're great at using big words to describe what has already occurred.  Predicting anything other than a precise re-run of past events is well above the typical ecnomist's pay grade.

    So when the liquidity problem starts getting reflected in the bottom line of companies outside the financial sector, and jobs are lost and businesses close down, you'll dutifully concur that there's a crisis?  Gee, thanks for sticking your neck out like that.

    Parent

    Wait a minute! (5.00 / 1) (#40)
    by Prof G on Tue Sep 16, 2008 at 11:32:40 AM EST
    There is certainly a crisis.  No one argues with that!  I only take issue with the view that McCain's "fundamentals are sound" remark is inaccurate.  Certainly, as McCain and everyone else agrees, the fundamentals will not continue to be sound if the crisis is not properly addressed.

    Parent
    Question (none / 0) (#112)
    by litigatormom on Tue Sep 16, 2008 at 04:35:54 PM EST
    Prof G said:

    ...output, employment and productivity are the key fundamentals.

    Productivity per worker has risen, although output is fairly flat. But in my view, the current unemployment rate -- which is rising, and will continue rising -- understates the soundness of that "fundamental."  Despite rises in productivity throughout this decade, real wages have been flat. Doesn't that mean that even employees with a full-time job are underemployed? Certainly, to the extent that the economy depends on the buying power of the middle class, the only reason the middle class has kept buying was the availability of consumer credit.  That's not going to keep the economy going as unemployment rises, and as those who still have jobs become more cautious about spending.  I'm not even talking about people who have already maxxed out their credit cards, or will be using them only to buy necessities like food.

    In addition, homeowners will not be able to keep up their spending because home equity loans are no longer being given out like lollipops.

    The consumer spending by the very top income bracket may continue to make Fifth and Madision Avenues look vibrant, but those people can't keep the economy afloat just by purchasing more Hermes purses and Gucci shoes.

    Parent

    You are sketching out (none / 0) (#119)
    by Prof G on Tue Sep 16, 2008 at 06:02:43 PM EST
    a standard recessionary scenario:  higher unemployment, tighter consumer credit and weaker consumer spending.  These things culminate in lower output and employment.  Let me say that unemployment figures are notoriously noisy, but you are certainly correct that a sustained increase in unemployment is bad news as far as the fundamentals I mention.

    Recessions are also associated with reduced productivity (i.e., output per worker).  Declines in productivity tend to lead recessions, so watching productivity gives another reasonable indication as to what lies ahead.  

    You also raise the issue of long-run trends in real wages.  It is not clear how the current crisis interacts with this.  Mixing  together financial crises and real wage trends probably serves to confuse the discussion.

    Parent

    This might be true (5.00 / 1) (#44)
    by Manuel on Tue Sep 16, 2008 at 11:35:57 AM EST
    but neither candidate has advanced a plan or new ideas to alter the fundamental nature of the economy.  The McCain plan boils down to "trust the market".  The Obama plan boils down to "more/better regultion" and stimulus.  Neither team wants to say that we are headed for a cliff and, if we are, neither one has articulated a plan to avert it.

    Personally, I think that the economic criis is overstated.  As I read recently, we've had eight once in a generation events in the last ten years.  The economy is so large and complex now that volatility is to be expected.  There is good reason to adapt our long term strategy but there is no reason to panic.

    Parent

    The reason no one has articulated (5.00 / 1) (#56)
    by tigercourse on Tue Sep 16, 2008 at 11:46:33 AM EST
    a plan to avert it is that nobody has a clue how to. Neither candidate, ideology aside, knows what the heck to do or say. They just can't admit that.

    Parent
    You are dead-on here. (5.00 / 1) (#58)
    by Prof G on Tue Sep 16, 2008 at 11:50:39 AM EST
    The major commercial banks remain strong, and this strength is being drawn upon to handle the current crisis.  I believe that the Fed and Treasury have finally decided on a "clean up the mess" policy that involves clearing out insolvent institutions (the reverse of Japan's policy).  Essentially, the U.S. is settling up on the housing bubble and overexpansion of the financial sector.  Certainly, there are losers in this process, but it figures to strengthen the underlying fundamentals of the economy if it is handled properly.

    Possible outcome:  In two weeks the crisis will blow over, shareholders of B of A, Wells Fargo, etc. will be happy, and the candidates will move on to talking about other issues.

    Parent

    and the economy will fix itself? (none / 0) (#86)
    by Jlvngstn on Tue Sep 16, 2008 at 02:08:00 PM EST
    in two weeks when it blows over?  Here is another outcome.  Unemployment rises to 6.5% this month and 7.0 percent next month.  Had we not decimated our reserve and created a deficit we could be investing in infrastructure which would create jobs and cycle money through our economy.  Or do you think Keynesian philosophy is wrong?

    Parent
    It is certainly possible (none / 0) (#90)
    by Prof G on Tue Sep 16, 2008 at 02:49:59 PM EST
    that the current crisis will trigger a sharp recession.  Moreover, I am sympathetic to Keynesian thinking, but let me point out that this thinking favors the Bush policy of high deficits.  Perhaps your comment pertains to a tradeoff between public and private investment.  I am not sure why one should favor infrastructure investment as far as creating jobs.  As an aside - if one does take the this view, then it seems unreasonable to criticize Palin for not trimming earmarks to zero.

    Parent
    sharp recession (none / 0) (#99)
    by Jlvngstn on Tue Sep 16, 2008 at 03:44:21 PM EST
    is not what prompted my response, it wast the lack of that statement which elicited it.  More importantly, from where will the jobs come?  I am not opposed to earmarks, they represent about 18 billion of the 432 billion deficit which by my calcuation is 4%.  Or if you take the 3 trillion dollar budget, 18 billion is a line item.

    Earmarks are not the problem defense spending as opposed to investment in R&D in energy would be money more judiciously spent but that is a policy position no one has been willing to tackle seriously since Bush I.

    Surpluses, in my mind should be reserved and protected to support the economy through infrastructure projects during the downfalls in the labor market.  The surplus is gone so it is moot, but what will get us out of the credit crisis is jobs creation.  People are not paying down their personal debt for a variety of reasons with fuel playing a major role.  Unemployment may be at 7% by the end of the year and the trickle down effect will create an even tougher market.

    Of course Krugman thinks it is a beautiful thing on paper but never works and he is a hell of a lot smarter than i....

    Parent

    But the high deficits of the Bush (none / 0) (#113)
    by litigatormom on Tue Sep 16, 2008 at 04:40:10 PM EST
    era were not created by improving or building new infrastructure. Far from it. A huge amount has been spent in Iraq, without concommitant increases in industrial manufacturing, as happened in WWII. I'm not just talking about the war itself, but the incredibly wasteful and low quality "rebuilding" that we've funded there.

    And part of the deficit was created by tax cuts, which have not, as far as I can see, increased real wages or led to greater investment in infrastructure or manufacturing. It's led to investment in a lot of synthetic securities, which has helped lead us to this pass.

    Parent

    Responses: (none / 0) (#121)
    by Prof G on Tue Sep 16, 2008 at 06:52:46 PM EST
    1.  By "Keynesian thinking" I mean running deficits to stimulate spending.  Your comments pertain to the efficiency of government spending (e.g., war vs. infrastructure).  This has an effect in the long run.  One can certainly take the position that Bush should have used government resources more efficiently, although I am not aware of evidence that the social return on Federal infrastructure investment would have been exceptionally high (think about the "Bridge to Nowhere").

    2.  I suppose "Keynesian philosophy" can also refer to government-provided jobs.  An infrastructure bank is a sensible idea if it could be managed correctly.  Such projects, however, have very long lead times and are costly to start and stop.  It would be tricky to fine-tune their implementation.

    3.  Investment by individuals in "synthetic securities" is not investment in the macroeconomic sense, it simply amounts to the trading of preexisting assets.  Investment in infrastructure and manufacturing capital refers to creation of new assets.  Presumably, efficient pricing of preexisting assets will lead to the correct amount of investment in new (private) assets.  From the point of view of private investment, trading in "synthetic securities" is bad if it distorts asset valuations, or if it interferes with the flow of credit (i.e., a "credit crunch").


    Parent
    You're not an Economics Prof, are you? (none / 0) (#124)
    by Don in Seattle on Tue Sep 16, 2008 at 11:56:45 PM EST
    1. By "Keynesian thinking" I mean running deficits to stimulate spending.  Your comments pertain to the efficiency of government spending (e.g., war vs. infrastructure).  This has an effect in the long run.  One can certainly take the position that Bush should have used government resources more efficiently, although I am not aware of evidence that the social return on Federal infrastructure investment would have been exceptionally high (think about the "Bridge to Nowhere").

    In Keynesian theory, the ultimate effect of an economic stimulus is highly dependent on the "multiplier effect," as payees turn around and spend their receipts, causing further economic activity; and so on, and so on, etc.

    The "multiplier" for a domestic stimulus varies, but it might be on the order of 10. For spending done halfway around the world (e.g. in Iraq), the multiplier would be approximately zero.

    For the federal government to waste its budget overseas is about as poor a way to stimulate the home economy as one could possibly imagine. By comparison, by Keynesian standards the Bridge to Nowhere is a great investment.

    Large deficits are not stimulative per se. If they were, the economy of WWII Great Britain would have been thriving.

    And, oh, yeah: "the long run" has nothing to do with this question.

    Parent

    Let me clarify... (none / 0) (#125)
    by Prof G on Wed Sep 17, 2008 at 01:41:54 AM EST
    I have no sympathy with the traditional "consumption multiplier effect", as it is inconsistent with the well-documented "lifetime permanent income hypothesis" (i.e., households base consumption on long-term wealth, not short-term swings in income that may be generated by government deficits).  The traditional multiplier effect plays no role in current research.  I have no idea why this idea is still taught in undergraduate macroeconomics.

    I do have some sympathy with the so-called "New Keynesian" ideas that came out of the 1980s.  Theories in this vein state that economic decisions can be guided by the size and distribution of income, rather than by prices only (thus the market fails to be perfectly competitive).  Your point that foreign spending figures to have a smaller short-run stimulative effect than domestic spending seems sensible in this context.  But much would depend on details of the particular economic model considered.  

    I feel that the previous comments were focused on whether defense spending had precluded more productive investments in infrastructure and manufacturing capital.  This is most certainly a long-run issue.


    Parent

    More on economics (none / 0) (#128)
    by Don in Seattle on Wed Sep 17, 2008 at 08:52:38 AM EST
    I have no sympathy with the traditional "consumption multiplier effect", as it is inconsistent with the well-documented "lifetime permanent income hypothesis" (i.e., households base consumption on long-term wealth, not short-term swings in income that may be generated by government deficits).  The traditional multiplier effect plays no role in current research.  I have no idea why this idea is still taught in undergraduate macroeconomics.

    That's interesting. Didn't the federal government send out $600 checks to most taxpayers this last year? Wasn't the intent to provide a classic Keynesian stimulus to spending? I guess that was money down the tubes, since households must have understood the very limited impact of a one-time $600 windfall on their long-term wealth.

    I do have some sympathy with the so-called "New Keynesian" ideas that came out of the 1980s.  Theories in this vein state that economic decisions can be guided by the size and distribution of income, rather than by prices only (thus the market fails to be perfectly competitive).

    Again, I'm having trouble trying to digest this. Keynesian theory is a macroeconomic model -- as are, I assume, the "neo-Keynesian" ideas that you refer to. It has little to do with markets that fail to be perfectly competitive, or with individual economic decision-making generally. These ideas are all in the purview of microeconomics.

    No sensible microeconomic theory would suggest that decisions are based on prices only, nor that cases where prices are not the sole determinative factor constitute market failures. Obviously, the shape of the supply and demand curves for each individual product underlie the market-clearing price for each, and the amount and distribution of income underlies the demand curve. The point is that, even in classical, pre-Keynesian models of economics, price is generally an output variable -- not an input variable, and certainly not the only one.

    Your point that foreign spending figures to have a smaller short-run stimulative effect than domestic spending seems sensible in this context.

    Thanks, but I still have some problems with your use of the word 'short-run' here. Surely you can't mean to suggest that in the long run, it all evens out? That in the long run, the exact same stimulative effect on our economy may be achieved by: 1) a billion more dollars of domestic spending, or 2) an extra billion dollars spent on the Iraq war?

    Parent

    These are good comments. (none / 0) (#129)
    by Prof G on Wed Sep 17, 2008 at 09:42:48 AM EST
    Here are some replies.

    1.  Yes, I believe that the $600 checks had little or no stimulative effect.  

    2.  The Keynesian model from undergraduate textbooks is entirely outdated.  No leading researcher in macroeconomics would rely on such a framework (except as a "hold your nose" simplifying assumption), and this has been true for at least 15 years.

    3.  Nearly all macroeconomic research these days relies on models in which the microeconomic framework is fully spelled out.  The models build on the microeconomic foundation of competitive general equilibrium (developed most coherently by Arrow and Debreu).  In these models all decisions are based exclusively on prices, not quantities (such as incomes), and equilibrium means that supply equals demand in every market.  Macroeconomic applications incorporate a dynamic aspect, wherein decisionmakers seek to forecast future prices and adjust their decisions accordingly.  Kydland and Prescott recently won the Nobel prize for their "Real Business Cycle" model, in which the microeconomic foundations are spelled out completely.  This model has become the benchmark for nearly all macroeconomic research.

    4.  New Keynesian models introduce market frictions to the framework, so the foundation is no longer perfectly competitive.  Decisionmakers can no longer base their choices exclusively on prices.  The models are based on microeconomic foundations that feature imperfect competition (e.g., firms have monopoly power).

    5.  Clarifications - in microeconomic general equilibrium, the distribution of endowments, not incomes, determines demand curves.  Incomes are determined when households sell their endowments on perfectly competitive markets.  Prices are an input variable to individual decisions, since individuals are price takers.  But prices are an output variable to the overall economy, since they adjust to equate supply and demand.

    6.  The distinction between "short run" and "long run" derives from the economists Burns and Mitchell, who pioneered the analysis of business cycles in the 1940s.  The idea is that we can distinguish a long-run macroeconomic trend, associated with economic growth, from short-run fluctuations around this trend, associated with business cycles.  Macroeconomists who study business cycles tend to consider them in isolation from long-run trends (but not me - see Ramey and Ramey, American Economic Review, 1995).  When I say "short-run stimulation," I refer a situation in which output is below trend, and policy seeks to push it back to trend.  I am raising the point, not often considered in macroeconomics, that the particular type of stimulative spending (e.g., war vs. infrastructure) can also have long-run effects on productivity.


    Parent
    Prof G. (1.50 / 2) (#7)
    by bocajeff on Tue Sep 16, 2008 at 10:42:43 AM EST
    Is it hard to write with your lips firmly attached to Sen. McCain's ....?

    Parent
    I don't understand (5.00 / 2) (#9)
    by Prof G on Tue Sep 16, 2008 at 10:51:39 AM EST
    this comment.  Both candidates have offered serious remarks on the crisis.  Little is gained by deriding the comments of either in an uninformed manner.

    Parent
    People here (none / 0) (#81)
    by Wile ECoyote on Tue Sep 16, 2008 at 01:27:03 PM EST
    don't want to hear stuff like this.  Only the progressive meme stuff is accepted without thought.

    Parent
    People are producing because (none / 0) (#22)
    by Radix on Tue Sep 16, 2008 at 11:07:24 AM EST
    people are still buying. If the banks, where these folks have their money, go under, then no more money. No more money, no more buying, no more buying , no more production. The horse is slowing down, so is the cart, if the horse dies, guess what happens to the cart, it tips over, see?

    Parent
    Not getting underfoot, perhaps, since neither can (none / 0) (#72)
    by Christy1947 on Tue Sep 16, 2008 at 12:37:43 PM EST
    act until January, by which time there may be a whole different situation to act on if those who can don't do it now. Bush is asleep at the wheel on this one and apparently Cheney is not interested.

    Parent
    Maybe Cheney would be interested (none / 0) (#94)
    by litigatormom on Tue Sep 16, 2008 at 03:29:18 PM EST
    if Halliburton and the makers of electronic spying equipment were being hammered in the markets.

    Parent
    Hmmm (none / 0) (#93)
    by litigatormom on Tue Sep 16, 2008 at 03:28:09 PM EST
    Credit is tight, making it difficult for businesses to invest and expand.  

    Workers are being laid off in droves, although the CEOs of their companies get huge severance packages. All those laid off workers, however, will not be making big Xmas purchases, especially since they've probably already maxxed out their credit cards, or will do so by Xmas just to buy food.

    The stock market is incredibly volatile. New stock issuances have come to a virtual standstill.

    The number of independent investment banks has decreased 60% the last 6 months; 40% have simply gone out of business.

    New construction is declining, in part because of decreased housing demand, and in part because developers cannot get construction loans.

    The US car industry is still in the crapper.

    The cost of fuel is sky high, and will not decline even if we drill, drill, drill.

    Equity investments, including retirement funds that senior citizens are already tapping to live on, are being massacred.

    Unless you are in the top 2% income bracket -- unless you were at Lehman or Bear Stearns, and who knows what will happen at Merrill -- the economy has been in the crapper for quite a while now.

    Parent

    Look (none / 0) (#116)
    by Ga6thDem on Tue Sep 16, 2008 at 05:10:20 PM EST
    you can argue that this is academically correct all day long. But unless you add the "american worker" part in that quote there's not question that it's damaging to McCain.

    It's kind of the same argument that people were using to defend Jeremiah Wright.

    Parent

    Has Obama put a "plan" out there for the (5.00 / 4) (#12)
    by Militarytracy on Tue Sep 16, 2008 at 10:57:17 AM EST
    people?  I haven't seen one yet.  Look, it doesn't make sense but what McCain is doing works.  First he flatters the American people by praising them that they are bedrock this country is built on.  Then he promises them their efforts will not be squandered again and he will put together a commission to see to that.  It doesn't matter if we think what he is saying is an oversimplification if it works to get him elected and this will.  Does Obama have a plan this A.M.?  I haven't seen one yet, if there is one that is what we need to be selling.  Smack down on the dude with the only brand of a product that the people are demanding will not work.  We will not win in this fashion.

    Obama is too similar to McCain on Econ (5.00 / 1) (#50)
    by Exeter on Tue Sep 16, 2008 at 11:43:09 AM EST
    Trade?  Regulation? Energy?  Workers rights?  Small, almost inconsequential differences on all of them.  For example, repealing Taft-Hartley would be 'change we need'... but where is Obama?    

    Parent
    YES...that is what Obama needs to talk about (none / 0) (#104)
    by coigue on Tue Sep 16, 2008 at 04:05:48 PM EST
    to sell his economic plan.

    The repeal of Taft-Hartley.

    (oh brother)

    Parent

    Have you looked? (2.00 / 1) (#26)
    by Don in Seattle on Tue Sep 16, 2008 at 11:12:48 AM EST
    http://www.barackobama.com/issues/economy/

    Parent
    Look you make the same mistake (5.00 / 3) (#29)
    by Militarytracy on Tue Sep 16, 2008 at 11:17:30 AM EST
    every Obamabot does.  It isn't the people's job to sell themselves Obama.  It is Obama's job.  Look at the headlines on the speeches given yesterday because I did, they are Obama blames and Biden blames.  I doesn't matter if you like it or not or you think it doesn't make sense, the general population expects a President to deliver the solution when they are frightened, hurting, and/or scared.  McCain is doing that today and Obama is not.

    Parent
    You said you hadn't seen Obama's plan. (none / 0) (#33)
    by Don in Seattle on Tue Sep 16, 2008 at 11:21:39 AM EST
    I steered you toward his economic positions. Doesn't mean I buy all of them 100%, but he's far more specific and progressive than McCain.

    Parent
    Okay, let me be more specific (5.00 / 2) (#41)
    by Militarytracy on Tue Sep 16, 2008 at 11:32:40 AM EST
    I haven't seen, heard, or felt Obama's plan delivered from his mouth my ears, eyes,...nothing.  I hate cable news but I've seen McCain.  You can't miss him just flipping channels and then you show up on the blogs and his solutions are right there.......Obama's solutions are I guess on his website someplace?

    Parent
    Obama has responded to McCain's speech. (none / 0) (#57)
    by Don in Seattle on Tue Sep 16, 2008 at 11:49:08 AM EST
    What are McCain's solutions that you speak of? A commission?

    Parent
    Obama's plan (none / 0) (#68)
    by Howard Zinn on Tue Sep 16, 2008 at 12:32:17 PM EST
    He spoke quite extensively today in Golden, Colorado on his economic plan, along with bullet-points.  It was on CNN.  Here's a link:

    And here's the text.

    I, too, have noticed that the media seems to be McCain-biased since he chose Palin. ;)

    Parent

    McCain biased? (5.00 / 1) (#79)
    by TimNCGuy on Tue Sep 16, 2008 at 01:03:46 PM EST
    Or just giving McCain more airtime? I would understand claiming more airtime. But, not bias. The media have been spending a whole lot of time recently talking about the "lies" in McCain's ads and not talking about the "lies" in Obama's ads at all. The media have been hyping Rove's week-end statement saying McCain has crossed the line with his ads and mostly failing to mention that Rove said the same thing about Obama's ads in the very same statement. What kind of bias is that? The media has been taking Palin on about issues (finally) instead of stupid stuff. But, where is the media taking on the other three in the race about issues and claims they have made? I want to see the media looking at the statements and claims of all 4 candidates with the same fervor they have for Palin over the past week.

    Parent
    well there's exaggerations (none / 0) (#82)
    by Howard Zinn on Tue Sep 16, 2008 at 01:37:20 PM EST
    and Obama is definitely guilty of typical politician exaggeration, and then there's bold-faced lies.  The kindergarten sex ed ad was bold-faced.  The lipstick thing -- the bridge to nowhere -- the earmarks.  All bold-faced, and just the tip of the iceberg.  So in the lies game, McCain is up 1453 to 10.

    The news-worthy aspect of the Rove thing is that here's a HUGE, devisive, Repub insider.  Of course he's going to sling mud at Dems -- that's just like breathing for him.  But when he points the finger at fellow Repubs, then you know their lies are extra vile.  I kinda thought that went without saying.

    Parent

    i just want all sides (5.00 / 1) (#84)
    by TimNCGuy on Tue Sep 16, 2008 at 01:53:09 PM EST
    treated in the same manner by the media. if they want to talk about earmarks, then every time they say Palin has only lowered the amount of earmarks in AK and not eliminated them, they should also repeat that Obama took as many earmarks as he could get for IL until last year when he began his run for president. when they talk about McCain having foemer lobbyists on his campaign, they should also be explaining that while Obama ran his campaign on having no FEDERAL lobbyists on his campaign, he had several STATE lobbyists. I'd need to look further into the "sex education" issue to get accurate details. I've heard that explained so many ways, I woildn't know what is true. Last night a repug pundit admitted that yes Obama may have "meant" for the kindergarteners to only get info about protecting themselves from predators... but what he meant isn't the standard, it's what the bill he voted for actaully says.... and the bill didn't limit it to that topic. The lipstick issue was stupid and could be taken either way depending on your point of view. BUt, the dumbest part of it was for Obama to use the comment when he or someone in his campaign should have known how it could be interpreted so close to Palin using the same phrasing herself.

    Parent
    It is an overstatement (5.00 / 1) (#85)
    by Prof G on Tue Sep 16, 2008 at 02:04:16 PM EST
    to say that Palin "lied" concerning the Bridge to Nowhere.  I have written a brief article that sorts out this issue:

    http://www.chicagotribune.com/news/opinion/letters/chi-080910bridge_briefs,0,7294354.story

    Palin did exaggerate the extent to which Congress was pushing the project, but this strikes me as mere populist hyperbole of the sort that both sides dish out.  The key point is that she overruled the state's Republican establishment when she stopped the project.


    Parent

    Gosh (5.00 / 2) (#88)
    by Steve M on Tue Sep 16, 2008 at 02:16:45 PM EST
    This argument is frankly embarrassing:

    Palin's rhetoric also gives the impression that terminating the project was tantamount to rejecting a federal funding offer. The federal contribution to the bridge budget actually amounted to only $36 million, or less than 10 percent of the projected cost of the bridge. By terminating the project, Palin freed these funds for use in other projects, thereby reducing to some extent the need for future earmarks. In this limited sense, the money was indeed returned to Washington.


    Parent
    No one would argue (5.00 / 1) (#91)
    by Prof G on Tue Sep 16, 2008 at 02:58:23 PM EST
    that Palin should have reduced Federal funding of Alaskan infrastructure to zero.  Suppose that instead of shifting the $36 million to other projects, she had "returned" the funds and obtained $36 million in new funding to finance these same projects.  Then the implication of her claim would have been literally correct, but there would be no difference whatsoever in the net Federal funds provided.  I can't see how this distinction matters at all.  The key is that Palin was unwilling to waste Federal money, unlike Alaska's Republican establishment.


    Parent
    Or (5.00 / 1) (#92)
    by Steve M on Tue Sep 16, 2008 at 03:08:31 PM EST
    instead of spending money on Other Projects + Bridge, she could have just spent the same amount of money on Other Projects as budgeted and given back the $36 million.  Unlike the two scenarios you compare, that scenario would create a valid difference - a $36 million difference.

    The elementary error in your logic lies in assuming that earmarked projects represent a defined class every year, and that if I take $36M extra this year that I didn't really need, now that means next year I can request $36M less.  In fact, there are always more worthy projects competing for funding than there are actual funds available, and thus there is never any reason to ask for less than the maximum you can get.  Absent actual evidence that the following year's funding request was lowered by $36M, the argument that, by taking extra money, she set herself up to ask for less in the future is silly.

    Parent

    Think of all the possible projects (none / 0) (#103)
    by Prof G on Tue Sep 16, 2008 at 04:01:06 PM EST
    in Alaska as being ordered from best to worst.  Say Palin takes $36 million from one of the worst projects are reallocates it to the best one.  In next year's funding request, required funding for the latter project is reduced by $36 million.  Congress chooses to fund this attractive project, but now it costs $36 million less.  This is a straightforward matter of capital budgeting.

    Now consider the full menu of projects requested by all states.  Congress must choose which projects to fund, but it will certainly choose to fund Alaska's best project.  Since this project costs $36 million less, it now has $36 million in added funds available to fund other projects.  Although Palin has "kept the money", it is clear that Congress still has $36 million in extra funds available.

    In fact, Palin's earmark reforms were designed to achieve this sort of outcome.  You can read about them here:

    http://www.juneauempire.com/stories/031808/opi_258953362.shtml

    Parent

    Sure (none / 0) (#107)
    by Steve M on Tue Sep 16, 2008 at 04:15:32 PM EST
    So please show me the evidence that they voluntarily asked for $36 million less the following year.

    Let's be clear here - not every dollar Alaska gets is earmarked for a specific project.  In fact, we see that after the bridge earmark was removed, they were more than happy to accept $36 million in un-earmarked funds to spend on the "best available project."  So why, then, would anyone but a fool believe that they would voluntarily leave $36 million on the table the following year?

    Let's say I embezzle $50 from my employer and spend it on groceries.  When I'm caught months later, I defend myself by saying, "Well, because I bought those groceries, in theory I could have asked for $50 less in the following week's paycheck since I didn't need groceries any more."  Okay, but did you take less the following week?  "Well, no, but in theory I could have, that's the important part!"

    Parent

    as i understand it (none / 0) (#120)
    by TimNCGuy on Tue Sep 16, 2008 at 06:14:30 PM EST
    she did veto about 500 million of earmark requests from Alaska and has severly reduced the amount of earmark funds that Alaska gets now compared to whatit has received in the past. I'm sures these vetos were more than enoug to cover the 36 mil.

    Parent
    Congress does not fund (none / 0) (#127)
    by Prof G on Wed Sep 17, 2008 at 02:14:21 AM EST
    all the projects requested by Alaska.  What matters is that Alaska reduces its prospects for receiving new Federal funding when it uses existing money (the $36 million) to fund attractive projects, since the latter are the very ones most likely to receive new funding.

    Another way to think about this:  using the $36 million to fund a good project means that you do not need to come up with that money via some other means.  You do not have to use new Federal or state funding, and you do not have to shift funds from other projects.  In particular, there is less need for new Federal funding, and in this sense the money finds its way back to Washington.


    Parent

    Alaska still receives (none / 0) (#95)
    by litigatormom on Tue Sep 16, 2008 at 03:33:26 PM EST
    far more federal money than it pays in federal taxes -- I think it's ratio of funds received to funds paid out is the highest in the nation.

    Palin requested close to $200mm in earmarks last year, and has teams of lobbyists in DC to lobby for more earmarks for Alaska.

    Parent

    the issue (none / 0) (#87)
    by Howard Zinn on Tue Sep 16, 2008 at 02:15:01 PM EST
    is that Palin was "for the bridge before she was against it."  While she was running for governor, she was for it, but when she was elected and it became an embarrassment, she was against it.

    And I know that politicians do this sort of thing all the time, including Obama.  The difference is that Palin makes the bridge issue a cornerstone of her stump speech and brags about it.  She makes it seem like she never supported it in the first place, which is a complete fabrication and a lie in my book.

    Sure anyone can parse phrases and make McCain look great ... wait a second ... isn't this a Dem blog?

    Parent

    as I noted (5.00 / 1) (#89)
    by TimNCGuy on Tue Sep 16, 2008 at 02:29:04 PM EST
    above Obama makes the "No federal lobbyists" claim a conerstone of his campaign. And real journalists should be able to knock a hole in that claim big enough to drive a truck through. To your other point, in the same way Palin was "for" the bridge before she was against it, Obama was "for" lobbyists before he was against them.

    Parent
    as I noted (none / 0) (#101)
    by Howard Zinn on Tue Sep 16, 2008 at 03:48:35 PM EST
    above, McCain is getting more attention b/c his lies and exaggerations are reaching a huge critical mass, while Obama slips a few here and there under the radar.

    It's the lipstick, the earmarks, the sex ed to kiddies, the bridge, all hitting at once, and all showing McCain for the underhanded dirty politician he is.

    He's running a much dirtier campaign that Obama is -- it's so obvious even Rove has called McCain out!  I remember hearing that factcheck.org has called McCain out many more times than Obama.

    Are you so pro-McCain that you're willing to call this a wash when it comes to lies?

    Parent

    i don't support either (none / 0) (#118)
    by TimNCGuy on Tue Sep 16, 2008 at 05:24:54 PM EST
    candidate. I am looking for the same treatment in the media for all candidates. If McCain has told 10 lies and Obama has told 6, I want to hear about ALL of them, not just the one who has told more. Every LIE you have listed isn't a total lie. They all have partial truth in them just like pols always do. But, I still want the media to point it out. Notice how even you left out the fact that Rove called Obama out for lies at the same time he called McCain out. That's your own version of "partial" truth, right? What you said was true, but it was incomplete and could lead people to the wrong conclusion about what Rove actually said. And, that's why youleft it out. To try to give it more impact. Just like a misleading political ad.

    Parent
    no, I left it out (none / 0) (#123)
    by Howard Zinn on Tue Sep 16, 2008 at 10:44:35 PM EST
    b/c it had been mentioned earlier in the post, so it didn't need reiterating.  The point is that Lord Darkness Rove stated, on the record, that McCain is going too far.  Of course he'd say that about Obama, because he's a Dem.  All of which I said earlier in the post, so please don't make false accusations and think that your snide comment made me see the light.

    The press does cover everyone's exaggerations. There's always a mention when a candidate stretches the truth.  Evidently you can't grasp the fact that it's only really newsworthy when one candidate is so vile and awful that even Satan says, "Sheesh, that's bad."

    Parent

    I disagree (none / 0) (#96)
    by litigatormom on Tue Sep 16, 2008 at 03:35:31 PM EST
    She didn't say "thanks but not thanks."  She said "please" and "sure" until it became clear that Congress had found it politically untenable to provide the money for the bridge.

    As for "we'll build it ourselves with our own money," she hasn't, has she?

    Parent

    nope. (none / 0) (#105)
    by coigue on Tue Sep 16, 2008 at 04:06:26 PM EST
    she took the earmark and used it for something else.

    Parent
    oops (none / 0) (#69)
    by Howard Zinn on Tue Sep 16, 2008 at 12:33:53 PM EST
    links didn't work:

    He spoke quite extensively today in Golden, Colorado on his economic plan, along with bullet-points.  It was on CNN.  Here's a link:

    And here's the text.

    I, too, have noticed that the media seems to be McCain-biased since he chose Palin. ;)

    Parent

    This was snark. (none / 0) (#27)
    by Emma on Tue Sep 16, 2008 at 11:13:46 AM EST
    Right?

    Parent
    I don't think this is snark (5.00 / 2) (#31)
    by Militarytracy on Tue Sep 16, 2008 at 11:19:04 AM EST
    but this that brainiac thing that the leftosphere suffers from.  They throw a link up to a whole bunch of info and they think that's going to get their candidate the job.

    Parent
    Do you want to see his plan, or don't you? (2.00 / 1) (#35)
    by Don in Seattle on Tue Sep 16, 2008 at 11:23:04 AM EST


    Parent
    No (5.00 / 4) (#38)
    by TimNCGuy on Tue Sep 16, 2008 at 11:26:35 AM EST
    I don't want to READ about his plan. I want him to step out in public and EXPLAIN his plan to me. I want to hear it from him. I want to know he understands his own plan and can answer questions about his plan without referring me to his website.

    Parent
    I'm reading the 'The Last Lecture' (5.00 / 1) (#42)
    by Militarytracy on Tue Sep 16, 2008 at 11:34:14 AM EST
    right now and you just won the big stuffed animal and it was also the elephant in the room.

    Parent
    This isn't a classroom (5.00 / 1) (#45)
    by hookfan on Tue Sep 16, 2008 at 11:37:24 AM EST
    for Obama or his bots to assign reading assignments. They need to talk to the American people and earn their votes. If not then Obama can go back to the Senate and do his own reading assignments.

    Parent
    Nobody's Plan for the Economy can be stated (none / 0) (#53)
    by Don in Seattle on Tue Sep 16, 2008 at 11:44:54 AM EST
    in 20 words or less. Every major issue has aspects that affect the economy.

    Obama gets roasted for being too general in his speeches, but the specifics are there, in his book and on the web. He does include specific policy positions in his speeches, but obviously not all of them in any one speech.

    Tim, do you really think McCain (or Phil Gramm) understands the economy better than Obama?

    Parent

    it really doesn't matter (5.00 / 2) (#63)
    by TimNCGuy on Tue Sep 16, 2008 at 12:02:53 PM EST
    what I think.  What matters is what the voters in swing states (I don't live in one) think.

    If you need to know what I really think, I don't trust EITHER of them.

    And, if I understood one of your earlier posts correctly, you pointed to Obama's website where we could read his overall economic policies.  You didn't point to a plan that is specific to the current "crisis".

    I many voters are like me, they are NOT going to anyone's website to read a bunch of details any more than they are going to read all of the fine print they were presented with for their sub-prime mortgage paperwork.  The person trying to "sell" them something has to convince them.  In this case it is you and Obama.

    I don't read the prospectus information that my financial advisor is required to push at me either.  I have developed a relationship with him over the years and I trust what he is telling me.  I also make him explain things to me in plain english.  He might as well keep all those reems of papers with the small print and save some trees.  But, legally he is required to give it to me.  I am not required to read it anymore than I am required to read Obama's position papers on his website.  And, it's NOT going to happen.

    Parent

    Which crisis do you mean, Tim? (none / 0) (#66)
    by Don in Seattle on Tue Sep 16, 2008 at 12:19:51 PM EST
    The mortgage crisis? The oil-price crisis? The longer term health-care cost crisis? The structural deficit crisis?

    If you can make your question specific, Tim, I might have some hope of giving a specific answer, or pointing to one.

    Parent

    your wish (none / 0) (#71)
    by Howard Zinn on Tue Sep 16, 2008 at 12:36:36 PM EST
    is his command:
     youtube vid:

    And here's the text.

    Parent

    You can't have it both ways. (none / 0) (#74)
    by Christy1947 on Tue Sep 16, 2008 at 12:42:54 PM EST
    Either you read the speech or listen to it on YouTube or wherever you can find it, which of necessity has to be shorter and more summary (esp. given the tendency to critcize O for pedantic and long speeches) OR you go to the place where the whole thing is written out and read every careful word, no matter how many hundreds or thousands of them.

    Give it up. The financial meltdown is a complex mess laid over another complex mess, built on a swamp, and acc to the NYT this morning, even the people who invented some of the bizarre inside-the-market debt reinsurance securities which are now sinking the credit market and us with it, can't either explain them or value them, so why do you expect anybody, pol or not, to explain them in baby words which fit into a little sound bite? Go do your work.

    Parent

    i think if you read my (5.00 / 1) (#78)
    by TimNCGuy on Tue Sep 16, 2008 at 12:56:27 PM EST
    actual posts you will NOT FIND anywhere in them where I said anything about expecting "sound bites" from a pol. I haven't had an opportunity yet to watch the video. But, I will. Does he takes questions after the speech to prove he knows what he is talking about? That's the form I would prefer to see. More like a press conference. He could come out and give his speech and then have a question and answer period at the end. And actually I would prefer he be questioned by people who understand economics instead of the standard journalists asking questions. Oh, and just to be clear, I would like to see McCain do the same.

    Parent
    He needs to sell his plan (5.00 / 1) (#43)
    by esmense on Tue Sep 16, 2008 at 11:34:19 AM EST
    It's not enough just to have one.

    Parent
    I have read his plan (5.00 / 1) (#97)
    by litigatormom on Tue Sep 16, 2008 at 03:38:03 PM EST
    and I support Obama (former HRC supporter here), but I agree that Obama can't rely on his website to convince people that he has a plan.  He has to TELL people what it is.  Now, he can't describe it in as much detail as he can on a website, but if he can't communicate his key ideas orally to the voters, he not only won't win, but he wouldn't be able to lead and shape public opinion if he did become president.

    Obama has to turn all that oratorical skill in talking about hope and change to communicating his ideas to voters in clear, compelling terms.

    He should watch Bill Clinton's speech at the convention to see how it is done. Bill's speech was incredibly substantive, and it was compelling and persuasive. Obama needs to do it like that.  Stat.

    Parent

    No. (none / 0) (#30)
    by Don in Seattle on Tue Sep 16, 2008 at 11:18:05 AM EST


    Parent
    Simplification (none / 0) (#117)
    by Ga6thDem on Tue Sep 16, 2008 at 05:11:33 PM EST
    can work. All that is needed is bullet points that can be sent out as talking points for the pundits.

    Parent
    McCain's plan (5.00 / 4) (#20)
    by Steve M on Tue Sep 16, 2008 at 11:05:28 AM EST
    "I'm always for less regulation," he told The Wall Street Journal last March, "but I am aware of the view that there is a need for government oversight" in situations like the subprime lending crisis, the problem that has cascaded through Wall Street this year. He concluded, "but I am fundamentally a deregulator."

    Anyone who is foolish enough to believe that McCain will usher in a new era of effective regulatory oversight deserves what they get.

    Alas. . . (none / 0) (#46)
    by LarryInNYC on Tue Sep 16, 2008 at 11:38:33 AM EST
    all the rest of us get it too.

    And, indeed, McCain's proposal to deal with regulatory failure is. . . to eliminate the regulators.

    Parent

    sigh (none / 0) (#47)
    by connecticut yankee on Tue Sep 16, 2008 at 11:38:36 AM EST
    Here we go again with McCain playing, "me too, me too".  I guess his lifetime of experience doing the opposite prepares him for all the waffling.

    Parent
    McCain gets his economic "ideas" (none / 0) (#98)
    by litigatormom on Tue Sep 16, 2008 at 03:40:24 PM EST
    from Phil Gramm, a/k/a Mr. "Mental Recession Stop Whining."  Gramm was one of the biggest proponents of de-regulation, and drafted a lot of the legislation that made it happen.

    Gramm is the most likely Secretary of the Treasury in a McCain White House.

    Be afraid. Be very afraid.

    Parent

    What is Obama going to do? (5.00 / 3) (#24)
    by Emma on Tue Sep 16, 2008 at 11:12:35 AM EST
    I'd really like to know.  

    Yay!  McCain bashing!  It's fun!

    Now.  What's Obama's solution.

    Nobody who has any sense expects him to (none / 0) (#75)
    by Christy1947 on Tue Sep 16, 2008 at 12:47:08 PM EST
    post on his website the specific regulations he intends to put in. Have you ever read all the regulations in the CFR on any subject at all? Nobody who is not a legal person interested in that subject has.

    It's as if you are sure in your heart that in HIS heart, O doesn't have an answer, and that therefore you can push endlessly for more detail because you refuse to be satisfied with anything he says or does or proposes, not really because of what's in the proposal but because he's proposing it. At the same time, you are willing to let McCain ride on a 'commission' without any guidelines as to what it must consider and what it should propose, becasue. . . he's McCain.

    There's a word for that but it's off-thread.

    Parent

    Well, I'm pretty sure he doesn't have an answer. (none / 0) (#83)
    by Emma on Tue Sep 16, 2008 at 01:46:13 PM EST
    Whether that absence is in his heart or his head or his policy, I don't know.  Why am I pretty sure he doesn't have an answer?  Because I haven't heard one from him.  What's important to him?  What's he going to do?  What's the fix?  

    The post-partisan mumbo jumbo, it's blah blah blah to me.  Don't care, don't believe it, don't want it.  But that's what I hear.  That and "McCain is old. And stupid.  And did I say old?"  That's what I heard after enduring all the dreck with Palin, that is.

    (And, I've read lots of CFR, btw.  Just FYI.)

    Parent

    McCain Invented The Blackberry (5.00 / 1) (#34)
    by MTSINAIMAMA on Tue Sep 16, 2008 at 11:22:54 AM EST
    He has a firm grasp of the situation.

    Saw that headline (5.00 / 1) (#37)
    by CST on Tue Sep 16, 2008 at 11:24:10 AM EST
    Made me laugh.  Someone call Al Gore!

    Parent
    I'm always so wrong (none / 0) (#51)
    by Militarytracy on Tue Sep 16, 2008 at 11:44:20 AM EST
    It is frustrating being me sometimes........I thought he invented the Huckleberry.

    Parent
    We're all cynical about "commissions," (5.00 / 2) (#36)
    by esmense on Tue Sep 16, 2008 at 11:23:45 AM EST
    but, over the last two days, McCain has been attacking Wall Street and the questionable and "corrupt" practices that brought on this crisis while Obama has been mostly parsing what McCain meant by "fundamentals."

    When is Obama going to address the "unscrupulous," "self-seeking" "rulers of the exchange of mankind's goods" as FDR did? When FDR said "They have no vision, and when there is no vision the people perish," he wasn't talking about Herbert Hoover -- he was talking about the financial leaders whose self-serving manipulations had harmed the nation at large.

    Why is the representative of the party of FDR not addressing the financial practices (and those who indulged in those practices) that are the problem more powerfully? Why is he instead mostly criticizing his opponent's way of addressing the problem? Is it because doing otherwise would require him to directly criticize too many important supporters?

    Is it possible to make a strong case for greater regulation, to propose real changes and solutions, without also making stronger criticisms of Wall Street and the financial practices of people and interests the Democrats have come to depend on?

    McCain's "commission" gambit is weak. But, in terms of political argument and persuasive proposals, Obama's response so far has been even weaker, or buried too far under petty criticisms of his opponent for people to notice.

    The deficit of leadership exhibited by both these candidates in this crisis is a tragedy for Democrats and Republicans alike.

    Can we extrapolate (5.00 / 1) (#48)
    by alsace on Tue Sep 16, 2008 at 11:40:47 AM EST
    McCain's comment to mean that the reason for the Great Depression was that workers in the 30's were lazy and unproductive?  Or was prohibition the cause, since those workers did not have the option of marrying a beer heiress?

    LOL.... (none / 0) (#60)
    by kdog on Tue Sep 16, 2008 at 11:53:01 AM EST
    But they did have alcohol heiress' during prohibition...gangsters have daughters too:)

    Parent
    The reality is that (5.00 / 1) (#65)
    by inclusiveheart on Tue Sep 16, 2008 at 12:14:59 PM EST
    when the Republican Party says that the workers are strong - it doesn't mean that they care about workers - they care about productivity regardless of the hardship that workers face - workers are expendable and replaceable - the ones who don't make it will simply be replaced - that is how they look at workers - that is how they look at the military - that is how they look at Americans - in their minds we work for them and not the other way around.

    The Republican Party is doing everything in their power to create the cheapest, most productive workforce in the world and at the moment they are succeeding in their mission.

    Exactly (none / 0) (#100)
    by litigatormom on Tue Sep 16, 2008 at 03:46:47 PM EST
    McCain says our workers are the most productive, but he cares nothing for the fact that the 20% gain in productivity this decade has been matched with a virtually 0% gain in real wages.

    McCain says our workers are the most creative, the best trained, but if they're unemployed, that creativity and training isn't going to get them new work if the economy isn't growing, particularly in an environment in which new capital and credit are scarce.

    McCain says he won't raise taxes on either the working class or the upper class, but in fact, his so-called healthcare plan proposes a regressive tax on the value of employer contributions to group insurance plans.  That tax, of course, would hardly be material to those in the top income brackets.

    McCain says he'll clean up the corrupt practices on Wall Street.  Really?  With Phil "I Never Met a De-Regulation Plan I Didn't Like" Gramm and Don Luskin (who wrote an article over the weekend saying "stop saying the economy is bad, it's not as bad as the Great Depression")?

    Parent

    Keep posting Prof G. (5.00 / 1) (#67)
    by Green26 on Tue Sep 16, 2008 at 12:26:46 PM EST
    I'm enjoying your comments. Maybe some of us will even learn something. I too like this site.

    Is he serious? (2.00 / 1) (#17)
    by Pegasus on Tue Sep 16, 2008 at 11:02:10 AM EST
    We're staring at a financial sector meltdown unprecedented in recent history, one is almost certainly going to spill out into the wider economy, and his best idea is... convene a commission??

    I mean, I know McCain doesn't have a clue, but isn't there anybody in the GOP who can at least feed him some lines that would be minimally plausible?  This is just embarrassing for him.

    sure (none / 0) (#21)
    by Jlvngstn on Tue Sep 16, 2008 at 11:05:33 AM EST
    you convene a commission when you want to avoid responsibility for the outcomes of your policy.  That way he can say, "I did what the commission told me to do".  Kind of the anti "I'm the decider", deciderer.

    Most recessions last 9 months to a year, by the time the commission convenes and gets down the issues, we will be out of the recession.  

    What is the best way out of this recession????

    Parent

    Decider (none / 0) (#25)
    by WS on Tue Sep 16, 2008 at 11:12:43 AM EST
    should be a real word.  It just might be Bush's greatest contribution to America.

    Are people really going to be fooled that Republicans are going to go after Big Business?      

    Parent

    I'm not fooled (none / 0) (#55)
    by hookfan on Tue Sep 16, 2008 at 11:45:56 AM EST
    that democrats like Steny hoyer or Joe Biden will.

    Parent
    I doubt we'll be out of the recession (none / 0) (#102)
    by litigatormom on Tue Sep 16, 2008 at 03:50:24 PM EST
    in nine months. And suppose the commission tells him something he doesn't want to hear, like Bushs didn't want to hear the recommendations of the 9/11 commission and the Iraq Study Group?

    Form a commission is a way of kicking a problem down the road and hoping that ignoring it for a while will make it disappear.  Perfect if you think the state of the economy is the result of a lot of whining, but otherwise a ridiculous idea.

    McCain doesn't care that much about the economy. He'll outsource the economy to Gramm the way Bush outsourced national security to Cheney.

    Parent

    well the housing market (none / 0) (#106)
    by Jlvngstn on Tue Sep 16, 2008 at 04:06:36 PM EST
    will be far from corrected or stable in nine months but we are almost at the bottom in the market after AIG.  I don't expect any more surprises from the market but who knows who is doctoring books ala enron (i know sarbox sarbox sarbox).....

    Parent
    Wamu is next (none / 0) (#108)
    by litigatormom on Tue Sep 16, 2008 at 04:21:16 PM EST
    and who knows after that?  Would you have thought in the beginning of the year that three out of the five major investment banks would be gone by the end of the third quarter?

    Parent
    yeah but not as dire as aig (none / 0) (#110)
    by Jlvngstn on Tue Sep 16, 2008 at 04:22:28 PM EST


    Parent
    That's what we think today (none / 0) (#114)
    by litigatormom on Tue Sep 16, 2008 at 04:43:39 PM EST
    But at this point I'm skeptical of assurances that the worst is almost behind us.

    I hope you're right.  

    Parent

    me too (none / 0) (#115)
    by Jlvngstn on Tue Sep 16, 2008 at 04:50:04 PM EST


    Parent
    Ahhhh.... (none / 0) (#2)
    by kdog on Tue Sep 16, 2008 at 10:33:20 AM EST
    The old "high level commission" trick....and when they come out with their report two years later, the president listens if he likes the findings and ignores it if he doesn't.  

    Remember Nixon's "high level commission" to study marijuana?  The findings didn't jive with his drug war plans, so he ignored it.  McCain would do the same if the commission's findings threatened his corporate paymasters.

    That's why I hate Senators (5.00 / 2) (#6)
    by bocajeff on Tue Sep 16, 2008 at 10:41:30 AM EST
    becoming presidents. Senators deliberate, pontificate, and become like, say, Joe Biden. They don't actually DO anything. Give me a governor or a mayor (of a town with more people than a circus car full of clowns) anyday!

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    AMEN! (none / 0) (#15)
    by Militarytracy on Tue Sep 16, 2008 at 11:00:35 AM EST


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    I like myself a governor who has been (5.00 / 1) (#16)
    by Militarytracy on Tue Sep 16, 2008 at 11:01:46 AM EST
    roasted slowly over hot coals until he is tender on the inside yet crispy on the outside ;)

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    ha (none / 0) (#52)
    by connecticut yankee on Tue Sep 16, 2008 at 11:44:21 AM EST
    Yeah, because Bush worked out so well.  

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    Yeah... (none / 0) (#59)
    by kdog on Tue Sep 16, 2008 at 11:51:24 AM EST
    But with governors and mayors you have to worry more about the tyrannical tyrant factor.  

    Once again I'm reminded of Kurt Vonnegut's observation of the fundamental flaw with our republic...abyone who would make an excellent commander and chief is smart enough not to want the job...we're left with the psychopaths.

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    Did being Governor of Alaska and Mayor of (none / 0) (#76)
    by Christy1947 on Tue Sep 16, 2008 at 12:50:45 PM EST
    Wasilla give Palin enough to deal with the stock market meltdown, if you think being a governor is such a good thing. The only big thing she did was to go with a pipeline proposal where her DNR appointee was a  paid lobbyist (research and analysis) for that proposal while on the AK government payroll, when the prior governor preferred a different one.

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    9-11 commission (none / 0) (#3)
    by CST on Tue Sep 16, 2008 at 10:34:22 AM EST
    Was a bad analogy.  Mostly because I don't think anyone thinks that anything usefull came out of it, and as you eluded, it took forever.

    However, I think someone (cough cough, OBAMA) should bring up FDR's 100 days and propose something similar.  It has reached that point.

    Side note - I've never been happier to be broke in my life.

    Really? (5.00 / 1) (#19)
    by Steve M on Tue Sep 16, 2008 at 11:02:34 AM EST
    I realize they're not sexy, but the 9/11 Commission recommended a number of very important reforms for our intelligence community.  There's a reason implementing those reforms was the very first bill passed by the Democratic Congress.  It's just a shame that we had to wait for the Democratic takeover in order for that to happen.

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    Fair enough (none / 0) (#32)
    by CST on Tue Sep 16, 2008 at 11:21:35 AM EST
    Although I did use the word "thinks" for a reason - it isn't sexy so it doesn't resonate much with voters.

    Especially because it took so long to implement.

    When I hear 9/11 commission I think more about looking for a problem than solving it.  But that's probably being unfair to the commission, since they did recommend important reforms.

    But from a gut-check level, I just don't think this is the analogy you want to go for.

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    I'll follow the hedge funds to the gates of hell. (none / 0) (#4)
    by steviez314 on Tue Sep 16, 2008 at 10:36:23 AM EST


    Like they said in the Old West... (none / 0) (#109)
    by litigatormom on Tue Sep 16, 2008 at 04:22:24 PM EST
    ...hedge funds, dead or alive.

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    You need a commission... (none / 0) (#10)
    by Addison on Tue Sep 16, 2008 at 10:51:44 AM EST
    ...when you're not sure what went wrong.

    I'm pretty sure everyone knows pretty much what went wrong here.

    McCain is looking backwards instead of forward. And his plan for a commission will only employ a dozen or so members of that commission, and not a single American more.

    The proposed commision (5.00 / 1) (#11)
    by Prof G on Tue Sep 16, 2008 at 10:55:51 AM EST
    is certainly a gimmick.  But in truth there is very little agreement as to either the causes of the crisis or the proper remedies (I have much professional expertise on these matters).  I am happy that both candidates express a desire to move with deliberation on the question of regulatory overhaul.

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    But the people will vote for the man (5.00 / 1) (#13)
    by Militarytracy on Tue Sep 16, 2008 at 10:58:55 AM EST
    presenting the understandable plan, the plan they can all get behind and take part in.  You would happy if McCain won?

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    I like the fact (5.00 / 1) (#39)
    by Prof G on Tue Sep 16, 2008 at 11:30:27 AM EST
    that the campaigns are moving beyond silly rhetoric and towards a discussion of economic policy.  So far their comments do not rise to the level of a "plan", but the basic parameters are becoming clear.  Obama criticizes deregulation, and he proposes restoration and/or expansion of Federal financial-market regulations.  McCain is suspicious of regulation per se, and he would favor regulatory reform that made better use of market forces (e.g., to increase transparency).  Like the majority of economists, I tend to lean toward more market-based approaches.  This leads me to favor McCain on this issue, but I haven't seen anything to suggest that Obama would not adopt a sensible approach.  

    In any event, banking regulation is in large measure the responsibility of the Fed.  Many informed commentators have laid responsibility for the current mess on Greenspan, who has been criticized for failure to rein in the expansion of credit that stimulated the housing bubble in the first place.  Congress and the Bush Administration have had very little role in this, Obama's comments notwithstanding.

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    It is hard sometimes (5.00 / 1) (#49)
    by Militarytracy on Tue Sep 16, 2008 at 11:41:30 AM EST
    when I want you to use your expertise to argue for the issues you believe in.  I think it is great that a econ brain is showing up here to participate.  I don't take sides reflexively often either, but you really really don't take sides while you are informing and it is hard for me to not want you to.  I want you to give me some stuff to use when I'm beating the kitchen table trying to get the country on track again.  Cough it up Professor (just kidding....)

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    I love this site! (5.00 / 1) (#62)
    by Prof G on Tue Sep 16, 2008 at 12:00:32 PM EST
    What a find!  

    I think the kitchen table conclusion is, neither candidate is really in a position to offer a plan that responds to the current crisis.  The important point is what they propose to deal with future crises.  Do you think that more government intervention, sensibly crafted, is the answer?  An Obama administration would move in this direction.  Do you think that the key problems can be addressed through more limited, market-oriented reforms?  This is the McCain approach.  Both candidates seem quite credible (please ignore the campaign rhetoric).  They have yet to offer details, but it may be unreasonable to press for too much detail at this point.  The choice boils down to one's basic perspective on the roles of government vs. the market.

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    Market-Based Approach Works If... (5.00 / 1) (#61)
    by santarita on Tue Sep 16, 2008 at 11:56:28 AM EST
    there is a level playing field and non-market forces (like government intervention) is absent.

    When an institution is deemed too big to fail, it is another way of saying that the market cannot be allowed to work for the good of society.  It seems to me that if an institution is too big or to important to fail and that government intervention is likely, then the government should have a strong hand in regulating that institution in order to prevent failure.

    I think Obama has more specifics on regulatory overhaul than McCain but I haven't seen a more specific and comprehensive approach yet from Obama.  (Calling for more transparency and accountability may sound good but is a far cry from a real solution.)  I'd like to hear what either candidate proposes to do with the federal government's new assets: Fannie Mae and Freddie Mac.  That decision will speak volumes.

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    Are the Causes of the Crisis in Doubt? (none / 0) (#54)
    by santarita on Tue Sep 16, 2008 at 11:45:14 AM EST
    I'm curious as to why you would say that?  Aren't the prime movers behind  the failures of large Wall St. firms, the collapse of the housing bubble and the investment in financial products backed by subprime and alt-a mortgages?  I'm not sure that I understand what you mean by not knowing the causes of the crisis.

     

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    By "cause" I mean, (none / 0) (#64)
    by Prof G on Tue Sep 16, 2008 at 12:08:19 PM EST
    for example, why it was so difficult for the market to re-price assets in a more efficient manner?   Indeed, novel forms of mortgage-backed securities existed to deal with this.  Why were they unsuccessful?  I could discuss several other questions connected with discerning the "cause".  I submit that answering these questions will occupy professional economists for many years to come.

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    A worthwhile subject to research, for sure. (none / 0) (#73)
    by santarita on Tue Sep 16, 2008 at 12:38:06 PM EST
    Well perhaps the market is dealing with the repricing of assets efficiently enough but in a catastrophic manner.  The question for political leaders is whether any fail-safe mechanisms  can prevent large scale economic disruptions and still remain consistent with capitalism.

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    Suitable regulation might have required (none / 0) (#77)
    by Christy1947 on Tue Sep 16, 2008 at 12:56:20 PM EST
    the geniuses who thought up and sold billion dollars of these strange securities outside the SEC disclosure system (1) to have thought it all through, including the assumptions and the possible consequences of the mortgage pool not having the quality they plainly all assumed, and losing further quality as the push to create the mortgages themselves in order to put them in these strange securities, and (2)disclosed it before these profit and bonus-hungry souls who were not in the business in the last downturn and didn't believe it could happen, sold the first one.

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    In all fairness... (none / 0) (#80)
    by santarita on Tue Sep 16, 2008 at 01:19:08 PM EST
    I think the bright boys who first created these instruments did think that their assumptions were sound and did think that the mechanisms were robust enough.  They failed to factor in (or thought that they had adequately provided for) borrower fraud, collapse of underwriting standards at the originating lender, collapse of underwriting standards in the secondary market, collapse of the credit rating agencies, failure of the regulators to exercise oversight - in other words systemic failures.  And part of the problem is groupthink- either no one challenged the optimistic assumption of the bright boys and/or the people that challenged were disregarded.  

    Part of what is going on also is that people forget that no investment product is free of risk, that's why people expect some kind of return for their risk.  The higher the return the greater the risk.  Investors probably loved Lehman Bros products because for a while they were getting high returns.  

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    The point is that regulation, i.e. registration (none / 0) (#122)
    by Christy1947 on Tue Sep 16, 2008 at 10:16:31 PM EST
     of these securities, would have made these bozos put it all down in writing and get it read and approved by somebody in an office which has no financial interest in the investment or in a legal or accounting relationship to the would-be issuer,  who is reading for logical consistency, clarity, and clear disclosure of risks, including financials in conformity with generally accepted accounting principles, including those  risks you list.  Earlier this year, it came out that these instruments, because of ratings, landed folks like a small township in Finland  and a school district in FLA in this mess, when they thought they were buying AAA securities. It is by no means clear that the geniuses of Lower Manhattan and other spots in fact even recognized the risks that were involved in some of the bizarro securities here involved, especially risk insurance type instruments.

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    Wasn't a big part of the problem (none / 0) (#111)
    by litigatormom on Tue Sep 16, 2008 at 04:27:45 PM EST
    that the financial houses never evaluated the risks inherent in these products when they first packaged them?  They assumed that any foreclosures would not materially affect the income stream from the securities, because they were part of much larger pool of mortgages.  They never focused on what would happen if lots of foreclosures in the pool occurred.

    It's a lot harder to re-price something when you never did your due diligence in the first place.

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    Recent risk analysis has utilized (none / 0) (#126)
    by Prof G on Wed Sep 17, 2008 at 01:53:38 AM EST
    elaborate mathematical models of asset pricing.  These models are based on very strong assumptions as to investor knowledge and rationality, as well as market liquidity.  Models in this vein perform rather poorly in empirical tests and I have always wondered why practitioners put such great faith in them.

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    McCain's Bold New Economic Plan | 129 comments (129 topical)

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