Weekend Watchdog Wrap-Up

Bill Scher

While the Sunday shows were, true to form, heavier on the politics of the bailout than substance, it was actually one of the better days for the Watchdog.

On ABC’s This Week, Sen. John McCain was asked about the need for additional economic stimulus — albeit not as part of the bailout package.

Host George Stephanopoulos brought up Sen. Barack Obama’s statement that a “stimulus plan for the middle-class, which extends unemployment benefits, adds infrastructure funding and sends money to the states to shore up their budgets” should follow passage of the bailout. Asked if he supported it, McCain said:

I am for keeping taxes low. I am for whatever steps we think we need to be taking right now. But first, let’s get this [bailout package] off the table.

After being asked a second time, McCain said:

I’ll have to look at it. But look, I’ll be glad to look at anything to help our economy. We did a stimulus package a few months ago as you well know. It had very little beneficial effect. I would like to see incentives for businesses to grow and locate. That’s lower taxes. That’s ways of making credit and funds available for them. Of course, we have to rebuild our infrastructure. I’d like to see along with that stimulus package, if it comes up, a commitment that there’ll be no earmarks.

Is he for stimulus or against? You be the judge!

I should note that the prior stimulus package was derided upon its January 2008 introduction by our own Robert Borosage for not including major infrastructure investment — and new regulation on the teetering financial industry:

[Congressional leaders] demanded, sensibly enough, that the tax cuts include 45 million in low-income families that the president would have excluded. They demanded the president take extending his tax cuts beyond 2010 off the table. They got some help for imperiled homeowners through the Federal Housing Authority and Fannie Mae.

So only $40 billion of the $150 billion package gets squandered on business tax boondoggles. The rebates — what Jesse Jackson calls Wal-Mart gift certificates — will get handed out by August at best. It might help a bit, although if the economy is still in bad shape in August, people are more likely to be paying down credit-card debt than buying a new TV made in China.

But $40 billion isn’t the largest cost. The real price is the continued misdirection of the economy and miseducation of the country.

We need what the stimulus package excludes. We need long term investment in rebuilding America — spending money on mass transit, on basic sewers and water disposal, on the electric grid, on renewable energy, on a green rebuilding of our urban areas, on schools and teachers, pre-K and affordable college. We need to stop squandering money abroad in misbegotten wars — now approaching $1 trillion spent on Iraq. We need to revive progressive taxation so at the very least hedge fund billionaires stop enjoying a lower tax rate than their secretaries. We need to develop a national strategy for the global economy, ending our addiction to oil, curbing the casino speculation that will eventually bring down the house, and balancing our trade with the mercantilist nations while capturing the new green industries of the future.

None of this, needless to say, is in the stimulus package. Instead we’re taught the wrong lessons: tax cuts are good, particularly business tax breaks; lower interest rates are a free lunch; the “fundamentals,” as the president constantly says, “are good.”

On NBC’s Meet The Press, the question of additional regulation on the financial industry received at least cursory attention during a debate between the two major party candidates in Colorado for U.S. Senate.

Host Tom Brokaw raised it with former Rep. Bob Schaffer (R):

BROKAW: Congressman, Chris Cox, who is the chairman of the SEC, said it’s not the dead hand of government.

SCHAFFER: Right.

BROKAW: In effect, he said it’s the blind eye of government and he now apologizes for regulations as they were deregulated not working, he said that we went voluntarily and Wall Street just didn’t respond to that. That put us in the jam that we’re in now and all of that grew out of a Republican culture beginning with Ronald Reagan.

SCHAFFER: Yeah.

BROKAW: So isn’t it time to re-institute closer regulation of Wall Street and these financial institutions, especially in an era of warp speed and electronic trading, which is very hard to keep track of?

SCHAFFER: In some, in some areas, perhaps, with respect to transparency, with respect to certain areas of accountability, of course. But not in a way that slows or constrains the ability of the, the economy to grow. You know, the–you can trace back, however, the–to 2005, with the legislation that was considered in 2005 and again in 2007 with respect to Fannie Mae and Freddie Mac, where there were attempts, actually led by Republicans in the Congress, to put more controls and to put more restraints on Fannie Mae and Freddie Mac.

The blame Fannie/Freddie strategy, which as I noted last week, is the conservative blame-shift maneuver of choice.

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