411 Politics Fact or Fiction: Week 104

Posted by Brandon Crow on 10.02.2008

Is the "bail out" a good idea? Does this financial crisis deserve to be part of Bush's legacy? Will John McCain's erratic behavior over the past two weeks cost him the election? With a possible Depression hanging over the nation, does Bush look like Herbert Hoover right now?

Welcome to Week 104 of Politics Fact or Fiction. The last three weeks have featured readers of the column, many of whom have been excavated from the comments section of various articles. This week, we're giving a couple of writers their fair shake at F or F. With us are the ever-popular JD Dunn, back for his second appearance, and Tom Head, the lead "guide" on civil liberties for About.com. Tom has also authored and/or coauthored 23 books, including one that's about to be published, entitled "Civil Liberties: A Beginner's Guide."

By the way, JD, Tom wrote some pretty flattering things about you in one of his emails to me.

This week is going to be quality with these two up at the plate!

Let's get to it.

Ding! Ding

1. Congress and the White House have reached a compromise agreement on the "bail out," including allowing the United States Treasury to purchase $700 billion of troubled debt, strict Congressional oversight of the program, pay limits for executives of companies who sign up for aid, help for homeowners unduly caught in the mortgage crisis, and a provision that would allow taxpayers (the lenders) to make interest on the money. You are in favor of this bail out.

JD Dunn: FACT. Reluctantly. It's not so much that I'm in favor of the bill as proposed as I am of taking steps to ensure that there is a credit system in the U.S.. The 100:1 ratio of angry callers and e-mailers to congressmen don't seem to realize that this is the best of a bad situation. Banks don't have enough money to lend, which not only means that you can't get a home loan, car loan, or student loan – you might not be able to get your money out in an emergency if you have large amounts in there (check your agreement, yes they can do that). Not only that, but even for those with pristine credit, the interest rates will be sky high to discourage borrowing. Discouraged borrowing, in turn, means fewer new businesses, less money in the economy, less hiring, higher unemployment, less tax revenue, more debt, more inflation, less power for the dollar, and more of a need to borrow… you see where this is going.

I think the Republicans have a number of better suggestions, including suspending the capital gains tax. Suspending the CG tax would encourage businesses to take on a large portion of the "toxic" debt. Think of it like a long road trip. If you can get someone to split gas with you, it really helps out. But, as Barack Obama says, "You can't let the perfect be the enemy of the good." I want a better bill, but, in absence of that, I am in favor of the bailout.

Tom Head: FICTION. Barely, though. A bailout is good; the bailout is not necessarily good. The biggest problem with it is that it gives the executive branch too much discretion to spend that $700 billion, and it gives banks receiving it too much discretion to make decisions about their budget (expect some sky-high CEO salaries to come out of this, for example). I also question putting the $700 billion up there at once; it would make more sense to me to let the Bush administration spend the first $400 billion first, then call a special session after the election for the other $300 billion if it's needed. Do we need to do something? Yes. But this business of "This is such an emergency that you don't have time to think--quick, approve this bill!," where many legislators haven't even read the thing yet, almost never ends well. The Iraq War is a good illustration of that. I do think that the bailout bill that eventually passes Congress will probably be a good piece of legislation that addresses all or most of the oversight concerns, but Congress is under no obligation to sign the boilerplate right away.

0 for 1. Ok, I gotta add a couple of cents here. Generally, I'm not in favor of bailing out big businesses. Often, they've arrived at their crisis point due to overbearing greed. It's not like with every day people who mostly arrive at crisis because of greedy and predatory practices of big businesses. Now, having said that, right now, we do need a "bail out" of some sort to stave off a deep and massive recession if not altogether a depression. And of course, that will have heavy repercussions on the common folk too. The bill is not great, but it's good enough for now. Ideally, I'd like to see less tax breaks for businesses in the bail out proposal, and a whole lot more punitive measures. If you bail them out and not make it painful for them, what incentive do they have to not do it again?

2. This financial disaster will, and deserves to, be part of the Bush legacy.

JD Dunn: FACT. Regardless of what the reality is, George W. Bush is the president, and the buck (what's left of it) stops with him. Bill Clinton deserves a share of the blame, as do greedy lenders and home buyers. When an economy as massive as ours is goes bad, it's not just the fault of one man. However, President Bush has had eight years in office, and many of those years with a Republican majority. As much as we hear conservatives saying they saw this coming all along, when they had the opportunity to take steps to prevent this, they were – well, outside of the Patriot Act, I'm not sure what their legacy will be. Political blame is a game of hot potato (or "potatoe," if you prefer), and the Bush Administration has the potato now.

Tom Head: FACT. This never should have reached Wall Street to begin with. Civil rights organizations such as ACORN and the NAACP have been talking about the effects of predatory lending for years, particularly subprime mortgages, and the Bush administration has done nothing because it doesn't take the concerns of low-income Americans seriously. I'm not saying that the Bush administration bears all of the blame--Clinton and Congress are at fault as well--but this problem has gotten worse over the past decade, and the Bush administration has had the bully pulpit for all that time and has done absolutely nothing to address this problem until rich people started losing money on the deal. Robber baron capitalism inevitably eats its own tail if left unmonitored, and the current economic crisis is only the latest example of this process at work.

1 or 2. Bush's legacy is screwed…but hey, no big deal, it was screwed way before this fiasco.

Switch!

3. John McCain's recent erratic behavior on the campaign trail has made him look rash and uninformed, and in the end, will cost him votes—and therefore the election—come November.

Tom Head: FICTION. I don't find John McCain's behavior erotic at all; if he worked some leather pants, maybe a little mascara... Oh, wait--you said erratic. Well, his behavior has certainly been that, but it's still a little early to be running a postmortem on the McCain campaign. RCP's poll of polls has Obama leading by only 4.8 points at the beginning of October, and McCain can potentially cover that ground if he gets lucky--if he performs devastatingly well in the remaining two debates, if Osama bin Laden releases another let's-help-the-Republicans tape on the eve of the election, or if swing state voters just turn out to be a lot more racist than they're letting on in the polls. Barack Obama will probably win, and McCain's antics will probably play a role of some kind in his victory, but it's definitely too early to call it. The truth is that McCain is performing far better than anyone could have reasonably expected a Republican to perform in October 2008, under the current circumstances; what will most likely cost him the election, assuming he loses, will be that he's running against Barack Obama while seeking a third Republican term following George W. Bush. That may or may not be a winnable scenario, regardless of what McCain does.

JD Dunn: FACT. Again, regardless of what the actual reality is, perception is the reality in politics. McCain's antics not only looked erratic, but transparently political. If you're going to stop campaigning to "save" the bailout bill, you don't have to hold a press conference about it – just go do it. His most recent tactic is a "listening tour" to find out what ideas the American people have. That sounds good, but I've been talking to the people around me. Don't be surprised if the idea he comes back with is a 20-story mayonnaise jar with all of our money in it buried in the back yard.

Not only that, but it reinforces an existing image of a man who doesn't look before he leaps. Being a "maverick" is cute for a while, but when it looks like you can't keep your cool when you're tested, that's a problem. Notice that Obama's poll ratings have only solidified since the suspension of the campaign and the debate. Obama has been cool throughout the crisis. In fact, he seems so cool that it's like he's not even paying attention to it at all (**cough**).

1 for 3. We'll see on November 4th.

4. Former Nixon advisor Ben Stein mentioned this week that Secretary of the Treasury Henry Paulson should have seen this crisis coming months away and because of his failure, he has unwittingly made Bush look like Herbert Hoover. You agree with Stein that Bush now looks like Hoover.

Tom Head: FICTION. Paulson himself looks a little bit like Hoover, an intelligent and eminently qualified bureaucrat who was perceived as incompetent, cold-blooded, and aloof when he presided over a 25 percent unemployment rate and the worst poverty epidemic in U.S. history, but Bush benefits from low expectations and a comparably better economic climate. He looks more like Dan Quayle than Herbert Hoover at this point, and the unemployment rate is closer to 5 percent than 25 percent, so I think the Great Depression comparisons are probably overblown. A better comparison might be...well, there is no good comparison, because no president in U.S. history has ever polled as badly as Bush has been polling, even before the last economic news hit. In order to be Herbert Hoover, Bush would have to actually be disappointing us with his performance on the economy--and I'm just not sure it's possible for Bush to disappoint us anymore. And again, with respect to Ben Stein, this isn't even close to being another Great Depression. It's a really nasty recession, but that isn't the same thing. The Okies aren't migrating west to pick oranges just yet.

JD Dunn: FICTION. He would look like Hoover if Jimmy Carter never existed. Gasoline lines in the southeast. Stagflation. Domination by Middle Eastern oil suppliers. Yes, we're partying like it's 1979. The biggest similarity between Bush and Carter is how pathetically impotent they both seem to solve the problems facing the country. George W. Bush doesn't even have enough stroke among his own party to deliver half of them for a bailout bill. It's kind of sad really. This is the juggernaut administration that helped suspend habeas corpus. This is the administration that fought two land wars at once. Think about it; this is an administration who, when they came into power, had a budget surplus, a city of New Orleans, and the planet Pluto. Now we have none of those. That's quite an accomplishment. It takes a lot of hard work to lose those things. And yet, they can't rally enough people to vote against economic ruin. My how the mighty have fallen.

2 for 4. He may not look exactly like Herbert Hoover, but he's pretty close.

We end this week 2 for 4, or 50%, which is what Obama is polling at now in many of swing states. Man, how two weeks (and quite a few political blunders) changes a presidential race.

See you guys next time with Week 105. By the way, next weeks questions will all focus on Sarah Palin, as she is so newsworthy currently. If you'd like to get your two shots in at next week's F or F, shoot me an email at [e-mail] and I'll do my best to put you in, even if it means a three way!