David Brooks on Obama and Palin

David Brooks is quoted as saying the following.

Obama has the great intellect. I was interviewing Obama a couple years ago, and I'm getting nowhere with the interview, it's late in the night, he's on the phone, walking off the Senate floor, he's cranky. Out of the blue I say, 'Ever read a guy named Reinhold Niebuhr?' And he says, 'Yeah.' So i say, 'What did Niebuhr mean to you?' For the next 20 minutes, he gave me a perfect description of Reinhold Niebuhr's thought, which is a very subtle thought process based on the idea that you have to use power while it corrupts you. And I was dazzled, I felt the tingle up my knee as Chris Matthews would say.


And the other thing that does separate Obama from just a pure intellectual: he has tremendous powers of social perception. And this is why he's a politician, not an academic. A couple of years ago, I was writing columns attacking the Republican congress for spending too much money. And I throw in a few sentences attacking the Democrats to make myself feel better. And one morning I get an email from Obama saying, 'David, if you wanna attack us, fine, but you're only throwing in those sentences to make yourself feel better.' And it was a perfect description of what was going through my mind. And everybody who knows Obama all have these stories to tell about his capacity for social perception. …

[Sarah Palin] represents a fatal cancer to the Republican party. When I first started in journalism, I worked at the National Review for Bill Buckley. And Buckley famously said he'd rather be ruled by the first 2,000 names in the Boston phone book than by the Harvard faculty. But he didn't think those were the only two options. He thought it was important to have people on the conservative side who celebrated ideas, who celebrated learning. And his whole life was based on that, and that was also true for a lot of the other conservatives in the Reagan era. Reagan had an immense faith in the power of ideas. But there has been a counter, more populist tradition, which is not only to scorn liberal ideas but to scorn ideas entirely. And I'm afraid that Sarah Palin has those prejudices. I think President Bush has those prejudices.

The article says that these quotations are from "an interview with The Atlantic's Jeffrey Goldberg at New York's Le Cirque."

The McCain bailout of the banks

Brad DeLong writes that

John McCain wants to give $100 billion of taxpayers' money to America's worst-behaving mortgage financiers.

Let's back up. For the past month the debate about how to deal with the collapse of the debt-trading portion of America's financial markets has been between two plans: the Paulson plan and the Elmendorf plan:

• The Paulson Plan: Have the government buy up distressed securities at market value, thus reducing the supply of high-yield debt securities that the private sector must hold. When you reduce the supply of anything you raise its price. Hence the Paulson plan's $700 billion purchases will push the prices of risky debt securities up, and so companies will then be able to sell their bonds again and so hire more workers, and depression will be averted.

• The Elmendorf Plan: Have the government directly invest in and take an equity stake in troubled banks, thus reassuring their depositors and creditors that they are sound. The banks will then be able to profit by buying up distressed securities--hence raising their prices--and by directly lending to companies that will then be able to hire more workers, and depression will be averted.

The argument for the Paulson plan was that the Elmendorf plan was socialism.

The argument for the Elmendorf plan was that it held the promise of doing a much better job of preventing depression, for each dollar committed to the Paulson plan reduces the gap between the demand and supply of distressed securities by only $1, while each dollar invested in a bank is then leveraged 8-to-1 as bank creditors and depositors are then willing to keep more money in the bank and so reduces the gap between the demand and supply of distressed securities by $8. Eight times as much bang for each federal buck, and the Elmendorf plan ensured that the taxpayers were protected to a greater extent: we did not just have the socialization of loss after the privatization of gain, we had the socialization of any gains that might occur if banks' equity values ever recovered.

The argument for passing Paulson-Dodd-Frank was:

• Time is of the essence: something needs to be done right now.
• Paulson-Dodd-Frank has sufficient flexibility that Assistant Secretary Neel Kashkari and his successors can do either Paulson or Elmendorf, at their judgment.
li>The logic of the situation will over time drive Kashkari and his successors toward an Elmendorf-like solution as he deals in the markets.

Now comes John McCain with something worse than Paulson:

Ben Smith's Blog: Moral hazard: Moral hazard
My colleague Victoria McGrane, late of our Capitol Hill bureau, emails with the most lucid explanation I've seen of what McCain did last night. The crucial shift from a recent congressional housing bill to McCain's more dramatic plan, she writes, was a move away from concern about moral hazard:

Details provided to reporters by senior adviser Doug Holtz-Eakin Wednesday morning make one thing clear: Taxpayers would directly pick up the tab for the difference in cost between a homeowner’s old, too-expensive mortgage and the cheaper one provided by the government... something that congressional lawmakers, led by House Financial Services Chairman Barney Frank (D-Mass.) specifically avoided when they crafted their own landmark housing bill, which passed in late August and took effect Oct. 1.

Congress’ bill – which Holtz-Eakin says provides at least part of the authority McCain would need to carry out his plan – provided a $300 billion program to help distressed borrowers refinance into cheaper Federal Housing Authority mortgages. But to participate, lenders and mortgage investors would have to reduce the mortgage principal...

Not so McCain's plan. McCain's plan is for the government to buy up $300 billion of distressed mortgages not at current market value but at full face value:

“Clearly we face the trade off that we would in fact be taking the negative equity position and putting it on the taxpayers books instead of putting it on the private lenders books or the homeowners books,” Holtz-Eakin told Politico. “We think the balance of risk has shifted to the point where this is the way to go.”

The McCain plan is:

• Take $300 billion.
• Pay double current market value to banks that have troubled mortgages on their books, thus:
  • Give a present of $100 billion to the bankers who made the loans.
  • Acquire and regularize the mortgages of only two-thirds as many homeowners as could have been accomplished if the $300 billion were invested wisely.

There's a big difference here: Democrats want to prevent depression and support the financial markets by investing taxpayer money in banks with troubled assets. Republicans want to give taxpayers money away to the shareholders and managers of banks with troubled assets.

I would say that this is unbelievable, but I do believe it.

Palin’s Kind of Patriotism

Another great column by Thomas Friedman.

Criticizing Sarah Palin is truly shooting fish in a barrel. But given the huge attention she is getting, you can’t just ignore what she has to say. And there was one thing she said in the debate with Joe Biden that really sticks in my craw. It was when she turned to Biden and declared: “You said recently that higher taxes or asking for higher taxes or paying higher taxes is patriotic. In the middle class of America, which is where Todd and I have been all of our lives, that’s not patriotic.”

What an awful statement. Palin defended the government’s $700 billion rescue plan. She defended the surge in Iraq, where her own son is now serving. She defended sending more troops to Afghanistan. And yet, at the same time, she declared that Americans who pay their fair share of taxes to support all those government-led endeavors should not be considered patriotic.

I only wish she had been asked: “Governor Palin, if paying taxes is not considered patriotic in your neighborhood, who is going to pay for the body armor that will protect your son in Iraq? Who is going to pay for the bailout you endorsed? If it isn’t from tax revenues, there are only two ways to pay for those big projects — printing more money or borrowing more money. Do you think borrowing money from China is more patriotic than raising it in taxes from Americans?” That is not putting America first. That is selling America first.

Sorry, I grew up in a very middle-class family in a very middle-class suburb of Minneapolis, and my parents taught me that paying taxes, while certainly no fun, was how we paid for the police and the Army, our public universities and local schools, scientific research and Medicare for the elderly. No one said it better than Justice Oliver Wendell Holmes: “I like paying taxes. With them I buy civilization.”

As I like to say,

Freedom isn't Free. That's why we pay taxes.

Mud Pies

Maureen Dowd has a nice column on McCain. But she ends it with this lovely quote from Sarah Palin. Palin was asked whether she thinks that Senator Obama is dishonest.

“I’m not saying he’s dishonest, but in terms of judgment, in terms of being able to answer a question forthrightly, it has two different parts to this. The judgment and the truthfulness and just being able to answer very candidly a simple question about when did you know him, how did you know him, is there still — has there been an association continued since ’02 or ’05, I know I’ve read a couple different stories. I think it’s relevant.”

The Great Schlep from The Great Schlep on Vimeo.

Sarah Silverman for Obama.

Clever Video.

The right blames the credit crisis on poor minority homeowners.

Daniel Gross - Slate Magazine has a column in which he replies to the claims of right. Apparently, among

the right-wing financial media (which is to say the financial media), and in certain parts of the op-ed-o-sphere, there's a consensus emerging that the whole mess should be laid at the feet of Fannie Mae and Freddie Mac, the failed mortgage giants, and the Community Reinvestment Act, a law passed during the Carter administration. The CRA, which was amended in the 1990s and this decade, requires banks—which had a long, distinguished history of not making loans to minorities—to make more efforts to do so.

The thesis is laid out almost daily on the Wall Street Journal editorial page, in the National Review, and on the campaign trail. John McCain said yesterday, 'Bad mortgages were being backed by Fannie Mae and Freddie Mac, and it was only a matter of time before a contagion of unsustainable debt began to spread.' Washington Post columnist Charles Krauthammer provides an excellent example, writing that 'much of this crisis was brought upon us by the good intentions of good people.' He continues: 'For decades, starting with Jimmy Carter's Community Reinvestment Act of 1977, there has been bipartisan agreement to use government power to expand homeownership to people who had been shut out for economic reasons or, sometimes, because of racial and ethnic discrimination. What could be a more worthy cause? But it led to tremendous pressure on Fannie Mae and Freddie Mac—which in turn pressured banks and other lenders—to extend mortgages to people who were borrowing over their heads. That's called subprime lending. It lies at the root of our current calamity." The subtext: If only Congress didn't force banks to lend money to poor minorities, the Dow would be well on its way to 36,000.

The Winner of Debate II? "That One"

Arianna Huffington made a nice point.

McCain also told us he knows how to fix the economy, knows how to win wars, and knows how to capture bin Laden. Is there a reason he's keeping all these a secret?

Gov. Schwarzenegger vetoes AB 2386, secret ballot election reform

From

Last week, the Governor vetoed AB 2386, a vital bill to reform secret ballot elections for farm workers. With this single stroke of his pen, the governor denied farm workers the tool they need to protect themselves. While we are disappointed with the Governor's veto, sadly we are not surprised.

When the governor vetoed a bill with similar goals last year, his veto message said, 'I am directing my Labor and Workforce Development Agency to work with the proponents of this bill to ensure that all labor laws and regulations are being vigorously enforced, and to make it absolutely clear to all concerned that my veto is premised on an expectation that agricultural workers receive the full protections of the law.'

Tragically this has not happened. During the black summer of 2008, as many as six farm workers died due to heat-related causes.

McCain lies again

As The Associated Press reports, in the debate last night MCCain proposed what he called an "American Homeownership Resurgence Plan" saying,

It's my proposal. It's not Sen. Obama's proposal. It's not President Bush's proposal.

What McCain didn't mention is that according to the bill proposed by Bush and passed by congress last week the Treasury Secretary already has the authority to do exactly what McCain proposes. If there is a difference between McCain's proposal and Bush's it is that McCain would require that the Treasury Secretary use nearly half of the $700 billion authorized by Congress to buy existing individual mortgages rather than leaving it to the Treasury Secretary to determine how the money will be used to support the mortgage market. This seems like too much micro-management at too high a level. It also seems to be very much in conflict with McCain's notion that the government is interfering too much in people's lives.

For McCain suddenly to make such a proposal, however, is quite consistent with his tendency to pop-off and impulsively adopt positions that he hasn't spent much time thinking out.

Furthermore, this sort of support for individual homeowners has been one of the Democrats' favorite approaches for months. For example, (according to the same AP story)

At a news conference on Sept. 24, Obama said, "we should consider giving the government the authority to purchase mortgages directly instead of simply purchasing mortgage-backed securities."

Days later, in a news release, he said he would "encourage Treasury to study the option of buying individual mortgages like we did successfully in the 1930s."

"Senator Obama has been consistently calling for policies that would buy up mortgages and restructure them so that families can stay in their houses," Obama economic adviser Jason Furman said. "He continues to support that and believes Treasury should use its authority in whatever way it can to bring about that goal, including buying mortgages directly."

McCain also failed to mention that his "new" proposal conflicts directly with the position he took last March.

Drawing a sharp distinction between himself and the two Democratic presidential candidates, Senator John McCain of Arizona warned Tuesday against vigorous government action to solve the deepening mortgage crisis and the market turmoil it has caused, saying that “it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers.”

Mr. McCain’s comments came a day after Senator Hillary Rodham Clinton of New York called for direct federal intervention to help affected homeowners, including a $30 billion fund for states and communities to assist those at risk of foreclosure. Mrs. Clinton’s Democratic opponent, Senator Barack Obama of Illinois, has similarly called for greater federal involvement, including creation of a $10 billion relief package to prevent foreclosures. …

In place of large-scale government assistance, Mr. McCain recommended two immediate but limited measures. He said that accountants should meet to review the system by which real estate and related assets are valued, and he urged mortgage lenders to step forward voluntarily to help credit-worthy borrowers who may be strapped for cash at the moment. …

“He’s not only far behind what either Clinton or Obama have proposed, he’s six months behind what the administration has already been doing,” said Andrew Jakabovics, associate director for the Economic Mobility Program at the Center for American Progress, a Democrat-leaning research group in Washington. Mr. Jakabovics was an early champion of programs like those now being discussed by Representative Barney Frank, Democrat of Massachusetts, and Senator Christopher J. Dodd, Democrat of Connecticut, to have the government either buy up or refinance millions of troubled loans.

In other words, not only is McCain simply coming around to an idea proposed by Democrats long ago, he is lying in claiming it is an original new idea on his part.

To be fair, perhaps McCain isn't lying; perhaps he's just out of touch and is having a hard time keeping up. After all, when Paulson issued his 3 page proposal a couple of weeks ago, McCain couldn't comment on it days later because he said he hadn't read it. If it takes McCain a week to read what is arguably the most important 3 pages having to do with the economy, the poor dear shouldn't be expected to keep up with the more general world of ideas.

After all, McCain seems to be living in the 1960s: he doesn't know how to use a computer, and he seems to think that we are still fighting the Vietnam war. If it was good enough for us then, why isn't it good enough for us now. (Perhaps someone should tell him we lost in Vietnam. Being a war hero normally means accomplishing something important. What did McCain accomplish in Vietnam by being a prisoner of war?)

The Associated Press: Palin lawyer meets with investigator in probe

This isn't news anymore, but it's a great lead sentence from the The Associated Press

By MATT VOLZ – Sep 22, 2008

ANCHORAGE, Alaska (AP) — Less than a week after balking at the Alaska Legislature's investigation into her alleged abuse of power, Gov. Sarah Palin on Monday indicated she will cooperate with a separate probe run by people she can fire.