Projecting an Obama presidency

I noted yesterday that I expect Barack Obama to win in November. I’m not one of those who think the race is over, not by a long shot—I’m just skeptical about the McCain campaign’s ability and will to make its case, especially after blockheaded moves like writing off Michigan. The key, I think, is that they haven’t been able to convince enough people that Sen. Obama isn’t a centrist (and aren’t likely to do so), even though on all the evidence, he isn’t. He’s a gifted politician at letting people believe of him what they want to believe, and people would prefer to believe that he’s “a uniter, not a divider” (for all that, I’d prefer to believe it); John McCain hasn’t succeeded in convincing enough people otherwise to win.The thing is, unlike George W. Bush, who did have a record of working in bipartisan fashion in Texas, Sen. Obama has no such record; and if such talk from the bipartisan Gov. Bush didn’t translate to results in his presidency, how much less should we expect true bipartisanship from a President Obama?Perhaps the most interesting indicator on this came during the debate when Sen. McCain said of Sen. Obama, “It’s hard to reach across the aisle from that far to the left.” Sen. Obama’s response: “Mostly that is me just opposing George Bush’s wrongheaded policies.” He seems to have thought that was a good comeback—as did others, from the post-debate commentary—but it wasn’t; in point of fact, it was a concession, one which offered a real insight into Sen. Obama’s mind. What he said in effect was, “You can’t expect me to be bipartisan when confronted with policies with which I disagree.” Granted, one must be careful not to push one sentence too far, and certainly absolutizing it would be unjustified; but the attitude expressed in that line is the exact antithesis of true bipartisanship. It’s the attitude that defines “bipartisanship” as “I’ll work with them when they’re not wrongheaded”—which tends to boil down to “when they do most of the compromising.” And given that George W. Bush wasn’t really all that conservative, it’s not like Sen. Obama (and the rest of the congressional Democrats) were being asked to reach a long way across to the right. But then, as Stanley Kurtz notes, this is the pattern for Barack Obama:

Obama’s vaunted reputation for bipartisanship is less than meets the eye. The Illinois legislature has long been home to a number of moderate Republicans, less fiscally conservative than their colleagues, many from districts where the parties are closely balanced. It was easy enough to get a few of these Republicans to sign onto small, carefully tailored spending bills directed toward particularly sympathetic recipients. The trouble with Obama’s bipartisanship is that it was largely a one-way street. Overcoming initial opposition from Catholic groups, for instance, Obama cosponsored an incremental bill on abortion, requiring hospitals to inform rape victims of morning-after pills. Yet rejecting compromise with the other side, Obama voted against bills that would have curbed partial-birth abortions. In other words, Obama is bipartisan so long as that means asking Republicans to take incremental steps toward his own broader goals. When it comes to compromising with the other side, however, Obama says “take a hike.” Obama voted against a bill that would have allowed people in possession of a court order protecting them from some specific individual to carry a concealed weapon in self-defense. The bill failed on a 29-27 vote. Bipartisanship for thee, but not for me: That’s how Obama ended up with the most liberal voting record in the U.S. Senate.

This all suggests that all the post-partisan language we heard from Sen. Obama ca. 2004 is unlikely to be reflected in an Obama presidency—especially since whatever his talk, Nancy Pelosi and the rest of the House and Senate Democrats aren’t running on promises of bipartisanship. They’re going to want to press their agenda, and who gives a hang what the GOP wants. As a consequence, if President Obama wants to get bills passed—and he will, as every president does, because that’s how presidents have “accomplishments” and “legacies”—it will have to be the bills they want, on their terms; Speaker Pelosi, Senate Majority Leader Harry Reid, and the rest of the Democratic powers on the Hill will take up their pipes and fiddles, and President Obama will dance to their tune. Speaker Pelosi will be the dominant figure in national politics (since I expect Majority Leader Reid to turn out pretty clearly as second fiddle to her first), and it will be her agenda driving the bus.Now, this might be a pretty stiff conclusion to draw, but there are several good reasons to think that this is how it will go. First, as Dick Morris pointed out three months ago, this is what happened to Bill Clinton in 1993, even though the congressional Democratic caucus was considerably less liberal then than now (for example, the Speaker of the House was Tom Foley of conservative eastern Washington, not Nancy Pelosi of liberal San Francisco) and the new president was a former governor who was used to working with a legislature. Clinton couldn’t “triangulate” with his own party firmly in control on the Hill, and so

as he took office as president, Bill Clinton found no alternative but to move dramatically to the left, shelving for the moment his promises of a middle-class tax cut and welfare reform. He had no choice.The Democratic majorities in both Houses served him with notice: Either you stay within the caucus and not cross the aisle in search of support for centrist policies, or we will do unto you what we did to Jimmy Carter when Tip O’Neill turned on him and made his life miserable.

If Gov. Clinton couldn’t govern as a centrist with the Democratic Congress of 1993-94, it’s almost inconceivable that Sen. Obama will be able to do so with the even more liberal Democratic Congress we will likely have in 2009. For one thing, he doesn’t have the experience in how to get his own agenda through a legislature; for another, despite all his use of centrist language, Sen. Obama has no observable record of centrist political impulses, much less achievements. (Indeed, he has little record of achievements at all, but we’ll get to that in a minute.) That’s why Stanley Kurtz, in his extensive examination of Sen. Obama’s years as a state senator, says he’s “fundamentally . . . a big-government redistributionist”:

Obama’s overarching political program can be described as “incremental radicalism.” On health care, for example, his long-term strategy in Illinois was no secret. He repeatedly proposed a state constitutional amendment mandating universal health care. Prior to the 2002 budget crisis, Obama’s plan was to use the windfall tobacco settlement to finance the transition to the new system. That would have effectively hidden the huge cost of universal care from the taxpayer until it was too late. Yet Obama touted his many tiny expansions of government-funded health care as baby steps along the path to his goal. The same strategy will likely be practiced-if more subtly-on other issues. Obama takes baby-steps when he has to, but in a favorable legislative environment, Obama’s redistributionist impulses will have free rein, and a budget-busting war on poverty (not to mention entitlement spending) will surely rise again.

As such, where President Clinton does seem to have been at least someone uncomfortable with the line he had to toe at the beginning of his term (judging by the way he moved toward the center once the reality in Congress changed), Sen. Obama is likely to be quite comfortable with that agenda. (He has, after all, supported it 97% of the time in the Senate when he’s bothered to show up to vote.) The reality of bipartisanship can be expected to disappear on all important matters (except perhaps when congressional Democrats want to be able to blame Republicans for an unpopular necessity), leaving behind only the language—which will likely be used primarily to bash Republicans as obstructionist for not going along with the program.This is especially true given that Sen. Obama has no record of resisting his own party. Rather, he’s been a machine politician for his whole political career; it was the Chicago machine that helped create him, and its own rules by which he played to force Alice Palmer out of his way in his first election, and he’s never once stood up to it. He’s never challenged it, or questioned it, or even really sought to influence it in any way. He even endorsed Richard Daley for re-election as mayor, which was perhaps the one time he really disappointed his liberal supporters in Chicago (since Mayor Daley’s an old-school Democrat, not a modern liberal Democrat), because he’s the boss and you don’t mess with the boss. Then down in Springfield, when even Illinois politicians call their state “one of the most corrupt at this point in the United States,” he claimed to make a difference, but nothing really changed, except that he contributed to the growth in spending that has led to severe budget problems in Illinois. Indeed, even now that he’s out of that environment, his state’s junior U.S. Senator and his party’s presidential candidate, he still didn’t want to stand up to the political bosses, like his mentor Emil Jones, the president of the Illinois State Senate; when asked to use his influence to help resurrect an important ethics bill aimed at reducing the corruption in Springfield, he initially refused; it was only when coverage in the Chicago papers made that problematic that he changed his mind and asked his old mentor to reconsider the issue. The other concern that I see here is in the words and attitudes of Speaker Pelosi, Harry Reid, Charles Schumer, and other senior Dems. Every time they open their mouths, I’m a little more convinced that they don’t see Sen. Obama as the leader of their party, but as the instrument through whom they intend to accomplish their purposes. Whether it’s Sen. Schumer declaring that Sarah Palin’s “lack of experience makes the thought of her assuming the presidency troubling” while remaining serenely untroubled by Sen. Obama’s lack of experience (which makes me think that the subtext is “he’s just out front running the campaign; when it gets down to brass tacks, it will really be Uncle Joe running the show”), or Majority Leader Reid calling on Sen. McCain as essential to help solve the financial crisis while essentially ignoring Sen. Obama, I just don’t see any reason to believe that these folks take their own nominee, the presumptive head of their party, seriously. I’m increasingly of the mind that they see him as the PR-flack-in-chief, the appealing face they want to put on the front of their agenda, nothing more—and if he should try to break out of that role and stand up to them, they’ll punish him for it.As a result, I have four substantive concerns about an Obama presidency. Two might be described as “conservative concerns”—things I don’t want to see because I’m conservative in my thinking that those who are liberal will welcome. The other two I think can fairly be called general concerns, because they’re things that it seems fair to assume liberals wouldn’t want to see happen either.One, I expect to see a hard-Left turn on social issues, including a significant reshaping of the federal judiciary. This, I think, is Reward #1 President Obama will owe his base, and one which he’ll be happy to give them; based on past performance, I expect the Senate GOP to roll over for this process and present their collective belly in submission. Obviously, liberals will be glad to see an administration committed to abortion on demand, expansion of gay rights, the submission of our Constitution to international opinion, etc.; I won’t.Two, I expect to see a hard-Left turn on economic issues. Hugh Hewitt did an excellent job of laying out what this will look like in his post “President Barack Hoover”; I don’t see any need to reinvent the wheel (especially when I couldn’t do half as well at it), so I’ll just encourage you to read it, with this comment: the core of Hewitt’s post is the reality that Sen. Obama’s announced agenda, if he puts it into practice (and I believe Speaker Pelosi et al. will hold him to it), will be a recapitulation of the mistakes President Hoover made that played a major role in turning a stock-market crash into a depression. This is a very real possibility, and I believe is a major reason why the markets are continuing to perform poorly: they expect Sen. Obama to win, just as I do, and they expect him to put his plan into effect, just as I do. Thus his own plan helps drive the economic crisis that will help him win, which is another neat little irony. Still, again, I realize that the Left has a different view on this than I do; we’ll see who’s right. I’ve certainly never claimed to be infallible, but I think the record of the last eighty years bears me out: raising taxes in a crisis brought a depression; the Reagan tax cuts started a long period of growth (not uninterrupted, but an upward trend for a long time) that has benefited everyone. Yes, we still have a lot of people who are poor by comparison to society as a whole—but materially, those who are poor today are a lot richer than the poor of thirty years ago.Three, I believe the approach we’ve seen from the Obama campaign to dissent and criticism will be repeated in the policies and responses of an Obama-led Executive Branch; given the clear willingness of his campaign to suppress freedom of speech to prevent criticism of their candidate, I believe we’ll see the same willingness from his administration and his chief congressional allies. This will mean a surge in the kind of the strongarm political tactics that we’ve already seen entirely too often this year. The thin part of the wedge will be the reinstitution of the “Fairness Doctrine” as a political/legal weapon to silence conservative talk radio and the pundits of Fox News. (Given what you can do with the Internet these days, I don’t think it will actually work to any significant degree; if that drives the Dems in Congress to try to regulate Internet speech, we could really be in for a battle royale.) Now, given that many American liberals want to see the return of the “Fairness Doctrine,” it may be optimistic of me to call this a general concern; it could turn out that liberals as a class are perfectly happy with censorship and political thuggery as long as it’s only used against people with whom they disagree. Certainly that has proven to be the case in other countries. This isn’t Canada, however, and I don’t think it’s likely to be any time in the near future; until proven otherwise, I think it’s necessary to give American liberals credit that their commitment to freedom of speech is real, and thus believe that most of them will not be willing to tolerate and defend this sort of behavior over the long haul, even if carried out by politicians they otherwise support. I certainly hope they won’t, because the Obama campaign’s efforts to shout down Stanley Kurtz and David Freddoso (in an effort to intimidate Chicago radio station WGN into canceling their appearances on Milt Rosenberg’s show) ought to be disturbing to anyone who cares about free speech. Of even greater concern should be the Obama “truth squads” in Missouri, where the campaign enlisted allies in public office to threaten prosecution of any TV station that runs any ads about Sen. Obama that the campaign deems untrue. Not only is this approach outrageously biased (one side’s allowed to lie, but the other isn’t?), it gets into some very grey areas about interpretation and intent, and thus raises some real concerns as to the approach an Obama Department of Justice might take to the First Amendment. This kind of approach, like Joe Biden’s suggestion that an Obama/Biden administration might prosecute the Bush administration, is nothing more nor less than the use (or threat of use) of political power to punish one’s opponents, intimidate critics, and silence dissenters; it’s the sort of thing we’re used to seeing in Zimbabwe, not here—and as the case of Zimbabwe shows, there’s nothing, not even money, that can corrupt a democracy faster, or more severely. I’ve argued before that one of the great problems with our politics in this day and age is that we absolutize our own perspectives—we assume that our own perspectives and presuppositions are the only legitimate ones, and that those who disagree with us can’t possibly be doing so sincerely, but must be acting out of motives that are selfish or otherwise wrong. The criminalization of politics, which we’re starting to see urged by the Obama campaign, is a more extreme version of that problem, because it argues that those motives are not only wrong, but are in fact criminal in nature. The chilling effect of that sort of approach should be deeply worrisome not just to conservatives, but also to true liberals.Four, and clearly a matter of general concern: al’Qaeda is weakened badly but far from dead—they still have the ability to pull something, and there’s good reason to think they’ll try. They’ve tested each of the last two administrations with a major attack in the first year (even if the 1993 World Trade Center attack didn’t succeed), and they’re bound to repeat the pattern if they can. As Hugh Hewitt says, “International jihadism must sense this is a moment in which any strike they can muster would have enormous consequences for Western confidence,” which gives them a powerful motive. This will only be reinforced in the case of an Obama administration, because al’Qaeda will almost certainly be denouncing him as an apostate—they’ll have to follow up their propaganda with an attack. If I had to guess, I’d think they’ll target the DC area, some combination of the Pentagon, the Capitol Building and the White House; my fear would be that they’ll use suitcase nukes.If and when this happens, I predict that we’ll see the same sort of ineffective, dithering response from Obama/Pelosi/Reid and their foreign-policy advisors that we saw to al’Qaeda provocations during the Clinton administration. (Remember the cruise-missile attack on the pharmaceutical plant in the Sudan?) I say this for a couple reasons. First, the sort of thing we’ve seen from Sen. Obama on foreign policy has been stubbornly refusing to admit that the surge worked in Iraq; stubbornly refusing to admit that we’ve significantly weakened al’Qaeda through the fight in Iraq; failing to understand that Afghanistan is a nearly impossible place to fight a war; repeatedly publicly announcing his intention to violate Pakistani sovereignty should he be elected (and why is it OK to fight in Pakistan but not in Iraq?); proclaiming moral equivalence between invader and invaded when Russia launched its attack on Georgia, then changing his position a couple times; allowing his running mate to tell the Israelis that an Obama administration wouldn’t take any serious measures to prevent Iran from going nuclear; surrounding himself with people who don’t like Israel when Israel is our only firm, stable ally in the Near East; and proclaiming repeatedly that he will meet with enemy dictators face to face without preconditions. I don’t see any signs that he understands how to conduct foreign policy effectively, that he has the instincts to identify an effective response, or that he has the will to carry it out.A couple years into an Obama presidency, I expect to see someone write the same sort of article about him that James Fallows wrote about Jimmy Carter; like President Carter, Sen. Obama is bright, fluent, and well educated, but ineffectual. Indeed, he lacks even the modest record of achievement Gov. Carter could claim—he simply has no significant professional accomplishment at any level of life. He was chosen as president of the Harvard Law Review, but wrote virtually nothing for it, and while he was well-liked by everybody, this was in part because he avoided conflict and confrontation—leaving an impending crack-up to his successor. The results of his time as a community organizer were modest, at best. He ran the Chicago Annenberg Challenge, which conspicuously failed to improve Chicago schools. As a state senator, he authored no major legislation. In the U. S. Senate, the same is true. He claims his campaign as evidence of his executive ability, but the more we find out about his campaign, the less impressive that is; he’s spent a lot of money in places where he will get no significant return, his campaign staff run a disorganized, chaotic ship which makes it hard for the press accompanying them to do their job (though they dote on him despite the consistent disrespect they receive), and he can’t even keep his campaign plane from stinking. As Beldar says, this raises a real question: “If Obama can’t perceive that problem on his own campaign plane and see to it that even that problem is solved, why would you ever think he can handle the national economy or world affairs?”The funny thing is, behind all this is the reality that a McCain loss could be the best thing possible for the Republican Party. For one thing, a victory in this election won’t be the usual prize for the winner; far from it, in fact. As Gerard Baker argued in The Times just before the first debate,

It is highly probable that that moment, the very hour that he takes office, will be the high point of his presidency. Whoever wins on November 4 will be ascending to the job at one of the most difficult times for an American chief executive in at least half a century. . . . 2008 may be the best year there has been to lose an election.This sobering reality was startlingly underscored this week by none other than Tom Daschle, the former leader of the Senate Democrats, the national co-chairman of Mr Obama’s presidential campaign, and the likely White House chief of staff in an Obama administration. He told a Washington power breakfast that he thought the winner of the election would have a 50 per cent chance at best—at best—of winning a second term in 2012.

If my primary concern were the good of the GOP, I’d be rooting for a close but real loss for Sen. McCain—perhaps to see Sen. Obama just edge over the 50% mark. It might be fun to see the McCain campaign manage an Al Gore Special (a defeat in the Electoral College combined with a measurable lead in the popular vote) just to see all the lefty pundits who denounced the system eight years ago suddenly become its biggest fans, but that wouldn’t do. Eight years ago, that scenario left Democrats walking away thinking they didn’t need to change anything because they hadn’t really lost, and that attitude hurt them in 2002 and ’04. As Bill noted over on The Thinklings, the GOP really needs to take a long, hard look at itself, and then regroup, rethink, and reboot; and that’s not going to happen unless the party takes a defeat that its most influential folks have to admit is a defeat.Of course, one might think that a squeaker of a victory would spark the Democrats to similar humility, leading them to govern with caution and moderation; but I don’t see that happening. They’re too angry and eager, and the hard-Left wing of the party has the ascendancy—and they’re firmly committed to no-quarter politics. If they eke out a close win, I expect to see the pundits write it off as “well, that was just John McCain; against a real Republican, we would have blown ’em out,” and charge merrily off to do exactly what they want to do. If I’m right in the concerns expressed above, the result will be a backlash in 2010 at least as bad as the 1994 backlash that brought the congressional GOP to power at the midpoint of exactly the sort of disaster term that Gerard Baker was talking about, followed by another Republican in the White House in 2012. That’s the best-case scenario for the GOP, to be sure, but it’s clearly a far better case than anything a McCain victory in November could create; it’s also, however, a very bad case for the nation. (Worst case would be everything about this except the GOP taking inventory and cleaning up its act, thus giving us a return to power by a party that hadn’t learned anything from losing it.)That’s why—and you may not believe this, but it’s the absolute truth—when Sen. Obama wins in November, I’m going to be praying hard for him to make good, wise, godly decisions, to stand up to his own party—and win—to actually govern from the center and make room for the beliefs and opinions of those on the other side of the aisle; I’m going to be praying that he will respond adroitly and decisively to the crises he inherits, and promptly, forcefully, and wisely to the new ones that come along. I’m going to pray, in other words, for an Obama presidency to be a wise and clearly successful one (though I acknowledge that to some extent, I’ll be asking that he disappoint his own base in so doing), even though that’s not what would be best for the party I support. I have a lot of disagreements with Sen. McCain, but this is one thing on which I totally agree with him: when it comes to politics, it shouldn’t be party first, it should be country first.

The crowning irony of a strange campaign

Paul Hinderaker of Power Line has brilliantly captured something I’ve been thinking about but hadn’t quite put together like this:

If it turns out to be the financial crisis that puts Barack Obama over the top in his quest for the White House, the irony will be difficult to overstate. First, the biggest driver of the financial crisis was not any conservative policy such as the kind of deregulation John McCain supports. Rather, as Diana West argues, the biggest driver was the “race-based social engineering” that “virtually created the sub-prime mortgage industry.” The implosion of that industry, in turn, triggered the present crisis.The operative vision, then, was leftist and racialist, not free-market. As West puts it, the social engineers decided that not “enough” minorities had homes because not “enough” minorities were eligible for mortgages. The solution was to junk the bottom-line, non-racial markers of mortgage eligibility traditionally used by banks to distinguish between good and bad credit risks—steady employment, clean credit, and a down payment. Obama, then, is the beneficiary of the terrible failure of affirmative action style policies in the mortgage banking sector.But the irony extends further. For it turns out that intimidating banks into making bad loans to minorities was a major activity of “community organizations” during the 1990s. And, according to Stanley Kurtz, Obama himself trained and funded ACORN activists who engaged in such intimidation.Using a combination of intimidation and white guilt to plunge the banking industry into the crisis that brings a radical activist to power—even Saul Alinsky couldn’t have drawn it up this well.

Negligence? Or deliberate endangerment?

Even as our government is supposed to be trying to support our economy through this difficult time in order to bring about a return to prosperity, we have a definite pattern among senior Democrats that’s working to undermine this. First, this past June, New York’s senior senator, Charles Schumer (D-NY), took deliberate action that sparked the run that brought down IndyMac. Time was, he would have been indicted for provoking the stampede. If he were a Republican, he probably still would be.Then, on Monday, having helped put a bipartisan agreement together on an economic rescue bill, the Speaker of the House, Nancy Pelosi (D-San Francisco), gave her troops the tacit green light—and key lieutenants the explicit green light—to vote it down, thereby sending the stock market into a tailspin.As if that weren’t enough, on Thursday, Senate Majority Leader Harry Reid (D-NV) told a group of reporters that “a major insurance company—one with a name that everyone knows” was “on the verge of going bankrupt.” The utterly predictable result was a sharp fall in stock prices across the insurance industry, since Sen. Reid’s vague comment called all those companies into question.The problem here is that, as every member of Congress ought to understand by now, “if we have learned anything amid the panic over Bear, Lehman, Merrill and adventures in naked short-selling, it is that rumors can obliterate economic value, instantly.” The fact that so many of our legislators (and not only Democrats, but including far too many senior members of that party) are behaving with so little care toward the institutions that are the engines that drive our national economy is deeply troubling. Rather like Barack Obama’s adventures in Iraqi policy, their behavior raises a couple possibilities.On the one hand, all this behavior could be absolutely deliberate: they could be intentionally working to worsen the economy at home and delay gains abroad in order to improve their own election prospects and those of their party. This could all be a willful effort with malice aforethought at political manipulation, putting the good of the Democratic Party ahead of the good of the nation.Or, it could be a combination of negligence, incompetence, and sheer folly. As Lois McMaster Bujold has her character Dr. Vorthys put it in her novel Komarr, “Carelessness, stupidity, haste, and ignorance are quite as powerfully destructive forces as homicidal intent. Though I must confess a special distaste for intent. It seems so unnecessarily redundant. It’s . . . anti-engineering.” I share his distaste; as such, I tend to agree with the principle, “Never attribute to malice what can be adequately explained by stupidity.” In this case, however (as in many), that isn’t terribly reassuring, as Jennifer Rubin explains:

But if we assume that they “meant no harm” we are left with an equally troubling conclusion: they are reckless and ignorant about the ways in which their words and actions may impact a fragile economy. Or to put it differently, their first consideration is invariably “How do we maximize the public’s perception that things are rotten?” rather than “What can we do to contain the conflagration?”It does remind one of their attitude on the Iraq war: every set back was gleefully trumpeted and every minor advance was dismissed. They never much cared how their rhetoric or votes might embolden the enemy or unnerve our ally. The sole consideration was domestic political gain. If they didn’t want to lose they certainly gave every indication it was low on their list of priorities. Bashing the President, rallying their base and positioning themselves for the next election was clearly more critical.Well, at least they are consistent.

Second time is the charm

Following the House defeat of the modified Paulson bill—a defeat not merely enabled but actively encouraged by the Speaker of the House, Nancy Pelosi—and the subsequent cratering of the stock market, the Senate decided to stand up and act like the adults on the Hill, passing a modified version of the bill in pointed fashion. Amazingly, it was even a more conservative version of the bill (despite the added pork), though I doubt it was enough so to be worth the cost of the bill’s failure the first time around. In any case, this time, Speaker Pelosi took the hint and actually decided to do her job, and the House fell in line and passed the bill, 263-171. It’s always nice to see our politicians acting like grownups for a change. (Even so, I still think a lot of these folks—Speaker Pelosi first and foremost—need to be swept out like yesterday’s dustbunnies.)Update: obviously, the rescue bill hasn’t stopped the stock market’s slide to this point; part of that, I expect, is the market principle “buy on rumor, sell on news,” which has always seemed stupid to me but is very much part of the pattern of the markets. Part of it, too, is that the markets expect an Obama victory and don’t like what they think that will mean. Even so, I remain convinced that those who opposed the bill on the grounds that it was bad for the free market were wrong; rather, as an editorial in Investors’ Business Daily, argued, the bill gave the government necessary tools to help heal the free market. Here’s hoping they’re used wisely and proactively.

And the deal falls apart

Dump the lot of them. Dump the Republicans who voted against it and called their cowardice “conservative”—what, do they think there’s going to be a better option to come along?—dump the 95 Democrats in the House who followed them down the rat hole, and dump the House “leadership” of both parties who couldn’t get the job done. Along with them, kick the Senate “leadership” to the curb who couldn’t even get a vote off. These are the guys who created the problem, and they’re the ones who refused to fix it until it came to a crisis, and now they won’t put their careers on the line to fix it when it is a crisis? What do we need them for? What good are they?Update: OK, it appears I was too hard on the House GOP, though I still think they did wrong: it appears Nancy Pelosi was trying to set them up. For all her productive efforts to pull the deal together, she never lifted a finger to get her own party to vote for it. In fact, she did everything possible to make it painless for House Democrats to vote against it. Then, just before the vote, she gave a speech tearing into the GOP, angering and alienating all those Republican Representatives whose votes she’d been soliciting. Clearly, she wanted the bill either to fail—and to be branded a Republican failure—or to pass in such a way that it could be blamed on the GOP as a Republican bill. I’m still very unhappy with the House GOP—again, do they think this failure is likely to lead to a better outcome?—but given that a lot of them really didn’t believe in the bill, I can understand why so many voted against it, given the stunts Speaker Pelosi was pulling; and given her behavior, there’s no question in my mind that the blame for this one belongs squarely on her shoulders.At this point, I’m hoping that my pessimism is wrong and that Joseph Calhoun is right:

We are not on the verge of a new depression. The housing bubble collapse in California, Florida and a few other states is not enough to bring down the entire banking system. Investors who made mistakes in these markets should be held responsible and those who navigated the Fed-distorted market should be rewarded for their wisdom and prudence. Enacting the Paulson plan will not allow that to happen and our economy will suffer for it in the long run. The Japanese tried to prop up failed banks in the aftermath of the bursting of their twin bubbles and the result was 15 years of stagnation. Why are we emulating a strategy that is a demonstrable failure? A better alternative would be to allow capitalism to work as it should and stop the interventions of the Fed in the money market. Trust capitalism. It works.

He’s a minority voice in his opinion that the economy can get through this without a major infusion of capital; but he could still be right. Here’s hoping.

A win-win rescue plan

The biggest mistake the federal government has made with respect to its economic rescue plan has been allowing it to be described as a “bailout.” It isn’t; rather, it’s a plan for the government to interject necessary capital into our financial markets, thereby enabling them to get through this period without collapsing, by buying assets. The problem for the markets is that these assets have dropped in value, but that doesn’t mean they have no value; they will generate income for taxpayers while they’re in government hands, and assuming they’re purchased at a reasonable price, it should be possible at some point in the relatively near future for the government to sell them at a profit. As such, this isn’t really a case of the government giving away hundreds of billions of dollars; rather, it’s a case of the governmentinvesting that money in order to bridge our economy across a difficult period and, ultimately, pay down some of the national debt.

That’s why it’s good news that a deal appears to be coming together for a clean plan—one that includes additional protections for taxpayers, but not diversions of money to left-wing interest groups; and that’s why no less a conservative economist than Larry Kudlow says, “For taxpayers, the bank rescue plan is a win-win-win-win.”

Update: a tentative deal appears to be in place despite the efforts of a handful of Democratic senators who crashed the negotiations and began making various additional demands, including the reinsertion of the slush fund for ACORN. Apparently, Senate Majority Leader Harry Reid couldn’t control his own troops, but the people who were actually empowered to put the deal together found a way to work around them; this was partly due to his opposite number, Speaker of the House Nancy Pelosi, who used the power of her office to help get the deal done. If the deal holds and both parties are able to support it, a lot of the credit will also belong to John McCain, who played a significant role in bringing the House Republicans into the process. As Hugh Hewitt says, this deal represents “a reassuring return of purposeful legislating by the Congress.”

Thirty years of economic history in ten minutes

The value of this video, imho, isn’t the McCain/Palin commercial at the end, it’s the sheer volume of source material, mostly from the MSM, that’s referenced here in mapping out the trail that led us to this point; some of these stories I’ve seen and posted on (here, for instance), but others were new to me.HT: The Anchoress, who has an excellent rant on the egregious behavior of the Democratic (and some of the Republican) “leadership” of Congress in this crisis:

I need to first opine that the Democrats yesterday blew my mind with their last-minute addition of 56 billion to the bail-out, their sneaky, slippery attempt to play political games with some of this money—directing it to ACORN (!) – and their subsequent attempt to lie and to blame the GOP—the president—anyone but themselves for not passing a bill which the GOP CANNOT BLOCK. We already know that Nancy Pelosi has no leadership skills except in spite and obstruction—we see she is completely out of her depths here, but Barney Frank’s behavior last night, and his disrespect toward the GOP and the President was particularly egregious in a time of crisis. He behaved like a trapped animal trying to distract the hunters toward anyone but him. Meanwhile Chuck Schumer is unusually, uncharacteristically silent; Barack Obama—except when mentioned by a press pretending he is leading—seems irrelevant to the process and to have no genuine ideas or input, or a desire to lead. All he seems capable of doing is whining about the debate while Rome falls about his ankles. McCain is quite right that the debates would be less urgent if Obama had done the Town Halls McCain had asked for—debates Obama said he’d have “anytime, anywhere” before refusing all of them. I say at this point SCREW the moderated debates that tell us nothing and insist that these candidates town-hall it and speak DIRECTLY to the people who will be most affected by all of this—that would be the ordinary folk. And do the same for Biden and Palin if they debate. And seriously, if there is a debate, it should be on economics, and energy just now, not foreign policy. Speaking of foreign policy, in the midst of all of this, Israel is asking the American president to give a green light to bomb Iran. Imagine having all that on your plate for one day! I don’t know that John McCain is the “perfect” man for the White House, but I’m pretty damn sure at this point that a man with 150 days experience in the Senate, no instincts to lead, a whiny disposition, and a frightening willingness to use the Justice Department as his private thug-corps is the guy we need in the Oval Office in there very serious times. And finally, to end the rant, Charles Krauthammer says we need a few good public hangings re this financial mess. I think—after seeing our “leadership” demonstrate that they haven’t the balls to lead without political cover—we should put them out of their miseries by demanding a few resignations from the leadership of BOTH parties, and both banking committees.

Why we need to get the deal done

Steven Pearlstein lays it all out in the Washington Post as simply and clearly as I’ve seen yet.Beldar comments,

When you get two-thirds of the way through it, you’ll understand why some things that are getting lots of discussion are not, in fact, big problems, and you’ll also understand in at least general terms what actually is the big problem, how very big indeed it is, and why addressing it somehow is so very urgent. . . .I’m . . . convinced that this is one of those situations where as a nation, we simply cannot allow the quest for the perfect to remain an implacable obstacle to the acceptance of the good, or even the probably mostly okay. On these issues, ninety-nine point something percent of us, including our national leaders, are dilettantes at best. And this is one of those situations in which, in the words of that brilliant economist George S. Patton, “A good plan violently executed now is better than a perfect plan executed next week.”

Hugh Hewitt adds, in his “Memo To House Republicans,”

Here’s a shocker: No one likes the risks involved in Paulson 2.0 or the precedent of using so much public money to rescue reckless bankers, both private and semi-private.But there is a very good chance that (1) it will actually make money for the Treasury and (2) without it the financial crisis will spread and the small businesses of America and the people who own and staff them will be deeply injured. These businesses are the backbone of the economy, and they are in danger. This isn’t just a bailout of Wall Street; it is a breakwall for Main Street. . . .You cannot stand by and watch people’s business and savings hemorrhage and expect them to reward you for your purity of purpose and incompetence of execution.

The state of the deal

Here’s what the McCain campaign has to say about the current state of affairs:

To address our current financial crisis, John McCain suspended his campaign and returned to Washington, D.C., today to help build a bipartisan consensus for a proposal that would protect the American taxpayer.Despite today’s news reports, there never existed a “deal,” but merely a proposal offered by a small, select group of Members of Congress. As of right now, there exists only a series of principles, including greater oversight and measures to address CEO pay. However, these principles do not enjoy a consensus in Congress. At today’s cabinet meeting, John McCain did not attack any proposal or endorse any plan. John McCain simply urged that for any proposal to enjoy the confidence of the American people, stressing that all sides would have to cooperate and build a bipartisan consensus for a solution that protects taxpayers. However, the Democrats allowed Senator Obama to run their side of the meeting. That did not work as the meeting quickly devolved into a contentious shouting match that did not seek to craft a bipartisan solution. At this moment, the plan that has been put forth by the Administration does not enjoy the confidence of the American people as it will not protect that taxpayers and will sacrifice Main Street in favor of Wall Street. The bottom line is that as of tonight, there are not enough Republican or Democrat votes for the current plan. However, we are still optimistic that a bipartisan solution will be found. Republicans and Democrats want a deal that will protect the taxpayers. Tomorrow, John McCain will return to Capitol Hill where he will work with all sides to build a bipartisan solution that protects taxpayers and keeps Americans in their homes.

That’s certainly where the priorities ought to be: to protect responsible taxpayers and let the burden of the crisis fall on those who have been irresponsible (which means, among other things, shooting down Richard Durbin’s efforts to get the irresponsible off the hook at everyone else’s expense); unfortunately, the lobbying dollars are not with the taxpayer, they’re with the same folks whose irresponsibility and bad policies got us into this to begin with, so at the moment, I’m not real optimistic. Still, I think Megan McArdle’s right, we need to make the best deal we can make, even if we don’t think it’s a good one; if we don’t, here’s what we’re looking at (according to John Podhoretz, anyway):

If a deal isn’t reached by Sunday night, and a bill isn’t signed into law by Sunday night, it is likely we will wake up Monday morning to a market meltdown overseas of a sort the world has never seen—and then we will just wait, mute, until the American markets open. Monday will be an interesting test case: We will see just how much poorer the investing class can get in just one day. And then, a second day. And then, a week. As the whirlwind begins its reaping.

And by “the investing class” he doesn’t just mean the rich; he means all of us who need to save for the future, and have been doing so, and who could watch those savings blow away in the wind from Wall Street. Ladies and gentlemen of the Congress, you have 72 hours; if you get this wrong, they could be, to all intents and purposes, the last 72 hours of your political careers. Use them wisely.

How to fix the financial crisis

Approve the Paulson plan with one, and only one, modification: instead of giving the Treasury Secretary the power to spend $700 billion, hire Warren Buffett to do it.

“I bet they’ll make a profit,” said Buffett, who pointed out that hedge funds specialising in junk assets were already picking up mortgage-related securities with a view to making profits of 15% to 20%. He said a positive return was feasible if the government ignores the book value of instruments or the original cost to banks and instead pays the prevailing market rates for the bombed out assets.”They’ll pay back the $700bn and make a considerable amount of money if they approach it like that,” said Buffett. “I would love to have $700bn at Treasury rates to buy fixed-income securities—there’s a lot of money to be made.”