King George in Decline: Misadventures of an Aging Prep-School Cheerleader: Volume 5: Bush, McCain, and the Financial Crisis

Sep 30, 2008

The next time you hear a supporter of “free market” economics preaching against socialism and “welfare giveaways,” go ahead and have a good laugh. The free marketeers of the Bush administration drew up a $700 billion bailout of financial institutions that lost money on bad housing loans. For comparison, the bailout costs eighteen times as much as that favorite target of conservatives, the Food Stamps program. The Bushites complain about the cost of programs that help poor people, but they’re always happy to give more of your money to Wall Street. Socialism is administration policy, but only when the people receiving government money are rich.

Bush and Cheney responded to this crisis the same way they dealt with previous emergencies. They asked themselves, “How can our corporate backers make money off this?” They used the September 11 attacks to justify all manner of scams, especially the invasion of Iraq, which tripled the price of oil and added billions to the coffers of Halliburton, a company that formerly employed Dick Cheney as CEO. Hurricane Katrina gave the administration an excuse to suspend legal protections for workers, privatize government housing, and subsidize private schools. Oh, and they also awarded another contract to Halliburton. While I’m sure the president and VP were disappointed that they couldn’t hire Cheney’s cronies to re-build Wall Street, they still came up with a sweetheart deal for the aristocracy of finance.

Bush’s plan, as presented by his Treasury Secretary, Henry Paulson, was essentially a no-strings-attached gift to top lenders. Public outcry forced Congress to make changes. The amended plan is better than Bush’s, but it’s still indefensible. The bill’s safeguards for taxpayers are weak and the bailout doesn’t help those who are really suffering from the current recession. It’s not too late to contact your congressional representatives and oppose this latest corporate boondoggle. As of this writing, the House of Representatives has already voted against it once. Here are some good summaries of the bill’s problems, along with proposals that will actually help the economy.

The fat cats may be holding out their platinum cups for federal aid right now, but they took a very different view of government intervention a few years ago. As financial expert Danny Schechter pointedout(/archive-king-george-in-decline-the-misadventures-of-an-aging-prep-school-cheerleader-volume-two), this crisis has been coming ever since the business, government, and media elite sold the country a brand of snake oil called deregulation. The theory was that we could trust Wall Street to behave, because competition between different firms would curb corruption. There were two main problems with that idea. First, in cases where companies have a common interest at odds with the needs of consumers, borrowers, and small-time investors, their executives will work together to defeat the general good. Second, since the Reagan administration, all sorts of corporations have been engaged in a frenzy of mergers, consolidating into a few mega-firms and thwarting competition. Those businesses are now so rich that they can buy the government and so large that their collapse would have repercussions for the entire economy. First they bribed Uncle Sam; then they took him hostage.
Like his Fortune 500 overlords, Senator John McCain has changed his tune about government involvement in the economy. In March, McCain bragged that he was “fundamentally a deregulator.” In April, shortly after foreclosures hit a new record high, he said this about the millions who were losing their homes: “It is not the responsibility of the American public to spare them from the consequences of their own bad judgment.” Now, with stock prices falling and some of the largest banks in trouble, the GOP nominee wants to take action, even advocating more aggressive regulation of finance. The new John McCain, tough sheriff of Wall Street, has existed for two weeks out of a twenty-five-year political career. Since he only turned up after the stock market and the candidate’s poll numbers both fell sharply, I’m guessing there won’t be much sign of him after Election Day, whoever wins the White House.

Barack Obama’s response to the recession, though it doesn’t go far enough, is superior to that of Bush and McCain. It includes new spending on the country’s crumbling infrastructure and genuine regulation of the loan industry. One of the most ominous facts about McCain is that his staff is a who’s who of the politicians and lobbyists who wrecked the economy. To help craft his economic proposals, McCain picked former Senator Phil Gramm, the author of the 1999 banking deregulation that helped cause the sub-prime disaster. Likewise, of the 177 corporate lobbyists working for the GOP nominee’s campaign, 83 recently worked for Wall Street.[i] Under Bush, big business completed its takeover of the government, writing the laws and placing its minions in key posts. Enron’s CEO picked the president’s energy regulators; the oil companies dictated Iraq policy. Judging by the army of lobbyists surrounding him, McCain would, if anything, tighten corporations’ grip on the executive branch. If we let the Bush regime get a third term under McCain, the current economic crisis will look small compared to what follows.

If you haven’t already registered to vote, now is the time. Here’s a list with each state’s registration deadline: