# Bailout

Give up on passing cap-and-trade in the Senate

I have been ready to pull the plug on the climate change bill for a while now. The American Clean Energy and Security Act, which narrowly passed the House last June, gave too much away to polluting industries and wouldn’t increase renewable energy production beyond what we are likely to see if no bill passes. More broadly, Mark Schapiro’s recent piece in Harper’s Magazine argues persuasively that a cap-and-trade system lets some people make a lot of money selling fake emission reductions.

Climate change legislation can only get worse in the Senate, where too many senators are beholden to corporate interests in the energy and agricultural sectors. Even before the Massachusetts special election brought the Democratic caucus down to 59 seats, key Senate Democrats were either asking for more giveaways to coal-burning utilities or begging the White House not to pursue the cap-and-trade system at all.

This month Democratic Senator Byron Dorgan predicted that the Senate will pass a stand-alone energy bill to expand energy production in various ways without capping greenhouse gas emissions. Unfortunately, you can count on the Senate to throw more money toward boosting fossil fuel production than renewable energy.

I agree with those who say we need comprehensive federal action to fight global warming, but the environmental movement needs to adapt to the realities in Congress.

Last year dozens of environmental groups focused their staff energy and mobilized volunteers to advocate for a sweeping climate change bill. This year we need to focus resources on where the real battle lies. Instead of urging citizens to sign petitions and call their senators about cap-and-trade, which is looking like a dead letter, we need to fight for the strongest possible renewable electricity standard in the energy bill.

More important, we need to block efforts to prevent the Environmental Protection Agency from regulating greenhouse gas emissions. Last month the EPA took a big step toward regulating global warming pollutants under the Clean Air Act. Republican Senator Lisa Murkowski has introduced a resolution to overturn the EPA rules and has three Democratic co-sponsors so far. Stopping Murkowski’s effort should be a top priority for environmentalists.

One complicating factor: some environmental groups have received grants to support advocacy on climate change legislation. I would encourage charitable foundations and other large donors to be flexible about how such money is spent. Cap-and-trade is going nowhere. Let environmentalists focus on the real fights in Congress this year.

Any relevant thoughts are welcome in this thread.

Final note: Murkowski is at war with the EPA even though she represents Alaska, one of the states most affected by global warming. Is she stupid, corrupt or both?

Past time for Geithner to go

UPDATE: Cenk Uygur asks and answers a very good question: Why is Fox News leaving Geithner alone?

Let’s hope the latest scandalous revelation about Timothy Geithner will bring a rapid end to his service as Treasury secretary:

Jan. 7 (Bloomberg) — The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show.

AIG said in a draft of a regulatory filing that the insurer paid banks, which included Goldman Sachs Group Inc. and Societe Generale SA, 100 cents on the dollar for credit-default swaps they bought from the firm. The New York Fed crossed out the reference, according to the e-mails, and AIG excluded the language when the filing was made public on Dec. 24, 2008. The e-mails were obtained by Representative Darrell Issa, ranking member of the House Oversight and Government Reform Committee.

The New York Fed took over negotiations between AIG and the banks in November 2008 as losses on the swaps, which were contracts tied to subprime home loans, threatened to swamp the insurer weeks after its taxpayer-funded rescue. The regulator decided that Goldman Sachs and more than a dozen banks would be fully repaid for $62.1 billion of the swaps, prompting lawmakers to call the AIG rescue a “backdoor bailout” of financial firms.

“It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information,” said Issa, a California Republican. Taxpayers “deserve full and complete disclosure under our nation’s securities laws, not the withholding of politically inconvenient information.” […]

Barney Frank, a Massachusetts Democrat and chairman of the House Financial Services Committee, said the e-mail exchanges were “troubling” and that he supports holding congressional hearings to review them.

I’ve been hoping for the last year that President Obama would ditch Geithner sooner rather than later. President Obama didn’t react publicly to the November report from the Office of the Special Inspector General for the Troubled Asset Relief Program, which slammed Geithner’s conduct during the AIG bailout. But it’s clear that Geithner wasn’t looking out for the public interest in his last job and never should have been promoted to his current position.  

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Year in review: national politics in 2009 (part 1)

It took me a week longer than I anticipated, but I finally finished compiling links to Bleeding Heartland’s coverage from last year. This post and part 2, coming later today, include stories on national politics, mostly relating to Congress and Barack Obama’s administration. Diaries reviewing Iowa politics in 2009 will come soon.

One thing struck me while compiling this post: on all of the House bills I covered here during 2009, Democrats Leonard Boswell, Bruce Braley and Dave Loebsack voted the same way. That was a big change from 2007 and 2008, when Blue Dog Boswell voted with Republicans and against the majority of the Democratic caucus on many key bills.

No federal policy issue inspired more posts last year than health care reform. Rereading my earlier, guardedly hopeful pieces was depressing in light of the mess the health care reform bill has become. I was never optimistic about getting a strong public health insurance option through Congress, but I thought we had a chance to pass a very good bill. If I had anticipated the magnitude of the Democratic sellout on so many aspects of reform in addition to the public option, I wouldn’t have spent so many hours writing about this issue. I can’t say I wasn’t warned (and warned), though.

Links to stories from January through June 2009 are after the jump. Any thoughts about last year’s political events are welcome in this thread.

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Lots of links for a snowy day

Many Iowans will be leaving work or school early today, or perhaps not going in at all, as the season’s first big winter blast rolls in. Here’s plenty of reading to keep you busy if you are stuck at home.

Global news first: The United National Climate Change Conference in Copenhagen opened yesterday. To follow news from the proceedings, I’m reading the team of Mother Jones bloggers in Copenhagen. The Open Left blog will also post regular updates from Natasha Chart and Friends of the Earth staff who are on the ground. If you prefer a mainstream media perspective, check out The Climate Pool on Facebook, which is a collaboration among major news organizations.

Also on Monday, Environmental Protection Agency Administrator Lisa Jackson signed off on two findings that will pave the way to regulate carbon dioxide emissions under the Clean Air Act. This action follows from a 2007 U.S. Supreme Court ruling in Massachusetts v. EPA. More background and details can be found on the EPA’s site. Environment Iowa explains the significance of the EPA’s action here. An expert panel surveyed by Grist disagreed on whether the EPA’s “endangerment finding” would affect the Copenhagen talks.

The most important reason I oppose the current draft bills on climate change kicking around Congress is that they would revoke the EPA’s authority to regulate carbon dioxide. Chris Bowers explains why that would be disastrous here.

Uganda is considering a horrific law that would subject homosexuals to long prison terms or even the death penalty. One Iowa is collecting signatures on a petition to Senator Chuck Grassley, asking him to speak out against this law. Grassley’s never going to be a gay rights advocate, but he should agree that criminalizing homosexuality is wrong. Grassley is involved with “The Family,” which is connected to the proposed bill in Uganda.

On the economic front, President Obama is expected to announce plans to use about $200 billion allocated for the Wall Street bailout to fund a jobs bill Congress will consider soon.. The Hill previewed some of the measures that may end up in that bill.

Some economists who met with Governor Chet Culver yesterday think Iowa has already reached the bottom of this recession. I hope they are right, but either way, policy-makers should listen to their ideas for reforming Iowa’s budget process. I’ll write a separate post on this important development soon. Here is the short take:

The state could base its spending on a multi-year average, such as the previous three years, or five years or seven years, said Jon Muller, president of Muller Consulting Inc., a public policy and business development consulting firm based in Des Moines.

“The way it’s always worked, when times are really good, we increase spending and we cut taxes,” Muller said. “And when times are bad, there’s pressure to increase taxes and decrease spending. And that all happens when the demand for government is at its highest,” Muller said.

The multi-year idea would flip, he said.

“In good times you would be squirreling money at way a little at a time. And in bad times, you could continue to increase spending to service the growing demands of a recession.”

It would require state lawmakers to not touch the reserves, even in times of plenty. But it would also reduce the need to tap into reserves just to get by during rainy days, the advisers said.

Regarding budget cuts, the Newton Independent reports here on a “plan to reorganize the Iowa Department of Human Services operations under two deputy directors, six rather than nine divisions, five rather than eight service areas, more part-time offices and the elimination of 78 currently vacant positions” (hat tip to Iowa Independent). Click this link for more details about the proposed restructuring.

On the political front, John Deeth analyzes possible changes the Democratic National Committee is considering for the presidential nomination process. Jerome Armstrong had a good idea the DNC won’t implement: ban caucuses everywhere but Iowa. No other state derives the party-building benefits of caucuses, but just about every state that uses caucuses for presidential selection has lower voter participation than would occur in a primary.

I haven’t written much on health care reform lately, because recent developments are so depressing. Our best hope was using the budget reconciliation process to pass a strong bill in the Senate with 51 votes (or 50 plus Joe Biden). Now that Senate Majority Leader Harry Reid has taken reconciliation off the table, we’re left with a variety of bad compromises to get to 60 votes in the Senate. I am not convinced the final product will be any improvement over the status quo. It will certainly be worse for millions of Americans required to buy overpriced private health insurance. If there’s a quicker way to neutralize the Democrats’ advantage with young voters, I don’t know what it is.

Speaking of health care reform, Steve Benen wrote a good piece about Grassley’s latest grandstanding on the issue.

Speaking of things that are depressing, John Lennon was shot dead 29 years ago today.  Daily Kos user noweasels remembers him and that night. Although Paul’s always been my favorite Beatle, I love a lot of John’s work too. Here’s one of his all-time best:

Share any relevant thoughts or your own favorite Lennon songs in the comments.

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Bailout yields record pay on Wall Street

Americans won’t be happy to learn that Wall Street salaries may be higher this year than they were before the current recession began:

Major U.S. banks and securities firms are on pace to pay their employees about $140 billion this year — a record high that shows compensation is rebounding despite regulatory scrutiny of Wall Street’s pay culture.

Workers at 23 top investment banks, hedge funds, asset managers and stock and commodities exchanges can expect to earn even more than they did the peak year of 2007, according to an analysis of securities filings for the first half of 2009 and revenue estimates through year-end by The Wall Street Journal.

Ian Welsh wrote a depressing post at Open Left yesterday:

All they did was throw cash at the problem, without dealing with the underlying issues, which is why they didn’t manage (as Jerome points out) to kickstart ANY net private spending.  They didn’t break up major banks.  They didn’t allow bankruptcy judges to rewrite mortgages.  Their mortgage program kept hardly anyone in the house.  And their money for financial firms did not increase lending by one cent. […]

This is going to be the worst “recovery” of your lifetime, unless you’re in the financial sector at a relatively high level.  Bank profits have recovered but ordinary people are not, in a generation, going to see a full recovery from this clusterfuck – employment will not recover to pre-recession levels before the next recession, and I don’t expect it to recover after that recession either.

At this point, in fact, I am expecting this to turn into a double dip recession-this “recovery” will not have any significant legs.

Continuing George Bush’s Wall Street bailout policy will prove to be a costly mistake for President Obama. Watch the Huffington Post Investigative Fund’s interview with Neil Barofsky, who “monitors a dozen separate bailout-related programs that now account for nearly $3 trillion in financial commitments.” Among other things, his research has confirmed that the bailout did not increase lending to the business sector.

Republicans pretend that Iowa Democrats are to blame for all our economic troubles, but the factors impeding employment growth are nationwide problems, like falling wages and major banks cutting back on loans to small businesses.

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Vilsack declines pork industry request (for now)

Following up on the request by nine governors and pork industry giants for the U.S. Department of Agriculture to spend $50 million on excess pork products, Radio Iowa reported on Tuesday that the USDA can’t help right now:

“We are down to our last $7 or 8 million because there’s been such a demand for so many kinds of commodities, including pork. I think in the last fiscal year $62 million worth of pork purchases have been made,” [Secretary of Agriculture Tom] Vilsack says. “…So we are trying to meet the demands of everyone.”

Vilsack says there may be more money in the pipeline this fall. “When October 1 comes, when the new fiscal year starts, we have a little greater flexibility and at that time we are taking a look at all these requests,” Vilsack says, “and we will make determinations at that point in time in terms of what is being requested of us and what we think makes sense.” […]

“We are very sensitive to the concerns of the pork industry. We have tried to respond by asking our institutional purchasers like the Department of Defense and others to purchase more pork products. We’ll continue to do that,” Vilsack says. “But I think we are stuck by virtue of the amount of money left in the account that we use to do this, but in October 1 it gets replenished and we’ll be in a different position.”

Meanwhile, Iowa Citizens for Community Improvement makes it easy for you to e-mail Governor Chet Culver to tell him you oppose taxpayer-funded bailouts of factory farms.

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Open thread on Obama's press conference

I’m not watching it live, but I will update this post later with some clips and commentary.

In the meantime, share your thoughts about what the president is saying tonight.

UPDATE: I am swamped with preparations for the Natural Living Expo and didn’t watch the replay of the press conference.

Sam Stein wrote up the story for Huffington Post.

TomP had an interesting take on Obama’s comments about how we should not demonize investors.

Beltway journalists seem to think the big story of the night was whom the president didn’t call on, as opposed to what he said. They do like to make everything about themselves.

SECOND UPDATE: Todd Beeton’s liveblog at MyDD was good.

The Wall Street bailout looks worse and worse

I was against the Wall Street bailout from the beginning, but hoped to be wrong about what it would achieve.

Unfortunately, it’s turned out like I expected–a huge taxpayer giveaway that has does nothing to get credit flowing or stabilize the banking sector.

Read this piece by bobswern and explain to me why President Obama is letting Treasury Secretary Timothy Geithner and economic adviser Larry Summers steer him in this disastrous direction. Obama is too smart not to be able to figure out what’s wrong with continuing the expensive, accountability-free Bush policy.

More links to commentaries on the corporate bailouts are in this diary by Jerome Armstrong.

Mark my words: later this year, Washington pundits and so-called “centrist Democrats” who claimed we had to “do something” to save the banking sector will warn us that we can’t afford universal health care reform.

Open thread on Obama's 2010 budget and cabinet

President Barack Obama will present his first budget request to Congress today.

Early leaks indicate that he will propose some tax increases on the wealthiest Americans as well as some spending cuts to help pay for health care reform.

Ezra Klein, an excellent blogger on health care, is excited about what’s in the budget regarding health care reform. Although there is no detailed plan, Obama is submitting eight principles that should define health care reform efforts. Klein believes the principle of “universality” is likely to lead Congress to propose an individual mandate to hold health insurance.

I support mandated coverate only if there is a public plan that any American, regardless of age and income, can purchase as an alternative to private health insurance. The public plan would work like Medicare, in that individuals would be able to choose their own providers. Unfortunately, the Massachusetts model of mandatory private insurance without a meaningful public option has left a lot of problems unsolved.

It is not clear how much Obama will do to roll back George W. Bush’s tax cuts for the wealthiest Americans. I am with House Speaker Nancy Pelosi and others who would prefer to start rolling back tax cuts for the top 1 percent immediately. Last month the president seemed to be leaning toward letting those tax cuts expire over the next two years rather than fighting to repeal them this year.

According to Bloomberg,

President Barack Obama’s first budget request would provide as much as $750 billion in new aid to the financial industry […]

No wonder Obama went out of his way to make the case for helping banks during his address to Congress on Tuesday night. I firmly oppose shelling out another $750 billion toward this end, especially since the bailout money we’ve already spent hasn’t accomplished the stated goals of the program.

According to AFP, today’s budget proposal will include a plan

to raise money through a mandatory cap on greenhouse emissions.

Obama’s budget director Peter Orszag earlier estimated that a cap-and-trade scheme could generate 112 billion dollars by 2012, and up to 300 billion dollars a year by 2020.

Cap-and-trade may be more politically palatable, but a carbon tax may be a better approach for reducing greenhouse-gas emissions.

In cabinet-related news, have calculated that expanding the food-stamp program

Interior Secretary Ken Salazar wasn’t the top choice of environmentalists, but I was pleased to read this post:

Interior Secretary Ken Salazar canceled oil shale development leases on Federal lands in Colorado, Utah and Wyoming and announced that the Interior Department would first study the water, power and land-use issues surrounding the development oil shale.

Meanwhile, Homeland Security Secretary wants to review US Immigration and Customs Enforcement raids and told Congress that employers should be the focus of raids seeking to enforce immigration laws at workplaces. Obviously, swooping in and arresting a bunch of undocumented workers does nothing to address the root of the problem if employers are not forced to change their hiring practice.

Yesterday Obama named former Washington Governor Gary Locke as his latest choice to run the Commerce Department. Locke seems like a business-friendly Democrat, which is a big improvement over conservative Republican Judd Gregg, who thankfully withdrew his nomination for this post.

Republicans have been freaking out because of alleged plans by the Obama administration to “take control of the census.” Of course the GOP wants to continue the practices that have caused millions of white Americans to be double-counted in past censuses while millions more Americans in urban centers (largely non-whites) were not counted at all. Click here for more on the political battle over the census.

This thread is for any thoughts or comments about Obama’s cabinet or budget.

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More proof that the Wall Street bailout was ill-conceived

Remember how urgent it was for Congress to approve the Wall Street bailout last fall to free up credit? Not surprisingly, things didn’t work out that way:

A new report out of the Treasury Department Tuesday confirmed what many lawmakers, housing advocates, small businesses and individual consumers have known all along: That despite hundreds of billions of dollars flowing from Washington to the finance industry, bank lending among recipients of the Troubled Asset Relief Program fell in the last three months of 2008.

Among the 20 largest TARP recipients, median mortgage and business lending both fell by 1 percent over that span, Treasury found, while median credit card lending rose 2 percent, “reflecting greater reliance on existing credit lines by consumers.”

The findings were based on a survey of the 20 banks receiving the most federal help under the TARP, and marks the first in what will be a series of monthly reports analyzing the lending trends among bailed-out banks.

It would be nice to know what the banks are doing with the bailout money, but they don’t want to tell anyone.

How disappointing that Barack Obama’s Treasury Secretary Timothy Geithner wants to continue the misguided effort begun by George Bush’s Treasury Secretary, Henry Paulson.

Here are some more links on why Geithner’s plan “fails on almost every level.” Excerpt:

Robert Kuttner offers a strong analysis of Geithner’s strategy to salvage the banking industry in The American Prospect, noting that Geithner is explicitly avoiding the simplest and cheapest solution in favor of propping up the current Wall Street regime. The current plan is designed to support a financial architecture that has proven completely ineffective in maintaining the nation’s basic economic functions.

Someone who works for a non-profit organization told me last week that he has filled out a detailed six-page application for a $1,000 federal grant, while Geithner wants to get $350 billion on the basis of a vague two-page proposal.

Josh Marshall notes that “a lot of key political appointments at the Treasury haven’t been made yet, let alone been confirmed.” He takes a stab at explaining why:

one of the big issues is that it’s actually hard to find people with the requisite knowledge of banks and the capital markets who aren’t also compromised — either in policy or business terms — by the housing bubble and the rest of the financial collapse. And that raises again as a question: why have none of the people who were financial orthodoxy dissidents and saw what was coming been brought in to the administration. I know I’m hardly the first one to bring this up. And we know that the big appointees — Summers and Geithner — were part of the mix. But there aren’t even any of them further down into the appointment structure. They’re all still on the outside.


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News flash: personnel shape policy

When Barack Obama nominated Timothy Geithner for Treasury Secretary and appointed Larry Summers to be the chief presidential economics adviser, I became very worried. Summers had a hand in some of Bill Clinton’s deregulation policies that have contributed to our current economic problems, and Geithner was a key architect of the Wall Street bailout last fall.

Here and at other blogs, some commenters urged me to “give Obama a chance–he hasn’t even been inaugurated yet.”

Geithner confirmed my worst fears today when he rolled out the new-and-improved bailout plan (using the second $350 billion tranche from the Troubled Assets Relief Program). Economist James Galbraith came up with the name Bad Assets Relief Fund (BARF) to describe Geithner’s plan.

Other bloggers have already explained why Geithner’s proposal is an unimaginably pricey gift to Wall Street bankers at the expense of the public interest. This diary by MyDD user bobswern hits all the main points, drawing on a front-page story in the New York Times and other sources.

Writing about how Geithner prevailed over presidential advisers like David Axelrod, who wanted to attach more strings to the taxpayer money Wall Street bankers would receive, David Sirota observed,

Interestingly, the divide inside the administration seems to hearken back to a divide discussed very early on in the formation of the administration – the one whereby progressives were put in strictly political positions, and zombie conservatives were put in the policymaking positions. In this case, more progressive politicos like Axelrod was overruled by corporate cronies like Geithner.

The good news is that at least there seems to be something of a debate inside the administration, however tepid. The bad news is what I and others predicted: namely, that progressives seem to have been ghettoized into the political/salesmanship jobs, the conservative zombies shaping policy aren’t interested in having any debate with them. Worse, we’re now learning that those zombies are as rigidly ideological as their initial policies seemed to suggest.

I stand by my prediction that Geithner will turn out to be one of Barack Obama’s worst appointments. I can’t fathom why Obama wants to “own” the very worst aspects of the Bush administration’s failed Wall Street bailout, while also depriving the government of cash needed for other domestic priorities.

The stock market fell sharply today, perhaps because investors have no confidence in Geithner’s scheme and perhaps because the compromise stimulus bill that passed the U.S. Senate came straight out of bizarro world (do click that link, you’ll enjoy it).

I hope Obama will recognize his mistake and let Geithner and Summers go within a year or so, but they’re already poised to do plenty of damage to his administration.

Speaking of bad appointments, isn’t it amazing that Obama didn’t even make Senator Judd Gregg of New Hampshire promise to vote for the stimulus bill in exchange for being named Commerce Secretary? Why would you put someone in a cabinet position with influence over economic policy if that person doesn’t even support the president’s stimulus plan?

Apparently Obama’s also considering making a lobbyist for the Chamber of Commerce the main presidential adviser on judicial appointments. I’ve long anticipated that judges appointed by Obama would be corporate-friendly, pro-choice moderates in the Stephen Breyer mode, but I never imagined that a Chamber of Commerce lobbyist would be in a position to recommend only judges who would favor business interests.

If Tennessee Governor Phil Bredesen becomes Secretary of Health and Human Services, the Obama-Biden magnet is coming off my car.

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More Lemon Socialism

Paul Krugman, upcoming recipient for the Nobel Prize in Economics, wrote an interesting article in the NY Times carried by Common Dreams http://www.commondreams.org/view/2009/02/02-1 yesterday.

The title of Mr. Krugman's article is “Bailouts for Bunglers”.  In this article, Mr. Krugman's major thesis is to ask the Obama administration to Nationalize the banks needing bailout capital, citing the “Lemon Socialism” rule.  In a nutshell, Lemon Socialism is where losses are socialized, profits are privatized.

I'm trying not to get personal here, but when they foreclosed on my friend's and family's businesses and homes, there was no safe”bailout” for them, they lost everything.  My oldest daughter is currently living in her car in Dallas, TX. One of my closest and oldest friends was forced to lay off half a dozen loyal employees into this economy with very little hope of finding another job as an auto mechanic.

No one rewarded any of my friends and family for the decisions they made which forced them into these circumstances, and I'm not asking anyone to reward these folks. It just seems criminal that those whose unbridled greed created the current market meltdown should receive compensatory bonuses for a “job well done”?

President Roosevelt saved capitalism for another 75 years when he initiated his plan of economic recovery.

Maybe President Obama should just let it go down in flames, I'm already paying to help out my kid, and I paid my friend more than it was worth to have him help me fix the brakes on my car recently (I could have done the job myself), I'll be damned if I'm willing to help foot the bill to pay some Wall Street banker a multi-million dollar salary for helping create this mess. 

Make the bankers give up their homes to the folks who lost theirs, I say.  Maybe if the financial wizards of Wall Street had to spend the winter living in THEIR cars they could come up with a solution all on their own. no help from the government.   

Q. When is it bad for a member of Congress to be a multimillionaire?

A. Only when that member of Congress criticizes government policies that benefit the super-wealthy at the expense of most taxpayers.

See also Missouri blogger Clark on the same subject.

Speaking of hypocrisy, note the conspicuous absence of Republican outrage over $18 billion in taxpayer dollars from the Wall Street bailout being used to pay bonuses to corporate executives.

That figure is larger than the total value of all earmarks Congress approved in 2008.

As Michael Bersin observed, it’s also more than the price tag of the automakers’ bailout that so many Republicans lamented.

Iowa Democrats in Congress trust Obama with bailout money

The House of Representatives passed a symbolic “disapproval” measure on Thursday to oppose the release of the second $350 billion tranche to the Treasury Department’s Troubled Assets Relief Program (TARP), more commonly known as the Wall Street bailout. About a third of House Democrats joined most of the Republicans (including Iowa’s Tom Latham and Steve King) in this measure.

However, all three Iowa Democrats (Bruce Braley, Dave Loebsack and Leonard Boswell) voted against the disapproval resolution, meaning they are on record not opposing the release of another $350 billion to the TARP.

The House action was merely symbolic because last week a similar “disapproval” resolution failed in the U.S. Senate. Chuck Grassley voted with most Republicans trying to block the release of the $350 billion, but Tom Harkin voted with most Democrats to reject the motion of disapproval. (President-elect Barack Obama personally contacted many senators urging them not to block the $350 billion.)

I believe that the events of the last few months have shown that the Wall Street bailout was costly and ineffective. It did not free up credit, as banks remain reluctant to lend. It did not stabilize the stock market either. New York Times columnist and Nobel Prize-winning economist Paul Krugman argues persuasively here that policy-makers are in effect “making huge gifts to bank shareholders at taxpayer expense.”

That said, perhaps the Obama administration will use the second half of the TARP money more competently than the Bush administration used the first $350 billion. I certainly hope so, not only for the sake of the economy and the banking system, but also for the sake of Democrats who now well and truly “own” this bailout.

Bleeding Heartland Year in Review: Iowa politics in 2008

Last year at this time I was scrambling to make as many phone calls and knock on as many doors as I could before the Iowa caucuses on January 3.

This week I had a little more time to reflect on the year that just ended.

After the jump I’ve linked to Bleeding Heartland highlights in 2008. Most of the links relate to Iowa politics, but some also covered issues or strategy of national importance.

I only linked to a few posts about the presidential race. I’ll do a review of Bleeding Heartland’s 2008 presidential election coverage later this month.

You can use the search engine on the left side of the screen to look for past Bleeding Heartland diaries about any person or issue.

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Open thread on the auto bailout (updated)

I opposed the massive Wall Street bailout rushed through Congress this fall, but if the government can provide hundreds of billions of dollars to financial firms with no oversight, it’s only fair that $13.4 billion of the Troubled Asset Relief Program be used to prevent General Motors and Chrysler from collapsing:

“These are not ordinary circumstances,” Bush said at the White House today. “In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action.”

The cost of letting automakers fail would lead to a 1 percent reduction in the growth of the U.S. economy and mean about 1.1 million workers would lose their jobs, including those in the auto supply business and among dealers, the White House said in a fact sheet.

‘Necessary Step’

President-elect Barack Obama endorsed the plan, calling it in a statement a “necessary step” to avoid a major blow to the economy.

“I do want to emphasize to the Big Three automakers and their executives that the American people’s patience is running out,” Obama said later at a news conference. “They’re going to have to make some hard choices.”

The United Auto Workers are “disappointed” that Bush added “unfair conditions singling out workers,” the union’s president, Ronald Gettelfinger, said in a statement.

“We will work with the Obama administration and the new Congress to ensure that these unfair conditions are removed,” Gettelfinger said.

This diary by TomP has a lot more detail and reaction to the bailout deal.

It would be grossly unfair for only the workers to be asked to sacrifice to make these companies profitable. Some Republicans, notably Senator Bob Corker of Tennessee are explicitly trying to drive wages in union shops down to the level paid to non-union employees of Japanese automakers in the southern states.

But it’s no coincidence that the standard of living in states with more union workers is higher than the standard of living in the deep south.

I don’t know enough about the details to know whether this bailout can save GM and Chrysler, but failing to act was not an option with so many jobs on the line.

By the way, all three U.S. automakers have made a lot of mistakes over the years, but kudos to management of Ford Motors for locking in a large credit line while credit was easy to obtain. In case you were wondering, that’s why Ford is not currently on the brink of collapse, begging for a government bailout. Nevertheless, I’m sure Ford will have to do a lot of restructuring to adapt to this tough economy, just like GM and Chrysler. I can’t imagine 2009 will be much better for new car sales than 2008 was.

Chrysler has already idled all of its plants for a month. Ford is extending the holiday break at most of its plants until January 12, and GM plans massive production cuts next year.

Those actions may be necessary to save the automakers, but they will have disastrous ripple effects in all the communities where the idled factories are located.

Some of these problems could have been avoided if Congress had fixed our broken health-care system years ago. This report is more than two years old:

The competitive disadvantage of U.S. automakers resulting from the absence of a national strategy on health care financing is becoming increasingly clear. GM faces legacy costs (health care plus pensions for retired workers) of $1,500 per car. Together, the Big Three automakers support roughly 800,000 retirees, compared to less than 1,000 for foreign-owned competitors in the United States.

Clearly the failure to address America’s health care finance problems has become a major competitive disadvantage for our economy as a whole and has placed U.S. workers in a diminished bargaining position for wages and job security in relation to the rest of the industrialized world. Targeting retiree health costs offers an opportunity to provide strong incentives for industry action on fuel savings investment and reduces the competitive disadvantage.

Share any relevant thoughts in the comments.

UPDATE: Why I am not surprised to learn that banks like Goldman Sachs and Morgan Stanley are giving out large bonuses to some executives after receiving billions in bailout money from the federal government?

Note also that George Bush attached all kinds of conditions to the loans for automakers, while major financial institutions just got free money with no oversight.

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Joe the Plumber "appalled" by McCain, (hearts) Palin

Your laugh for the day comes from the Huffington Post, which wrote up an interview right-wing loudmouth Glenn Beck did with Joe “the Plumber” Wurzelbacher.

John McCain made Joe the Plumber famous by dropping his name more than 20 times during the third presidential debate. Although Wurzelbacher is not licensed as a plumber, McCain and Sarah Palin continued to mention Joe the Plumber at rallies, and the campaign even had “I’m voting for Joe the Plumber” printed up on bumper stickers.

Now Wurzelbacher is cashing in with a new book called “Joe the Plumber: Fighting for the American Dream.” Here’s the thanks McCain gets for making this guy a household name:

I honestly felt even more dirty after I had been on the campaign trail and seen some things that take place. It was scary, man […] When I was on the bus with him, I asked him a lot of questions about the bailout because most Americans did not want that to happen. Yet he voted for it. … And I asked him some pretty direct questions. Some of the answers you guys are gonna receive – they appalled me, absolutely. I was angry. In fact I wanted to get off the bus after I talked to him.

Wurzelbacher thinks Palin is “the real deal,” though:

[…] she definitely had energy and she definitely went to work for American people, and it disgusts me on how often they try to bash her just for her sincerity. It’s just, you know, she really wants to work for America and I mean, I wish people would listen to her and let them, and let her work for us. You know, she wants to serve us. She’s not looking for power.

Sounds like somebody would love to be part of Palin’s 2012 presidential campaign.

Huffington Post has a link to the full text of the interview (scroll down the page to find it).

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Braley urges House leaders to improve oversight of bailout

Last week I wrote about some of the problems related to the Wall Street bailout. Among other things, no one knows what the Treasury Department has been doing with the money.

On November 18 Representative Bruce Braley sent a letter to leaders of the U.S. House “urging them to finish naming members of a congressional oversight panel charged with overseeing the implementation of the $700 billion bailout package.” His office released the text of the letter:

Dear Speaker [Nancy] Pelosi, Majority Leader [Steny] Hoyer, and Minority Leader [John] Boehner,

Thank you for your leadership throughout the 110th Congress.  As you know, we are facing an economic crisis as serious as any our nation has faced during my lifetime.  While this crisis started on Wall Street, it now affects Iowans and Americans from all walks of life.  We are all hopeful that the recently enacted Emergency Economic Stabilization Act (EESA) will have a significant impact on the recovery of financial markets.

Just last week, Treasury Secretary Henry Paulson announced a change in course on how taxpayer funds from the EESA will be used to stabilize the economy. He stated that instead of buying troubled assets, Treasury would use the funds to invest in nonbank financial companies, and to promote consumer borrowing through credit cards, car loans, and student loans. As reported in the Washington Post on November 13, 2008, the Bush Administration has already committed $290 billion of the $700 billion rescue package.

With all that is going on, I am concerned that all of the members have not yet been nominated to the five-member Congressional Oversight panel, as designated by Section 125 of the EESA. As you know, the EESA included language that required the release of a detailed report from the congressional panel 30 days after the bailout program began.  This deadline for this initial report has since passed. Additionally, the congressional oversight panel is supposed to issue a report on January 20, 2009, giving an update on the financial regulatory process. Since a congressional panel is not yet finalized, it is unclear as to whether this deadline can be met.

I strongly believe that the American people have a right to know how their taxpayer funds are being used by the Treasury, especially in light of the recent change in course on how to revitalize the economy.  It is essential that Congress conduct vigorous oversight during this process. That is why I urge you to make it a top priority to complete the assembly of a Congressional Oversight Panel as soon as possible.

Thank you again for your leadership, and thank you for your attention to this issue.  Please feel free to contact me if you have any questions.


Bruce Braley

Braley voted against the first proposed bailout but supported the revised version for reasons described here. Although I didn’t agree with his second vote, I appreciate his effort to improve Congressional oversight so that Treasury can be held accountable for how funds are being used.

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How's that bailout working for us?

I wouldn’t mind Democrats passing an incredibly unpopular bill a few weeks before an election, if the bill solved a big problem.

Unfortunately, the Wall Street bailout Congressional leaders rushed to pass this fall doesn’t seem to have accomplished much, besides hand some Republican incumbents a great campaign issue.

We were told that the Bush administration needed this plan passed immediately, or else credit would dry up and the stock market would go into a tailspin.

But as it turns out, Treasury Secretary Henry Paulson had no idea what to do:

The Bush administration dropped the centerpiece of its $700-billion financial rescue plan Wednesday, reflecting the remarkable extent to which senior government officials have been flying by the seat of their pants in dealing with the deepening economic crisis.

Treasury Secretary Henry M. Paulson said the administration would scrub plans to buy troubled mortgage-backed securities but continue to devote bailout funds to restore liquidity to credit markets.


“You’ve had a tremendous amount of improvisation here,” said Douglas W. Elmendorf, a former Federal Reserve economist and an informal advisor to Obama’s transition team. “Even smart people get things wrong when they have no models to follow and are acting quickly, so it’s natural that there’d be some reworking.”

Or as Sen. Charles E. Grassley (R-Iowa) put it: “When you see so many changes, you wonder if they really know what they’re doing.”

Paulson, who originally dismissed emergency government investments in financial institutions as a recipe for failure, said most of the first half of the $700 billion had already gone to making emergency investments in banks and other companies aimed at reviving the routine borrowing and lending that are crucial to the economy.

Although Paulson said those actions had helped thaw credit markets and prevent “a broad systemic event” in the global economy, he acknowledged that most financial firms are still deeply reluctant to lend.

So, Paulson has been winging it, doing what he originally opposed, but credit remains very tight.

But no problem, because Congress imposed strict accountability measures in that revised version of the bailout, right?

Not according to the Washington Post: Bailout Lacks Oversight Despite Billions Pledged

In the six weeks since lawmakers approved the Treasury’s massive bailout of financial firms, the government has poured money into the country’s largest banks, recruited smaller banks into the program and repeatedly widened its scope to cover yet other types of businesses, from insurers to consumer lenders.

Along the way, the Bush administration has committed $290 billion of the $700 billion rescue package.

Yet for all this activity, no formal action has been taken to fill the independent oversight posts established by Congress when it approved the bailout to prevent corruption and government waste. Nor has the first monitoring report required by lawmakers been completed, though the initial deadline has passed.

“It’s a mess,” said Eric M. Thorson, the Treasury Department’s inspector general, who has been working to oversee the bailout program until the newly created position of special inspector general is filled. “I don’t think anyone understands right now how we’re going to do proper oversight of this thing.”

To put that $290 billion in context, the U.S. spent about $170 billion on the war in Iraq during all of 2007. Yet the stock market is still swinging wildly and financial institutions are “still deeply reluctant to lend.”

House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid got suckered into backing bad policy that was also bad politics. Barack Obama was eager to go along as well.

Next time leading Democrats want to pass something that expensive, could they at least make it something useful, like universal health care or high-speed rail connecting major cities?

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Veterans ask, "Why, Congressman Latham?"

Fourth district Democratic candidate Becky Greenwald launched this new web ad yesterday:

This is a solid ad, and I’d like to see it on television screens as well as computer screens. You can donate to the Greenwald campaign through her website.

Incumbent Tom Latham started running this negative ad about the bailout last week:

As I noticed while listening to the two radio debates between Latham and Greenwald, Latham is clinging to his bailout votes like a life raft, and yet:

Here’s Latham’s voting record on corporate subsidies.

Here’s Latham’s voting record that relates to government checks on corporate power.

Here’s Latham’s voting record on corporate tax breaks in general (including sub-categories on tax breaks for the oil and gas industry and for the wealthiest individuals).

Latham must be very grateful to be able to talk about the bailout instead of his long record of standing with corporations rather than middle-class taxpayers.

If you live in the fourth district or have friends and relatives there, please spread the word about Latham’s voting record as a whole.

But more important, please get involved with the Greenwald campaign as a volunteer in the final stretch.

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Help Rob Hubler get his message out

Steve King keeps adding to the multitude of reasons to elect Rob Hubler to represent Iowa’s fifth district in Congress. He is running a misleading television ad in the Sioux City market:

Friday, October 17, 2008                  

         COUNCIL BLUFFS – Rob Hubler, Democratic candidate for Congress in Iowa’s 5th district, today called on Rep. Steve King to pull his new television ad in which he falsely claims credit for “working with others” to widen Highway 20 from two lanes to four lanes.

         Following an announcement by the Iowa Department of Transportation on Tuesday that $48 million had been allocated for 11.7 miles of four-laning Highway 20, King began running a television commercial claiming credit for the funding.  All of the funding is from a special fund recently approved by the Iowa legislature and none of the funding is from federal sources.

         “Steve King taking credit for funding Highway 20 improvements would be like me taking credit for the sun coming up this morning,” said Hubler.  “Our state legislators and the Iowa Department of Transportation deserve credit for allocating the funding for Highway 20, which is long overdue,” he said.  “King had nothing to do with approving money for highway improvements but, three weeks before an election, he is desperate to show some accomplishments in Congress, by taking credit where it is not due.”

         State Sen. Steve Warnstadt of Sioux City, who has fought for funding in the Iowa legislature, said today that the legislature, “rather than wait for the promises of federal politicians to be fulfilled, worked in a bipartisan manner to not only create the funding for TIME-21, but ensured that projects like four-laning Highway 20 would be top priority for new funding.”

         “I’m pleased that the Iowa Transportation Commission did not wait for federal funds, and is using the resources provided to them by the legislature for critical projects like Highway 20,” said Sen. Warnstadt.

         In his television ad, that began running this week, King says:  “Six years ago I made a commitment to you that I would pull out all the stops to build four-lane Highway 20.  Today with the commission’s announcement, I can tell you that 46 more miles will be built within five years.  My number one transportation priority was a promise, now it’s a plan, soon it will be a reality.  We work together and we get things done.”

         In a press release issued the same day, King again took credit for the Highway 20 improvement project.  “Steve King had absolutely nothing to do with any of that funding and is shamelessly trying to take credit for it,” said Hubler.  “I suppose this is what you do when you’ve spent six years in Congress and have only a resolution encouraging people to celebrate Christmas to show for it,” he added.

         Hubler pointed out that King is unable to get anything done to help his district because he is not respected by other members of Congress, even those in his own party.  “By contrast, Rep. Leonard Boswell of Iowa has a program for Highway 34 in which he gets 20 miles paved every year,” he said.

         Hubler said that he will work with the rest of the Iowa delegation to make sure Iowa gets help with maintaining our highways and bridges.  “I will sponsor and fight for legislation to fund at least ten miles of Highway 20 widening each year until it is completed,” he said.  “If Steve King had done this, we would have 60 miles completed during his three terms in Congress.”

This press release from the Iowa Department of Transportation confirms the above comments by Hubler and State Senator Steve Warnstadt. This project is funded by the state, not by any federal appropriation.

Iowa Guy calls out the television ad as one of King’s “lies.” Here is a rough transcript that someone in the fifth district sent to me (if anyone has an official script, please send me a copy). Judge for yourself:

King: I’m Steve King. I approve this message. Six years ago I made a commitment to you that I would pull out all of the stops to build 4 lane Highway 20. Today with the commission’s announcement, I can tell you that 46 more miles will be built within five years. My number one transportation priority was a promise, now it’s a plan, soon it will be a reality. We work together and we get things done.

Voice Over: “Steve King for Congress”

King’s ad creates a false impression. Note how he refers to “the commission” without making clear that he’s talking about the Iowa Transportation Commission’s announcement regarding Highway 20. He talks about how his “promise” is now a “plan” that will soon be a “reality,” without specifying what he did to make that plan a reality (because he played no role).

I read in one of my parenting books that lying can be a form of wish fulfillment. If I had achieved as little for constituents as King has, I’d probably wish I could take credit for a popular highway project too.

Speaking of King’s record, you may recall this article the Sioux City Journal published over the summer, asking “How effective is Steve King?” (Answer: not very.) In the article, King described a “key moment” for him:

King said the extended 2007 funding debate for reauthorization of the federal State Children’s Health Insurance Program was a key moment. The measure was initially written for an increase of $35 billion, but was scaled back before being signed by President Bush in December.

King took to the House floor last fall with a sign that said the SCHIP acronym should instead stand for “Socialized Clinton-style Hillarycare for Illegals and their Parents.”

“I do believe if you took me out of the equation, there would have been a different (funding) result,” King said.

I have a close friend (self-employed) whose family was getting health coverage through her husband’s job. He was just laid off this month. Fortunately, their kids are eligible to be added to HAWK-I (that’s the Iowa version of SCHIP) as of November 1.

Plenty of children would be going without health insurance if not for HAWK-I, and in this economy, demand for the program will probably rise significantly.

Isn’t it great that King fought to scale back the funding?

Another recent “achievement” for King was his proposal to create a commission to study the current financial crisis. Hubler had some choice words about that idea, and I’ve put his full statement after the jump. Some excerpts:

       “For six years, Steve King has supported an administration that has refused to accept responsibility or to hold anyone accountable for policies that have devastated the middle class, provided tax breaks to big oil companies, mismanaged an unnecessary war, and now caused the worst financial meltdown since the Great Depression,” said Hubler.  “We don’t need to spend millions of dollars on a commission that will take months to find out what we already know; when there are no rules, and no regulators, markets do not regulate themselves.”

       “King opposed common-sense regulations designed to protect investors and consumers as his Republican-led Congress gave the Bush administration the authority to dismantle rules, allowing greedy Wall Street speculators and unscrupulous lenders free rein to engage in subprime lending with no oversight from Congress,” Hubler continued.  “Yet, instead of accepting responsibility for his part in creating this mess, King has tried to blame middle class borrowers for the collapse of the housing market,” said Hubler, referring to comments King made Saturday at a town hall meeting in Onawa.

Hubler is a strong Democrat as well as a strong candidate, which is why Wisconsin Senator Russ Feingold’s Progressive Patriots Fund is supporting him.

Hubler can win this race if he is able to get his message to voters. He’s already been up on the radio with at least one ad, featuring former Congressman Berkley Bedell. The Hubler campaign has also produced this voter guide (pdf file) to mail district-wide. To reach more voters through direct mail and broadcast media, the campaign needs your help. Please donate today.

We have a great opportunity to take advantage of the coming Democratic wave. This post at Swing State Project notes that seats once thought safe for Republicans are becoming competitive across the country. The author names IA-05 (as well as IA-04) among the “Republican seats at severe risk of being lost or swept away in the ensuing tide.”

The Republican Party is now spending money on behalf of incumbents in some districts comparable to western Iowa in terms of partisan makeup. This recent story from Politico notes:

GOP Reps. John B. Shadegg of Arizona, Lee Terry of Nebraska, Henry Brown Jr. of South Carolina and Dan Lungren of California are all fighting for their political lives, a reversal of fortunes that has caught even the most astute campaign observers by surprise.

Markos commented on the Politico piece,

Shadegg’s AZ-03 is R+5.9.

Terry’s NE-02 is R+9.0.

Brown’s SC-01 is R+9.6

Lungren’s CA-03 is R+6.7.

Iowa’s fifth district has a partisan voting index of R+8. As I’ve written before, ten House Democrats already represent districts at least as Republican. This election will increase that number. Let’s make IA-05 one of them.

King’s third-quarter FEC filing showed a financial advantage over Hubler, but hardly an intimidating war chest. His cash on hand may not even be sufficient to run television ads across the district for the remainder of the campaign. He certainly won’t have a turnout operation to rival what Barack Obama’s campaign and the Iowa Democratic Party have going in western Iowa.

It only takes a minute to donate to Hubler’s campaign, giving him the resources to spread his message in the final weeks. Please take the time to help send a good man to Congress.

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Quick hit on the second Latham-Greenwald radio debate

The second radio debate between Becky Greenwald and  Tom Latham just ended. Kudos to KGLO-AM in Mason City for running a much better debate than WHO 1040 in Des Moines did on Monday. The questions by both journalists in the studio and callers were clear, substantive and balanced. I listened to the livestream, but I hope the station will make the audio available on their website (http://www.kgloam.com).

My overall impression was that Greenwald did just what she needed to do in the two radio debates. As I see it, her most important tasks were:

1. Demonstrate that she understands the issues and is able to speak comfortably on a range of topics.

2. Hold Latham accountable for his lockstep Republican voting record and failure to get key problems solved during his 14 years in Congress.

3. Remind voters that the country is on the wrong track, and she will be there to support Barack Obama’s efforts to put it on the right track.

Greenwald succeeded on all of those fronts.

As for Latham, I see his most important objectives for the debates this way:

1. Avoid acting like a jerk or making a big gaffe.

2. Distance himself from the Republican Party and George Bush’s failed policies.

3. Remind voters of his accomplishments as a member of Congress.

Only the first point can be considered a complete success for Latham, in my opinion. He was respectful toward his opponent and did not make any howlers. His answers did plenty to accomplish the second and third tasks, but Greenwald was able to rebut many of his claims during her own responses.

All challengers have to prove that they are “ready for prime time,” and there is no question that Greenwald did so. I share Chase Martyn’s perspective on the first debate; Latham and Greenwald debated as equals.

Greenwald answered the questions fluidly and precisely. In particular, she was very strong on health care, Social Security, Iraq, energy, taxes, and deregulation. She called Latham on his past support for Republican efforts to privatize Social Security. He repeatedly denied supporting “privatization,” but Greenwald pointed out that there is creating personal accounts (which could get decimated in bear market) is tantamount to privatizing a system that currently provides guaranteed benefits. After the jump, you can read a statement the Greenwald campaign issued on Social Security shortly after the debate.

Greenwald did not stumble or become flustered when faced with a hostile question. (This was also apparent during the first debate.) When callers brought up immigration, she talked about the need to enforce the laws for employers and asked why Latham hadn’t done anything to solve this problem before it got to the point of raids in Marshalltown and Postville. In both debates she also mentioned that many people are surprised to learn Postville is in the fourth district, because Congressman Bruce Braley has been so much more active in seeking enforcement of safety, labor and immigration laws with respect to Agriprocessors. Despite Latham’s claim that Greenwald supports “amnesty” for illegal immigrants, she made clear that she is talking about a path to some kind of legal status for employment (not necessarily citizenship), which could involve fines or in some cases returning to the home country to wait in line.

Greenwald’s closing statement hit on her campaign’s most important themes: the country has been going in the wrong direction for eight years, she firmly believes Obama will be elected president, and she wants to be there to help him change our direction.

As in Monday’s debate, Latham used every opportunity to bring up the bailout bill he voted against twice. In fact, I feel he should send House Speaker Nancy Pelosi a thank-you note, because he was clinging to his votes against the bailout like a life raft. Again and again, Latham cited the bailout as proof that he doesn’t always vote with Bush and stands with the little guy against Wall Street corruption.

He also used the bailout answers to claim that he supports better regulation of Wall Street. He blamed Democrats Barney Frank and Chris Dodd for Congress’s failure to better regulate Fannie Mae and Freddie Mac. That is only a small part of the overall picture, though. For the last 15 years, Republicans in Washington have been pushing for less regulation of corporations and more corporate subsidies, and Latham has been right there with them.

Here’s Latham’s voting record on corporate subsidies.

Here’s Latham’s voting record that relates to government checks on corporate power.

Here’s Latham’s voting record on corporate tax breaks in general (including sub-categories on tax breaks for the oil and gas industry and for the wealthiest individuals).

Latham must be very grateful to be able to talk about the bailout instead of his long record of standing with corporations rather than middle-class taxpayers. Greenwald mentioned Latham’s longstanding support for deregulation, but those matters have received less media attention than this week’s stock market declines, which Latham pointed to as evidence that the bailout failed.

Greenwald brought up provisions in the revised bailout bill that benefit Iowans (those were the additions that brought Senator Tom Harkin and Congressman Bruce Braley on board). Latham avoided talking about the details of those “sweeteners” but spoke generally about opposing the Washington-style mentality that if you take a bad bill and add $150 billion in spending to it, it becomes a good bill. That’s probably the best argument he can make for why he voted against a bill containing the wind energy tax credit and tax breaks for flood-damaged businesses.

From where I’m sitting, the bailout was the best card Latham had to play, and he made full use of it. If not for that issue, today’s debate would have been a blowout for Greenwald.

Regarding health care, Latham stated clearly today that he would not support John McCain’s proposal as currently drafted, because it doesn’t address issues such as Medicare reimbursements. Earlier in the week, Greenwald’s campaign, the Iowa Democratic Party, and Americans United for Change had been hammering him on his apparent support for McCain’s plan during Monday’s debate.

In today’s debate, Latham did not mention the problem of insurance companies excluding coverage for pre-existing conditions, which Greenwald mentioned prominently in her answer on health care.

Latham expressed pride in many of the bills he has co-sponsored relating to health care, but Greenwald brought up the big picture, which is that the problems in our health care sector have gotten worse, not better, during Latham’s 14 years in Congress. For 12 of those years, he was in the majority party. Why hasn’t he accomplished more?

As for partisanship, Latham mentioned several times today that the Democratic mayor of Boone is supporting him. Here he tapped into the goodwill that often comes to members who serve on the House Appropriations Committee. I don’t think I heard him embrace any of Obama’s proposals, though.

Latham didn’t return to an argument he made several times in Monday’s debate, which is that Iowa’s Democratic members of Congress have more partisan voting records than he does.

He doesn’t seem to understand that the problem with his lockstep Republican voting record is not that it’s “partisan.” The problem is, the Republican policies he has supported down the line (from the war in Iraq to almost any domestic issue you name) have failed. They have put our country on the wrong track. We need to move in a different direction, and Latham isn’t going to support the change we need.

It’s always hard for me to put myself in the mindset of an undecided voter as I listen to a debate. My impression was that Greenwald helped herself a lot, especially since the voters of the fourth district are very likely to support Obama by a significant margin over McCain.

I don’t think Latham did much today to hurt himself, but I wonder whether his bailout votes will be enough to convince fourth district residents that he has been more than a loyal supporter of the most unpopular president in history.

UPDATE: Greenwald’s statement on Social Security is after the jump.

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Oops--The bailout didn't stabilize the markets

When Congress debated the bailout package last week, plenty of respected economists argued that the bill would do little to fix the problems in the banking sector. However, others insisted we had to “do something” to avert a market meltdown.

Many people became reluctant supporters of the bailout because of the need to “do something.” Here’s how Tom Harkin explained his “yes” vote:

I reluctantly voted in favor of this bill because I believe our nation’s financial system faces serious challenges, and it is important for us to act.  However, I am under no illusions.  I firmly believe that Congress should not have been rushed into this action, but we needed to do something to calm the markets and restore confidence in our economy. While this package will do that in the short term, we must modify it early next year to strengthen and improve the rescue framework – and I will be leading the charge to do that.

Since George Bush signed the bailout bill into law, global and American stock markets have fallen sharply, with the Dow Jones industrial average now at its lowest point in five years.

The front-page headline on Tuesday’s Des Moines Register was apt:

Global markets plunge in response to rescue

Experts unsure what moves might restore confidence

But a week earlier, many of those “experts” insisted that disaster would strike if Congress didn’t jump on board the runaway train. Day after day, the Register’s coverage was slanted in favor of the bailout proposal.

The bailout was very bad politics, but that wouldn’t bother me so much if it had been good policy. Unfortunately, it is already turning out to be a very expensive non-solution to a big problem.

In the coming years, that non-solution will deprive us of the money needed for real solutions.

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House bailout debate/vote thread

The House of Representatives is debating the bailout bill that cleared the Senate on Wednesday.

Bruce Braley, who voted against the bailout on Monday, has announced that he will support this version. His statement explaining his decision is after the jump.

Dave Loebsack and Leonard Boswell voted for the bailout on Monday and will surely support this version too.

I don’t expect Tom Latham or Steve King to change their votes against the bailout.

UPDATE: The bill passed 263 to 171. Here is the roll call:


All three Democrats in the Iowa delegation voted yes, while Latham and King voted no.

SECOND UPDATE: George Bush signed the bill already.

Becky Greenwald issued the following statement:

Greenwald Condemns Latham for Voting Against Cleaning Up the Financial Mess He Helped Create

Waukee, IA – Today, Becky Greenwald condemned Tom Latham for voting against the Emergency Economic Stabilization Act of 2008 as the economy faces its most serious crisis since the Great Depression.

“I am disappointed that Tom Latham voted against fixing the financial mess he helped create. Latham’s years of support for George Bush’s failed economic policies and deregulation of the financial markets while taking hundreds of thousands of dollars from Wall Street put America in the economic crisis it faces today. I’m just glad he didn’t get his way when he supported George Bush’s plan to privatize Social Security and risk America’s retirement safety net on Wall Street. And to add insult to injury, this vote was also a vote against providing tax relief to middle income families and disaster victims in Iowa.

“I am pleased the House passed the Economic Rescue Bill. Today’s bill will help to unfreeze credit, protect taxpayers, provide tax relief for Iowans affected by natural disasters, and fix the Alternative Minimum Tax to exempt middle-income taxpayers. It was clear action needed to be taken to protect Iowans, and these provisions go a long way to support working families in the 4th District, who were forgotten in the original bill.

“Through no fault of their own, Iowans who have planned and saved for retirement and families trying to send their children to college would have been forced to delay their plans. Something needed to be done, and Tom Latham voted to do nothing.

“It’s time we have a representative that values working families and Main Street over Wall Street.”

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Open thread on the bailout and the economy

Last night the Senate passed a bailout bill that was somewhat different from the version the House rejected on Monday. The Senate vote was 74-25 (roll call here), with Chuck Grassley and Tom Harkin both voting in favor.

Last week Harkin had spoken out against the original bailout proposal, so obviously he was satisfied with the changes made. (UPDATE: Harkin’s statement explaining his vote is after the jump.)

Both Barack Obama and John McCain voted for the bailout last night. Today, Obama made the economy the centerpiece of a campaign speech in Michigan. Click here to read the speech and watch video clips.

Congressional candidate Becky Greenwald, who said on Monday that she would have opposed the House version of the bailout, issued a statement urging Tom Latham to support the Senate version when it comes back to the House:

“I strongly encourage Tom Latham to support this new version of the financial rescue bill. The Senate version of the bill integrated constructive changes including temporarily raising the FDIC insurance caps, renewable energy tax credits and fixing the Alternative Minimum Tax to exempt middle-income taxpayers. These provisions go a long way to support working families in the 4th District, who were forgotten in the original bill.  

“I still think more needs to be done to address the underlying problem of keeping families in their homes, but it is clear by the impending unavailability of credit, we need to take action now. I am encouraged by the modifications to this bill. I hope the House will embrace the modified bill. I encourage Tom Latham to vote in favor of this bill and take this important step in addressing our financial crisis.”

Congressional candidate Rob Hubler, who said on Monday that he would have voted for the bailout in the House, posted this statement on the front page of his website:

“The failed economic policies of the Bush administration, supported consistently by Steve King, combined with the lack of common-sense regulations and oversight by Congress has led us to this financial train-wreck.

“Six years ago, the Bush administration sought authorization to use military force to invade Iraq.  We acted too quickly and became mired down in war.  Today, it is asking for authorization to use financial force in the market place.  We must not make the mistake of acting too quickly without enough information, and we must address the problems of Main Street as well as Wall Street.  The revised proposal includes subsidies to support the production of ethanol and wind energy, which will be helpful to Iowa’s economy.

“By raising the insurance level from $100,000 to $250,000 for savings accounts, we will help small-town bankers survive the current financial crisis.  If the revised version of the rescue package provides that taxpayers will be paid back every dime of the billions it will take to avert an extended recession and gets money to people on Main Street, I would reluctantly vote in favor of the legislation in order to stabilize the economy so that families and businesses on Main Street are not further affected.  I am encouraged that both Senators Obama and McCain are now working toward a solution, while Steve King is still pushing failed policies, such as eliminating the capital gains taxes which favor wealthy Wall Street speculators.  Main Street doesn’t have any capital gains to pay taxes on right now.

“If I am elected to Congress. I will be a strong voice in favor of regulatory measures and vigilant oversight-unlike Steve King-to see that checks and balances are put back in place so that we never have to experience this kind of calamity again.”

Speaking of Steve King, he made news yesterday during a talk radio show. He argued that McCain was right to say the fundamentals of our economy are strong. I didn’t watch Keith Olbermann’s Countdown show last night, but apparently King earned the title of third-worst person in the world for the day.

I haven’t had a chance to read up on the specific improvements made in the Senate bailout bill. I am skeptical that this will solve the problems in the banking sector, however. Senator Russ Feingold of Wisconsin issued this statement explaining his opposition:

“I will oppose the Wall Street bailout plan because though well intentioned, and certainly much improved over the administration’s original proposal, it remains deeply flawed. It fails to offset the cost of the plan, leaving taxpayers to bear the burden of serious lapses of judgment by private financial institutions, their regulators, and the enablers in Washington who paved the way for this catastrophe by removing the safeguards that had protected consumers and the economy since the great depression. The bailout legislation also fails to reform the flawed regulatory structure that permitted this crisis to arise in the first place. And it doesn’t do enough to address the root cause of the credit market collapse, namely the housing crisis. Taxpayers deserve a plan that puts their concerns ahead of those who got us into this mess.”

-Senator Russ Feingold, October 1, 2008

Former Labor Secretary Robert Reich expects the economy to continue to worsen with or without the bailout.

The economist/blogger Bonndad wrote a piece analyzing the various bailout proposals. He concluded, “As far as I have seen, no one has offered any solution to the credit crunch that makes any sense. ”

This is an open thread for any comments related to the economy or the bailout proposals.

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How the Iowa delegation voted on the bailout

I was pleasantly surprised to hear that the $700 billion bailout bill failed in Congress today on a truly bipartisan vote: 140 Democrats for, 95 against; 65 Republicans for, 133 against.

In the House, Bruce Braley, Tom Latham and Steve King voted no, while Dave Loebsack and Leonard Boswell voted yes.

The full statement from Braley’s office is after the jump. I will update this post with full statements from Iowa’s other members of Congress as they become available. The Des Moines Register has excerpts from each representative’s statement here:


Senator Tom Harkin spoke out against the bailout several days ago.

UPDATE: I encourage those of you who support this bailout to read these notes from a conference call Treasury had with about 800 Wall Street analysts. If you click the link you can even download a recording of the call and listen yourself. The notes at that site are plenty for me. All of the “concessions” the Democrats got were meaningless:

1. The tranching is a mere formality, and the Treasury boys as much as said so. They could take the $700 billion max as soon as the bill has passed,

2. However, they do not plan any action immediately, will wait a couple of weeks. They want to focus their efforts on stronger companies but also made noise about protecting the financial system. This, by the way, is the Japanese convoy system all over.


5. The exec comp provisions sound like a joke, They DO NOT affect existing contracts, they affect only contracts entered into during the two years of the authority of this program and then affect only golden parachutes. More detail on that point, but I don’t need more detail to get the drift of the gist.

Regarding that second point about Treasury planning to wait a couple of weeks before doing anything, I totally agree with this analysis:

Waiting a couple of weeks because no one has any idea when or where the next bomb will blow up. In other words, all their doomsday scenarios about Black Monday were B.S. They screamed the check had to be written by Monday, but now they’re saying they actually have a few weeks before they need to cash it. Plus, this will allow them to “seek guidance” from GS, JPM, and other selfless public servants about where the money should be funneled.

Remember, a Treasury official admitted to Forbes last week that they made up the $700 billion number. There was no analysis supporting that number.

I think Jerome Armstrong is right on target:

It’s almost as if, the administration thought this election through already, and decided that if they could bust the budget wide enough, then Democrats, incoming with 60 votes in the Senate, 250 in the House, and a President, would be able to do nothing but cut costs.  Try to spend anything in ’09, and the Republicans would be re-born as fiscal deficit hawks running against the spendster libruls.

I don’t pretend to know the solution here, other than taking the fiscal downer now, which is admittedly trite. I also have to wonder about the tact to ‘own’ this thing as well, making it a Democratic bill that takes on Bush, which has its own set of problems. Its become so poisoned that to let the Republicans off the hook would seem to be handing them a gift. At the end of the day, I am doubtful that this “no” sticks, and won’t be at all surprised to see a dozen votes flip to pass this behemoth budget buster pass as is. We win it all, and are able to do nothing but raise taxes and cut spending.

Folks, this is a trap that will enrich a bunch of people while doing little to help the overall economy.

Final point: I totally disagree with Nate Silver, who said this about retiring members of Congress who voted for the bailout:

The congressmen who are retiring this year — and who therefore can perhaps be described as the most neutral arbiters of the public good — voted overwhelmingly for this measure.

Neutral arbiters of the public good?

A lot of retired members of Congress go work at lobbying firms, “consult” with investment banks or get paid to serve on corporate boards. I reject the premise that their support for the bailout means it was a good idea.

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Why $700 billion? They "wanted to choose a really large number"

I stand by my contention that Treasury Secretary Henry Paulson’s bailout scheme is among the worst proposals to come out of George Bush’s very bad presidency.

So I am glad to learn that Iowa Treasurer Mike Fitzgerald wants some questions answered before urging Congress to pass the bailout. Click the link to read Marc Hansen’s column about a conference call Fitzgerald and other state treasurers had on Thursday with acting U.S. treasury undersecretary for domestic finance.

I am no economics whiz, but I can help answer Fitzgerald’s first question:

Why $700 billion?

From his office at the Capitol, Fitzgerald listened intently, waiting for the answer that never came. And what did he get instead?

“Nothing,” he says, “other than a lot of babble.”

What’s so magical about $700 billion? Fitzgerald still doesn’t know. It’s about 5 percent of the gross domestic product, if that means anything.

“Magical” is a good word for the number, because as it turns out, they just made it up.

I know this because a few days ago, Open Left diarist fladem posted this link from Forbes magazine:

In fact, some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.

“It’s not based on any particular data point,” a Treasury spokeswoman told Forbes.com Tuesday. “We just wanted to choose a really large number.”

David Sirota has written two good pieces quoting Nobel prize-winning economists and others on why there is no crisis requiring a bailout package. Here is part 1, and here is part 2.

In an alternate universe where John Edwards hadn’t disgraced himself, he could have been an effective voice against the rush to shovel taxpayer dollars to Wall Street.

Instead, we have Barack Obama’s campaign letting Roger Altman speak for them in favor of Paulson’s scheme. That’s

the same Roger Altman who was a Clinton Treasury official when the Clinton-backed deregulatory orgy was taking place, the same Roger Altman who is now an investment banker who stands to make bank if this bailout passes, the same Roger Altman who Bloomberg notes “is advising a group of investors who are trying to prevent their shares from being diluted in the U.S. takeover of American International Group Inc.” – that is, who have a direct financial interest in Paulson’s bailout package.

Watching this train barrel down the track is quite discouraging.

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Tell Leonard Boswell to give more to the DCCC

I haven’t written much about Leonard Boswell since the Democratic primary for the third Congressional district, because there hasn’t been much to say. He hasn’t been campaigning much, nor has he needed to. IA-03 is not a competitive House district according to any of the people who follow Congressional races closely (for instance, Swing State Project, the Cook Report and Open Left).

The Democratic Congressional Campaign Committee (DCCC) spent money to defend Boswell in 2004 and 2006 but hasn’t seen the need for that this year.

So I was more than a little annoyed to receive a fundraising solicitation from Dody Boswell this week:

Dear Friends,

First, thank you all for your support with Leonard’s campaign.  I know we’ve all been working hard for the last few months and now we only have 50 days to go!  It’s great to know so many of you have already gone online to donate.

It is truly with urgency, that I need to ask you again to help out my husband.  The election is closing in and we need to raise enough money to buy some media for the last few weeks of the campaign.  We also have the reporting deadline in two weeks on September 30 and need to show the press that we have the funds to compete.

Our goal is within reach and I know if everyone donated at least forty-two more dollars we will make that goal!!!  You can donate at www.boswellforcongress.com or click on the link below.


I can personally tell you how hard Leonard works for us.  And that he appreciates everything that you do to allow him to continue his efforts on our behalf in Washington.

I thank you so very much,


PS – Your small contribution of $42 really will make all the difference!

Boswell for Congress

P.O. Box 6220

Des Moines, IA 50309

Excuse me, Boswell needs “to show the press that we have the funds to compete”?

As of June 30, Boswell had $393,852 on hand, while little-known Republican challenger Kim Schmett had $28,768. Boswell has held several fundraisers since then.

He should not be asking constituents for more money. He should be handing over a large chunk of his campaign account to the DCCC so they can use it to play for more Republican-held seats and to defend truly vulnerable incumbents (the way the DCCC helped Boswell in past years).

You can reach Boswell’s Congressional office at (202)225-3806.

You can reach his campaign headquarters at (515)883-2254 or Campaign@BoswellForCongress.com.

Tell his staff that you want him to give at least 10 percent of his campaign’s cash on hand to the DCCC.

For more on this year’s Use It or Lose It campaign, read this post by Lucas O’Connor. If every safe House incumbent handed over 10 percent of his or her campaign account, the DCCC would have an additional $8.3 million to use in competitive races.

On a different subject, I called Boswell’s Congressional office yesterday and was told he did not have any statement yet on the bailout proposal. What do you want to bet he was among the Blue Dogs who urged Nancy Pelosi today to move toward the position of the Bush administration and corporate lobbyists?

I’ll fill in that oval next to Boswell’s name on the ballot, but he won’t get a dime from me.

I’m giving as much as I can afford to Rob Hubler and Becky Greenwald.

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Open thread on the bailout and Bush's televised address

I forgot that our lame duck fearless leader was going to address the nation tonight on why we should hand over $700 billion to his buddies on Wall Street.

I saw that Warren Buffett is investing $5 billion in Goldman Sachs and will receive equity in return. Why should taxpayers settle for less?

This is an open thread for anything related to the bailout or Bush’s speech. How did he look and sound?

McCain: Corrupt liar, or clueless pawn?

Perhaps a little from column A and a little from column B:

One of the giant mortgage companies at the heart of the credit crisis paid $15,000 a month from the end of 2005 through last month to a firm owned by Senator John McCain’s campaign manager, according to two people with direct knowledge of the arrangement.

The disclosure undercuts a statement by Mr. McCain on Sunday night that the campaign manager, Rick Davis, had had no involvement with the company for the last several years.

Mr. Davis’s firm received the payments from the company, Freddie Mac, until it was taken over by the government this month along with Fannie Mae, the other big mortgage lender whose deteriorating finances helped precipitate the cascading problems on Wall Street, the people said.

They said they did not recall Mr. Davis’s doing much substantive work for the company in return for the money, other than speak to a political action committee of high-ranking employees in October 2006 on the approaching midterm Congressional elections. They said Mr. Davis’s firm, Davis & Manafort, had been kept on the payroll because of Mr. Davis’s close ties to Mr. McCain, the Republican presidential nominee, who by 2006 was widely expected to run again for the White House.

The Obama campaign has talked about how McCain surrounds himself with lobbyists while posturing to be against the “special interests,” but this takes it to a new level.

Freddie Mac paid Rick Davis’s firm $15,000 a month for more than 30 months (that’s $180,000 a year for nearly three years) for doing no work other than staying close to McCain.

McCain either doesn’t know what’s going on in his inner circle or brazenly lied to the press. How can we trust him to run the country?

Speaking of McCain, after the jump I’ve posted a new viral e-mail that’s going around with the subject line, “You owe $2,293.53 dollars to Wall Street Fat Cats… check, cash or charge?”

The e-mail discusses how McCain and his adviser, former Senator Phil Gramm, voted to deregulate the banking industry, which led to the current stock market meltdown. Click here to read two alternative versions of the e-mail, playing on the same concept. Pass it on!

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The bailout may be the worst Bush administration proposal ever

If we’re talking about policy mistakes with disastrous long-term outcomes, it’s hard to top the Iraq War for loss of life and the 2005 energy bill for threats to the planet.

In fact, we could be here all day if we set out to brainstorm all the horrible things to come out of George Bush’s presidency.

But it does seem like the proposed bailout of failing banks is a contender for worst Bush administration proposal ever.

Here are a bunch of links on the subject.

Paul Krugman of the New York Times is updating his blog frequently.

Senator Bernie Sanders: Billions for Bailouts: Who Pays?

Former Labor Secretary Robert Reich: What Wall Street Should Be Required to Do, to Get A Blank Check From Taxpayers

Bonddad: This is one of the worst bills to ever be proposed.

Robert Borosage: Financial Crisis: Time for a Citizens’ Plan?

Devilstower: Three Times is Enemy Action

Ian Welsh: How To Bail Out Ordinary Mortgage Holders And Not Just Banks

8ackgr0und N015e wrote a funny piece on one angle of this story that hasn’t received as much attention.

Two of Josh Marshall’s readers ask really good questions.

This post by Matt Stoller includes an excellent statement from Senator Hillary Clinton.

As far as I know, no members of Congress from Iowa have issued public statements about the bailout, but I will post them as they become available.

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