The Democrats, and specifically Barney Frank, are often blamed for the current financils crisis, as they excouraged home ownership by those making lower than average incomes. The following NY Times article documents how Alan Greenspan contributed greatly to the economic crisis. It wasn't the fault of Barney Frank and the Democrats in Congress, as many Republicans are trying to assert.
“Not only have individual financial institutions become less vulnerable to shocks from underlying risk factors, but also the financial system as a whole has become more resilient.” — Alan Greenspan in 2004
George Soros, the prominent financier, avoids using the financial contracts known as derivatives “because we don’t really understand how they work.” Felix G. Rohatyn, the investment banker who saved New York from financial catastrophe in the 1970s, described derivatives as potential “hydrogen bombs.”
And Warren E. Buffett presciently observed five years ago that derivatives were “financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”
One prominent financial figure, however, has long thought otherwise. And his views held the greatest sway in debates about the regulation and use of derivatives — exotic contracts that promised to protect investors from losses, thereby stimulating riskier practices that led to the financial crisis. For more than a decade, the former Federal Reserve Chairman Alan Greenspan has fiercely objected whenever derivatives have come under scrutiny in Congress or on Wall Street. “What we have found over the years in the marketplace is that derivatives have been an extraordinarily useful vehicle to transfer risk from those who shouldn’t be taking it to those who are willing to and are capable of doing so,” Mr. Greenspan told the Senate Banking Committee in 2003. “We think it would be a mistake” to more deeply regulate the contracts, he added.
Today, with the world caught in an economic tempest that Mr. Greenspan recently described as “the type of wrenching financial crisis that comes along only once in a century,” his faith in derivatives remains unshaken.
The problem is not that the contracts failed, he says. Rather, the people using them got greedy. A lack of integrity spawned the crisis, he argued in a speech a week ago at Georgetown University, intimating that those peddling derivatives were not as reliable as “the pharmacist who fills the prescription ordered by our physician.”
But others hold a starkly different view of how global markets unwound, and the role that Mr. Greenspan played in setting up this unrest.
“Clearly, derivatives are a centerpiece of the crisis, and he was the leading proponent of the deregulation of derivatives,” said Frank Partnoy, a law professor at the University of San Diego and an expert on financial regulation.
The derivatives market is $531 trillion, up from $106 trillion in 2002 and a relative pittance just two decades ago. Theoretically intended to limit risk and ward off financial problems, the contracts instead have stoked uncertainty and actually spread risk amid doubts about how companies value them.
If Mr. Greenspan had acted differently during his tenure as Federal Reserve chairman from 1987 to 2006, many economists say, the current crisis might have been averted or muted.
Over the years, Mr. Greenspan helped enable an ambitious American experiment in letting market forces run free. Now, the nation is confronting the consequences.
Derivatives were created to soften — or in the argot of Wall Street, “hedge” — investment losses. For example, some of the contracts protect debt holders against losses on mortgage securities. (Their name comes from the fact that their value “derives” from underlying assets like stocks, bonds and commodities.) Many individuals own a common derivative: the insurance contract on their homes.
On a grander scale, such contracts allow financial services firms and corporations to take more complex risks that they might otherwise avoid — for example, issuing more mortgages or corporate debt. And the contracts can be traded, further limiting risk but also increasing the number of parties exposed if problems occur.
Throughout the 1990s, some argued that derivatives had become so vast, intertwined and inscrutable that they required federal oversight to protect the financial system. In meetings with federal officials, celebrated appearances on Capitol Hill and heavily attended speeches, Mr. Greenspan banked on the good will of Wall Street to self-regulate as he fended off restrictions.
Ever since housing began to collapse, Mr. Greenspan’s record has been up for revision. Economists from across the ideological spectrum have criticized his decision to let the nation’s real estate market continue to boom with cheap credit, courtesy of low interest rates, rather than snuffing out price increases with higher rates. Others have criticized Mr. Greenspan for not disciplining institutions that lent indiscriminately.
But whatever history ends up saying about those decisions, Mr. Greenspan’s legacy may ultimately rest on a more deeply embedded and much less scrutinized phenomenon: the spectacular boom and calamitous bust in derivatives trading.
Faith in the System
Some analysts say it is unfair to blame Mr. Greenspan because the crisis is so sprawling. “The notion that Greenspan could have generated a totally different outcome is naïve,” said Robert E. Hall, an economist at the conservative Hoover Institution, a research group at Stanford.
Mr. Greenspan declined requests for an interview. His spokeswoman referred questions about his record to his memoir, “The Age of Turbulence,” in which he outlines his beliefs.
“It seems superfluous to constrain trading in some of the newer derivatives and other innovative financial contracts of the past decade,” Mr. Greenspan writes. “The worst have failed; investors no longer fund them and are not likely to in the future.”
In his Georgetown speech, he entertained no talk of regulation, describing the financial turmoil as the failure of Wall Street to behave honorably.
“In a market system based on trust, reputation has a significant economic value,” Mr. Greenspan told the audience. “I am therefore distressed at how far we have let concerns for reputation slip in recent years.”
As the long-serving chairman of the Fed, the nation’s most powerful economic policy maker, Mr. Greenspan preached the transcendent, wealth-creating powers of the market.
A professed libertarian, he counted among his formative influences the novelist Ayn Rand, who portrayed collective power as an evil force set against the enlightened self-interest of individuals. In turn, he showed a resolute faith that those participating in financial markets would act responsibly.
An examination of more than two decades of Mr. Greenspan’s record on financial regulation and derivatives in particular reveals the degree to which he tethered the health of the nation’s economy to that faith.
As the nascent derivatives market took hold in the early 1990s, and in subsequent years, critics denounced an absence of rules forcing institutions to disclose their positions and set aside funds as a reserve against bad bets.
Time and again, Mr. Greenspan — a revered figure affectionately nicknamed the Oracle — proclaimed that risks could be handled by the markets themselves.
“Proposals to bring even minimalist regulation were basically rebuffed by Greenspan and various people in the Treasury,” recalled Alan S. Blinder, a former Federal Reserve board member and an economist at Princeton University. “I think of him as consistently cheerleading on derivatives.”
Arthur Levitt Jr., a former chairman of the Securities and Exchange Commission, says Mr. Greenspan opposes regulating derivatives because of a fundamental disdain for government.
Mr. Levitt said that Mr. Greenspan’s authority and grasp of global finance consistently persuaded less financially sophisticated lawmakers to follow his lead.
“I always felt that the titans of our legislature didn’t want to reveal their own inability to understand some of the concepts that Mr. Greenspan was setting forth,” Mr. Levitt said. “I don’t recall anyone ever saying, ‘What do you mean by that, Alan?’ ”
Still, over a long stretch of time, some did pose questions. In 1992, Edward J. Markey, a Democrat from Massachusetts who led the House subcommittee on telecommunications and finance, asked what was then the General Accounting Office to study derivatives risks.
Two years later, the office released its report, identifying “significant gaps and weaknesses” in the regulatory oversight of derivatives.
“The sudden failure or abrupt withdrawal from trading of any of these large U.S. dealers could cause liquidity problems in the markets and could also pose risks to others, including federally insured banks and the financial system as a whole,” Charles A. Bowsher, head of the accounting office, said when he testified before Mr. Markey’s committee in 1994. “In some cases intervention has and could result in a financial bailout paid for or guaranteed by taxpayers.”
In his testimony at the time, Mr. Greenspan was reassuring. “Risks in financial markets, including derivatives markets, are being regulated by private parties,” he said.
“There is nothing involved in federal regulation per se which makes it superior to market regulation.”
Mr. Greenspan warned that derivatives could amplify crises because they tied together the fortunes of many seemingly independent institutions. “The very efficiency that is involved here means that if a crisis were to occur, that that crisis is transmitted at a far faster pace and with some greater virulence,” he said.
But he called that possibility “extremely remote,” adding that “risk is part of life.”
Later that year, Mr. Markey introduced a bill requiring greater derivatives regulation. It never passed.
Resistance to Warnings
In 1997, the Commodity Futures Trading Commission, a federal agency that regulates options and futures trading, began exploring derivatives regulation. The commission, then led by a lawyer named Brooksley E. Born, invited comments about how best to oversee certain derivatives.
Ms. Born was concerned that unfettered, opaque trading could “threaten our regulated markets or, indeed, our economy without any federal agency knowing about it,” she said in Congressional testimony. She called for greater disclosure of trades and reserves to cushion against losses.
Ms. Born’s views incited fierce opposition from Mr. Greenspan and Robert E. Rubin, the Treasury secretary then. Treasury lawyers concluded that merely discussing new rules threatened the derivatives market. Mr. Greenspan warned that too many rules would damage Wall Street, prompting traders to take their business overseas.
“Greenspan told Brooksley that she essentially didn’t know what she was doing and she’d cause a financial crisis,” said Michael Greenberger, who was a senior director at the commission. “Brooksley was this woman who was not playing tennis with these guys and not having lunch with these guys. There was a little bit of the feeling that this woman was not of Wall Street.”
Ms. Born declined to comment. Mr. Rubin, now a senior executive at the banking giant Citigroup, says that he favored regulating derivatives — particularly increasing potential loss reserves — but that he saw no way of doing so while he was running the Treasury.
“All of the forces in the system were arrayed against it,” he said. “The industry certainly didn’t want any increase in these requirements. There was no potential for mobilizing public opinion.”
Mr. Greenberger asserts that the political climate would have been different had Mr. Rubin called for regulation.
In early 1998, Mr. Rubin’s deputy, Lawrence H. Summers, called Ms. Born and chastised her for taking steps he said would lead to a financial crisis, according to Mr. Greenberger. Mr. Summers said he could not recall the conversation but agreed with Mr. Greenspan and Mr. Rubin that Ms. Born’s proposal was “highly problematic.”
On April 21, 1998, senior federal financial regulators convened in a wood-paneled conference room at the Treasury to discuss Ms. Born’s proposal. Mr. Rubin and Mr. Greenspan implored her to reconsider, according to both Mr. Greenberger and Mr. Levitt.
Ms. Born pushed ahead. On June 5, 1998, Mr. Greenspan, Mr. Rubin and Mr. Levitt called on Congress to prevent Ms. Born from acting until more senior regulators developed their own recommendations. Mr. Levitt says he now regrets that decision. Mr. Greenspan and Mr. Rubin were “joined at the hip on this,” he said. “They were certainly very fiercely opposed to this and persuaded me that this would cause chaos.”
Ms. Born soon gained a potent example. In the fall of 1998, the hedge fund Long Term Capital Management nearly collapsed, dragged down by disastrous bets on, among other things, derivatives. More than a dozen banks pooled $3.6 billion for a private rescue to prevent the fund from slipping into bankruptcy and endangering other firms.
Despite that event, Congress froze the Commodity Futures Trading Commission’s regulatory authority for six months. The following year, Ms. Born departed.
In November 1999, senior regulators — including Mr. Greenspan and Mr. Rubin — recommended that Congress permanently strip the C.F.T.C. of regulatory authority over derivatives.
Mr. Greenspan, according to lawmakers, then used his prestige to make sure Congress followed through. “Alan was held in very high regard,” said Jim Leach, an Iowa Republican who led the House Banking and Financial Services Committee at the time. “You’ve got an area of judgment in which members of Congress have nonexistent expertise.”
As the stock market roared forward on the heels of a historic bull market, the dominant view was that the good times largely stemmed from Mr. Greenspan’s steady hand at the Fed.
“You will go down as the greatest chairman in the history of the Federal Reserve Bank,” declared Senator Phil Gramm, the Texas Republican who was chairman of the Senate Banking Committee when Mr. Greenspan appeared there in February 1999.
Mr. Greenspan’s credentials and confidence reinforced his reputation — helping him to persuade Congress to repeal Depression-era laws that separated commercial and investment banking in order to reduce overall risk in the financial system.
“He had a way of speaking that made you think he knew exactly what he was talking about at all times,” said Senator Tom Harkin, a Democrat from Iowa. “He was able to say things in a way that made people not want to question him on anything, like he knew it all. He was the Oracle, and who were you to question him?”
In 2000, Mr. Harkin asked what might happen if Congress weakened the C.F.T.C.’s authority.
“If you have this exclusion and something unforeseen happens, who does something about it?” he asked Mr. Greenspan in a hearing.
Mr. Greenspan said that Wall Street could be trusted. “There is a very fundamental trade-off of what type of economy you wish to have,” he said. “You can have huge amounts of regulation and I will guarantee nothing will go wrong, but nothing will go right either,” he said.
Later that year, at a Congressional hearing on the merger boom, he argued that Wall Street had tamed risk.
“Aren’t you concerned with such a growing concentration of wealth that if one of these huge institutions fails that it will have a horrendous impact on the national and global economy?” asked Representative Bernard Sanders, an independent from Vermont.
“No, I’m not,” Mr. Greenspan replied. “I believe that the general growth in large institutions have occurred in the context of an underlying structure of markets in which many of the larger risks are dramatically — I should say, fully — hedged.”
The House overwhelmingly passed the bill that kept derivatives clear of C.F.T.C. oversight. Senator Gramm attached a rider limiting the C.F.T.C.’s authority to an 11,000-page appropriations bill. The Senate passed it. President Clinton signed it into law.
Pressing Forward
Still, savvy investors like Mr. Buffett continued to raise alarms about derivatives, as he did in 2003, in his annual letter to shareholders of his company, Berkshire Hathaway.
“Large amounts of risk, particularly credit risk, have become concentrated in the hands of relatively few derivatives dealers,” he wrote. “The troubles of one could quickly infect the others.”
But business continued.
And when Mr. Greenspan began to hear of a housing bubble, he dismissed the threat. Wall Street was using derivatives, he said in a 2004 speech, to share risks with other firms.
Shared risk has since evolved from a source of comfort into a virus. As the housing crisis grew and mortgages went bad, derivatives actually magnified the downturn.
The Wall Street debacle that swallowed firms like Bear Stearns and Lehman Brothers, and imperiled the insurance giant American International Group, has been driven by the fact that they and their customers were linked to one another by derivatives.
In recent months, as the financial crisis has gathered momentum, Mr. Greenspan’s public appearances have become less frequent.
His memoir was released in the middle of 2007, as the disaster was unfolding, and his book tour suddenly became a referendum on his policies. When the paperback version came out this year, Mr. Greenspan wrote an epilogue that offers a rebuttal of sorts.
“Risk management can never achieve perfection,” he wrote. The villains, he wrote, were the bankers whose self-interest he had once bet upon.
“They gambled that they could keep adding to their risky positions and still sell them out before the deluge,” he wrote. “Most were wrong.”
No federal intervention was marshaled to try to stop them, but Mr. Greenspan has no regrets.
“Governments and central banks,” he wrote, “could not have altered the course of the boom.”
NY Times column by Maureen Dowd illustrates how McCain is not running an honorable campaign.
WASHINGTON
Some of John McCain’s friends, from the good old days when he talked straight, feared that his Greek tragedy would be that he would be defeated by George Bush twice: once in 2000, because of W.’s no-conscience campaigning, and again in 2008, because of W.’s no-brains governing.
But if McCain loses, he will have contributed to his own downfall by failing to live up to his personal standard of honor.
John McCain has long been torn between wanting to succeed and serving a higher cause. Right now, the drive to succeed is trumping any loftier aspirations. He cynically picked a running mate with less care than theater directors give to picking a leading actor’s understudy. And he has been running a seamy campaign originally designed by the bad seed of conservative politics, Lee Atwater.
It was adapted in 2000 in Atwater’s home state of South Carolina by Atwater acolytes in W.’s camp to harpoon McCain with rumors that he had fathered out of wedlock a black baby (as opposed to adopting a Bangladeshi infant girl in wedlock). Sulfurous Atwater-style rumor-mongering by Bush supporters — that McCain had come home from a Hanoi tiger cage with snakes in his head — aimed to stop him during that primary after he had zoomed in New Hampshire.
Atwater relished teaching rich, white Republicans to feign a connection to the common man so they could get in office and economically undermine the common man. In the 1988 campaign, the Machiavellian ran to help George Bush Sr. defeat Michael Dukakis with this unholy quintet of charges:
The Democrat was a ’60s-style liberal who would raise taxes and take away guns. He was weak and would not protect the country militarily. He was a member of the elite “Harvard Yard’s boutique.” He had a foreign-sounding name and was not on “the American side.” He was on the side of the Scary Black Man.
Sound familiar?
Certainly, at some level, John McCain must be disgusted with himself for using the tactics perfected by the same crowd that used these tactics to derail him in 2000. He’s now curmudgeonly, even hostile, toward the press — the group he used to spend hours with every day and jokingly describe as his base.
He unleashed Sarah Palin to slime their opponent and suggested that the Democrat with the foreign-sounding name who came from the Harvard Yard boutique is not on the American side.
Campaigning last weekend, Palin cast their Democratic rival as “someone who sees America, it seems, as being so imperfect that he’s palling around with terrorists who would target their own country.”
The woman is sounding more Cheney than Cheney. Palin said that Obama’s relationship with the former Weatherman William Ayers proved that he did not have the “truthfulness and judgment” to be president. Asked by William Kristol if the Rev. Jeremiah Wright should be an issue, she said, “I don’t know why that association isn’t discussed more.”
Atwater gleefully tried to paint Willie Horton as Dukakis’s running mate. With a black man running, it’s even easier for Atwater’s disciple running McCain’s campaign to warn that white Americans should not open the door to the dangerous Other, or “That One,” as McCain referred to Obama in Tuesday night’s debate. (A cross between “The One” and “That Woman.”)
On Monday, McCain made Obama, who has been campaigning for almost two years now, sound like an ominous intruder, questioning his character and motives, telling a New Mexico crowd that “even at this late hour in the campaign, there are essential things we don’t know about Senator Obama ...
“All people want to know is: What has this man ever actually accomplished in government? What does he plan for America? In short: Who is the real Barack Obama?”
The new McCain TV ad, “Dangerous,” calls Obama “dishonorable,” “dangerous” and “too risky for America.”
McCain aides have been blunt in their need to change the subject from the economy. But, as with Bush Senior’s re-election campaign, slithery character attacks don’t scare as well when Americans are already scared about keeping their jobs and retirement savings. Maybe that’s why McCain didn’t bring up Ayers or Wright during the debate, instead leaving it to Sarah Barracuda.
Palin finally took questions on Tuesday from her traveling press corps on her campaign plane. Asked if she thought Senator Obama was dishonest, McCain’s Mean Girl meandered:
“I’m not saying he’s dishonest, but in terms of judgment, in terms of being able to answer a question forthrightly, it has two different parts to this. The judgment and the truthfulness and just being able to answer very candidly a simple question about when did you know him, how did you know him, is there still — has there been an association continued since ’02 or ’05, I know I’ve read a couple different stories. I think it’s relevant.”
Of course she does.
Maureen Dowd's NY Times column describing Palin's abuse of the english language.
I had hoped I was finally done with acting as an interpreter for politicians whose relationship with the English language was tumultuous.
There’s W.’s gummy grammar, of course, like the classic, “Is our children learning?” And covering the first Bush White House required doing simultaneous translation for a president who never met a personal pronoun he liked or a wacky non sequitur he could resist.
Poppy Bush drew comparisons to Warren G. Harding, whose prose reminded H. L. Mencken of “a string of wet sponges. ... It is so bad that a sort of grandeur creeps into it.” When Harding died, E. E. Cummings lamented, “The only man, woman or child who wrote a simple declarative sentence with seven grammatical errors is dead.”
Being mush-mouthed helped give the patrician Bushes the common touch. As Alistair Cooke observed, “Americans seem to be more comfortable with Republican presidents because they share the common frailty of muddled syntax and because, when they attempt eloquence, they do tend to spout a kind of Frontier Baroque.”
Darn right. And that, doggone it, brings us to a shout-out for the latest virtuoso of Frontier Baroque, bless her heart, the governor of the Last Frontier. Her reward’s in heaven.
At Sarah Palin’s old church in Wasilla, they spoke in tongues. Maybe that’s where she picked it up.
Hillary Clinton and John McCain ran against Barack Obama by sneering that their prose was meatier than The One’s poetry. Sarah’s running against the Democrat’s highfalutin eloquence by speakin’ in homespun haikus.
We could, following her strenuously folksy debate performance, wonder when elite became a bad thing in America. Navy Seals are elite, and they get lots of training so they can swim underwater and invade a foreign country, but if you’re governing the country that dispatches the Seals, it’s not O.K. to be elite? Can likable still trump knowledgeable at such a vulnerable crossroads for the country?
Did Joe Biden have to rhetorically rush over to Home Depot before Sarah could once more brandish “a little bit of reality from Wasilla Main Street there brought to Washington, D.C.?”
With her pompom patois and sing-songy jingoism, Palin can bridge contradictory ideas that lead nowhere: One minute she promises to get “greater oversight” by government; the next, she lectures: “Government, you know, you’re not always a solution. In fact, too often you’re the problem.”
Talking at the debate about how she would “positively affect the impacts” of the climate change for which she’s loath to acknowledge human culpability, she did a dizzying verbal loop-de-loop: “With the impacts of climate change, what we can do about that, as governor, I was the first governor to form a climate change subcabinet to start dealing with the impacts.” That was, miraculously, richer with content than an answer she gave Katie Couric: “You know, there are man’s activities that can be contributed to the issues that we’re dealing with now, with these impacts.”
At another point, she channeled Alicia Silverstone debating in “Clueless,” asserting, “Nuclear weaponry, of course, would be the be-all, end-all of just too many people in too many parts of our planet.” (Mostly the end-all.)
A political jukebox, she drowned out Biden’s specifics, offering lifestyle as substance. “In the middle class of America, which is where Todd and I have been, you know, all our lives,” she said, making the middle class sound like it has its own ZIP code, superior to 90210 because “real” rules.
Sometimes, her sentences have a Yoda-like — “When 900 years old you reach, look as good you will not” — splendor. When she was asked by Couric if she’d ever negotiated with the Russians, the governor replied that when Putin “rears his head” he is headed for Alaska. Then she uttered yet another sentence that defies diagramming: “It is from Alaska that we send those out to make sure that an eye is being kept on this very powerful nation, Russia, because they are right there.”
Reared heads reared themselves again at the debate, when she said that Fannie Mae and Freddie Mac “were starting to really kind of rear the head of abuse.”
She dangles gerunds, mangles prepositions, randomly exiles nouns and verbs and also — “also” is her favorite vamping word — uses verbs better left as nouns, as in, “If Americans so bless us and privilege us with the opportunity of serving them,” or how she tried to “progress the agenda.”
Poppy Bush dropped personal pronouns and launched straight into verbs because he was minding his mother’s admonition against “the big I.” Palin, by contrast, uses a heck of a lot of language to praise herself as a fresh face with new ideas who has “joined this team that is a team of mavericks.” True mavericks don’t brand themselves.
The following is another insightful NY Times column by Frank Rich. It summarizes the last week of the campaign and why the McCain strategy is not working.
SARAH PALIN’S post-Couric/Fey comeback at last week’s vice presidential debate was a turning point in the campaign. But if she “won,” as her indulgent partisans and press claque would have it, the loser was not Joe Biden. It was her running mate. With a month to go, the 2008 election is now an Obama-Palin race — about “the future,” as Palin kept saying Thursday night — and the only person who doesn’t seem to know it is Mr. Past, poor old John McCain.
To understand the meaning of Palin’s “victory,” it must be seen in the context of two ominous developments that directly preceded it. Just hours before the debate began, the McCain campaign pulled out of Michigan. That state is ground zero for the collapsed Main Street economy and for so-called Reagan Democrats, those white working-class voters who keep being told by the right that Barack Obama is a Muslim who hung with bomb-throwing radicals during his childhood in the late 1960s.
McCain surrendered Michigan despite having outspent his opponent on television advertising and despite Obama’s twin local handicaps, an unpopular Democratic governor and a felonious, now former, black Democratic Detroit mayor. If McCain can’t make it there, can he make it anywhere in the Rust Belt?
Not without an economic message. McCain’s most persistent attempt, his self-righteous crusade against earmarks, collapsed with his poll numbers. Next to a $700 billion bailout package, his incessant promise to eliminate all Washington pork — by comparison, a puny grand total of $16.5 billion in the 2008 federal budget — doesn’t bring home the bacon. Nor can McCain reconcile his I-will-veto-government-waste mantra with his support, however tardy, of the bailout bill. That bill’s $150 billion in fresh pork includes a boondoggle inserted by the Congressman Don Young, an Alaskan Republican no less.
The second bit of predebate news, percolating under the radar, involved the still-unanswered questions about McCain’s health. Back in May, you will recall, the McCain campaign allowed a select group of 20 reporters to spend a mere three hours examining (but not photocopying) 1,173 pages of the candidate’s health records on the Friday of Memorial Day weekend. Conspicuously uninvited was Lawrence Altman, a doctor who covers medicine for The New York Times. Altman instead canvassed melanoma experts to evaluate the sketchy data that did emerge. They found the information too “unclear” to determine McCain’s cancer prognosis.
There was, however, at least one doctor-journalist among those 20 reporters in May, the CNN correspondent Sanjay Gupta. At the time, Gupta told Katie Couric on CBS that the medical records were “pretty comprehensive” and wrote on his CNN blog that he was “pretty convinced there was no ‘smoking gun’ about the senator’s health.” (Physical health, that is; Gupta wrote there was hardly any information on McCain’s mental health.)
That was then. Now McCain is looking increasingly shaky, whether he’s repeating his “Miss Congeniality” joke twice in the same debate or speaking from notecards even when reciting a line for (literally) the 17th time (“The fundamentals of our economy are strong”) or repeatedly confusing proper nouns that begin with S (Sunni, Shia, Sudan, Somalia, Spain). McCain’s “dismaying temperament,” as George Will labeled it, only thickens the concerns. His kamikaze mission into Washington during the bailout crisis seemed crazed. His seething, hostile debate countenance — a replay of Al Gore’s sarcastic sighing in 2000 — didn’t make the deferential Obama look weak (as many Democrats feared) but elevated him into looking like the sole presidential grown-up.
Though CNN and MSNBC wouldn’t run a political ad with doctors questioning McCain’s medical status, Gupta revisited the issue in an interview published last Tuesday by The Huffington Post. While maintaining a pretty upbeat take on the candidate’s health, the doctor-journalist told the reporter Sam Stein that he couldn’t vouch “by any means” for the completeness of the records the campaign showed him four months ago. “The pages weren’t numbered,” Gupta said, “so I had no way of knowing what was missing.” At least in Watergate we knew that the gap on Rose Mary Woods’s tape ran 18 and a half minutes.
It’s against this backdrop that Palin’s public pronouncements, culminating with her debate performance, have been so striking. The standard take has it that she’s either speaking utter ignorant gibberish (as to Couric) or reciting highly polished, campaign-written sound bites that she’s memorized (as at the convention and the debate). But there’s a steady unnerving undertone to Palin’s utterances, a consistent message of hubristic self-confidence and hyper-ambition. She wants to be president, she thinks she can be president, she thinks she will be president. And perhaps soon. She often sounds like someone who sees herself as half-a-heartbeat away from the presidency. Or who is seen that way by her own camp, the hard-right G.O.P. base that never liked McCain anyway and views him as, at best, a White House place holder.
This was first apparent when Palin extolled a “small town” vice president as a hero in her convention speech — and cited not one of the many Republican vice presidents who fit that bill but, bizarrely, Harry Truman, a Democrat who succeeded a president who died in office. A few weeks later came Charlie Gibson’s question about whether she thought she was “experienced enough” and “ready” when McCain invited her to join his ticket. Palin replied that she didn’t “hesitate” and didn’t “even blink” — a response that seemed jarring for its lack of any human modesty, even false modesty.
In the last of her Couric interview installments on Thursday, Palin was asked which vice president had most impressed her, and after paying tribute to Geraldine Ferraro, she chose “George Bush Sr.” Her criterion: she most admires vice presidents “who have gone on to the presidency.” Hours later, at the debate, she offered a discordant contrast to Biden when asked by Gwen Ifill how they would each govern “if the worst happened” and the president died in office. After Biden spoke of somber continuity, Palin was weirdly flip and chipper, eager to say that as a “maverick” she’d go her own way.
But the debate’s most telling passage arrived when Biden welled up in recounting his days as a single father after his first wife and one of his children were killed in a car crash. Palin’s perky response — she immediately started selling McCain as a “consummate maverick” again — was as emotionally disconnected as Michael Dukakis’s notoriously cerebral answer to the hypothetical 1988 debate question about his wife being “raped and murdered.” If, as some feel, Obama is cool, Palin is ice cold. She didn’t even acknowledge Biden’s devastating personal history.
After the debate, Republicans who had been bailing on Palin rushed back to the fold. They know her relentless ambition is the only hope for saving a ticket headed by a warrior who is out of juice and out of ideas. So what if she is preposterously unprepared to run the country in the midst of its greatest economic crisis in 70 years? She looks and sounds like a winner.
You can understand why they believe that. She has more testosterone than anyone else at the top of her party. McCain and his surrogates are forever blaming their travails on others, wailing about supposed sexist and journalistic biases around the clock. McCain even canceled an interview with Larry King, for heaven’s sake, in a fit of pique at a CNN anchor, Campbell Brown.
We are not a nation of whiners, as Phil Gramm would have it, but the G.O.P. is now the party of whiners. That rebranding became official when Republican House leaders moaned that a routine partisan speech by Nancy Pelosi had turned their members against the bailout bill. As the stock market fell nearly 778 points, Barney Frank taunted his G.O.P. peers with pitch-perfect mockery: “Somebody hurt my feelings, so I will punish the country!”
Talk about the world coming full circle. This is the same Democrat who had been slurred as “Barney Fag” in the mid-1990s by Dick Armey, a House leader of the government-bashing Gingrich revolution that helped lower us into this debacle. Now Frank was ridiculing the House G.O.P. as a bunch of sulking teenage girls. His wisecrack stung — and stuck.
Palin is an antidote to the whiny Republican image that Frank nailed. Alaska’s self-styled embodiment of Joe Sixpack is not a sulker, but a pistol-packing fighter. That’s why she draws the crowds and (as she puts it) “energy” that otherwise elude the angry McCain. But she is still the candidate for vice president, not president. Americans do not vote for vice president.
So how can a desperate G.O.P. save itself? As McCain continues to fade into incoherence and irrelevance, the last hope is that he’ll come up with some new game-changing stunt to match his initial pick of Palin or his ill-fated campaign “suspension.” Until Thursday night, more than a few Republicans were fantasizing that his final Hail Mary pass would be to ditch Palin so she can “spend more time” with her ever-growing family. But the debate reminded Republicans once again that it’s Palin, not McCain, who is their last hope for victory.
You have to wonder how long it will be before they plead with him to think of his health, get out of the way and pull the ultimate stunt of flipping the ticket. Palin, we can be certain, wouldn’t even blink.
Here's a wonderful column by Tom Friedman, about the current financial crisis.
I was channel surfing on Monday, following the stock market’s nearly 800-point collapse, when a commentator on CNBC caught my attention. He was being asked to give advice to viewers as to what were the best positions to be in to ride out the market storm. Without missing a beat, he answered: “Cash and fetal.”
I’m in both — because I know an unprecedented moment when I see one. I’ve been frightened for my country only a few times in my life: In 1962, when, even as a boy of 9, I followed the tension of the Cuban missile crisis; in 1963, with the assassination of J.F.K.; on Sept. 11, 2001; and on Monday, when the House Republicans brought down the bipartisan rescue package.
But this moment is the scariest of all for me because the previous three were all driven by real or potential attacks on the U.S. system by outsiders. This time, we are doing it to ourselves. This time, it’s our own failure to regulate our own financial system and to legislate the proper remedy that is doing us in.
I’ve always believed that America’s government was a unique political system — one designed by geniuses so that it could be run by idiots. I was wrong. No system can be smart enough to survive this level of incompetence and recklessness by the people charged to run it.
This is dangerous. We have House members, many of whom I suspect can’t balance their own checkbooks, rejecting a complex rescue package because some voters, whom I fear also don’t understand, swamped them with phone calls. I appreciate the popular anger against Wall Street, but you can’t deal with this crisis this way.
This is a credit crisis. It’s all about confidence. What you can’t see is how bank A will no longer lend to good company B or mortgage company C. Because no one is sure the other guy’s assets and collateral are worth anything, which is why the government needs to come in and put a floor under them. Otherwise, the system will be choked of credit, like a body being choked of oxygen and turning blue.
Well, you say, “I don’t own any stocks — let those greedy monsters on Wall Street suffer.” You may not own any stocks, but your pension fund owned some Lehman Brothers commercial paper and your regional bank held subprime mortgage bonds, which is why you were able refinance your house two years ago. And your local airport was insured by A.I.G., and your local municipality sold municipal bonds on Wall Street to finance your street’s new sewer system, and your local car company depended on the credit markets to finance your auto loan — and now that the credit market has dried up, Wachovia bank went bust and your neighbor lost her secretarial job there.
We’re all connected. As others have pointed out, you can’t save Main Street and punish Wall Street anymore than you can be in a rowboat with someone you hate and think that the leak in the bottom of the boat at his end is not going to sink you, too. The world really is flat. We’re all connected. “Decoupling” is pure fantasy.
I totally understand the resentment against Wall Street titans bringing home $60 million bonuses. But when the credit system is imperiled, as it is now, you have to focus on saving the system, even if it means bailing out people who don’t deserve it. Otherwise, you’re saying: I’m going to hold my breath until that Wall Street fat cat turns blue. But he’s not going to turn blue; you are, or we all are. We have to get this right.
My rabbi told this story at Rosh Hashana services on Tuesday: A frail 80-year-old mother is celebrating her birthday and her three sons each give her a present. Harry gives her a new house. Harvey gives her a new car and driver. And Bernie gives her a huge parrot that can recite the entire Torah. A week later, she calls her three sons together and says: “Harry, thanks for the nice house, but I only live in one room. Harvey, thanks for the nice car, but I can’t stand the driver. Bernie, thanks for giving your mother something she could really enjoy. That chicken was delicious.”
Message to Congress: Don’t get cute. Don’t give us something we don’t need. Don’t give us something designed to solve your political problems. Yes, Hank Paulson and Ben Bernanke need to accept strict oversights and the taxpayer must be guaranteed a share in the upside profits from all rescued banks. But other than that, give them the capital and the flexibility to put out this fire.
I always said to myself: Our government is so broken that it can only work in response to a huge crisis. But now we’ve had a huge crisis, and the system still doesn’t seem to work. Our leaders, Republicans and Democrats, have gotten so out of practice of working together that even in the face of this system-threatening meltdown they could not agree on a rescue package, as if they lived on Mars and were just visiting us for the week, with no stake in the outcome.
The story cannot end here. If it does, assume the fetal position.
The current discussion on bail-out plans overshadows the root causes of our economic stress. It is important that we address these issues otherwise any economic package will amount to no more than a band aid to our problems.
We are too much a nation of wealth consumers, instead of being wealth generators. We are now living of the wealth generated in the past, and by too few industries currently. Until we reverse this course we will continue our economic decline.
In my opinion, the following actions should be undertaken:
To provide some historical insight and other opinions, I have taken excerpts from the papers of others (links included) that I believe should contribute to this discussion.
NY Times article
One of the sharpest exchanges Friday night in the presidential debate between Senators John McCain and Barack Obama came on the issue of taxes. When Mr. McCain charged that his opponent had “voted in the United States Senate to increase taxes on people who make as low as $42,000 a year,” Mr. Obama replied: “That’s not true, John. That’s not true.”
“That’s just a fact,” Mr. McCain responded. “Again, you can look it up.”
So what does the record say when you look it up? Is one candidate right and the other wrong, or are both exaggerating?
In the past, Mr. McCain has characterized Mr. Obama’s position on taxes in ways that proved to be demonstrably inaccurate. His remarks on Friday night, which he amplified on the campaign trail on Monday, seemed to be an effort to shift him away from that shaky ground. However, they too contain assertions that are misleading or overstated.
Mr. McCain’s campaign has made it clear that he intends to portray Mr. Obama as an advocate of tax increases in the home stretch of the presidential race. Appearing Sunday on “Meet the Press” on NBC, Mr. McCain’s senior strategist, Steve Schmidt, said Mr. Obama’s voting record on taxes was “different from what he says out on the campaign trail” and was “a recipe for disaster for the economy.”
The basis of Mr. McCain’s accusation is that Mr. Obama has voted twice this year for Democratic-supported resolutions on the budget for the 2009 fiscal year, which begins Wednesday. In those nonbinding resolutions, Mr. Obama and others, including two Republicans, voted to allow the tax cuts that President Bush pushed through Congress in 2001 and 2003 to expire at the end of 2010, as envisioned in the original legislation.
The budget resolutions are merely a blueprint and do not have the force of law. But even if they indicate a propensity by Mr. Obama to vote to raise taxes — something he and his campaign would fiercely dispute — there is a question of whether the vote would raise taxes at all.
“It strikes me as a bizarre proposition and a false premise to argue that you are voting for a tax increase by not voting to cut taxes,” said Bob Williams, senior research associate at the nonpartisan Tax Policy Center in Washington. “Not voting in favor of extending something into the future does not seem to me to be voting for a tax increase.”
Mr. Williams, formerly the assistant director of tax analysis at the Congressional Budget Office, attributed Mr. McCain’s claim to what he called “the silly season” of the presidential campaign. “They are both so anxious to find something to make the other guy look wrong,” he said.
Mr. Williams pointed out that Mr. Obama had “pushed the same kind of demagoguery as regards Social Security” by falsely accusing Mr. McCain of wanting to cut benefits in half.
The bottom line is that if passed into law without accompanying tax relief measures, the budget resolutions that Mr. Obama endorsed would raise taxes for some individuals making $42,000 a year. But it would not raise taxes for all of them. For a single taxpayer with no dependents, the amount of that increase would be $15. A single taxpayer with one child earning $58,000 or less, however, would not pay additional taxes.
In his presidential platform, Mr. Obama has also proposed several measures to mitigate the impact of letting the Bush tax cuts expire. Under his plan, only individuals making $200,000 or more and families earning more than $250,000 a year, accounting for less than 2 percent of the population, would pay additional taxes, and more than 90 percent of the population would receive a tax break of some sort.
“It is our position that if in 2011 the Bush tax cuts expire, we would define that as a tax increase,” said Mr. Obama’s chief economic adviser, Jason Furman. “The Obama plan is designed to prevent a tax increase that George Bush signed into law.”
In remarks on the campaign trail on Monday in Columbus, Ohio, Mr. McCain broadened his accusations, saying that Mr. Obama had “never voted to cut your taxes” and was “always cheering for higher taxes or against tax relief.”
Mr. McCain himself originally opposed the Bush tax cuts, saying they were a fiscally irresponsible gift to the wealthy “at the expense of middle-class Americans who need tax relief.” But he now favors extending them permanently.
Mr. McCain’s accusations on Friday and Monday are the latest iteration of a line of attack that his campaign has been employing for several months, after an earlier claim that Mr. Obama was proposing “the largest single tax increase since World War II” was debunked by economists and tax experts.
The McCain campaign originally maintained that Mr. Obama’s support of the nonbinding budget resolution meant he would raise taxes on those making as little as $32,500 a year. That failed to distinguish between total income and taxable income.
But even after adopting the $42,000 figure as his benchmark, Mr. McCain went on to misrepresent his opponent’s position. In a Spanish-language advertisement, for example, the McCain campaign has said that Mr. Obama favors raising taxes on “families” making $42,000 a year.
That figure is incorrect as well. In reality, a family of four with annual income of up to $90,000, to take one example, would not have been affected even in the unlikely event that the Democratic budget resolution were to be enacted with no accompanying tax relief for the middle class.
In an English-language Web advertisement issued in August, Mr. McCain also claimed that Mr. Obama favored “a tax increase for everyone earning more than $42,000 a year.” That statement is patently false. Under Mr. Obama’s tax proposal, those in the middle of the middle class — people earning $37,000 to $66,000 a year — would receive a tax cut of more than $1,000 a year, more than three times what Mr. McCain is proposing in his tax platform.
NY Times - How McCain and the Republicas have taken our country down the wrong road economically.
Madness.
I’m not holding my breath, but I would like to see the self-proclaimed conservative, small government, anti-regulation, free-market zealots step up and take responsibility for wrecking the American economy and bringing about the worst financial crisis since the Depression.
Even now, with the house on fire, the most extreme among them won’t pick up the fire hoses and try to put it out.
With the fate of the Bush administration’s desperate $700 billion bailout of the financial industry hanging in the balance, Representative Darrell Issa, a Republican from California, stuck to his political playbook like a man covered in Krazy Glue. He pronounced himself “resolute” in his opposition to the bailout because to be otherwise would amount to a betrayal of party principles.
To deviate from those principles, in Mr. Issa’s view, would be like placing “a coffin on top of Ronald Reagan’s coffin.”
We are in very strange territory here.
George H.W. Bush warned us about “voodoo economics” in 1980, but the ideologues clamped a gag on him and put him on the Gipper’s ticket. For much of the time since then, the madmen of the right have carried the day. They were freed of their remaining few restraints with the ascendance of George W. Bush in 2000.
These were the reckless clowns who led us into the foolish multitrillion-dollar debacle in Iraq and who crafted tax policies that enormously benefited millionaires and billionaires while at the same time ran up staggering amounts of government debt. This is the crowd that contributed mightily to the greatest disparities in wealth in the U.S. since the gilded age.
This was the crowd that cut the cords of corporate and financial regulations and in myriad other ways gleefully hacked away at the best interests of the United States.
Now we’re looking into the abyss.
When President Bush went on television last week to drum up support for the bailout package, he looked almost dazed, like someone who’d just climbed out of an auto wreck.
“Our entire economy is in danger,” he said.
He should have said that he, along with his irresponsible Republican colleagues and their running buddies in the corporate and financial sectors, put the entire economy in danger. John McCain and his economic main man, Phil (“this is a mental recession”) Gramm, were right there running with them.
Credit markets have frozen almost solid, banks are toppling like dominoes and brokerage houses are vanishing like props in a magic act. And who was one of the paramount leaders of the manic anti-regulatory charge that led to this sorry state of affairs? None other than Mr. Gramm himself, a former chairman of the Senate Banking Committee.
Where is Mr. Gramm now? Would you believe that he’s the vice chairman of UBS Securities, the investment banking arm of the Swiss bank UBS? Of course you would. A New York Times article last spring noted that the “elite private bankers” of UBS “built a lucrative business in recent years by discreetly tending the fortunes of American millionaires and billionaires.”
Toadying to the rich while sabotaging the interests of working people was always Mr. Gramm’s specialty. He was considered a likely choice to be treasury secretary in a McCain administration until he made his impolitic “mental recession” comment. He also said the U.S. was a “nation of whiners.”
The tone-deaf remarks in the midst of severe economic hard times undermined Senator McCain’s convoluted efforts to reinvent himself as some kind of populist. But they were wholly in keeping with the economic worldview of conservative Republicans.
The inescapable disconnect between rhetoric and reality is often stark. Senator McCain has been ranting recently about the excessive pay and “bloated golden parachutes” of failed corporate executives. And yet one of his closest advisers on economic matters is Carly Fiorina, who was forced out as chief executive of Hewlett-Packard. Her golden parachute was an estimated $42 million.
Voters have to shoulder a great deal of the blame for the economic mess the country is in. Too many were willing, for whatever reasons, to support politicians who spat in the eye of economic common sense. Now the voodoo that permeated conservative economic policies for so many years has come back to haunt us big-time.
The question voters should be asking John McCain is whether he has stopped serving his party’s economic Kool-Aid, which has taken such a toll on working families, and is ready to change his ways. Is his sudden populist transformation the real thing or just a mirage?
In the gale force winds of a full-fledged economic hurricane, it’s fair to ask Senator McCain whether he still considers himself a conservative, small government, anti-regulation, free-market zealot. Or whether he’s seen the light.
NY Timescolumn by Paul Krugman
It’s 3 a.m., a few months into 2009, and the phone in the White House rings. Several big hedge funds are about to fail, says the voice on the line, and there’s likely to be chaos when the market opens. Whom do you trust to take that call?
I’m not being melodramatic. The bailout plan released yesterday is a lot better than the proposal Henry Paulson first put out — sufficiently so to be worth passing. But it’s not what you’d actually call a good plan, and it won’t end the crisis. The odds are that the next president will have to deal with some major financial emergencies.
So what do we know about the readiness of the two men most likely to end up taking that call? Well, Barack Obama seems well informed and sensible about matters economic and financial. John McCain, on the other hand, scares me.
About Mr. Obama: it’s a shame that he didn’t show more leadership in the debate over the bailout bill, choosing instead to leave the issue in the hands of Congressional Democrats, especially Chris Dodd and Barney Frank. But both Mr. Obama and the Congressional Democrats are surrounded by very knowledgeable, clear-headed advisers, with experienced crisis managers like Paul Volcker and Robert Rubin always close at hand.
Then there’s the frightening Mr. McCain — more frightening now than he was a few weeks ago.
We’ve known for a long time, of course, that Mr. McCain doesn’t know much about economics — he’s said so himself, although he’s also denied having said it. That wouldn’t matter too much if he had good taste in advisers — but he doesn’t.
Remember, his chief mentor on economics is Phil Gramm, the arch-deregulator, who took special care in his Senate days to prevent oversight of financial derivatives — the very instruments that sank Lehman and A.I.G., and brought the credit markets to the edge of collapse. Mr. Gramm hasn’t had an official role in the McCain campaign since he pronounced America a “nation of whiners,” but he’s still considered a likely choice as Treasury secretary.
And last year, when the McCain campaign announced that the candidate had assembled “an impressive collection of economists, professors, and prominent conservative policy leaders” to advise him on economic policy, who was prominently featured? Kevin Hassett, the co-author of “Dow 36,000.” Enough said.
Now, to a large extent the poor quality of Mr. McCain’s advisers reflects the tattered intellectual state of his party. Has there ever been a more pathetic economic proposal than the suggestion of House Republicans that we try to solve the financial crisis by eliminating capital gains taxes? (Troubled financial institutions, by definition, don’t have capital gains to tax.)
But even President Bush has, in the twilight of his administration, turned to relatively sensible people to make economic decisions: I’m not a fan of Mr. Paulson, but he’s a vast improvement over his predecessor. At this point, one has the suspicion that a McCain administration would have us longing for Bush-era competence.
The real revelation of the last few weeks, however, has been just how erratic Mr. McCain’s views on economics are. At any given moment, he seems to have very strong opinions — but a few days later, he goes off in a completely different direction.
Thus on Sept. 15 he declared — for at least the 18th time this year — that “the fundamentals of our economy are strong.” This was the day after Lehman failed and Merrill Lynch was taken over, and the financial crisis entered a new, even more dangerous stage.
But three days later he declared that America’s financial markets have become a “casino,” and said that he’d fire the head of the Securities and Exchange Commission — which, by the way, isn’t in the president’s power.
And then he found a new set of villains — Fannie Mae and Freddie Mac, the government-sponsored lenders. (Despite some real scandals at Fannie and Freddie, they played little role in causing the crisis: most of the really bad lending came from private loan originators.) And he moralistically accused other politicians, including Mr. Obama, of being under Fannie’s and Freddie’s financial influence; it turns out that a firm owned by his own campaign manager was being paid by Freddie until just last month.
Then Mr. Paulson released his plan, and Mr. McCain weighed vehemently into the debate. But he admitted, several days after the Paulson plan was released, that he hadn’t actually read the plan, which was only three pages long.
O.K., I think you get the picture.
The modern economy, it turns out, is a dangerous place — and it’s not the kind of danger you can deal with by talking tough and denouncing evildoers. Does Mr. McCain have the judgment and temperament to deal with that part of the job he seeks?
NT TIMES ARCTICLE
Senator John McCain was on a roll. In a room reserved for high-stakes gamblers at the Foxwoods Resort Casino in Connecticut, he tossed $100 chips around a hot craps table. When the marathon session ended around 2:30 a.m., the Arizona senator and his entourage emerged with thousands of dollars in winnings.
A lifelong gambler, Mr. McCain takes risks, both on and off the craps table. He was throwing dice that night not long after his failed 2000 presidential bid, in which he was skewered by the Republican Party’s evangelical base, opponents of gambling. Mr. McCain was betting at a casino he oversaw as a member of the Senate Indian Affairs Committee, and he was doing so with the lobbyist who represents that casino, according to three associates of Mr. McCain.
The visit had been arranged by the lobbyist, Scott Reed, who works for the Mashantucket Pequot, a tribe that has contributed heavily to Mr. McCain’s campaigns and built Foxwoods into the world’s second-largest casino. Joining them was Rick Davis, Mr. McCain’s current campaign manager. Their night of good fortune epitomized not just Mr. McCain’s affection for gambling, but also the close relationship he has built with the gambling industry and its lobbyists during his 25-year career in Congress.
As a two-time chairman of the Indian Affairs Committee, Mr. McCain has done more than any other member of Congress to shape the laws governing America’s casinos, helping to transform the once-sleepy Indian gambling business into a $26-billion-a-year behemoth with 423 casinos across the country. He has won praise as a champion of economic development and self-governance on reservations.
“One of the founding fathers of Indian gaming” is what Steven Light, a University of North Dakota professor and a leading Indian gambling expert, called Mr. McCain.
As factions of the ferociously competitive gambling industry have vied for an edge, they have found it advantageous to cultivate a relationship with Mr. McCain or hire someone who has one, according to an examination based on more than 70 interviews and thousands of pages of documents.
Mr. McCain portrays himself as a Washington maverick unswayed by special interests, referring recently to lobbyists as “birds of prey.” Yet in his current campaign, more than 40 fund-raisers and top advisers have lobbied or worked for an array of gambling interests — including tribal and Las Vegas casinos, lottery companies and online poker purveyors.
When rules being considered by Congress threatened a California tribe’s planned casino in 2005, Mr. McCain helped spare the tribe. Its lobbyist, who had no prior experience in the gambling industry, had a nearly 20-year friendship with Mr. McCain.
In Connecticut that year, when a tribe was looking to open the state’s third casino, staff members on the Indian Affairs Committee provided guidance to lobbyists representing those fighting the casino, e-mail messages and interviews show. The proposed casino, which would have cut into the Pequots’ market share, was opposed by Mr. McCain’s colleagues in Connecticut.
Mr. McCain declined to be interviewed. In written answers to questions, his campaign staff said he was “justifiably proud” of his record on regulating Indian gambling. “Senator McCain has taken positions on policy issues because he believed they are in the public interest,” the campaign said.
Mr. McCain’s spokesman, Tucker Bounds, would not discuss the senator’s night of gambling at Foxwoods, saying: “Your paper has repeatedly attempted to insinuate impropriety on the part of Senator McCain where none exists — and it reveals that your publication is desperately willing to gamble away what little credibility it still has.”
Over his career, Mr. McCain has taken on special interests, like big tobacco, and angered the capital’s powerbrokers by promoting campaign finance reform and pushing to limit gifts that lobbyists can shower on lawmakers. On occasion, he has crossed the gambling industry on issues like regulating slot machines.
Perhaps no episode burnished Mr. McCain’s image as a reformer more than his stewardship three years ago of the Congressional investigation into Jack Abramoff, the disgraced Republican Indian gambling lobbyist who became a national symbol of the pay-to-play culture in Washington. The senator’s leadership during the scandal set the stage for the most sweeping overhaul of lobbying laws since Watergate.
“I’ve fought lobbyists who stole from Indian tribes,” the senator said in his speech accepting the Republican presidential nomination this month.
But interviews and records show that lobbyists and political operatives in Mr. McCain’s inner circle played a behind-the-scenes role in bringing Mr. Abramoff’s misdeeds to Mr. McCain’s attention — and then cashed in on the resulting investigation. The senator’s longtime chief political strategist, for example, was paid $100,000 over four months as a consultant to one tribe caught up in the inquiry, records show.
Mr. McCain’s campaign said the senator acted solely to protect American Indians, even though the inquiry posed “grave risk to his political interests.”
As public opposition to tribal casinos has grown in recent years, Mr. McCain has distanced himself from Indian gambling, Congressional and American Indian officials said.
But he has rarely wavered in his loyalty to Las Vegas, where he counts casino executives among his close friends and most prolific fund-raisers. “Beyond just his support for gaming, Nevada supports John McCain because he’s one of us, a Westerner at heart,” said Sig Rogich, a Nevada Republican kingmaker who raised nearly $2 million for Mr. McCain at an event at his home in June.
Only six members of Congress have received more money from the gambling industry than Mr. McCain, and five hail from the casino hubs of Nevada and New Jersey, according to data from the Center for Responsive Politics dating back to 1989. In the presidential race, Senator Barack Obama has also received money from the industry; Mr. McCain has raised almost twice as much.
In May 2007, as Mr. McCain’s presidential bid was floundering, he spent a weekend at the MGM Grand on the Las Vegas strip. A fund-raiser hosted by J. Terrence Lanni, the casino’s top executive and a longtime friend of the senator, raised $400,000 for his campaign. Afterward, Mr. McCain attended a boxing match and hit the craps tables.
For much of his adult life, Mr. McCain has gambled as often as once a month, friends and associates said, traveling to Las Vegas for weekend betting marathons. Former senior campaign officials said they worried about Mr. McCain’s patronage of casinos, given the power he wields over the industry. The officials, like others interviewed for this article, spoke on condition of anonymity.
“We were always concerned about appearances,” one former official said. “If you go around saying that appearances matter, then they matter.”
The former official said he would tell Mr. McCain: “Do we really have to go to a casino? I don’t think it’s a good idea. The base doesn’t like it. It doesn’t look good. And good things don’t happen in casinos at midnight.”
“You worry too much,” Mr. McCain would respond, the official said.
A Record of Support
In one of their last conversations, Representative Morris K. Udall, Arizona’s powerful Democrat, whose devotion to American Indian causes was legendary, implored his friend Mr. McCain to carry on his legacy.
“Don’t forget the Indians,” Mr. Udall, who died in 1998, told Mr. McCain in a directive that the senator has recounted to others.
More than a decade earlier, Mr. Udall had persuaded Mr. McCain to join the Senate Indian Affairs Committee. Mr. McCain, whose home state has the third-highest Indian population, eloquently decried the “grinding poverty” that gripped many reservations.
The two men helped write the Indian Gaming Regulatory Act of 1988 after the Supreme Court found that states had virtually no right to control wagering on reservations. The legislation provided a framework for the oversight and growth of Indian casinos: In 1988, Indian gambling represented less than 1 percent of the nation’s gambling revenues; today it captures more than one third.
On the Senate floor after the bill’s passage, Mr. McCain said he personally opposed Indian gambling, but when impoverished communities “are faced with only one option for economic development, and that is to set up gambling on their reservations, then I cannot disapprove.”
In 1994, Mr. McCain pushed an amendment that enabled dozens of additional tribes to win federal recognition and open casinos. And in 1998, Mr. McCain fought a Senate effort to rein in the boom.
He also voted twice in the last decade to give casinos tax breaks estimated to cost the government more than $326 million over a dozen years.
The first tax break benefited the industry in Las Vegas, one of a number of ways Mr. McCain has helped nontribal casinos. Mr. Lanni, the MGM Mirage chief executive, said that an unsuccessful bid by the senator to ban wagering on college sports in Nevada was the only time he could recall Mr. McCain opposing Las Vegas. “I can’t think of any other issue,” Mr. Lanni said.
The second tax break helped tribal casinos like Foxwoods and was pushed by Scott Reed, the Pequots’ lobbyist.
Mr. McCain had gotten to know Mr. Reed during Senator Bob Dole’s 1996 presidential campaign, which Mr. Reed managed. Four years later, when Mr. McCain ran for president, Mr. Reed recommended he hire his close friend and protégé, Rick Davis, to manage that campaign.
During his 2000 primary race against George W. Bush, Mr. McCain promoted his record of helping Indian Country, telling reporters on a campaign swing that he had provided critical support to “the Pequot, now the proud owners of the largest casino in the world.”
But Mr. McCain’s record on Indian gambling was fast becoming a difficult issue for him in the primary. Bush supporters like Gov. John Engler of Michigan lambasted Mr. McCain for his “close ties to Indian gambling.”
A decade after Mr. McCain co-authored the Indian gambling act, the political tides had turned. Tribal casinos, which were growing at a blazing pace, had become increasingly unpopular around the country for reasons as varied as morality and traffic.
Then came the biggest lobbying scandal to shake Washington.
Behind an Inquiry
At a September 2004 hearing of the Indian Affairs Committee, Mr. McCain described Jack Abramoff as one of the most brazen in a long line of crooks to cheat American Indians. “It began with the sale of Manhattan, and has continued ever since,” he said. “What sets this tale apart, what makes it truly extraordinary, is the extent and degree of the apparent exploitation and deceit.”
Over the next two years, Mr. McCain helped uncover a breathtaking lobbying scandal — Mr. Abramoff and a partner bilked six tribes of $66 million — that showcased the senator’s willingness to risk the wrath of his own party to expose wrongdoing. But interviews and documents show that Mr. McCain and a circle of allies — lobbyists, lawyers and senior strategists — also seized on the case for its opportunities.
For McCain-connected lobbyists who were rivals of Mr. Abramoff, the scandal presented a chance to crush a competitor. For senior McCain advisers, the inquiry allowed them to collect fees from the very Indians that Mr. Abramoff had ripped off. And the investigation enabled Mr. McCain to confront political enemies who helped defeat him in his 2000 presidential run while polishing his maverick image.
The Abramoff saga started in early 2003 when members of two tribes began questioning Mr. Abramoff’s astronomical fees. Over the next year, they leaked information to local newspapers, but it took the hiring of lobbyists who were competitors of Mr. Abramoff to get the attention of Mr. McCain’s committee.
Bernie Sprague, who led the effort by one of the tribes, the Saginaw Chippewas in Michigan, hired a Democratic lobbyist who recommended that the tribe retain Scott Reed, the Republican lobbyist, to push for an investigation.
Mr. Reed had boasted to other lobbyists of his access to Mr. McCain, three close associates said. Mr. Reed “pretty much had open access to John from 2000 to at least the end of 2006,” one aide said.
Lobbyist disclosure forms show that Mr. Reed went to work for the Saginaw Chippewa on Feb. 15, 2004, charging the tribe $56,000 over a year. Mr. Abramoff had tried to steal the Pequots and another tribal client from Mr. Reed, and taking down Mr. Abramoff would eliminate a competitor.
Mr. Reed became the chief conduit to Mr. McCain’s committee for billing documents and other information Mr. Sprague was digging up on Mr. Abramoff, Mr. Sprague said, who said Mr. Reed “did a great to service to me.”
“He had contacts I did not,” Mr. Sprague said. “Initially, I think that the senator’s office was doing Reed a favor by listening to me.”
A few weeks after hiring Mr. Reed, Mr. Sprague received a letter from the senator. “We have met with Scott Reed, who was very helpful on the issue,” Mr. McCain wrote.
Information about Mr. Abramoff was also flowing to Mr. McCain’s committee from another tribe, the Coushatta of Louisiana. The source was a consultant named Roy Fletcher, who had been Mr. McCain’s deputy campaign manager in 2000, running his war room in South Carolina.
It was in that primary race that two of Mr. Abramoff’s closest associates, Grover Norquist, who runs the nonprofit Americans for Tax Reform, and Ralph Reed, the former director of the Christian Coalition, ran a blistering campaign questioning Mr. McCain’s conservative credentials. The senator and his advisers blamed that attack for Mr. McCain’s loss to Mr. Bush in South Carolina, creating tensions that would resurface in the Abramoff matter.
“I was interested in busting” Mr. Abramoff, said Mr. Fletcher, who was eventually hired to represent the tribe. “That was my job. But I was also filled with righteous indignation, I got to tell you.”
Mr. Fletcher said he began passing information to John Weaver, Mr. McCain’s chief political strategist, and other staff members in late 2003 or January 2004. Mr. Weaver confirmed the timing.
Mr. McCain announced his investigation on Feb. 26, 2004, citing an article on Mr. Abramoff in The Washington Post. He did not mention the action by lobbyists and tribes in the preceding weeks. His campaign said no one in his “innermost circle” brought information to Mr. McCain that prompted the investigation.
The senator declared he would not investigate members of Congress, whom Mr. Abramoff had lavished with tribal donations and golf outings to Scotland. But in the course of the investigation, the committee exposed Mr. Abramoff’s dealings with the two men who had helped defeat Mr. McCain in the 2000 primary.
The investigation showed that Mr. Norquist’s foundation was used by Mr. Abramoff to launder lobbying fees from tribes. Ralph Reed was found to have accepted $4 million to run bogus antigambling campaigns. And the investigation also highlighted Mr. Abramoff’s efforts to curry favor with the House majority leader at the time, Tom DeLay, Republican of Texas, a longtime political foe who had opposed many of Mr. McCain’s legislative priorities.
Mr. McCain’s campaign said the senator did not “single out” Ralph Reed or Mr. Norquist, neither of whom were ever charged, and that both men fell within the “scope of the investigation.” The inquiry, which led to guilty pleas by over a dozen individuals, was motivated by a desire to help aggrieved tribes, the campaign said.
Inside the investigation, the sense of schadenfreude was palpable, according to several people close to the senator. “It was like hitting pay dirt,” said one associate of Mr. McCain’s who had consulted with the senator’s office on the investigation. “And face it — McCain and Weaver were maniacal about Ralph Reed and Norquist. They were sticking little pins in dolls because those guys had cost him South Carolina.”
Down on the Coushattas reservation, bills related to the investigation kept coming. After firing Mr. Abramoff, the tribe hired Kent Hance, a lawyer and former Texas congressman who said he had been friends with Mr. McCain since the 1980s.
David Sickey, the tribe’s vice chairman, said he was “dumbfounded” over the bills submitted by Mr. Hance’s firm, Hance Scarborough, which had been hired by Mr. Sickey’s predecessors.
“The very thing we were fighting seemed to be happening all over again — these absurd amounts of money being paid,” Mr. Sickey said.
Mr. Hance’s firm billed the tribe nearly $1.3 million over 11 months in legal and political consulting fees, records show. But Mr. Sickey said that the billing statements offered only vague explanations for services and that he could not point to any tangible results. Two consultants, for instance, were paid to fight the expansion of gambling in Texas — even though it was unlikely given that the governor there opposed any such prospect, Mr. Sickey said.
Mr. Hance and Jay B. Stewart, the firm’s managing partner, defended their team’s work, saying they successfully steered the tribe through a difficult period. “We did an outstanding job for them,” Mr. Hance said. “When we told them our bill was going to be $100,000 a month, they thought we were cheap. Mr. Abramoff had charged them $1 million a month.”
The firm’s fees covered the services of Mr. Fletcher, who served as the tribe’s spokesman. Records also show that Mr. Hance had Mr. Weaver — who was serving as Mr. McCain’s chief strategist — put on the tribe’s payroll from February to May 2005.
It is not precisely clear what role Mr. Weaver played for his $100,000 fee.
Mr. Stewart said Mr. Weaver was hired because “he had a lot of experience with the Senate, especially the new chairman, John McCain.” The Hance firm told the tribe in a letter that Mr. Weaver was hired to provide “representation for the tribe before the U.S. Senate.”
But Mr. Weaver never registered to lobby on the issue, and he has another explanation for his work.
“The Hance law firm retained me to assist them and their client in developing an aggressive crisis management and communications strategy,” Mr. Weaver said. “At no point was I asked by Kent Hance or anyone associated with him to set up meetings with anyone in or outside of government to discuss this, and if asked I would have summarily declined to do so.”
In June 2005, the tribe informed Mr. Hance that his services were no longer needed.
Change in Tone
After the Abramoff scandal, Mr. McCain stopped taking campaign donations from tribes. Some American Indians were offended, especially since Mr. McCain continued to accept money from the tribes’ lobbyists.
Resentment in Indian Country mounted as Mr. McCain, who was preparing for another White House run, singled out the growth in tribal gambling as one of three national issues that were “out of control.” (The others were federal spending and illegal immigration.)
Franklin Ducheneaux, an aide to Morris Udall who helped draft the 1988 Indian gambling law, said that position ran contrary to Mr. McCain’s record. “What did he think? That Congress intended for the tribes to be only somewhat successful?” Mr. Ducheneaux said.
Mr. McCain began taking a broad look at whether the laws were sufficient to oversee the growing industry. His campaign said that the growth had put “considerable stress” on regulators and Mr. McCain held hearings on whether the federal government needed more oversight power.
An opportunity to restrain the industry came in the spring of 2005, when a small tribe in Connecticut set off a political battle. The group, the Schaghticoke Tribal Nation, had won federal recognition in 2004 after producing voluminous documentation tracing its roots.
The tribe wanted to build Connecticut’s third casino, which would compete with Foxwoods and another, the Mohegan Sun. Facing public opposition on the proposed casino, members of the Connecticut political establishment — many of whom had received large Pequot and Mohegan campaign donations — swung into action.
Connecticut officials claimed that a genealogical review by the Bureau of Indian Affairs was flawed, and that the Schaghticoke was not a tribe.
The tribe’s opponents, led by the Washington lobbying firm Barbour Griffith & Rogers, turned to Mr. McCain’s committee. It was a full-circle moment for the senator, who had helped the Pequots gain tribal recognition in the 1980s despite concerns about their legitimacy.
Now, Mr. McCain was doing a favor for allies in the Connecticut delegation, including Senator Joseph I. Lieberman, a close friend, according to two former Congressional aides. “It was one of those collegial deals,” said one of the aides, who worked for Mr. McCain.
Barbour Griffith & Rogers wanted Mr. McCain to hold a hearing that would show that the Bureau of Indian Affairs was “broken,” said Bradley A. Blakeman, who was a lobbyist for the firm at the time.
“It was our hope that the hearing would shed light on the fact that the bureau had not followed their rules and had improperly granted recognition to the Schaghticoke,” Mr. Blakeman said. “And that the bureau would revisit the issue and follow their rules.”
Mr. McCain’s staff helped that effort by offering strategic advice.
His staff told a lobbyist for the firm that the Indian Affairs Committee “would love to receive a letter” from the Connecticut governor requesting a hearing, according to an e-mail exchange, and offered “guidance on what the most effective tone and approach” would be in the letter.
On May 11, 2005, Mr. McCain held a hearing billed as a general “oversight hearing on federal recognition of Indian tribes.” But nearly all the witnesses were Schaghticoke opponents who portrayed the tribe as imposters.
Mr. McCain set the tone: “The role that gaming and its nontribal backers have played in the recognition process has increased perceptions that it is unfair, if not corrupt.”
Chief Richard F. Velky of the Schaghticokes found himself facing off against the governor and most of the state’s congressional delegation. “The deck was stacked against us,” Mr. Velky said. “They were given lots of time. I was given five minutes.”
He had always believed Mr. McCain “to be an honest and fair man,” Mr. Velky said, “but this didn’t make me feel that good.”
Mr. Velky said he felt worse when the e-mail messages between the tribe’s opponents and Mr. McCain’s staff surfaced in a federal lawsuit. “Is there a letter telling me how to address the senator to give me the best shot?” Mr. Velky asked. “No, there is not.”
After the hearing, Pablo E. Carrillo, who was Mr. McCain’s chief Abramoff investigator at the time, wrote to a Barbour Griffith & Rogers lobbyist, Brant Imperatore. “Your client’s side definitely got a good hearing record,” Mr. Carillo wrote, adding “you probably have a good sense” on where Mr. McCain “is headed on this.”
“Well done!” he added.
Cynthia Shaw, a Republican counsel to the committee from 2005 to 2007, said Mr. McCain made decisions based on merit, not special interests. “Everybody got a meeting who asked for one,” Ms. Shaw said, “whether you were represented by counsel or by a lobbyist — or regardless of which lobbyist.”
Mr. McCain’s campaign defended the senator’s handling of the Schaghticoke case, saying no staff member acted improperly. The campaign said the session was part of normal committee business and the notion that Mr. McCain was intending to help Congressional colleagues defeat the tribe was “absolutely false.”
It added that the senator’s commitment to Indian sovereignty “remains as strong as ever.”
Within months of the May 2005 hearing, the Bureau of Indian Affairs took the rare step of rescinding the Schaghticokes’ recognition. A federal court recently rejected the tribe’s claim that the reversal was politically motivated.
Making an Exception
That spring of 2005, as the Schaghticokes went down to defeat in the East, another tribe in the West squared off against Mr. McCain with its bid to construct a gambling emporium in California. The stakes were similar, but the outcome would be far different.
The tribe’s plan to build a casino on a former Navy base just outside San Francisco represented a trend rippling across the country: American Indians seeking to build casinos near population centers, far from their reservations.
The practice, known as “off-reservation shopping,” stemmed from the 1988 Indian gambling law, which included exceptions allowing some casinos to be built outside tribal lands. When Mr. McCain began his second stint as chairman of the Indian Affairs Committee three years ago, Las Vegas pressed him to revisit the exceptions he had helped create, according to Sig Rogich, the Republican fund-raiser from Nevada.
“We told him this off-reservation shopping had to stop,” Mr. Rogich said. “It was no secret that the gaming industry, as well as many potentially affected communities in other states, voiced opposition to the practice.”
In the spring of 2005, Mr. McCain announced he was planning a sweeping overhaul of Indian gambling laws, including limiting off-reservation casinos. His campaign said Las Vegas had nothing to do with it. In a 2005 interview with The Oregonian, Mr. McCain said that if Congress did not act, “soon every Indian tribe is going to have a casino in downtown, metropolitan areas.”
Prospects for the proposed California project did not look promising. Then the tribe, the Guidiville Band of Pomo Indians, hired a lobbyist based in Phoenix named Wes Gullett.
Mr. Gullett, who had never represented tribes before Congress, had known Mr. McCain since the early 1980s. Mr. Gullett met his wife while they were working in Mr. McCain’s Washington office. He subsequently managed Mr. McCain’s 1992 Senate campaign and served as a top aide to his 2000 presidential campaign. Their friendship went beyond politics. When Mr. McCain’s wife, Cindy, brought two infants in need of medical treatment back to Arizona from Bangladesh, the Gulletts adopted one baby and the McCains the other. The two men also liked to take weekend trips to Las Vegas.
Another of Mr. McCain’s close friends, former Defense Secretary William S. Cohen, was a major investor in the Guidivilles’ proposed casino. Mr. Cohen, who did not return calls, was best man at Mr. McCain’s 1980 wedding.
Scott Crowell, lawyer for the Guidivilles, said Mr. Gullett was hired to ensure that Mr. McCain’s overhaul of the Indian gambling laws did not harm the tribe.
Mr. Gullett said he never talked to Mr. McCain about the legislation. “If you are hired directly to lobby John McCain, you are not going to be effective,” he said. Mr. Gullett said he only helped prepare the testimony of the tribe’s administrator, Walter Gray, who was invited to plead his case before Mr. McCain’s committee in July 2005. Mr. Gullett said he advised Mr. Gray in a series of conference calls.
On disclosure forms filed with the Senate, however, Mr. Gullett stated that he was not hired until November, long after Mr. Gray’s testimony. Mr. Gullett said the late filing might have been “a mistake, but it was inadvertent.” Steve Hart, a former lawyer for the Guidivilles, backed up Mr. Gullett’s contention that he had guided Mr. Gray on his July testimony.
When asked whether Mr. Gullett had helped him, Mr. Gray responded, “I’ve never met the man and couldn’t tell you anything about him.”
On Nov. 18, 2005, when Mr. McCain introduced his promised legislation overhauling the Indian gambling law, he left largely intact a provision that the Guidivilles needed for their casino. Mr. McCain’s campaign declined to answer whether the senator spoke with Mr. Gullett or Mr. Cohen about the project. In the end, Mr. McCain’s bill died, largely because Indian gambling interests fought back. But the Department of Interior picked up where Mr. McCain left off, effectively doing through regulations what he had hoped to accomplish legislatively. Carl Artman, who served as the Interior Department’s assistant secretary of Indian Affairs until May, said Mr. McCain pushed him to rewrite the off-reservation rules. “It became one of my top priorities because Senator McCain made it clear it was one of his top priorities,” he said.
The new guidelines were issued on Jan. 4. As a result, the casino applications of 11 tribes were rejected. The Guidivilles were not among them.
WHAT we learned last week is that the man who always puts his “country first” will take the country down with him if that’s what it takes to get to the White House.
For all the focus on Friday night’s deadlocked debate, it still can’t obscure what preceded it: When John McCain gratuitously parachuted into Washington on Thursday, he didn’t care if his grandstanding might precipitate an even deeper economic collapse. All he cared about was whether he might save his campaign. George Bush put more deliberation into invading Iraq than McCain did into his own reckless invasion of the delicate Congressional negotiations on the bailout plan.
By the time he arrived, there already was a bipartisan agreement in principle. It collapsed hours later at the meeting convened by the president in the Cabinet Room. Rather than help try to resuscitate Wall Street’s bloodied bulls, McCain was determined to be the bull in Washington’s legislative china shop, running around town and playing both sides of his divided party against Congress’s middle. Once others eventually forged a path out of the wreckage, he’d inflate, if not outright fictionalize, his own role in cleaning up the mess his mischief helped make. Or so he hoped, until his ignominious retreat.
The question is why would a man who forever advertises his own honor toy so selfishly with our national interest at a time of crisis. I’ll leave any physiological explanations to gerontologists — if they can get hold of his complete medical records — and any armchair psychoanalysis to the sundry McCain press acolytes who have sorrowfully tried to rationalize his erratic behavior this year. The other answers, all putting politics first, can be found by examining the 24 hours before he decided to “suspend” campaigning and swoop down on the Capitol to save America from the Sunnis or the Shia, or whoever perpetrated all those credit-default swaps.
To put these 24 hours in context, you must remember that McCain not only knows little about the economy but that he has not previously expressed any urgency about its meltdown. It was on Sept. 15 — the day after his former idol Alan Greenspan pronounced the current crisis a “once-in-a-century” catastrophe — that McCain reaffirmed for the umpteenth time that the “fundamentals of our economy are strong.” As recently as Tuesday he had not yet even read the two-and-a-half-page bailout proposal first circulated by Hank Paulson last weekend. “I have not had a chance to see it in writing,” he explained. (Maybe he was waiting for it to arrive by Western Union instead of PDF.)
Then came Black Wednesday — not for the stock market, which was holding steady in anticipation of Washington action, but for McCain. As the widely accepted narrative has it, his come-to-Jesus moment arrived that morning, when he awoke to discover that Barack Obama had surged ahead by nine percentage points in the Washington Post/ABC News poll. The McCain campaign hastily suited up its own pollster to belittle that finding — only to be drowned out by a fusillade of new polls from Fox News, Marist and CNN/Time, each with numbers closer to Post/ABC than not. Obama was rising most everywhere except the moose strongholds of Alaska and Montana.
That was not the only bad news raining down on McCain. His camp knew what Katie Couric had in the can from her interview with Sarah Palin. The first excerpt was to be broadcast by CBS that night, and it had to be upstaged fast.
But even that wasn’t the top political threat McCain faced last week. Bigger still was the mounting evidence of the seamless synergy between his campaign and Fannie Mae and Freddie Mac, the mortgage monsters at the heart of the housing bust that set off our current calamity. Most of all, it was the fast-moving events on that front that precipitated his panic to roll out his diversionary, over-the-top theatrics on Wednesday.
What we were learning — through The New York Times, Newsweek and Roll Call — was ugly. Davis Manafort, the lobbying firm owned by McCain’s campaign manager, Rick Davis, had received $15,000 a month from Freddie Mac from late 2005 until last month. This was in addition to the $30,000 a month that Davis was paid from 2000 to 2005 by the so-called Homeownership Alliance, an advocacy organization that he headed and that was financed by Freddie and Fannie to fight regulation.
The McCain campaign tried to pre-emptively deflect such revelations by reviving the old Rove trick of accusing your opponent of your own biggest failings. It ran attack ads about Obama’s own links to the mortgage giants. But neither of the former Freddie-Fannie executives vilified in those ads, Franklin Raines and James Johnson, had worked at those companies lately or are currently associated with the Obama campaign. (Raines never worked for the campaign at all.) By contrast, Davis is the tip of the Freddie-Fannie-McCain iceberg. McCain’s senior adviser, his campaign’s vice chairman, his Congressional liaison and the reported head of his White House transition team all either made fortunes from recent Freddie-Fannie lobbying or were players in firms that did.
By Wednesday, the McCain campaign’s latest tactic for countering this news — attacking the press, especially The Times — was paying diminishing returns. Davis abruptly canceled his scheduled appearance that day at a weekly reporters’ lunch sponsored by The Christian Science Monitor, escaping any further questions by pleading that he had to hit the campaign trail. (He turned up at the “21” Club in New York that night, wining and dining McCain fund-raisers.)
It’s then that Angry Old Ironsides McCain suddenly emerged to bark that our financial distress was “the greatest crisis we’ve faced, clearly, since World War II” — even greater than the Russia-Georgia conflict, which in August he had called the “first probably serious crisis internationally since the end of the cold war.” Campaigns, debates and no doubt Bristol Palin’s nuptials had to be suspended immediately so he could ride to the rescue, with Joe Lieberman as his Robin.
Yet even as he huffed and puffed about being a “leader,” McCain took no action and felt no urgency. As his Congressional colleagues worked tirelessly in Washington, he malingered in New York. He checked out the suffering on Main Street (or perhaps High Street) by conferring with Lady Lynn Forester de Rothschild, the Hillary-turned-McCain supporter best known for her fabulous London digs and her diatribes against Obama’s elitism. McCain also found time to have a well-publicized chat with one of those celebrities he so disdains, Bono, and to give a self-promoting public speech at the Clinton Global Initiative.
There was no suspension of his campaign. His surrogates and ads remained on television. Huffington Post bloggers, working the phones, couldn’t find a single McCain campaign office that had gone on hiatus. This “suspension” ruse was an exact replay of McCain’s self-righteous “suspension” of the G.O.P. convention as Hurricane Gustav arrived on Labor Day. “We will put aside our political hats and put on our American hats,” he declared then, solemnly pledging that conventioneers would help those in need. But as anyone in the Twin Cities could see, the assembled put on their party hats instead, piling into the lobbyists’ bacchanals earlier than scheduled, albeit on the down-low.
Much of the press paid lip service to McCain’s new “suspension” as it had to its prototype. In truth, the only campaign activity McCain did drop was a Wednesday evening taping with David Letterman. Don’t mess with Dave. Picking up where the “The View” left off in speaking truth to power, the uncharacteristically furious host hammered the absent McCain on and off for 40 minutes, repeatedly observing that the cancellation “didn’t smell right.”
In a journalistic coup de grâce worthy of “60 Minutes,” Letterman went on to unmask his no-show guest as a liar. McCain had phoned himself that afternoon to say he was “getting on a plane immediately” to deal with the grave situation in Washington, Letterman told the audience. Then he showed video of McCain being touched up by a makeup artist while awaiting an interview by Couric that same evening at another CBS studio in New York.
It’s not hard to guess why McCain had blown off Letterman for Couric at the last minute. The McCain campaign’s high anxiety about the disastrous Couric-Palin sit-down was skyrocketing as advance excerpts flooded the Internet. By offering his own interview to Couric for the same night, McCain hoped (in vain) to dilute Palin’s primacy on the “CBS Evening News.”
Letterman’s most mordant laughs on Wednesday came when he riffed about McCain’s campaign “suspension”: “Do you suspend your campaign? No, because that makes me think maybe there will be other things down the road, like if he’s in the White House, he might just suspend being president. I mean, we’ve got a guy like that now!”
That’s no joke. Bush has so little credibility he can govern only through surrogates (Paulson is the new Petraeus). When he spoke about the economic crisis in prime time earlier that same night, he registered as no more than an irritating speed bump en route to “David Blaine: Dive of Death.”
It’s that utter power vacuum that gave McCain the opening to pull his potentially catastrophic display of economic “leadership” last week. He may be the first presidential candidate in our history to risk wrecking the country even before being voted into the Oval Office.
Maureen Dowd, in the NY Times, writes about a fictional conversation between Barack Obama and President Bartlet of the West Wing TV series. Funny but true.
Now that he’s finally fired up on the soup-line economy, Barack Obama knows he can’t fade out again. He was eager to talk privately to a Democratic ex-president who could offer more fatherly wisdom — not to mention a surreptitious smoke — and less fraternal rivalry. I called the “West Wing” creator Aaron Sorkin (yes, truly) to get a read-out of the meeting. This is his account:
BARACK OBAMA knocks on the front door of a 300-year-old New Hampshire farmhouse while his Secret Service detail waits in the driveway. The door opens and OBAMA is standing face to face with former President JED BARTLET.
BARTLET Senator.
OBAMA Mr. President.
BARTLET You seem startled.
OBAMA I didn’t expect you to answer the door yourself.
BARTLET I didn’t expect you to be getting beat by John McCain and a Lancôme rep who thinks “The Flintstones” was based on a true story, so let’s call it even.
OBAMA Yes, sir.
BARTLET Come on in.
BARTLET leads OBAMA into his study.
BARTLET That was a hell of a convention.
OBAMA Thank you, I was proud of it.
BARTLET I meant the Republicans. The Us versus Them-a-thon. As a Democrat I was surprised to learn that I don’t like small towns, God, people with jobs or America. I’ve been a little out of touch but is there a mandate that the vice president be skilled at field dressing a moose —
OBAMA Look —
BARTLET — and selling Air Force Two on eBay?
OBAMA Joke all you want, Mr. President, but it worked.
BARTLET Imagine my surprise. What can I do for you, kid?
OBAMA I’m interested in your advice.
BARTLET I can’t give it to you.
OBAMA Why not?
BARTLET I’m supporting McCain.
OBAMA Why?
BARTLET He’s promised to eradicate evil and that was always on my “to do” list.
OBAMA O.K. —
BARTLET And he’s surrounded himself, I think, with the best possible team to get us out of an economic crisis. Why, Sarah Palin just said Fannie Mae and Freddie Mac had “gotten too big and too expensive to the taxpayers.” Can you spot the error in that statement?
OBAMA Yes, Fannie Mae and Freddie Mac aren’t funded by taxpayers.
BARTLET Well, at least they are now. Kind of reminds you of the time Bush said that Social Security wasn’t a government program. He was only off by a little — Social Security is the largest government program.
OBAMA I appreciate your sense of humor, sir, but I really could use your advice.
BARTLET Well, it seems to me your problem is a lot like the problem I had twice.
OBAMA Which was?
BARTLET A huge number of Americans thought I thought I was superior to them.
OBAMA And?
BARTLET I was.
OBAMA I mean, how did you overcome that?
BARTLET I won’t lie to you, being fictional was a big advantage.
OBAMA What do you mean?
BARTLET I’m a fictional president. You’re dreaming right now, Senator.
OBAMA I’m asleep?
BARTLET Yes, and you’re losing a ton of white women.
BARTLET I mean tons.
OBAMA I understand.
BARTLET I didn’t even think there were that many white women.
OBAMA I see the numbers, sir. What do they want from me?
BARTLET I’ve been married to a white woman for 40 years and I still don’t know what she wants from me.
OBAMA How did you do it?
BARTLET Well, I say I’m sorry a lot.
OBAMA I don’t mean your marriage, sir. I mean how did you get America on your side?
BARTLET There again, I didn’t have to be president of America, I just had to be president of the people who watched “The West Wing.”
OBAMA That would make it easier.
BARTLET You’d do very well on NBC. Thursday nights in the old “ER” time slot with “30 Rock” as your lead-in, you’d get seven, seven-five in the demo with a 20, 22 share — you’d be selling $450,000 minutes.
OBAMA What the hell does that mean?
BARTLET TV talk. I thought you’d be interested.
OBAMA I’m not. They pivoted off the argument that I was inexperienced to the criticism that I’m — wait for it — the Messiah, who, by the way, was a community organizer. When I speak I try to lead with inspiration and aptitude. How is that a liability?
BARTLET Because the idea of American exceptionalism doesn’t extend to Americans being exceptional. If you excelled academically and are able to casually use 690 SAT words then you might as well have the press shoot video of you giving the finger to the Statue of Liberty while the Dixie Chicks sing the University of the Taliban fight song. The people who want English to be the official language of the United States are uncomfortable with their leaders being fluent in it.
OBAMA You’re saying race doesn’t have anything to do with it?
BARTLET I wouldn’t go that far. Brains made me look arrogant but they make you look uppity. Plus, if you had a black daughter —
OBAMA I have two.
BARTLET — who was 17 and pregnant and unmarried and the father was a teenager hoping to launch a rap career with “Thug Life” inked across his chest, you’d come in fifth behind Bob Barr, Ralph Nader and a ficus.
OBAMA You’re not cheering me up.
BARTLET Is that what you came here for?
OBAMA No, but it wouldn’t kill you.
BARTLET Have you tried doing a two-hour special or a really good Christmas show?
OBAMA Sir —
BARTLET Hang on. Home run. Right here. Is there any chance you could get Michelle pregnant before the fall sweeps?
OBAMA The problem is we can’t appear angry. Bush called us the angry left. Did you see anyone in Denver who was angry?
BARTLET Well ... let me think. ...We went to war against the wrong country, Osama bin Laden just celebrated his seventh anniversary of not being caught either dead or alive, my family’s less safe than it was eight years ago, we’ve lost trillions of dollars, millions of jobs, thousands of lives and we lost an entire city due to bad weather. So, you know ... I’m a little angry.
OBAMA What would you do?
BARTLET GET ANGRIER! Call them liars, because that’s what they are. Sarah Palin didn’t say “thanks but no thanks” to the Bridge to Nowhere. She just said “Thanks.” You were raised by a single mother on food stamps — where does a guy with eight houses who was legacied into Annapolis get off calling you an elitist? And by the way, if you do nothing else, take that word back. Elite is a good word, it means well above average. I’d ask them what their problem is with excellence. While you’re at it, I want the word “patriot” back. McCain can say that the transcendent issue of our time is the spread of Islamic fanaticism or he can choose a running mate who doesn’t know the Bush doctrine from the Monroe Doctrine, but he can’t do both at the same time and call it patriotic. They have to lie — the truth isn’t their friend right now. Get angry. Mock them mercilessly; they’ve earned it. McCain decried agents of intolerance, then chose a running mate who had to ask if she was allowed to ban books from a public library. It’s not bad enough she thinks the planet Earth was created in six days 6,000 years ago complete with a man, a woman and a talking snake, she wants schools to teach the rest of our kids to deny geology, anthropology, archaeology and common sense too? It’s not bad enough she’s forcing her own daughter into a loveless marriage to a teenage hood, she wants the rest of us to guide our daughters in that direction too? It’s not enough that a woman shouldn’t have the right to choose, it should be the law of the land that she has to carry and deliver her rapist’s baby too? I don’t know whether or not Governor Palin has the tenacity of a pit bull, but I know for sure she’s got the qualifications of one. And you’re worried about seeming angry? You could eat their lunch, make them cry and tell their mamas about it and God himself would call it restrained. There are times when you are simply required to be impolite. There are times when condescension is called for!
OBAMA Good to get that off your chest?
BARTLET Am I keeping you from something?
OBAMA Well, it’s not as if I didn’t know all of that and it took you like 20 minutes to say.
BARTLET I know, I have a problem, but admitting it is the first step.
OBAMA What’s the second step?
BARTLET I don’t care.
OBAMA So what about hope? Chuck it for outrage and put-downs?
BARTLET No. You’re elite, you can do both. Four weeks ago you had the best week of your campaign, followed — granted, inexplicably — by the worst week of your campaign. And you’re still in a statistical dead heat. You’re a 47-year-old black man with a foreign-sounding name who went to Harvard and thinks devotion to your country and lapel pins aren’t the same thing and you’re in a statistical tie with a war hero and a Cinemax heroine. To these aged eyes, Senator, that’s what progress looks like. You guys got four debates. Get out of my house and go back to work.
OBAMA Wait, what is it you always used to say? When you hit a bump on the show and your people were down and frustrated? You’d give them a pep talk and then you’d always end it with something. What was it ...?
BARTLET “Break’s over.”
This New York Times column by Frank Rich clearly and forcefully points out the many lies and ethical lapses of the McCain campaign. It is well worth the time it takes to read it.
NOT until 2004 could the 9/11 commission at last reveal the title of the intelligence briefing President Bush ignored on Aug. 6, 2001, in Crawford: “Bin Laden Determined to Strike in U.S.” No wonder John McCain called for a new “9/11 commission” to “get to the bottom” of 9/14, when the collapse of Lehman Brothers set off another kind of blood bath in Lower Manhattan. Put a slo-mo Beltway panel in charge, and Election Day will be ancient history before we get to the bottom of just how little he and the president did to defend America against a devastating new threat on their watch.
For better or worse, the candidacy of Barack Obama, a senator-come-lately, must be evaluated on his judgment, ideas and potential to lead. McCain, by contrast, has been chairman of the Senate Commerce Committee, where he claims to have overseen “every part of our economy.” He didn’t, thank heavens, but he does have a long and relevant economic record that begins with the Keating Five scandal of 1989 and extends to this campaign, where his fiscal policies bear the fingerprints of Phil Gramm and Carly Fiorina. It’s not the résumé that a presidential candidate wants to advertise as America faces its worst financial crisis since the Great Depression. That’s why the main thrust of the McCain campaign has been to cover up his history of economic malpractice.
McCain has largely pulled it off so far, under the guidance of Steve Schmidt, a Karl Rove protégé. A Rovian political strategy by definition means all slime, all the time. But the more crucial Rove game plan is to envelop the entire presidential race in a thick fog of truthiness. All campaigns, Obama’s included, engage in false attacks. But McCain, Sarah Palin and their surrogates keep repeating the same lies over and over not just to smear their opponents and not just to mask their own record. Their larger aim is to construct a bogus alternative reality so relentless it can overwhelm any haphazard journalistic stabs at puncturing it.
When a McCain spokesman told Politico a week ago that “we’re not too concerned about what the media filter tries to say” about the campaign’s incessant fictions, he was channeling a famous Bush dictum of 2003: “Somehow you just got to go over the heads of the filter.” In Bush’s case, the lies lobbed over the heads of the press were to sell the war in Iraq. That propaganda blitz, devised by a secret White House Iraq Group that included Rove, was a triumph. In mere months, Americans came to believe that Saddam Hussein had aided the 9/11 attacks and even that Iraqis were among the hijackers. A largely cowed press failed to set the record straight.
Just as the Bushies once flogged uranium from Africa, so Palin ceaselessly repeats her discredited claim that she said “no thanks” to the Bridge to Nowhere. Nothing is too small or sacred for the McCain campaign to lie about. It was even caught (by The Christian Science Monitor) peddling an imaginary encounter between Cindy McCain and Mother Teresa when McCain was adopting her daughter in Bangladesh.
If you doubt that the big lies are sticking, look at the latest Washington Post/ABC News poll. Half of voters now believe in the daily McCain refrain that Obama will raise their taxes. In fact, Obama proposes raising taxes only on the 1.9 percent of households that make more than $250,000 a year and cutting them for nearly everyone else.
You know the press is impotent at unmasking this truthiness when the hardest-hitting interrogation McCain has yet faced on television came on “The View.” Barbara Walters and Joy Behar called him on several falsehoods, including his endlessly repeated fantasy that Palin opposed earmarks for Alaska. Behar used the word “lies” to his face. The McCains are so used to deference from “the filter” that Cindy McCain later complained that “The View” picked “our bones clean.” In our news culture, Behar, a stand-up comic by profession, looms as the new Edward R. Murrow.
Network news, with its dwindling handful of investigative reporters, has barely mentioned, let alone advanced, major new print revelations about Cindy McCain’s drug-addiction history (in The Washington Post) and the rampant cronyism and secrecy in Palin’s governance of Alaska (in last Sunday’s New York Times). At least the networks repeatedly fact-check the low-hanging fruit among the countless Palin lies, but John McCain’s past usually remains off limits.
That’s strange since the indisputable historical antecedent for our current crisis is the Lincoln Savings and Loan scandal of the go-go 1980s. When Charles Keating’s bank went belly up because of risky, unregulated investments, it wiped out its depositors’ savings and cost taxpayers more than $3 billion. More than 1,000 other S.&L. institutions capsized nationwide.
It was ugly for the McCains. He had received more than $100,000 in Keating campaign contributions, and both McCains had repeatedly hopped on Keating’s corporate jet. Cindy McCain and her beer-magnate father had invested nearly $360,000 in a Keating shopping center a year before her husband joined four senators in inappropriate meetings with regulators charged with S.&L. oversight.
After Congressional hearings, McCain was reprimanded for “poor judgment.” He had committed no crime and had not intervened to protect Keating from ruin. Yet he, like many deregulators in his party, was guilty of bankrupt policy-making before disaster struck. He was among the sponsors of a House resolution calling for the delay of regulations intended to deter risky investments just like those that brought down Lincoln and its ilk.
Ever since, McCain has publicly thrashed himself for his mistakes back then — and boasted of the lessons he learned. He embraced campaign finance reform to rebrand himself as a “maverick.” But whatever lessons he learned are now forgotten.
For all his fiery calls last week for a Wall Street crackdown, McCain opposed the very regulations that might have helped avert the current catastrophe. In 1999, he supported a law co-authored by Gramm (and ultimately signed by Bill Clinton) that revoked the New Deal reforms intended to prevent commercial banks, insurance companies and investment banks from mingling their businesses. Equally laughable is the McCain-Palin ticket’s born-again outrage over the greed of Wall Street C.E.O.’s. When McCain’s chief financial surrogate, Fiorina, was fired as Hewlett-Packard’s chief executive after a 50 percent drop in shareholders’ value and 20,000 pink slips, she took home a package worth $42 million.
The McCain campaign canceled Fiorina’s television appearances last week after she inadvertently admitted that Palin was unqualified to run a corporation. But that doesn’t mean Fiorina is gone. Gramm, too, was ostentatiously exiled after he blamed the economic meltdown on our “nation of whiners” and “mental recession,” but he remains in the McCain loop.
The corporate jets, lobbyists and sleazes that gravitated around McCain in the Keating era have also reappeared in new incarnations. The Nation’s Web site recently unearthed a photo of the resolutely anticelebrity McCain being greeted by the con man Raffaello Follieri and his then girlfriend, the Hollywood actress Anne Hathaway, as McCain celebrated his 70th birthday on Follieri’s rented yacht in Montenegro in August 2006. It’s the perfect bookend to the old pictures of McCain in a funny hat partying with Keating in the Bahamas.
Whatever blanks are yet to be filled in on Obama, we at least know his economic plans and the known quantities who are shaping them (Lawrence Summers, Robert Rubin, Paul Volcker). McCain has reversed himself on every single economic issue this year, often within a 24-hour period, whether he’s judging the strength of the economy’s fundamentals or the wisdom of the government bailout of A.I.G. He once promised that he’d run every decision past Alan Greenspan — and even have him write a new tax code — but Greenspan has jumped ship rather than support McCain’s biggest flip-flop, his expansion of the Bush tax cuts. McCain’s official chief economic adviser is now Douglas Holtz-Eakin, who last week declared that McCain had “helped create” the BlackBerry.
But Holtz-Eakin’s most telling statement was about McCain’s economic plans — namely, that the details are irrelevant. “I don’t think it’s imperative at this moment to write down what the plan should be,” he said. “The real issue here is a leadership issue.” This, too, is a Rove-Bush replay. We want a tough guy who will “fix” things with his own two hands — let’s take out the S.E.C. chairman! — instead of wimpy Frenchified Democrats who just “talk.” The fine print of policy is superfluous if there’s a quick-draw decider in the White House.
The twin-pronged strategy of truculence and propaganda that sold Bush and his war could yet work for McCain. Even now his campaign has kept the “filter” from learning the very basics about his fitness to serve as president — his finances and his health. The McCain multihousehold’s multimillion-dollar mother lode is buried in Cindy McCain’s still-unreleased complete tax returns. John McCain’s full medical records, our sole index to the odds of an imminent Palin presidency, also remain locked away. The McCain campaign instead invited 20 chosen reporters to speed-read through 1,173 pages of medical history for a mere three hours on the Friday before Memorial Day weekend. No photocopying was permitted.
This is the same tactic of selective document release that the Bush White House used to bamboozle Congress and the press about Saddam’s nonexistent W.M.D. As truthiness repeats itself, so may history, and not as farce.
I am just tired of the McCain’s campaign accusing Obama without substantiating the facts of their ads and campaign of calumny and maliciousness against him. On the other hand, Obama has continued to meticulously and articulately hammers McCain on issues of national concern and all we get from the McCain’s is a dogmatic and archaic mentality of reciprocating by denigrating and fallaciously accusing Obama of distortions.
How does McCain respond to the fact that he had voted and is indeed in support of the privatization of social security? As Obama rightly pointed out in Florida, let to McCain the Millions of dollars accruing as benefit for those who had earned it may as well be down the drain as a sequel to the near collapse of the financial market.
Read Obama hammers McCain on Social Security by visiting the link below:
http://www.cnn.com/2008/POLITICS/09/20/campaign.wrap/
In his zeal to present to the people of this country his maverick nature- which in reality may be synonymous to the stubbornness and pigheadedness that we have often seen in the fading Washington that he has been part of for close to three decades, McCain has as a matter of fact catapulted his mediocrity to such an alarming peak in context of his economic articulations and understanding that I believe the country will not be able to find any logical excuses to return the Republican Party back to office again.
One of the most disturbing aspects of the current economic crisis is the multi-million dollar paychecks the chief executives get, after they've run the company into the ground and pulled the average stockholders along with them. There should be a law against this type of greed and shareholder abuse.
This NY Times column describes the siutation beautifully.
Are you capable of taking a perfectly good 158-year-old company and turning it into dust? If so, then you may not be earning up to your full potential.
You should be raking it in like Richard Fuld, the longtime chief of Lehman Brothers. He took home nearly half-a-billion dollars in total compensation between 1993 and 2007.
Last year, Mr. Fuld earned about $45 million, according to the calculations of Equilar, an executive pay research company. That amounts to roughly $17,000 an hour to obliterate a firm. If you’re willing to drive a company into the ground for less, apply by calling Lehman Brothers at (212) 526-7000.
Oh, nevermind.
I’m delighted to announce that Mr. Fuld (who continues to lead Lehman since it entered bankruptcy proceedings this week) is the winner of my annual Michael Eisner Award for corporate rapacity and poor corporate governance. The award honors the pioneering achievements in this field of Mr. Eisner, the former Walt Disney chief.
This isn’t a plaque that will simply gather dust in a closet. It’s a shower curtain to commemorate the $6,000 one that the former C.E.O. of Tyco purchased and billed to his shareholders.
So, Mr. Fuld, you’ll be pleased to know that I’ve picked out a lovely green vinyl number for you. Only $14.99! Why, I saved you $5,985!
Perhaps it seems frivolous to be handing out shower curtains to chief executives when we’re caught in a deepening economic crisis. Well, it is.
But one of our broad national problems is rising inequality, and it is exacerbated by corporate executives helping themselves to shareholders’ cash. Three decades ago, C.E.O.’s typically earned 30 to 40 times the income of ordinary workers. Last year, C.E.O.’s of large public companies averaged 344 times the average pay of workers.
John McCain seems to think that the problem is that C.E.O.’s are greedy. Well, of course, they are. We’re all greedy. The real failure is one of corporate governance, which provides only the flimsiest oversight to curb the greed of executives like Mr. Fuld.
“Compare the massive destruction of wealth for shareholders to what he gets at the end of the day,” said Lucian Bebchuk, the director of the corporate governance program at Harvard Law School. A central flaw of governance is that boards of directors frequently are ornamental and provide negligible oversight.
As Warren Buffett has said, “in judging whether corporate America is serious about reforming itself, C.E.O. pay remains the acid test.” It’s a test that corporate America is failing.
These Brobdingnagian paychecks are partly the result of taxpayer subsidies. A study released a few weeks ago by the Institute for Policy Studies in Washington found five major elements in the tax code that encourage overpaying executives. These cost taxpayers more than $20 billion a year.
That’s enough money to deworm every child in the world, cut maternal mortality around the globe by two-thirds and also provide iodized salt to prevent tens of millions of children from suffering mild retardation or worse. Alternatively, it could pay for health care for most uninsured children in America.
Do we truly believe that C.E.O.’s like Mr. Fuld are more deserving of tax dollars than sick children?
Perhaps it’s understandable that C.E.O.’s are paid heroically when they succeed, but why pay prodigious sums when they fail? E. Stanley O’Neal, the former chief of Merrill Lynch, retired last year after driving the firm over a cliff, and he walked away with $161 million.
The problem isn’t precisely paychecks that are huge. Baseball stars, investment bankers and hedge fund managers all earn obscene sums, but honestly — through arm’s-length transactions. You and I may gasp, but that’s the free market at work.
In contrast, boards pay C.E.O.’s after negotiations that are often more like pillow talk. Relationships are incestuous, and compensation consultants provide only a thin veneer of respectability by finding some “peer group” of companies so moribund that anybody shines in comparison. The result is what critics call the Lake Wobegon effect, which miraculously leaves all C.E.O.’s above average. Indeed, one study of 1,500 companies found that two-thirds claimed to be outperforming their peer groups.
John Kenneth Galbraith, the great economist, once explained: “The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself.”
There are widely discussed technical solutions to C.E.O.’s overpaying themselves that we should move toward. We can also learn from Britain and Australia, which offer shareholders more rights than in America, redrawing the balance between shareholders and management and curbing pay in the process.
As for Mr. Fuld, unfortunately, he had no comment for this column. At $17,000 an hour, it probably wasn’t worth his time.
John McCain has been changing his positions moment by moment, to try and appeal to the voters. He doesn't seem to understand the economy. He is running from his OWN positions of just a few months ago!
This NY Times column, by Gail Collins, captures the ever changing John McCain superbly.
VIENNA, Ohio
“The people of Ohio are the most productive in the world!” yelled John McCain at a rally outside of Youngstown on Tuesday. Present company perhaps excluded, since the crowd was made up entirely of people who were at liberty in the middle of a workday.
Folks were wildly enthusiastic as the event began. That was partly because Sarah Palin was also on the bill. (With Todd!) And when McCain took the center stage, they were itching to cheer the war hero and boo all references to pork-barrel spenders.
Nobody had warned them that he had just morphed into a new persona — a raging populist demanding more regulation of the nation’s financial system. And since McCain’s willingness to make speeches that have nothing to do with his actual beliefs is not matched by an ability to give them, he wound up sounding like Bob Dole impersonating Huey Long.
Really, if McCain is going to keep changing into new people, the campaign should send out notices. (Come to a rally for the next president of the United States. Today he’s a vegetarian!)
“We’re going to put an end to the abuses on Wall Street — enough is enough!” this new incarnation yelled, complaining angrily about greed and overpaid C.E.O.’s. Slowly, people begin to peel out of the crowd and drift away. Even in these troubled times, there are apparently a number of Republicans who think highly of corporate executives and captains of high finance.
The whole transformation was fascinating in a cheap-thrills kind of way. It’s not every day, outside of “Incredible Hulk” movies, that you see somebody make this kind of turnaround in the scope of a few hours.
On Monday in Jacksonville, Fla., McCain made his now-famous reassurance that the fundamentals of the economy were still good. It’s a longstanding line of his, but this was perhaps not the best week to dredge it up. So the handlers went to work, and by the time McCain arrived in Orlando a few hours later he was reprogrammed. And angry!
“We’re going to put an end to the abuses on Wall Street! Enough is enough! We’re going to put an end to the greed!” he told a town hall meeting crowded with Hispanic Republicans. It was a rather jumbled message, but the new story line was firm. The fundamentals were not things like employment rates or trade statistics. The fundamentals were the workers.
We are the fundamentals!
And, naturally, the humble, hard-working fundamentals are good. Who could doubt it? Was Barack Obama trying to say that he didn’t think the American working man and woman was good? Was this the sort of thing they talked about at those fancy-schmancy Hollywood fund-raisers? Which, of course, John McCain hates. Give him some hard cider and a log cabin, and he’s happy as a clam.
But wait! The fundamentals are in danger! At risk because of “greed.” Which John McCain was shocked to discover has been running rampant in the canyons of Wall Street.
Now in an election like this, you expect a certain amount of tactical reimagining. McCain used to like reporters, and now he treats them as if they were carrying the Ebola virus. Fair enough, although given the fact that he’s terrible at speeches, and the famous town halls have now become Republican-only lovefests, the campaign really should invent some new method of communication. (And remember, the man doesn’t text.)
It is also disconcerting, of course, to hear the Republicans rail against Washington as if the Socialist Workers Party had been running things there for the last eight years. But really, what would you do if you were McCain? There aren’t a lot of options, and he never did like George W. anyway.
This new tactic is different. McCain has always, genuinely, believed in dismantling government regulations, and there he was, vowing to create new “comprehensive regulations that will apply the rules and enforce them to the fullest.” It makes you think that he’s trying to impersonate something he’s not. Or wasn’t. Or might not be. The image is getting fuzzy.
This week, while McCain’s chief economic adviser was telling reporters that it was wrong to “run for president by denigrating everything in sight and trying to scare people,” McCain’s ad people were unveiling a new spot announcing “Our economy in crisis!” and calling for “tougher rules on Wall Street” along, of course, with more offshore drilling. Mournful unemployment-line music swells.
I have absolutely no idea of how John McCain would handle a financial crisis if he were president. But on behalf of all the nation’s fundamentals I would like to say that he now has me ready to stage a run on the first bank in sight.
NY Times
Anchorage
I’ve been in Alaska only a week, but I’m already feeling ever so much smarter about Russia.
I can’t quite see it from my hotel window, but, hey, I know it’s out there somewhere, beyond all the stuffed bears and cruise ships and glaciers and oil derricks.
The proximity of the country from which William Seward bartered to buy Alaska for $7 million — Seward’s icebox — is so illuminating that I suddenly realize that we would commit a grave error by overestimating Russia’s economic strength. After all, it represents only 2.8 percent of the world’s G.D.P., even though its gross domestic product has ballooned from $200 billion in 1999 to $1.7 trillion this year.
But I overanalyze.
An Arctic blast of action has swept into the 2008 race, making thinking passé. We don’t really need to hurt our brains studying the world; we just need the world to know we’re capable of bringing a world of hurt to the world if the world continues to be hell-bent on misbehaving.
Two weeks after being thrown onto a national ticket, and moments after being speed-briefed by McCain foreign-policy advisers, our new Napoleon in bunny boots (not the Pamela Anderson kind, but the knock-offs of the U.S. Army Extreme Cold Weather Vapor Barrier Boots) is ready to face down the Russkies and start a land war over Georgia, and, holy cow, what business is it of ours if Israel attacks Iran?
The trigger-happy John McCain has indeed found a soul mate. Trigger squared. In Fairbanks on Thursday, at a deployment ceremony for her son who is going to Iraq, Governor Palin followed the lead of McCain and W. in fusing Osama bin Laden’s diabolical work on 9/11 and the mission in Iraq. She told the departing troops, “You’ll be there to defend the innocent from the enemies who planned and carried out and rejoiced in the deaths of thousands of Americans.”
Asked by Charlie Gibson what insight into Russian actions her Alaskan proximity gave her, Sarah blithely replied: “They’re our next-door neighbors. And you can actually see Russia from land here in Alaska.”
Being a next-door neighbor is not quite enough, though. If Sarah had been reading about the world she feels so confident about leading rather than just parroting by rote what Randy Scheunemann and the neocons around McCain drilled into her last week — Drill, baby, drill! — she might have realized that as heinous as Russia’s behavior toward Georgia was, it was not completely unprovoked. The State Department has let it be known that it warned McCain’s friend, Misha, the hotheaded president of Georgia, not to send troops in to crush the rebellion in two breakaway states.
And she might not have had to clench her jaw and play for time when Gibson raised the Bush doctrine, the wacko preemption philosophy that so utterly changed the world.
The really scary part of the Palin interview was how much she seemed like W. in 2000, and not just the way she pronounced nu-cue-lar. She had the same flimsy but tenacious adeptness at saying nothing, the same generalities and platitudes, the same restrained resentment at being pressed to be specific, as though specific is the province of silly eggheads, not people who clear brush at the ranch or shoot moose on the tundra.
Just as W. once could not name the General-General running Pakistan, so Palin took a position on Pakistan that McCain had derided as naïve when Obama took it.
“We must not, Charlie, blink, Charlie, because, Charlie, as I’ve said, Charlie, before, John McCain has said, Charlie, that — and remember here, Charlie, we’re talking about John McCain, Charlie, who, Charlie, is John McCain and I won’t be blinking, Charlie.”
She tried to finesse her previous church comments about Iraq, asking worshipers to pray “that there is a plan, and that plan is God’s plan.” Earnestly repeating after her tutors, she said she had meant to echo Abraham Lincoln, that in war we must pray that we are on God’s side rather than that he is on ours. But her original comments sounded more W. than Abe — taking your policy and ideology and giving it the hallowed mantle of a mission from God.
Sarah has single-handedly ushered out the “Sex and the City” era, and made the sexy new model for America a retro one — the glamorous Pioneer Woman, packing a gun, a baby and a Bible.
Her explosion onto the scene made Obama seem even more like a windy, wispy egghead. Like W., Sarah has the power of positive unthinking. But now we may want to think about where ignorance and pride and no self-doubt has gotten us. Being quick on the trigger might be good in moose hunting, but in dealing with Putin, a little knowledge might come in handy.
Imagine for a minute that attending the Republican convention in St. Paul, sitting in a skybox overlooking the convention floor, were observers from Russia, Iran and Venezuela. And imagine for a minute what these observers would have been doing when Rudy Giuliani led the delegates in a chant of “drill, baby, drill!”
I’ll tell you what they would have been doing: the Russian, Iranian and Venezuelan observers would have been up out of their seats, exchanging high-fives and joining in the chant louder than anyone in the hall — “Yes! Yes! Drill, America, drill!” — because an America that is focused first and foremost on drilling for oil is an America more focused on feeding its oil habit than kicking it.
Why would Republicans, the party of business, want to focus our country on breathing life into a 19th-century technology — fossil fuels — rather than giving birth to a 21st-century technology — renewable energy? As I have argued before, it reminds me of someone who, on the eve of the I.T. revolution — on the eve of PCs and the Internet — is pounding the table for America to make more I.B.M. typewriters and carbon paper. “Typewriters, baby, typewriters.”
Of course, we’re going to need oil for many years, but instead of exalting that — with “drill, baby, drill” — why not throw all our energy into innovating a whole new industry of clean power with the mantra “invent, baby, invent?” That is what a party committed to “change” would really be doing. As they say in Texas: “If all you ever do is all you’ve ever done, then all you’ll ever get is all you ever got.”
I dwell on this issue because it is symbolic of the campaign that John McCain has decided to run. It’s a campaign now built on turning everything possible into a cultural wedge issue — including even energy policy, no matter how stupid it makes the voters and no matter how much it might weaken America.
I respected McCain’s willingness to support the troop surge in Iraq, even if it was going to cost him the Republican nomination. Now the same guy, who would not sell his soul to win his party’s nomination, is ready to sell every piece of his soul to win the presidency.
In order to disguise the fact that the core of his campaign is to continue the same Bush policies that have led 80 percent of the country to conclude we’re on the wrong track, McCain has decided to play the culture-war card. Obama may be a bit professorial, but at least he is trying to unite the country to face the real issues rather than divide us over cultural differences.
A Washington Post editorial on Thursday put it well: “On a day when the Congressional Budget Office warned of looming deficits and a grim economic outlook, when the stock market faltered even in the wake of the government’s rescue of Fannie Mae and Freddie Mac, when President Bush discussed the road ahead in Iraq and Afghanistan, on what did the campaign of Senator John McCain spend its energy? A conference call to denounce Senator Barack Obama for using the phrase ‘lipstick on a pig’ and a new television ad accusing the Democrat of wanting to teach kindergartners about sex before they learn to read.”
Some McCain supporters criticize Obama for not having the steel in his belly to use force in the dangerous world we live in today. Well I know this: In order to use force, you have to have force. In order to exercise leverage, you have to have leverage.
I don’t know how much steel is in Obama’s belly, but I do know that the issues he is focusing on in this campaign — improving education and health care, dealing with the deficit and forging a real energy policy based on building a whole new energy infrastructure — are the only way we can put steel back into America’s spine. McCain, alas, has abandoned those issues for the culture-war strategy.
Who cares how much steel John McCain has in his gut when the steel that today holds up our bridges, railroads, nuclear reactors and other infrastructure is rusting? McCain talks about how he would build dozens of nuclear power plants. Oh, really? They go for $10 billion a pop. Where is the money going to come from? From lowering taxes? From banning abortions? From borrowing more from China? From having Sarah Palin “reform” Washington — as if she has any more clue how to do that than the first 100 names in the D.C. phonebook?
Sorry, but there is no sustainable political/military power without economic power, and talking about one without the other is nonsense. Unless we make America the country most able to innovate, compete and win in the age of globalization, our leverage in the world will continue to slowly erode. Those are the issues this election needs to be about, because that is what the next four years need to be about.
There is no strong leader without a strong country. And posing as one, to use the current vernacular, is nothing more than putting lipstick on a pig.
When Sen. Obama came back to the country after his unique and exceptionally successful trip overseas and coupled with the way and manner that he handles the scenarios remaining calm in the face of interference and exuding in objectivity and zeal based on the energy that was emanating from the people all of the world that came to hear him speaks, we learnt from our organs of information dissemination that such an outstanding and pragmatically important visit does not have any positive impact on the opinions of Americans about him.
During the Democratic National Convention in Denver, Obama’s choice of Biden was informed as a result of the necessity of making sure that such a choice was based on reality and the essentiality of a complementary role which in modern politics is absolutely indispensable. Without engaging McCain on personal issues Obama and company went about their business of telling Americans what the issues are and how they hope to alleviate their suffering by making sure that they put in place modalities that can lead to hope and change in the country. Again the press and those who pay them say there was no net gain appreciation for an Obama- Biden ticket.
The comes the Republican Party convention in Minnesota and all hell was let loose, with those who favors the status quo orchestrating the worst pick in history as the best bet for a country that will soon be dealing with Russia, Venezuela, Pakistan, North Korea and the others in trying to either convince them or the committee of nations that the world need to be a better place to live. What a shame that even at the heart of those who propagate these anomalies, they are aware of the great disservice to the country and yet for the sake of money, egocentrism and myopia, they are not bothered about the lies and deceptions that may as well be the bane of the current dispensation.
