Sep 8th, 2008 at 1:47 pm
Regular People
I think my colleague Satyam’s been bitten by the elitism bug and thinks it’s a “gaffe” for Sarah Palin to say that Fannie and Freddie had “gotten too big and too expensive to the taxpayers” when, in fact, they weren’t funded by the taxpayers at all. Palin doesn’t understand the basic structure of the GSEs and neither do most Americans. All this liberal sneering at public officials for not having, you know, a in-depth knowledge of policy matters is exactly why we’re seen as out of touch.
65 Responses to “Regular People”
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September 8th, 2008 at 1:52 pm
The fact that I had to read that twice to make sure of the sarcasm speaks volumes of the campagin coverage this cycle.
September 8th, 2008 at 1:52 pm
It’s worse than not understanding. Anyone could fail to understand the GSEs; they’re complicated. She thought she understood, but in fact she didn’t. That’s worse. Ignorance can be corrected by learning, but wrong ideas are harder to root out.
September 8th, 2008 at 1:56 pm
So … the Republicans win by acting as dumb as they think Americans are?
Is that like turkey hunting?
.
September 8th, 2008 at 1:56 pm
Actually, I bet she understands both what they and what she said.
The GOP wants to treat this as if the problem is one of expense. That way they won’t have to talk about what kind of oversight or regulation might be needed. She isn’t that stupid: she’s lying.
The issue is too big not to have been part of her briefing.
It fits the Republic MO, yes?
September 8th, 2008 at 1:59 pm
Clearly, Palin should have just called the two institutions a buncha homos with pointy heads who eat arugula.
September 8th, 2008 at 2:00 pm
And in a sense it is a quibble to strain a gnat on such a abstruse subject as FANNIE MAE & Freddie, especially since it is a USG-backed semi-public corporation. But this liberal press strains the gnat on the Repubs and swallows the camel on BHO. I think we’re starting to see the American people make up their minds.
Sam Stein of HuffPuff deserves commendation for first bringing John Edwards’ smarmy little episodes with Rielle to light.
September 8th, 2008 at 2:01 pm
Why is it a gaffe? Palin’s basically correct. All these years of implicit guarantees and the meme about “too big to fail” have meant taxpayers were always on the hook. Now we’ve finally formalized what used to be informal, and the taxpayers (in the form of higher taxes or lower living standards via higher inflation if the government turns to its printing presses) will end up shelling out way over a trillion bucks (my estimate). Fannie/Freddie were/are too big and too expensive. Rock on Sarah.
September 8th, 2008 at 2:02 pm
Palin knows noting about quantum mechanics/
September 8th, 2008 at 2:05 pm
It’s worse than not understanding. Anyone could fail to understand the GSEs; they’re complicated.
The GSEs are complicated, but Palin’s statement rockets right past “missing subtlety” and scores a direct hit on “really has absolutely no idea what she’s talking about.”
Perhaps a journalist could ask Sarah Palin what she thinks the correct size for the GSEs should be. I bet the answer would be pretty entertaining.
September 8th, 2008 at 2:06 pm
re Lettuce and Elitism – You know the GOP should be mocked and laughed at for that arugula bullshit – But lots of jejune liberal media types on the margins of elitehood like to validate it –
If elitism means a house in Nantucket, then most journos are locked out – But if it just means haute bourgeois tast in food and movies, then it makes them feel special.
Also – most reporters are only liberal on social issues – so they they don’t care too much about all the other stuff. In fact, they seem to enjoy the ghastly Republicans in power for no other reason than to complain about them.
September 8th, 2008 at 2:08 pm
Sarah Palin did not abort the GSEs. That is all I know. And that is all I care about.
September 8th, 2008 at 2:09 pm
Republicans are afraid of lettuce and other green leafy vegetables.
September 8th, 2008 at 2:11 pm
The GOP wants to treat this as if the problem is one of expense.
It is a problem of expense. A very big expense — to the taxpayers. One that will have to be paid in the form of lower living standards for many people.
That way they won’t have to talk about what kind of oversight or regulation might be needed.
There will quite rightly be little or no talk of “oversight or regulation” until financial markets stabilize. I make no secret as to my own policy preference (allowing the taxpayers to exit entirely from the mortgage business), but I’m content to delay any discussions of reform and the final status of Fannie/Freddie until such time as we’re certain we’ve dodged the bullet of depression.
September 8th, 2008 at 2:13 pm
McCain/Palin
Change we can Make believe in!
September 8th, 2008 at 2:17 pm
Francisco,
I completely agree. Sarcasm is seriously over-used in blog-land. It has great snark appeal, but it reduces the level of discourse and makes the writer’s intent more difficult to accurately gauge.
All,
Nerd question: Does the GSE issue Matt raises represent a kind of functional limit for democratic governance? When so many of the important issues are too complicated for most non-experts to really grasp, how likely are we to establish useful and correct expectations of our elected leadership?
One possible solution, an appeal to expertise, often generates more noise than signal as both sides bring in their Ivy League educated experts to argue the absolute truth of contradictory positions. In the court of public opinion, expertise becomes just another partisan tool. This leaves many to make election decisions based on more easily understood issue proxies: Did that guy have an affair? Was she caught on tape lying? Does he seem patriotic?
September 8th, 2008 at 2:17 pm
I don’t believe this counts as a gaffe under the Kinsley rule because Palin was not a politician who inadvertently blurted out the truth; she inadvertently revealed her ignorance.
Honestly, it’s not the same, and since surely 99.8% of all Americans could not tell you exactly what it is that Freddy Mac or Fannie Mae do, I doubt very much this will hurt her candidacy. What could hurt her chances is if voters come to believe that Palin is willing to impose her ignorance on those who know better…and on that score (for instance, her half-hearted attempt to ban books) the jury is still out.
September 8th, 2008 at 2:19 pm
Jasper: Okay, so by your parsing, “Fannie and Freddie had gotten too expensive for taxpayers” was referring to the potential cost of a bailout, a cost that we now have to pay because…it’s too expensive? rock on, indeed.
September 8th, 2008 at 2:19 pm
Remember that famous formulation of Sen Roman Hruska (R-Neb) back in the Nixon era:
There are a lot of mediocre people in the United States, and they deserve some representation too.
September 8th, 2008 at 2:24 pm
Palin’s remark can be easily explained away with the consideration of implicit costs to the taxpayer, which are just as real as any other.
Who knows if it’s what she meant, but the statement is not obviously wrong.
September 8th, 2008 at 2:26 pm
“The Democrats and the feminist media establishment failed in their effort to represent Governor Palin as a Dan Quayle dunce in drag, a trigger-happy Stepford Wife and negligent mother (because she would choose to run for vice president despite her young family and 17-year old unmarried, pregnant daughter). The frenzy of the initial assault, and the sanctimonious conceit that American women would be offended by the candidacy of such an allegedly ditzy yokel, showed that McCain had remembered the basic military strategic lessons to apply maximum force at the decisive point and achieve complete surprise: If the liberal Democrats are taking the high ground on extramarital sex and working motherhood, you know they are frightened.
But even the Republicans were not prepared for the virtuosity of Ms. Palin’s debut on Wednesday night. Managing to be winsome and even ingenuous, while witty; hard-hitting without being a harridan; an authentic feminist about what women can aspire to, while being a traditionalist; a clean government achiever and a populist enemy of the oil companies’ excesses and the proverbial special interests; a spunky and endearing, yet effective, attack dog; she touched all the buttons. The early Democratic and media ripostes of offended American womanhood, lumpenbourgeois mediocrity and the primitive frontierswoman with a rifle in one hand and a Bible in the other, were completely inadequate.
She is a naturally popular person, and a contrast with Joe Biden, a monotonous leftist journeyman, full of pretension and loquacity, a plagiarist (from Neil Kinnock of all people) with hair plugs …”
Lord Conrad Black
September 8th, 2008 at 2:29 pm
The sad reality is, I wasn’t sure that you were kidding.
For all we know, this is just a trick to get people to call her on it…thereby solidifying her support among those who “hate being talked down to.” It wouldn’t be shocking at this point.
September 8th, 2008 at 2:30 pm
Palin’s statement isn’t even wrong, as the saying goes.
The takeover action doesn’t eliminate the expense to the tax payers in any way shape or form.
Ask her a follow up, newsies! Does she want the government in the mortgage business? I bet not and yet lots of people depended upon Freedie or Fannie to get a mortgage. What does she want in its place? What about oversight of GSEs? Does she favor expanding oversight or going free-for-all? Letting her make vague gassy remarks helps, well, Sarah Palin.
(Smites forehead.)
September 8th, 2008 at 2:32 pm
Palin’s remark can be easily explained away with the consideration of implicit costs to the taxpayer, which are just as real as any other….Who knows if it’s what she meant, but the statement is not obviously wrong.
Really, Jeff H? So you’d say that it was the sheer size of the GSEs that was the problem, and mismanagement was in no way involved? Because that seems, to me, to be the gist of Palin’s statement.
September 8th, 2008 at 2:33 pm
“All this liberal sneering at public officials for not having, you know, a in-depth knowledge of policy matters is exactly why we’re seen as out of touch.”
The scary part is that this sentence is actually correct.
September 8th, 2008 at 2:33 pm
Who knows if it’s what she meant, but the statement is not obviously wrong.
And we have our Marc Ambinder award winner for the frame.
September 8th, 2008 at 2:36 pm
“a pitbull with lipstick” trumps everything else that will be said this election cycle. unfortunately the majority of american people are unable, or unwilling, to comprehend anything more complex. take, for instance, “the surge worked”. to impeach that demonstrably false statement requires nuance — and more words than will fit on the average bumper sticker. nuance is complex. ipso facto “the surge worked”. most of america do not have any idea about freddie or fannie…so this cannot be a gaffe. it pains me but mccain will have his hand on the bible on jan. 20th because the republicans understand this, and the democrats don’t.
September 8th, 2008 at 2:37 pm
Times are too desperate for Matt’s subtle blog sarcasm unless it is also accompanied by beautifully crafted but misspelled op-ed pieces in the Washington Post and the New York Times at least once a week. Then it would be OK.
September 8th, 2008 at 2:41 pm
I hope that Palin explains her remark by referring to the implicit cost of the GSEs to the taxpayer as Number 19 suggests. That would be excellent new for McCain!
September 8th, 2008 at 2:47 pm
The key to this “gaffe” is how the response is framed.
If the response is, “These are the people who foreclosed on your house and Sarah Palin doesn’t even know who they are,” I think that’ll work.
If it’s just, “Sarah Palin fails to understand the functional details of the secondary mortgage market,” well, needless to say, that’s a loser.
September 8th, 2008 at 2:48 pm
Jeffrey Davis Says: “Ask her a follow up”
Mary Says: “I hope that Palin explains her remark”
Do you people live in a cave?
September 8th, 2008 at 2:49 pm
Jasper: Okay, so by your parsing, “Fannie and Freddie had gotten too expensive for taxpayers” was referring to the potential cost of a bailout.
Er, no. Palin was speaking this weekend, when there was no longer anything “potential” about the vast cost to the taxpayers. We all know taxpayers are going to shell out many hundreds of billions. The only question is the exact number.
September 8th, 2008 at 2:50 pm
It’s not that she got it wrong. Most people don’t understand the difference either. It’s that most people are not in position to be President starting in 4 months. Sarah Palin is. To show her ignorance on one of the most important issues in this election should be damning, but it won’t be. The press didn’t hit McCain for not knowing the difference between Shi’a and Sunni, and they won’t hit Palin over this. Hell, the press isn’t even hitting McCain/Palin hard for the blatant “bridge-to-nowhere” lies. They give headlines like “Palin stretches truth” instead of “Palin lies”. This gives casual reader the impression that Palin was telling mostly truth, when in fact it was mostly lie.
I’m seriously beginning to wonder if we haven’t already passed our peak as a society. Education is now something to be looked down on, facts aren’t as important as repeating the lie until it’s believable, and lowering the public discourse to kindergarten-level name-calling is ok as long as you say you’re being a serious adult. Everyone says the country is on the wrong track, but half the country doesn’t actually seem to care. McCain is a proven liar, but no one cares because he says he’s a “straight-talker”. Did I mention his honor is unquestionable because he was a POW?
When I was growing up, I was told to work hard and get a good education and someday I could make something of myself. Now look at us. Our kids couldn’t care less about actually working for success. And why should they? We make idiots that eat bugs on TV into millionaires and select president/vp candidates that finish last in their class or change schools like they change clothes, only to end up with a journalism degree in sports broadcasting.
When did we reach the point where we wanted a president that was just average? Why on earth wouldn’t we pick the person with the most gifted mind to lead the country? A corporation would NEVER pick a dumb CEO over a smart one. Why? Because that’s a good way to drive the company into the ground. Dumb people make dumb decisions and usually compound that bad choice by refusing to admit it was a dumb choice. Putting someone without the ability to perform the mental gymnastics required to run this country into the White House is idiotic… but I’m terrified we’re going to do it because people would rather see someone “just like them” than someone who “reeks of greatness”.
September 8th, 2008 at 2:58 pm
Sad to say that 1) the major media outlets probably won’t spend much time on the gaffe, and 2) you’re probably right about the non-leet voters thinking it’s totally normal to reference the economy without knowing what the hell you’re talking about.
Also, was she ad-libbing? Sarah, baby- STICK TO THE POINTS ON THE CARDS!
September 8th, 2008 at 3:00 pm
@ jeremy
“…people would rather see someone “just like them” than someone who “reeks of greatness”…”
i know…and that worked out so well the last time.
September 8th, 2008 at 3:07 pm
Paul Krugman points out today that “Fannie Mae was originally a government agency; it was privatized in 1968, not for any good economic reason, but to move its debt off the federal balance sheet (and Freddie was created 2 years later as a competitor.)” Fact is, the implied government guarantee–which we saw actualized yesterday–means they’re de facto public, in the same way your available credit counts toward your net worth…
The recent law putting taxpayers directly on the hook for hundreds of billions was passed by the financial wizards in your Democratic congress and signed by your Republican president. If you have a beef with your money going to bail out malfeasant Wall Street crooks, you might want to talk to Joe Biden. Or John McCain. Or even Barack Obama. But Sarah Palin had nothing to do with it…
September 8th, 2008 at 3:12 pm
The reason “we” are considered out of touch is not because we harp on the fact that Palin knows almost nothing about national issues, it’s because “we” write articles arguing that Americans shouldn’t be allowed to drive more than 75 mph. If they want to go fast, they should ride the Acela, like normal, decent people.
September 8th, 2008 at 3:20 pm
No matter how the trolls here try and spin this, this was an an error, and a rather serious one at that…No question…It doesn’t matter whether the general public knows nothing about Freddie and Fannie — she is supposed to these thing and to know a lot about this…People are looking for help here, and she doesn’t know a thing…This is shocking…
Obama should be all over this with: “Here we are in the middle of a housing crisis and their VP candidate, a heartbeat away from the presidency, has no idea how its two major players function…I wouldn’t trust her to take out the garbage, let alone help Americans out of this mess…She not a pitbull with lipstick, she’s George W. Bush with lipstick.”
September 8th, 2008 at 3:37 pm
This gaffe pales in comparison to McCain’s recent observation that social security is in trouble because it uses current receipts from taxpayers to fund its payments to beneficiaries, notwithstanding the fact that was the way it was designed and always successfully worked. Hasn’t hurt his credibility one bit. Unfortunately if that didn’t gain any traction on McSame’s unsuitability, don’t imagine that this will tarnish her one bit.
September 8th, 2008 at 3:54 pm
So by “too expensive” she means the bailout is too expensive and should not be done? This would mean that she is disagreeing with McCain.
I don’t think so.
September 8th, 2008 at 3:55 pm
Jeremy: “A corporation would NEVER pick a dumb CEO over a smart one. Why? Because that’s a good way to drive the company into the ground.” Right. So we got to where we are today by . . . ??
Fred B. : “It doesn’t matter whether the general public knows nothing about Freddie and Fannie…” Very true. What matters is that the people running Freddie and Fannie didn’t know anything. All those Wharton grads, Harvard MBAs…
Listen, kids, by generational accounting the US is insolvent. We’re broke, get it? We used to have a steel industry — it’s gone. We used to have a textile industry — also gone. The Big 3 automakers are lining-up for bail-outs — be sure y’all dig deep. Fact is, as far as leadership goes, a lot of people think random would be better than what we’ve got. Sombody out of the phone book. Anybody. That’s what Barack and Sarah are. Random Americans…
September 8th, 2008 at 3:57 pm
“Ask her a follow up, newsies!”
This was an address, not an interview or press conference. There was no initial question to “follow up” from, and there isn’t going to be.
September 8th, 2008 at 4:00 pm
Jasper, either your candidate doesn’t understand major economic issues, or she doesn’t understand the English language. There’s no door #3.
September 8th, 2008 at 4:01 pm
“Sombody out of the phone book. Anybody. That’s what Barack and Sarah are. Random Americans…”
And is it unimportant that one of those “random Americans” understands the issues involved and the other doesn’t?
September 8th, 2008 at 4:08 pm
Sure it’s a gaffe, but politically it’s weak sauce. Look, if a gaffe requires several sentences to explain, it’s probably not going to resonate.
Compare it to McCain not being able to say how many homes he has. No explanation required there.
September 8th, 2008 at 4:59 pm
You know what people might consider elitist, though? Snarky comments like yours, Matt. With your insight, I and surely many others could’ve gotten more out of your take on the gaffe than the fact that you can be sarcastic about something that’s actually pretty alarming. I’m all for a laugh, guy, but come on. If it seems like I’m taking this too seriously, it’s because I fucking am. It’s about time others did as well.
September 8th, 2008 at 5:07 pm
This is much more distressing. I never expect a Republican on the ticket to know, well, anything. I do expect their speechwriters to at least know enough to get it wrong in a way that makes sense. As someone above stated – this isn’t even wrong. It’s in 2+2=Trenton territory.
September 8th, 2008 at 5:14 pm
Jasper, either your candidate doesn’t understand major economic issues, or she doesn’t understand the English language.
She’s not my candidate. I’m both an Obama voter and an Obama contributor. I just don’t think the plain meaning (as opposed to the strained, contorted, “gotcha” meaning) of Palin’s words are wrong. I think she’s rather obviously correct: Fannie/Freddie ARE too expensive to the US taxpayer.
I sincerely hope this isn’t the extent of Palin’s “gaffes.”
September 8th, 2008 at 5:31 pm
I agree, Matt. Michael Moore makes a related point in his recent newsletter.
Related: There’s a difference between ignorance and stupidity. One aspect of being stupid is inability or no interest in learning. Ignorance can be cured; stupidity not.
September 8th, 2008 at 6:27 pm
tomemos: “And is it unimportant that one of those ‘random Americans’ understands the issues involved and the other doesn’t?”
By “the issues” you mean making us all co-signers for the Fannie & Freddie bond debt overseas banks were walking away from? No, I don’t think understanding that is unimportant. Barney Frank’s bill, the one that passed the House in July 272-152 and made it possible, how’d Barack vote on that when it hit the Senate? Present? How about Biden? McCain?
September 8th, 2008 at 6:41 pm
By “the issues” you mean making us all co-signers for the Fannie & Freddie bond debt overseas banks were walking away from?
John: Are you saying it would have been preferable to let Fannie and Freddie fail? Please clarify.
September 8th, 2008 at 8:17 pm
You betcha. Most of the $5.3 trillion in mortgages they hold are fine. The bailout was principally about the bond debt they were having trouble rolling over. Well, suppose they couldn’t. Who gets hurt? Who holds that paper? Cui bono? Let’s put a human face on it. Hint: It’s not mom and pop, who own the little grocery down the street:
Today The S&P 500 Financials Index rallied 4.7 percent on the wonderful news, reaching its highest level since June 19. Citigroup climbed $1.25 to $20.32, while Bank of America added $2.50 to $34.73 and Wachovia jumped $2.24, or 13 percent, to $18.99. JPMorgan Chase & Co., the third-biggest U.S. bank, increased 4.9 percent to $41.55. Goldman Sachs Group Inc. climbed 4 percent to $169.73 after Merrill analyst Guy Moszkowski raised his recommendation on the shares to ‘buy from ‘underperform.’
You guys all know Goldman Sachs, right? Hank Paulson, Bush’s Treasury Secretary, used to be their CEO. And Bob Rubin, Clinton’s Treasury Secretary, he was their CEO too, wasn’t he? Runs Citigroup now, I believe. Met with Barack not long ago…
They’re wired-in, no matter what. They’re privatizing profit and socializing loss…
September 8th, 2008 at 8:40 pm
I’m with Jasper here. They are certainly too big and when the government has implicitly backed the debt that is an expense as made clear by the bailout and the GSEs very low borrowing costs. It would have been expensive for the government to hedge out the risk that FN/FH would go under and from that perspective it’s clear that FN/FH is expensive. Just because the government doesn’t pay a monthly fee doesn’t mean that its not expensive, costs can be hidden. This is basically the same issue that we had with SIVs last summer, when banks had huge off balance sheet liabilities that they technically didn’t have to take back when the assets went bad, but in practice they almost all did.
My other defense of Palin: I work with FN/FH all the time and the people whose job it is to understand how the GSEs work talk like that (although they would say government instead of taxpayer).
September 8th, 2008 at 8:51 pm
So you’d say that it was the sheer size of the GSEs that was the problem, and mismanagement was in no way involved?
The mismanagement was only a problem because of the size. If they only held a few million dollars in debt, the impact they could have on the economy would be small.
So yes, mismanagement was the proximate cause, but it’s the size of the institutions that causes that mismanagement to have a massive impact on the economy.
September 8th, 2008 at 10:33 pm
Palin may have sounded fuzzy, but she had a genuine point. The implicit taxpayer guarantee is a real cost. McCain’s gaffes have been much worse.
September 9th, 2008 at 11:17 am
John: There were more riders on that bill than just the bailout, including some actual regulation and transparency – the same stuff McCain’s campaign manager used to lobby against. McCain didn’t vote on the bill, of course. He hasn’t voted on anything in months. Obama was out of the country at the time, giving a speech to some… Germans, was it? I’ll understand if you didn’t hear about that, it’s pretty obscure. Biden voted yea.
What I would be really interested in hearing is an obviously educated person’s perspective on what would happen if FN/FH couldn’t roll over their bonds. Considering that they don’t have the assets to cover the rollover, to a simple person like myself it seems as though they’d declare bankruptcy. And the trillions in mortgage-backed securities they sold would… what? Be canceled? Repaid for pennies on the dollar? Mortgages transferred directly to security holders?
September 9th, 2008 at 12:27 pm
I’m seriously beginning to wonder if we haven’t already passed our peak as a society. Education is now something to be looked down on, facts aren’t as important as repeating the lie until it’s believable, and lowering the public discourse to kindergarten-level name-calling is ok as long as you say you’re being a serious adult.
I think that Jeremy is on to something here and I used to joke about when GWB was elected. If McCain pulls this off we have to seriously consider that we have “jumped the shark”.
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