The Opportunity
If the powers that be tell me that the country needs something like the financial measures being announced today, I’m not going to disagree with them. But tactically, I think it’d be crazy to just hand this package over for the President’s signature. Every time progressives in congress try to get something done for working people, conservatives either block it or else hold it hostage to some nutty tax cut. Why not tie this bailout to something like the second stimulus package of enhanced food stamps, extended unemployment insurance, and enhanced aid to state governments straining under the yoke of Medicaid payments?
It’d be absurd for the government to be moving hundreds of billions of dollars around amidst an economic crisis while doing nothing for, say, janitors who get laid off from Lehman Brothers. The problems to worry about here are in the “real” economy. Propping up the financial sector can help accomplish that, but we also need to prop up normal people trying to pay the bills and weather the storm.
50 Responses to “The Opportunity”
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September 19th, 2008 at 11:24 am
Oh, Matt, you don’t understand. The financial wizards who got us into this mess are really, really smart and need to be rewarded and protected so they can go on being so smart. It’s the American way.
The rest of us can go pound sand.
September 19th, 2008 at 11:30 am
Because someone has to be the grownup.
September 19th, 2008 at 11:32 am
Brien: What’s the difference between grownup and patsy?
September 19th, 2008 at 11:32 am
Shorter Matthew: All your dollars are belong to us.
September 19th, 2008 at 11:35 am
Amen, Matt. If the Dems can’t tack some help for working folks onto this bailout, screw ‘em.
September 19th, 2008 at 11:39 am
Matthew is correct. Otherwise we are not keeping the “fundamentals” of the economy strong.
September 19th, 2008 at 11:40 am
“Why not tie this bailout to something like the second stimulus package of enhanced food stamps, extended unemployment insurance, and enhanced aid to state governments straining under the yoke of Medicaid payments?”
Poor Matt. He just doesn’t get it.
September 19th, 2008 at 11:42 am
I believe it was Will Rogers who said during the Depression:
“Tell the government you’ve got a sick pig and they’ll send out a vet. Tell the government you’ve got a sick child and [in effect] they’ll tell you it’s your problem.”
September 19th, 2008 at 11:46 am
It’s like Wall Street is playing D&D and the Dungeon Master is named Reality.
Financial Wizards: I cast my greed spell. It should do + 1 billion damage.
Reality: There is a strange force at work called rational asset pricing. Your spell has the reverse effect! Minus 1 billion damage! How many hit points do you have again?
Financial Wizards: Ummmm…not a billion.
Reality: That’s alright. I’ll just give you additional hit points that I steal from the future of your children.
Financial Wizards: Cool! Can I try that spell again?
Reality: Of course but you’ll have to wait a few turns. The amount of future you can steal is finite but it renews itself every generation.
September 19th, 2008 at 11:46 am
Why the support for unemployment insurance, food stamps, state government aid, etc. rather than just increasing the EITC (even temporarily) which is more effective, better targeted, etc.?
September 19th, 2008 at 11:49 am
Stimulus II should include money to immediately implement the backlogged transit projects in the FTA hopper right now. This will put people to work and invest in our economy, while starting to restructure ourselves around a new paradigm that doesn’t include endless home building on shoddy credit and gas guzzling commutes. Also, since we’ve spent nearly $600 billion in Iraq, how about we high tail it out of there and start spending some of that money that would be borrowed anyway if we stay on our own economy.
September 19th, 2008 at 11:49 am
I like the idea in theory, but in practice please note you are necessarily talking about needing to significantly increase tax revenues to pay for all this.
Which in fact I have no real problem with, but that is undoubtedly part of why people may not leap to run up the bill as high as possible by giving something to everyone.
September 19th, 2008 at 11:54 am
For a bailout price tag estimate:
http://www.politico.com/news/stories/0908/13602.html
Note this revealing tidbit from the article:
“What you heard last evening is one of those rare moments — certainly rare in my experience here — was that Democrats and Republicans decided we needed to work together, quickly,” Dodd said.
Right. Nothing unites the GOPocrats faster than a deal to give your money to Wall Street. Oh well, they can still argue about gay marriage.
September 19th, 2008 at 11:55 am
It’s like Wall Street is playing D&D and the Dungeon Master is named Reality.
A Monty Haul campaign, if ever one there was.
September 19th, 2008 at 11:55 am
I’m really tempted to say we should just call Wall Street’s bluff. What if we don’t bail them out? We’ve still got a perfectly good commercial banking system that can make loans to businesses and individuals who have nothing to do with this mess. The massive “systemic” bail-out they’re talking about would cost hundreds of billions of dollars, if not more. You could buy a lot of real world infrastructure spending with that. Infrastructure that would provide real jobs and real benefits. Is it really more important to fund a jobs program for investment bankers than for blue collar workers?
Seriously, I think this is an opportunity for the Democrats to very clearly come out on the side of Main Street rather than Wall Street. If they’re afraid of opposing a bail-out directly then insist that Wall Street pay for its own bail-out by ending the hedge fund loop-hole on carried interest, taxing dividends as income, and restoring the full estate tax. These taxes can be phased in as the current crisis abates.
But my preferred outcome is that we do nothing for Wall Street and spend the money on Main Street instead.
September 19th, 2008 at 12:04 pm
Fuck yeah.
They ought to tie it to Wyden health care plan.
This is why you need good legislation ready to go. You never know when you’ll get a shot at passing it.
September 19th, 2008 at 12:09 pm
Maybe a freudian typo in the Name box, but that last comment was mine.
September 19th, 2008 at 12:13 pm
We’ve heard about Disaster Capitalism. How’s about some Disaster Liberalism?
September 19th, 2008 at 12:19 pm
Yes, this is exactly what we need. The nuts on the right trying to bail out their rich friends and the left wing nuts doling out cash to the “poor”. A middle class guy who is paying his taxes and bought a house that he can afford will get squeezed (increased taxes or more debt for his kids).
September 19th, 2008 at 12:21 pm
Better: Since the US Gov will be buying up all of the “toxic” mortgage securities out there, here is the big chance to cram down the principal on the mortgages to something like 90% of value, and convert to fixed-rate.
And at the same time, as you say, include assistance for non-home owners.
-partialobs
September 19th, 2008 at 12:22 pm
We’ve heard about Disaster Capitalism. How’s about some Disaster Liberalism?
The Wall Street crisis looks like a threat to instantiated power. Instantiated power is acting to end the threat.
If Congress and Wall Street feared riots, mass strikes, an encampment of poor people on the Mall, etc without a “bail-out” for ordinary Americans, then we’d get our bailout. But since we’re not a threat to their system, we don’t get anything.
And FWIW, as much as I want Obama to win, President Obama doesn’t represent that kind of threat, either.
September 19th, 2008 at 12:22 pm
DCreader, the reason we can’t call Wall Street’s bluff is the same reason Democrats cannot call any of the usual Republican bluffs on any of the usual subjects: war, terrorism, warrantless wiretapping, etc.
Because Republicans have already proven that they will sabotage any deal that doesn’t provide exactly what they want, and then blame Democrats for the failure until Democrats retreat and give Republicans *more* of what they want.
That is, assuming that Democrats don’t *like* being blackmailed by Republicans…
September 19th, 2008 at 12:40 pm
RE Chris’s comment “That is, assuming that Democrats don’t *like* being blackmailed by Republicans…”
——-
The Democrats are like a teenage slut in the backseat of a car. They make a token protest for appearances sake and then rip their panties off.
September 19th, 2008 at 12:56 pm
Help the poor? Why not help all the people who have mortgages they cannot afford that are sliced and diced into the bad debt the government is talking about taking on? If you were shuttled into a bad mortgage by sophisticated mortgage brokers, why don’t you get your house free and clear of any encumbrances? If wall street gets bailed out, and the government assumes responsibility for the mortgaged backed securities that are underperforming and causing the problem in the first place, such that performance of those securities no longer matters because Uncle Sam has them, why not let those who originally borrowed on those mortgages off the hook?
You want economic stimulus? Let people off the hook for the mortgages they have been subjected to by a corrupt group of banks and mortgage brokers. Folks could spend a lot more money if they didn’t have to worry about paying for a loan foisted upon them by a much more financially sophisticated lender.
September 19th, 2008 at 1:04 pm
Yeah, there’s your problem right there.
September 19th, 2008 at 1:08 pm
“Republicans spend hundreds of billions of taxpayer dollars bailing out Wall Street, can’t spare a dime for ordinary Americans.” Sounds like a great idea. Good luck with reelection.
September 19th, 2008 at 1:15 pm
I think the bailout should include returning to pre-Bush tax levels for those in the upper two brackets or more, raising the capital gains tax, bringing back the tax on dividends, raising the estate tax, putting an end to oil company subsidies, instituting a CEO-overpayment tax on businesses who pay their CEOs more than 100% that of their average worker, etc. But of course I am a selfish class warrior who only looks out for 99% of the population.
I really think they should consider changing the Wall Street Bull to a pony, since they are really getting one in this deal while the rest of us get the shaft. All hail the new “Pony Market”!
September 19th, 2008 at 1:28 pm
“Democrats won’t agree to help save economy until political demands are met.” Sounds like a great idea. Good luck with reelection.
September 19th, 2008 at 1:29 pm
what I find strange is the amounts of money involved never seem to make a difference. It seems you can wheedle any amount of money from the American taxpayer if you create some pretext about spending it on a hot war or avoiding a financial crisis. But make the mistake of saying you’re spending even one cent on poverty or foreign aid, and we’ll rise up in righteous indignation at the waste of taxpayer money.
I think the reason for this is that often, we don’t actually care about being a real sucker, we care about not looking like being a sucker. Protect our self-image, you can take any amount of our money. Threaten it, we’ll fight you for every dime.
September 19th, 2008 at 1:56 pm
I’d like to slowdown a little bit and take a look at what is being proposed. The Patriot Act was rushed through in a “crisis” and that worked out great, didn’t it?
If the markets are that shaky, suspend trading for a week. It didn’t hurt to do that after 9/11 and it slowed the rush to panic. I do not want the next decade of government spending to be decided in a closed room over the weekend. Let’s discuss this before acting.
September 19th, 2008 at 2:14 pm
And maybe advocates for spending appropriate amounts of money on poverty and foreign aid should take this desire, the desire not to be seen as a soft-touch and a sucker, into account. Something like “Everybody wants to do their fair share. But nobody wants to be a sucker”, and then make the case that spending a little bit of money on poverty and foreign aid is not being a sucker, it’s just being a prudent, shrewd citizen and taxpayer, creating new value and prosperity which will benefit us all in the long run.
September 19th, 2008 at 2:25 pm
Other Ed, I’m not sure suspending trading for a week would have helped. The problem is that these balance sheets really are bad.
September 19th, 2008 at 2:27 pm
“A rat done bit my sister Nell
(with Whitey on the moon)”
replace bailing out megamillionaire speculators with Whitey being on the moon
and
rats biting kids in substandard housing with rats biting kids in substandard housing
September 19th, 2008 at 3:16 pm
Maybe we could hold off the bail out for GM until they meet new, revised CAFE standards, have an EV on the American market in 2 years, and have a whole fleet of hybrids ready in 3 years?
Oh. Silly me. If the taxpayers will buy bad loans, they certainly should patriotically buy bad car companies.
September 19th, 2008 at 3:23 pm
How about tying it to a 6 month stay in foreclosures?
September 19th, 2008 at 3:24 pm
Come on people, any plan other than “roll over for the Republicans” will require Democrats to grow a spine. Not bloody likely.
September 19th, 2008 at 3:37 pm
Corporate lobbyists played a huge role into getting us into this mess, so let’s just ban corporate lobbyists.
We can tailor it in such a way so as not to make it clearly unconstitutional, and even when the corporations and the GOP fight it and it goes to the Supreme Court in 2-3 years, so what?
Then we can talk about how horrible the Supreme Court majority is for protecting the rights of corporations to “lobby” (read: bribe) politicians as 1st Amendment free speech rights.
September 19th, 2008 at 6:01 pm
I think many posters here don’t quite appreciate how close to collapse the financial system at large really is, or how catastrophic the consequences of a collapse would be for working people. It’s deeply unfortunate that bailouts directly help the Wall Streeters as much as they do, but they indirectly help tens of millions of lower- and middle-class Americans.
The Great Depression did favors for no one, and I truly think we’re close to that level of damage. If bailouts prevent that, good.
I like Matt’s idea of including help for the janitors, but it has the major flaw of being utterly impossible. The proposed solutions don’t require Congressional approval. Matt’s vague “powers that be” construction skirts this reality.
September 19th, 2008 at 11:55 pm
The proposed solutions don’t require Congressional approval.
Huh? So the Fed and the Treasury can spend a trillion dollars without an appropriation? I don’t think so . . .
September 20th, 2008 at 12:48 am
It’d be absurd for the government to be moving hundreds of billions of dollars around amidst an economic crisis while doing nothing for, say, janitors who get laid off from Lehman Brothers.
Silly Matt: you don’t understand that it’s the job of Democrats to restore stablity to the economy so that the GOP can come back on a platform of ‘broken promises’ and hand over the keys and the checkbook to Wall Street execs once more.
September 20th, 2008 at 9:08 am
i dont see the problem here. the money being lost was never real and cant be lost unless we buy the idea. call it universal bankruptcy or jubilee starting today at noon every one keeps all tangible property in their hand goes to work on monday (if they produce something real)in exchange for something equally real no problem
September 20th, 2008 at 1:20 pm
SqueakyRat: that’s right, no Congressional approval needed. The Fed and Treasury have huge regulatory powers that don’t require Congress to do anything. Remember that the Fed funds itself through lending to banks, so it isn’t subject to appropriations oversight, even for huge amounts. Treasury is obviously under executive authority, but the money is all coming from the Fed, which mostly keeps Congress out. The Fed certainly seems to be briefing Schumer, Pelosi, et al., but I don’t know how much of that is necessity and how much courtesy.
The Fed really is the fourth branch of government in some ways; personally, I don’t think this is a bad thing. The gross politicization of the other three hasn’t spread to the Fed.
As of this morning, however, it would appear that the initial proposals being floated are not operative and the new ideas would, in fact, go through Congress. They will probably involve a rewrite of regulatory authority rather than simply using existing laws, in addition to that extra $700 billion Bush is now asking for.
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