Matt Yglesias

A “‘Heritage of the Left’ of the Right”

The political system enters a period of infinite regress:

In the wake of another chastening set of GOP defeats at the polls, Holtz-Eakin is now setting out to address those problems head-on. He’s developing a proposal for a new think tank that he describes as a “Center for American Progress for the right” — a reference to the liberal think tank that has supplied staff and policy proposals to the Obama administration and developed new ways to market its ideas. [...]

The irony, of course, is that the Center for American Progress itself was developed as a liberal answer to the Heritage Foundation, the conservative think tank that has been a source of Republican policy ideas for decades. But Holtz-Eakin says established think tanks of the right, like Heritage and the American Enterprise Institute, were “not helpful” during the McCain campaign because they weren’t politically engaged or innovative in their media strategies.

That’s why Holtz-Eakin says he now looks to the Center for American Progress as a model. The center, headed by former Clinton White House Chief of Staff John D. Podesta, combined a battery of domestic and foreign policy proposals with outreach innovations, such as hosting film screenings around the country and collecting e-mail addresses of people who sign up for the screenings.

This seems pretty misguided to me. In particular, DHE needs to think harder about the fact that there are already well-resourced conservative think tanks with plenty of capabilities. Before CAP came on the scene, there really wasn’t a “Heritage of the left.” On the right, Heritage and AEI already exist. The problem they face is that the conservative movement, as presently constituted, is not prepared to accept anything other than “tax cuts” as a solution to anything. Consequently, they’re not really even prepared to accept the premise that other problems exist. Tax cuts can’t solve climate change, so there must be no such thing! Tax cuts can’t curb inequality, so there must not be a problem with growing inequality.

If you’re a white guy looking to vent about how Puerto Rican women growing up poor in the Bronx get unfair advantages in life, the conservative movement has a lot to offer you. But otherwise there’s nothing there policywise. That’s not, however, because there are no organizations out there capable of developing or marketing policy. It’s because the movement has become unremittingly hostile to constructive policymaking. Everybody’s too busy cowering in fear from Rush Limbaugh to come up with anything.

The IndyMac Example: Nationalization Works

Branches of the bank formerly known as IndyMac, the largest bank nationalized by the FDIC during the current crisis, reopened today under new management and new ownership. As Pat Garofalo observes, “Even though it cost more than originally estimated, the successful nationalization and re-privatization of IndyMac — the fourth largest bank ever seized by federal regulators — shows that taking over troubled financial institutions, clearing them of their troubled assets, and selling them back to the private sector can be done.”

Nobody should kid themselves about the costs involved. Nationalizing larger institutions wouldn’t be an alternative to the federal government spending a ton of money. But at the same time, avoiding nationalization while keeping zombie institutions afloat isn’t a low-cost alternative to nationalization. And as we’re seeing with the furor over the AIG bonuses, keeping public officials at arm’s length from managing an institution that depends on government support to stay in business hardly succeeds in keeping the institution out of political controversy. All it does is muddy the lines of authority and responsibility, making it difficult to maintain consistent and politically sustainable policies.

Working with very large institutions would not be the same as working with IndyMac. In all likelihood looking at new legislation is a good idea as some kind of new process would need to be set up. Still, this solution remains the best approach. If the administration’s in need of political cover, they can bring nationalization support Doug Holtz-Eakin on board.

Doug Holtz-Eakin Calls for Bank Nationalization

I wonder if Doug Holtz-Eakin has talked to John McCain about this idea. I bet he could do more good for the world talking it up than wasting his time with inane Twitters. At any rate, I think DHE is making sense:

The right thing to do is to apply the principles of responsibility and competition, and the lessons of history to get this right. The most important lesson is that failed, insolvent banks cannot be permitted to continue to operate using taxpayers’ subsidies. Letting these “zombies” walk the financial system was at the heart of the savings and loan crisis and the slow Japanese recovery from its financial crisis. These institutions should be taken over, their management and shareholders suffer the consequences of their failure, and the assets re-sold to private sector entities as fast as is feasible. That’s good policy: discipline failure, promote real competition, and use assets effectively in the private sector.

This, of course, is the nationalization option promoted by Paul Krugman, Simon Johnson, and unwashed bloggers like yours truly.

The Curious Case of Doug Holtz-Eakin

One of the unwritten rules of political combat is that you don’t use certain people to say certain kinds of things. Sharp, partisan attacks of dubious merit are normal left to communications professionals. A candidate needs somebody to say this stuff just to get the quotes in circulation, and everybody understands that spokespeople are just out their representing your client. By contrast, a candidate also wants to have some credible experts in his orbit who can certify to the soundness of his policy plans. A person in that role will normally engage in some political activities, but he or she is also expected to treat his credibility as a precious resource to be expended on serious dispute, not frittered away in goofy partisan stunts.

When Doug Holtz-Eakin started out this campaign, he was definitely in the second category. Most people thought that he’d done a serious, professional job as head of the Congressional Budget Office and when he went to work for John McCain it was certainly everyone’s understanding that this would be his role. And he started out doing things like a long, substantive exchange with Grist about McCain’s climate plans.

But now he’s doing stuff like this that’s clearly the job of a flack, not a policy adviser:

“Now we know that the slogans ‘change you can believe in’ and ‘change we need’ are code words for Barack Obama’s ultimate goal: ‘redistributive change,’” said McCain advisor Doug Holtz-Eakin. “No wonder he wants to appoint judges that legislate from the bench – as insurance in case a unified Democratic government under his control fails to meet his basic goal: taking money away from people who work for it and giving it to people who Barack Obama believes deserve it. Europeans call it socialism, Americans call it welfare, and Barack Obama calls it change.”

It’s a strange development.