By Dan Froomkin
Special to washingtonpost.com
Wednesday, September 24, 2008; 12:43 PM
So this is what happens when the president of the United States has virtually no credibility left.
The nation is facing a serious financial crisis. But neither the public nor Congress have confidence in the solutions being put forth by President Bush's appointed economic leads.
Americans have learned what questions to ask when the Bush team starts to make threats. Is the situation as bad as they say? Do we have to respond the way they say? Are there any better alternatives? Do we have to act as fast as they say? And is it possible they don't know what they're doing?
The ultimate irony would be if, this time, Bush was right -- or even partly right.Unconvinced
The public is certainly not sold.
Matthew Benjamin writes for Bloomberg: "Americans oppose government rescues of ailing financial companies by a decisive margin, and blame Wall Street and President George W. Bush for the credit crisis.
"By a margin of 55 percent to 31 percent, Americans say it's not the government's responsibility to bail out private companies with taxpayer dollars, even if their collapse could damage the economy, according to the latest Bloomberg/Los Angeles Times poll."
Doyle McManus writes in the Los Angeles Times that the Times/Bloomberg poll initially appears to conflict with a poll released Tuesday by the Pew Research Center for the People and the Press. That poll found that 57 percent of respondents think the government is doing the right thing by intervening to stabilize the economy.
But, as McManus explains: "The contrast between the Times/Bloomberg poll and the Pew survey probably reflects the different wording of their questions.
"The Times/Bloomberg poll asked respondents whether they believed it was 'the government's responsibility to bail out private companies with taxpayers' dollars.' A majority said no.
"The Pew poll, by contrast, asked respondents if 'investing billions to try to keep financial institutions and markets secure' was the right thing to do. A majority said yes."
Dan Balz and Jon Cohen write in The Washington Post that, based on the results of a Washington Post/ABC News poll, "voters are cool toward the administration's initial efforts to deal with the current crisis. Forty-seven percent said they approve of the steps taken by the Treasury and the Federal Reserve to stabilize the financial markets, while 42 percent said they disapprove."
Here's the Post poll's language: "Do you approve or disapprove of the steps the Federal Reserve and the Treasury Department have taken to try to deal with the current situation involving the stock market and major financial institutions? Do you approve/disapprove strongly or somewhat?"A Skeptical Response on the Hill
Jay Newton-Small writes for Time that, "having heard doom and gloom from the Bush administration to justify everything from the Iraq war to the Patriot Act, rank-and-file Republicans and Democrats remain very skeptical about the rescue plan. In many legislators' minds, President Bush has cried wolf one too many times. 'This is eerily similar to the rush to war in Iraq,' Rep. Mike McNulty, Democrat of New York, said. 'We have been told repeatedly by this administration that the economy is fundamentally sound, and then all of the sudden they say the economy is going to collapse.'"
Carl Hulse writes in the New York Times: "When it comes to the Bush administration's $700 billion Wall Street rescue, there is no deficit in terms of Congressional derision.
"Take the alcohol-related argument, offered Tuesday by Representative Lloyd Doggett, Democrat of Texas, as he reminded his colleagues that President Bush had recently described Wall Street as suffering from a hangover. 'Mr. President, you gave them the keys to the liquor cabinet, by failing to enforce our laws,' he said. 'And now you're really demanding that Americans, who didn't get invited to the party, must pay for everything destroyed in the drunken brawl.'"
Michael Kranish writes in the Boston Globe: "Democrats and some influential Republicans on the [Senate Banking] committee weren't convinced the plan would work, while other senators blasted the Bush administration for missing the warning signs leading up to the crisis. . . .
"At the hearing yesterday, Republicans on the committee were as harsh as Democrats in criticizing the Bush administration's handling of the financial crisis. Senator Elizabeth Dole of North Carolina, a White House ally, blamed the Bush administration for 'astounding' mismanagement and lax oversight of Wall Street. Senator Bob Corker of Tennessee said the administration was like a 'deer in the headlights,' and coming up with solutions 'on the fly.' . . .
"With the proceedings carried live on nationwide television, members of the committee repeatedly asked why the White House waited so long before revealing the scope of the problem. Paulson said he warned Bush in a meeting around the time he became Treasury secretary in July 2006."
Lori Montgomery, Paul Kane and Neil Irwin write in The Washington Post: "The Bush administration sent some of its most powerful figures to Capitol Hill yesterday to rally support for a $700 billion plan to revive the U.S. financial system, but they encountered stiff resistance from lawmakers who are deeply skeptical of the proposal and angered by the administration's push for its speedy approval.
"Vice President Cheney, White House Chief of Staff Joshua B. Bolten and other Bush advisers shuttled from meeting to meeting, selling privately to worried lawmakers what Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Chairman Ben S. Bernanke pitched publicly at a Senate hearing: a massive bailout for the financial markets. They urged Congress to authorize the plan quickly and without many alterations.
"The issue transcended party lines. Democrats voiced doubts, and many Republicans, particularly in the House, balked at the entreaties from Cheney, Bolten and other officials."
The Post reports that many Democrats remain "unconvinced of the need for speed, comparing the administration's warnings that the economy will collapse unless Congress acts to warnings they received regarding the invasion of Iraq."
The reaction to Cheney's trip to the Hill was particularly telling.
Daniel W. Reilly and Patrick O'Connor write for Politico: "There was a time when Dick Cheney could turn back a Republican revolt on Capitol Hill.
"That time is gone.
"The vice president traveled to Capitol Hill on Tuesday to silence a chorus of GOP complaints about Treasury Secretary Henry Paulson's $700 billion plan. But House Republicans who walked into a closed-door meeting with Cheney steaming over the plan walked out just as angry, and they described what happened in between as both 'a bloodbath' and 'an unmitigated disaster.' . . .
"[A] lawmaker present said that Cheney and his team 'were the wrong guys' to send to the Hill: 'The problem is that they've used up a lot of goodwill.'"Better From Bush?
Martin Kady II writes for Politico: "House Majority Leader Steny H. Hoyer (D-Md.) and Majority Whip Jim Clyburn (D-S.C.) called on the president Tuesday to deliver a prime-time address laying out the case for the plan -- an address aimed both at viewers back home and at Republican members at the Capitol.
"'I caution the president that we cannot pass this package without his party's support,' Clyburn said. 'If it's a crisis . . . and we all need to come together, then as leader of this nation, the president needs to take the lead and bring the country together behind his plan. He must make a case to congressional Republicans and to the American people that his $700 billion rescue package is the right solution.'"
Corey Boles writes for Dow Jones: "Hoyer said the crisis in the financial markets was due to the lack of oversight he said has been a hallmark of the Bush administration, and it was the administration's plan and therefore responsibility to convince the country of its necessity.
"'I would hope that the president would go on national television and speak to the American people,' Hoyer said. 'I want to emphasize: their rationale, their request. The administration requesting the largest intervention in the private sector perhaps in history.'"
And CNN reports today that Bush may make a prime-time speech as early as tonight.Considering the Alternatives
Anthony Faiola and David Cho write in The Washington Post: "To hear Henry M. Paulson Jr. and Ben S. Bernanke tell it, there is only one plan to save the economy -- use $700 billion in taxpayer money to take the worst of Wall Street's assets off its books.
"But leading economists and financial analysts argue that there are a host of alternatives that would reduce taxpayers' liabilities and perhaps more effectively address the urgent crisis in financial markets. Although these experts concede that the clock is ticking, they say other approaches have been dismissed too quickly. . . .
"One approach seeks to reduce taxpayers' liability by offering collateral-backed loans to troubled banks, leaving them to work out their own solutions. Another idea is to have the government set up a profit-driven investment fund with the aim of infusing the financial system with cash without taking on bad debt. Still others suggest radically different tactics of directly helping homeowners by reducing mortgage principal or bolstering banks by suspending capital gains taxes. . . .
"'They presented this as a comprehensive, decisive solution, but it's clearly not comprehensive and probably not decisive,' said Simon Johnson, a former chief economist at the International Monetary Fund and a professor at Massachusetts Institute of Technology."Opinion Watch
George F. Will writes in his Washington Post opinion column: "Members of Congress are being exhorted to stampede, like lemmings in reverse, away from a postulated cliff. But some of the economic geographers who say they know that the cliff is there, and that the economy will plunge over it if Congress stops to think before empowering the secretary of the Treasury to control the flow of capital through the veins of American capitalism, are some of those experts who said in March that prophylactic federal intervention in the matter of Bear Stearns was necessary to contain the crisis. . . .
"The essence of this crisis is lack of knowledge, including the inability to know who owes what to whom, and where risk resides. In such a moment, government's speed should not vary inversely with its information."
Robert J. Samuelson writes in his Washington Post opinion column: "Historians will judge whether his outsized proposal was necessary, but the notion that its congressional enactment -- assuming that happens -- would magically end the crisis seems like wishful thinking. Americans often delude themselves that all problems can be 'solved' if only government would act 'boldly.' This may be another example."
The New York Times editorial board writes: "Rather than rushing to approve the $700 billion bailout, lawmakers need to examine alternatives. They should look for one that ideally would let taxpayers share in the gains from any postbailout revival, along with the bankers and private investors who will make money if the bailout succeeds."
The USA Today editorial board writes: "For members of Congress, the choice should be clear: Come to the rescue, but get something in return. Banks don't lend out of pure altruism. Neither should taxpayers."But Is It Inevitable?
Dana Milbank writes in The Washington Post that much of the expression of skepticism by senators yesterday was just posturing. "Lawmakers, afraid of being blamed for the next Great Depression, have little choice but to give Paulson much of what he wants. . . . [A]fter the Bush administration railroaded them on other emergency measures that later turned out to be problematic -- the Iraq war, the Department of Homeland Security and the USA Patriot Act -- the bipartisan outrage suggests that, this time," Milbank writes, all Congress will do is "make the administration squirm a bit."
Indeed, David Lightman and Margaret Talev write for McClatchy Newspapers that "the point man for the package in the House of Representatives, Financial Services Committee Chairman Barney Frank, D-Mass., said he didn't think that the level of dissent on both sides of the aisle was enough to derail a major bailout package, and that 'our primary focus at this point is still getting the thing nailed down with the Senate. I think we will be together on everything.
"'Am I concerned about all the concerns? You know, this is legislation. There are some people who I think are trying to derail it, but there are a lot of people who honestly want to make this work.'"A Fan
Bush has at least one fan in this campaign: His former speechwriter and adviser, Michael Gerson, who writes in his Washington Post opinion column that Bush and Paulson "have assumed the mantle of Franklin D. Roosevelt."Fratto Watch
White House spokesman Tony Fratto made two curious statements in a conference call yesterday.
"With respect to executive pay," he said, "I'm not going to get into specific, point-by-point details on what our views are on that, other than the Secretary of Treasury said it would make more difficult to make this plan work and effective if you provide disincentives for companies and firms out there who are holding mortgage-backed securities and other securities from participating in the program. You have to remember, these are not all weak or troubled firms that own mortgage-backed securities. A lot of them are very successful banks and investment houses that have done very well, have been responsible, are holding performing assets that have value. They were not necessarily irresponsible players, and so you have to be careful about how you deal with them."
Markos Moulitsas blogged afterward on Daily Kos: "Careful how you deal with them? How about you LET THE [expletive] FREE MARKET HANDLE IT then? If they want taxpayer funds to bail out their incompetence, they give up equity, they accept limits on executive compensation. If they don't want those conditions imposed on them, they don't take our money."
Fratto also denied that the plan "was conceived of or put together hastily. There was an enormous amount of analysis and debate and discussion before we came forward with this program. I think we have anticipated a lot of the questions that members of Congress would naturally have about taking this step, but we have had -- some of the policy staff have had months to think about what a program like this would be like and how it would work. Others have had at least weeks to think about it. Members of Congress have had days to think about it."
So the administration saw this coming months ago -- but neither did anything nor told anyone?
AFP reports: "In a subsequent email exchange, Fratto declined to say when the administration first began internal discussions on the mammoth plan, but told AFP: 'It shouldn't come as a surprise that we think about contingencies.'"Lame Duck Watch
Sheryl Gay Stolberg writes in the New York Times: "With his days in office dwindling, President Bush had scaled back his ambitions even before the Wall Street crisis. Now, economic turmoil has crashed like a wave over his administration, threatening to wash away Mr. Bush's plans for the remainder of his term.
"Barely 10 days ago, White House officials were still talking about the possibility of getting an energy bill through Congress, and just last week the president hosted his counterparts from Panama and Colombia in a bid to persuade lawmakers to pass long-stalled free-trade pacts.
"By Tuesday, as Mr. Bush's top advisers, including Vice President Dick Cheney, struggled to sell a huge $700 billion bailout plan to a skeptical Congress, their final-days priorities were undergoing a stark reordering. The bailout is likely to overshadow anything else Mr. Bush does during his 119 days left in office.
"'The bailout's all that's left,' said one Republican strategist who has consulted frequently with the administration."Bush at the UN
Neil MacFarquhar writes in the New York Times: "Wall Street and the Bush administration's record of financial oversight came under attack at the United Nations on Tuesday, with one world leader after another saying that market turmoil in the United States threatened the global economy.
"'We must not allow the burden of the boundless greed of a few to be shouldered by all,' said President Luiz Inácio Lula da Silva of Brazil in an opening speech that reflected the tone of the gathering. . . .
"With a pillar of American power -- its financial leadership -- so badly shaken, there was a certain satisfaction among some of the attendees that the Bush administration, which had long lectured other nations about the benefits of unfettered markets, was now rejecting its own medicine by proposing a major bailout of financial firms. . . .
"President Bush, making his eighth and last address to the United Nations, with which he has had a troubled relationship, sought to reassure world leaders that his administration was taking 'bold steps' to stanch the economic crisis in the United States, which, he said, 'would have a devastating effect on other economies around the world.'
"Amid a long ode to the importance of continuing the fight against terrorism, he devoted one paragraph to the rescue plan."
And here's something worth following up: "Germany's chancellor, Angela Merkel, . . . said that at last year's meeting of the Group of 8, she had strongly urged both the United States and Britain to be more rigorous in supervising financial activities, and even offered specific proposals to be applied to banks and other institutions.
"But the United States was not interested, she said. She also seemed to express a certain exasperation that the United States was now asking Europe for help, after inflicting damage on the rest of the world that could have been avoided."Iraq Watch
Deb Riechmann writes for the Associated Press: "The coalition of the willing that went to war in Iraq is becoming the coalition of the disappearing.
"President Bush and Iraqi President Jalal Talabani formally thanked the shrinking band of allies at a meeting Tuesday night on the sidelines of the U.N. General Assembly. . . .
"The coalition will dwindle from about 30 countries to a handful in the next 90 days or so, according to White House advisers."
From Bush's remarks: "A lot of people around the world have made sacrifices along with the Iraqi people to enable a country to emerge from the shadows of tyranny become a hopeful example for nations around the world."
A hopeful example?First Nail Watch
The first nail was driven in today by House Speaker Nancy Pelosi. No, not in Bush's coffin, but close. For the Jan. 20, 2009, presidential inaugural platform.
Johanna Neumann blogged a preview the other day for the Los Angeles Times.Fundraising Watch
Jennifer Duck reports for ABC News: "The White House announced Tuesday that President Bush will postpone a scheduled fundraiser in Florida Wednesday so that he can focus on the economy, according to White House Press Secretary Dana Perino."Live Online
I'm Live Online today at 1 p.m. ET. Come join in.Late Night Humor
Stephen Colbert on the bailout: "This is one of the most important, irrevocable economic decisions we will ever make. Let's make it in a state of panic."
Jon Stewart asked John Oliver: "Is this economic icing, then, sort of the turd icing on this administration's [expletive]-cake, if you will?"
And via U.S. News:
Jay Leno: "Oh, more bad news from President Bush. Remember those rebate checks from a few months ago? He wants them back. Yeah! We need to give that money to rich people on Wall Street. They need it more than you do!"
Jimmy Kimmel: "President Bush made a farewell speech in front of the United Nations General Assembly. You know, the President is not an eloquent speaker, but I thought he spoke quite powerfully today, especially at the end of his speech when he looked out at all the delegates representing all the nations of the world and . . . said, 'Can we borrow some money?'"Cartoon Humor