By Dan Froomkin
Special to washingtonpost.com
Thursday, September 25, 2008; 12:31 PM
In a rare prime-time speech last night, President Bush tried to terrify the American public into supporting his administration's proposed $700 billion Wall Street bailout. Given that some sort of compromise proposal was apparently already being worked out with congressional leaders, that might have been overkill.
But Bush clearly underperformed in addressing two things about the financial crisis. He didn't acknowledge any responsibility for what happened under his watch. And even more significantly, he didn't do nearly enough to assuage anger that the fat-cat Wall Street masters who profited so obscenely from driving the mortgage market into a frenzy are now going to be bailed out with taxpayer dollars, even as ordinary people continue to suffer.The Innocent Bystander
Terence Hunt writes for the Associated Press: "How did it happen, America's grave financial crisis? President Bush offered a bunch of explanations but held Washington completely blameless, painting a picture of a government standing innocently on the sidelines as the economy went off the rails.
"Somehow, under Bush's scenario, the country wound up at the precipice of 'a long and painful recession' at a time when, apparently, the Congress, the White House, the regulators and the Fed were doing exactly what they were supposed to be doing. Now that the economy has tanked, Bush says the federal government is responding with 'decisive action.'
"Shouldn't the people in charge have been doing that before everything became such a mess? . . .
"Nowhere in his 13-minute speech did the president suggest that the people in Washington who are supposed to keep an eye on the economy missed a step, failed to raise alarms or hesitated to intervene. The guilty parties in Bush's script were overseas lenders flush with cash, American borrowers reaching for more than they could afford, easy credit terms, a banking system eager to cooperate and too much optimism about rising home values.
"Bush spoke vaguely about investment banks that 'found themselves saddled with' toxic assets and banks that 'found themselves' with questionable balance sheets.
"The economic collapse -- well, it happened."
Steve Clemons blogs: "What is shocking about the presentation by Bush -- and the deal that is unfolding -- is that we don't see any acceptance of responsibility for the failure of his team's stewardship of the economy. We didn't hear acknowledgment that the compulsive deregulation mantra of Bush's political and economic allies created a massive bubble where lots of billionaires were created and now tens of millions of less fortunate Americans are holding the bill.
"We didn't hear Bush say that it's time to reverse the tax cuts that he put in place to help those who have already benefited from the perverse finance and housing bubble that was pumped up.
"We didn't hear a firm commitment from Bush to help the working families who hold these sub-prime and adjustable rate mortgages to stay in their homes and to help stabilize the lives of hard-hit Americans, their neighborhoods and their jobs. All the while, the macro players and big firms and their stakeholders are bailed out."Not a Giveaway?
John D. McKinnon writes in the Wall Street Journal: "The president tried to defuse widespread criticism of the $700 billion plan as a bailout of Wall Street, telling Americans in a prime-time televised address that the program 'is aimed at preserving America's overall economy,' not individual companies or industries. . . .
"Signaling a possible concession, Mr. Bush said the plan should be 'designed to protect taxpayers.' He even appeared to open the door to limits on compensation for executives of some companies, another provision many Democrats and some Republicans have demanded. Mr. Bush said there is emerging consensus that the plan 'should make certain that failed executives do not receive a windfall from your tax dollars.'"
But as McKinnon notes: "Two people familiar with the situation said Mr. Bush envisions compensation restrictions only in cases where the government is helping out a failing institution." In other words, it could have almost no effect.
Andrew Leonard writes for Salon: "We didn't hear anything about slowing foreclosures or getting equity for taxpayers from Bush. The president said he understands the 'frustration of responsible Americans,' but I'm not sure he gets exactly how much anger there is in this country at what has happened not just recently, in the economy, but over the entire course of his administration. Most Americans know that the economy is in trouble, even if they don't quite grasp how close we are skittering to a major meltdown. But what makes some of us maddest is to think that the people who have benefited most from the culture of deregulation and hands-off government that are supposed to be the watchwords of the Republican Party will be the recipients of one of the greatest disbursements of government largess in history."Putting It On the Line
Peter G. Gosselin, Richard Simon and Maura Reynolds write in the Los Angeles Times: "Putting his battered prestige on the line, Bush painted a stark picture of the country's financial condition: 'We're in the midst of a serious financial crisis. . . . Our entire economy is in danger,' he said. 'America could slip into a financial panic.' . . .
"With financial markets still jittery and credit for day-to-day economic activity apparently freezing up, Bush said he would convene a White House meeting today with leading Democrats and Republicans, including the two parties' presidential nominees, to seek agreement on a plan."
James Gerstenzang writes in the Los Angeles Times: "The White House is engaged in multiple skirmishes -- trying to fight the notion that the president has been AWOL in what it certainly hopes to be the final crisis of his tenure, while also seeking to win over a skeptical Congress and populace on a key point: that the extensive authority the legislation would grant the president's representatives and their successors is necessary."
To that end, Gerstenzang writes, Bush was sending two messages last night.
"One, to Congress and the nation, about the need to act with unprecedented alacrity on the economic bailout proposal drawn up in his name -- though his hand has been barely seen in its development.
"And a second, to the same audience, that the election 41 days away notwithstanding, the country has but one president at a time, and right now it is George W. Bush."
Michael Abramowitz writes in The Washington Post: "After ceding the lead role in responding to the crisis to Treasury Secretary Henry M. Paulson Jr., Bush last night grabbed the largest megaphone available -- a prime-time White House address to the nation -- to make the case that the economy could collapse without extraordinary government intervention in the workings of the financial markets. . . .
"With the president's approval ratings as low as ever -- 26 percent in a new Fox News poll-- his credibility among Democrats virtually nonexistent and his influence minimal among Republicans in Congress, it is not at all clear that the president's exhortations will move the emerging legislative package over the finish line in the face of opposition from vocal factions in both parties.
"But Bush and his aides concluded that they needed to at least try to explain to the American people the consequence of inaction -- and the reality, in their view, that the well-being of Main Street is inextricably linked to the recovery of Wall Street.
"One senior administration official, not authorized to speak on the record, noted that many members of Congress are 'getting a lot of negative feedback' about the Bush plan. 'A lot of members have said, "We need some help convincing the American people that there is a crisis and we need this extraordinary action," ' this official said. 'If not the president, who's going to do it?' "Where's the Leadership?
The New York Times editorial board writes: "It took President Bush until Wednesday night to address the American people about the nation's financial crisis, and pretty much all he had to offer was fear itself.
"There was no acknowledgement of the shocking failure of government regulation, or that the country cannot afford more tax cuts for the very wealthy and budget-busting wars, or that spending at least $700 billion of taxpayers' money to bail out Wall Street and the banks should be done carefully, transparently and with oversight by Congress and the courts.
"We understand why he may have been reluctant to address the nation, since his contempt for regulation is a significant cause of the current mess. But he could have offered a great deal more than an eerily dispassionate primer on the credit markets in which he took no responsibility at all for the financial debacle."
Gail Collins writes in her New York Times opinion column: "How do you think the besieged financial community felt when the White House announced that George W. Bush was going to address the nation on television Wednesday night?
"'We are in the midst of a serious financial crisis,' the president said, reading his lines flatly and stolidly, like an announcer delivering a long public-service message about new parking regulations for the holiday season. . . .
"There is, in a way, a kind of talent required to tell the nation that it's teetering on the brink of disaster in a way that makes the viewers' attention wander. Bush's explanation about how the rescue bill would unclog the lines of credit made the whole thing sound less important than a Liquid-Plumr commercial."Still Doubting
Stan Collender blogs: "How does a lame duck president with little or no credibility on economic issues and overall very low job approval ratings make a nationwide speech that dramatically changes public opinion on the Paulson Plan?
"How does a president with few rhetorical skills find the words and delivery to be convincing to a skeptical nation?
"How does a president with little credibility on economic issues rescue the plan proposed by the one person in his administration who has some credibility on economic issues?"
Short answer: He doesn't.
"I didn't hear the personal appeal from the president that I thought was needed. I also didn't hear the memorable one-liner . . . that people will remember and repeat tomorrow. It was a largely topline explanation of the problem that didn't really explain why the average person should support the Paulson plan. The president didn't do any harm with this speech, but I'm not sure he moved the needle either."
Dean Baker blogs for TPMCafe that "it is extremely difficult to trust this administration. It was good to hear President Bush say that he doesn't want the CEOs that wrecked their companies profit from this bailout, but does anyone believe that he will structure the bailout to ensure that this does not happen? Similarly, he has gone along with the idea that the government will get an equity stake in financial companies in exchange for buying their junk, but does anyone believe that we will get as good a deal as Warren Buffet did when he bought a stake in Goldman Sachs?
"There can be no presumption of good faith from this administration. Unless the conditions are written in stone, for example specific rules that limit executive compensation using the same type of language that CEOs use when they sign contracts with their companies, there is no reason for the public to believe that they will get a fair deal in this bailout. The public should also demand that some genuine outsiders, representatives of labor, consumer groups and other non-Wall Street segments of society, have a direct oversight role in this deal.
"If these demands are too extreme for the Bush administration, then they are not telling the truth about the financial crisis. If the risks are really as great as President Bush claims, then he should unhesitatingly agree to guarantees that will prevent the incompetents from profiting further from their incompetence. We shall see."
Robert Kuttner writes for the American Prospect that Congress should take a few weeks before acting: "Paulson's tactic of demanding instant action because impending catastrophe recalls how the same Bush Administration rushed through the USA PATRIOT Act. But there are two key differences. After 9/11, American citizens were terrified and willing to give the Bush administration whatever it wanted. And Congress totally caved. This time, citizens are frightened -- but not gulled. Congress is hearing from constituents that the Paulson plan is an outrage. . . .
"For a lot less than $700 billion, we could refinance every mortgage in America that is at risk of foreclosure. Along the way, we could keep people in their homes and shore up the collapse in housing prices. Paulson's plan does neither. Markets would begin loosening up, as in Paulson's plan, but the route would be bottom-up rather than top-down. Homeowners would be the primary beneficiaries rather than the incidental ones. With Paulson's approach, the wave of foreclosures continues, reducing the likelihood that the government gets its money back."And Yet, a Deal Is Close
Lori Montgomery and Paul Kane write in The Washington Post: "Treasury Secretary Henry M. Paulson Jr. said the White House would drop its resistance to lawmakers' demands for limits on executive compensation at companies that accept taxpayer money. Rep. Barney Frank (D-Mass.), the committee's chairman, called that a 'big step forward' and said he would push next year to apply those limits more broadly.
"Frank said Democrats in the House and Senate had reached agreement on a bill that would include an oversight board to monitor the bailout program, requirements that taxpayers share in future profits of companies that seek assistance and new powers for bankruptcy judges to modify home mortgages for distressed borrowers. Lawmakers also discussed doling out the money in segments, Frank said, adding, 'It's not going to be a straight $700 billion.'"
Gosselin, Simon and Reynolds write in the LA Times: "Frank explained the political logic of the situation this way: 'Whatever you think about whether or not there was a need [for a bailout] . . . once the president, secretary of the Treasury and chairman of the Federal Reserve have announced that if you don't do this, there will be a collapse, there's probably going to be a collapse if you don't do it.'"Germans Take Issue
Eric Pfanner writes in the New York Times about how Europeans are bristling at Bush's assertion that an influx of foreign money into the United States was one of the root causes of the credit crunch.
"Peer Steinbrück, the German finance minister, countered in a speech in Berlin that the conditions that gave rise to the current turmoil in the markets were allowed to develop because of a reckless pursuit of short-term profit and huge bonuses in 'Anglo-Saxon' financial centers -- along with a lack of political backbone to stand up to what he characterized as bankers' greed."Why the $700 Billion Figure?
Where does that $700 billion figure come from? Bush certainly didn't explain that last night. Maybe because there is no good explanation.
Brian Wingfield and Josh Zumbrun write for Forbes that "some of the most basic details" of the plan, "including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.
"'It's not based on any particular data point,' a Treasury spokeswoman told Forbes.com Tuesday. 'We just wanted to choose a really large number.'"
Paul Krugman blogs for the New York Times: "My sneaking suspicion is that they started with a determination to throw money at the financial industry, and everything else is just an excuse."Torture Watch
Mark Mazzetti writes in the New York Times: "Senior White House officials played a central role in deliberations in the spring of 2002 about whether the Central Intelligence Agency could legally use harsh interrogation techniques while questioning an operative of Al Qaeda, Abu Zubaydah, according to newly released documents.
"In meetings during that period, the officials debated specific interrogation methods that the C.I.A. had proposed to use on Qaeda operatives held at secret C.I.A. prisons overseas, the documents show. The meetings were led by Condoleezza Rice, then the national security adviser, and attended by Defense Secretary Donald H. Rumsfeld, Attorney General John Ashcroft and other top administration officials. . . .
"The documents are a list of answers provided by Ms. Rice and John B. Bellinger III, the former top lawyer at the National Security Council, to detailed questions by the Senate Armed Services Committee, which is investigating the abuse of detainees in American custody. . . .
" ABC News first reported on the White House meetings in a broadcast earlier this year."
Joby Warrick writes in The Washington Post: "The details of the controversial program were discussed in multiple meetings inside the White House over a two-year period, triggering concerns among several officials who worried that the agency's methods might be illegal or violate anti-torture treaties, according to separate statements signed by Rice and her top legal adviser. . . .
"Rice and [John B. Bellinger III, legal adviser to Rice at the State Department and formerly her top legal aide at the National Security Council,] both said they recalled related discussions inside the White House of an obscure Army survival training program that subjected military trainees to waterboarding -- a technique that simulates drowning -- and other harsh tactics to prepare them for conditions they might face if captured. The survival program, known as Survival, Evasion, Resistance and Escape, or SERE, was the inspiration for several of the interrogation methods later used at both CIA and Defense Department detention camps. . . .
"Senate Armed Services Committee Chairman Carl M. Levin (D-Mich.) has been investigating the origins of the decision to use harsh interrogation tactics on high-level detainees held by the Pentagon and CIA. Many congressional Democrats and some Republicans have equated some of the techniques to torture. Levin has linked the decision to use SERE methods to the abuse that occurred at Iraq's Abu Ghraib prison.
"'These discussions took place at the highest levels of the White House,' Levin said in an interview. The documents belie administration claims that abuse of detainees was 'the work of a few bad apples,' he said.
"Levin noted that the SERE methods themselves -- which included not only waterboarding but also exposure to temperature extremes, forced nudity and sensory deprivation -- were designed by Chinese communists to extract confessions from captured U.S. servicemen.
"'The validity of the confessions they didn't care about; they just wanted the confessions so they could put them on TV,' Levin said."
I wrote about the ABC report in my April 10 column. Discussions were so detailed, ABC's sources said, that some interrogation sessions were virtually choreographed by a White House advisory group.
And in my April 14 column, I wrote about how Bush said he was aware of the meetings, and said they were no big deal. I made the point that if you consider what the government did to be torture, which is a crime according to U.S. and international law, Bush's statement shifted his role -- and that of his top advisors -- from being accessories after the fact to being part of a conspiracy to commit.Deposing Addington
Citizens for Responsibility and Ethics in Washington announced yesterday that a federal court had granted its request to take a deposition from David Addington, Vice President Cheney's chief of staff, about record-preserving practices in that office.
CREW reports: "The court rejected the government's arguments that no discovery is warranted because they have demonstrated full compliance with the Presidential Records Act. Based on three White house declarations, U.S. District Judge Colleen Kollar-Kotelly questioned whether the vice president is preserving all vice presidential records, or only two subsets of records. The depositions must take place by October 6, 2008.
"Anne Weismann, CREW's chief counsel said today, 'With this decision, there is now nowhere for the White House to duck and hide. We are hopeful that these depositions will allow us to finally uncover whether these important records are being preserved or deliberately lost to future generations.'"
The Houston Chronicle editorial board writes: " Saturday a federal judge ordered Cheney to preserve a wide range of official papers from his time in office, because of concerns by an advocacy group that Cheney might otherwise destroy or withhold important documents. . . .
"As the Bush administration winds down, it would be foolhardy to expect Cheney to cooperate freely with efforts to shed light on the scope of his major role in this administration and his influence in shaping U.S. policy. But this ruling puts him on notice that he will be held accountable, and that's a good, if somewhat belated, precedent to set."India Watch
Demetri Sevastopulo and James Lamont write in the Financial Times: "Manmohan Singh, the Indian prime minister, will meet George W. Bush in Washington on Thursday as both leaders watch anxiously to see whether the US Congress will approve a landmark US-India nuclear deal.
"The deal, which would pave the way for the US to provide India with civilian nuclear technology, is seen as vital to both men."Legacy Watch
Timothy Garton Ash writes in the Guardian: "As the two men who would succeed him train like Olympic athletes for tomorrow's foreign policy debate, pause for a moment to complete your final report on the 43rd president of the United States. What would you say?
"I would sum up his two terms in four words: hubris followed by nemesis. . . .
"The irony of the Bush years is that a man who came into office committed to both celebrating and reinforcing sovereign, unbridled national power has presided over the weakening of that power in all three dimensions: military, economic and soft. . . .
"The massive, culpable distraction of Iraq, Bush's war of choice, leaves the US - and with it the rest of the west - on the verge of losing the war of necessity. Here, resurgent in Afghanistan and Pakistan, are the jihadist enemies who attacked the US on September 11 2001. By misusing military power, Bush has weakened it.
"Economically, the Bush presidency ends with a financial meltdown on a scale not seen for 70 years. The proud conservative deregulators (John McCain long among them) now oversee a partial nationalisation of the American economy that would make even a French socialist blush. . . .
"As for the decline in American soft power, . . . [h]is arrogance, his unilateralism, his insensitivity, his long-time denial of the need for urgent action on climate change: all fed directly into the plummeting credit of the US around the world. It would have been a different story with a different president.
"For years now, we have seen those who hate the US abusing and burning effigies of Bush. The truth is, the anti-Americans should be building gilded monuments to him. For no one has done more to serve the cause of anti-Americanism than GW Bush. It is we who like and admire the US who should, by rights, be burning effigies."Cartoon Watch
Jim Borgman on another Bush pig in a poke, Pat Bagley on Bush's puppet masters, Tom Toles on Bush's credibility problem, Steve Sack on Bush and the taxpayers, Rex Babin on Bush's hole, Lee Judge on Bush's idea of checks (not balances), Jim Morin on Bush's team, Rob Rogers on the new "Che W", and John Sherffius on Bush's core message.