What Does This Election Mean for Race?

[From a post in an intense conversation on Facebook, which began with Judith Butler's analysis of the significance of this year's Presidential election.]

My biggest cause for concern is the discourse in which individual achievement is an index of progress against racism. We have had two Black Supreme Ct justices, 1 Black Secretary of State, 2 Black Senators, 3 Black governors, several Black Fortune 500 CEOs, a Black woman the top entertainer (Oprah), and several other key firsts. The ascension of each was absolutely historic, and of the same KIND (in the dichotomy kind/degree) as Obama’s election. I contend that Obama’s election is different primarily in DEGREE, not KIND. Yes, Obama was elected by half of the electorate, while the others gained their position through other selection processes. But again, I think this is a difference of degree, not kind: Oprah, for instance, was selected, so to speak, by a national audience of TV consumers.

Iris Marion Young focuses on the difference between distributive paradigms for talking about justice, and domination-oriented ones. In the former, justice means changing the distribution of things taken to be quantifiable resources. In the latter, justice means eliminating structures of group-based domination. Almost all of the discourse of the significance of Obama’s election is based in the distributive paradigm: one of the most significant properties has now been more fairly re-distributed. But the Senate composition itself points to the failure of this distributive approach to capture the full picture of injustice: the re-distribution of the Presidency actually creates the possibility of the non-distribution of the Senate. In the same 45 years since “I Have a Dream” that people have invoked to mark the historicity of a Black person attaining the Presidency, only two Black people (out of several hundred) have been elected Senators. When Obama leaves the Senate, at most the Senate will be 1% Black – in a nation that is at least 13% Black.

Here’s the thing – many, many people (42% in the most recent Gallup poll) claim that Obama’s election will “improve race relations.” This implies that Obama’s election will go towards eradicating racism. When one pushes to ask HOW the election will actually do this, usually one of two effects is suggested: (1) Obama will help White people continue to re-imagine what Black people can be, which will create ; or (2) Obama will model a way for White and non-White people to “talk about race” in a way that doesn’t “divide,” like before. The problem is that neither of these actually helps eradicate racism. Racism persists because one racially marked group is consistently permitted asymmetric participation in the structures of power-relations that then (differentially) constrain the field of action available to all racially-marked Others. Actually ending racism involves, in the most basic terms (1) recognition, on the part of the asymmetrically participating group, that they ARE, in fact, asymmetrically participating, and (2) adoption, on the part of the asymmetrically participating group, of practices (which includes policies) that systemically undermine the asymmetry.

To put it plainly: racism only ends when and as White supremacy is acknowledged as real group-effect and White people decide to do things otherwise. At a minimum, there must be recognition of non-White groups’ actually being asymmetrically constrained (in different forms and degrees among different racially other groups). And my worry is that a distribution-based discourse of individual achievement works AGAINST the recognition of the persisting GROUP-based asymmetry. Certainly, among Black communities, individual achievement can deeply be a sign of group justice-making. But in the consciousness and discourse of White people, the recognition of individual achievers usually does not co-articulate with recognition of realities of GROUP domination. Indeed, in White consciousnesses – especially those (the majority) who are not conscientized much around racism – the recognition of individual achievement often occludes recognition of group domination.

On the Eve of the 2008 Election

Most will feel that this message is premature in the highest. But an essential challenge is to stay one step ahead of the political curve, to anticipate the reality our leaders will be trying to impose tomorrow, when the dust is still settling from today. We regular voters are totally caught up in the Presidential election (and, for some, the Congressional one). But the elites who administer our political discourse are well immersed in shaping the post-election realities – and we have to be ready to push back, hard and fast.

From the momentum of the Nov. 4 election, we must define a new operative policy “center” on the issue of universal healthcare. A vast majority of the electorate wants expanded healthcare access, but there is nothing close to consensus on the details of achieving it. Yet a proposal being developed behind the scenes by Sen. Ted Kennedy (see article below) may well be the best way to establish such a new center.

Fiscal conservatives – who will constitute a working majority in at least the House of Representatives – will undoubtedly push the frame that the financial crisis means there’s no money for major expansion of healthcare access. That will make it even more urgent to push back with a frame that says, NOW IS THE TIME FOR UNIVERSAL HEALTHCARE.

We have found $1 trillion dollars for the War on Terror and $700 billion for a Wall Street bailout: can we find the money to give every US person access to quality, affordable healthcare? You betcha!

While recovering from a brain tumor, most of us (who have healthcare) would focus on convalescing. But from his sickbed, Sen. Kennedy has been mobilizing the force to complete a task that has eluded FDR, Truman, Johnson, Nixon, and Clinton. He has been coordinating a major effort with both Congresssional leaders AND private-sector stakeholders to arrive at a proposal for universal healthcare to be introduced at the very start of the 111th Congress.

If Kennedy succeeds in crafting legislation that would deliver universal or near-universal healthcare, we need to do all we can to generate the political will that re-defines the policy center towards the sort of plan he is preparing.

These conversations are EXTRAORDINARY in that they have included the AFL-CIO, the Business Roundtable, the U.S. Chamber of Commerce, the National Federation of Independent Business, the National Retail Federation, the Federation of American Hospitals, the American Medical Association, America’s Health Insurance Plans, Families USA, AARP and the Consumers Union. IF Kennedy really can craft legislation acceptable to all those groups (and that’s a big if, to be sure) then it will likely have the best chances of prevailing against corporation opposition as anything anyone will come up with.

As the Wall Street Journal noted last week, the wing of the Democratic elite with the most influence over Obama is pushing for an incremental approach to the new Democratic trifecta (Presidency, House, Senate). This would likely look something like focusing on S-CHIP initially, and then pushing several other bills that increase healthcare access in particular ways – and then pushing for broad healthcare reform in 2010 or even after the 2010 midterm elections.

Some will say that only incremental steps are possible right now. But isn’t the whole point of our moment that Yes, We Can make fundamental change in our government and policy? Every year, 19,500 people – six 9/11s – die due to lack of health insurance. These deaths call for something more than incremental change.

The War on Terror isn’t incremental. The Wall Street bailout isn’t incremental. Such a healthcare crisis should be able to generate a concrete, widespread sense of crisis on par with terrorism or recession (or Depression or “Law and Order” in past eras). But only if people like you and me demonstrate the political will to demand fundamental change. And only if there is massive pressure for fundamental change might Congress and the President choose incremental options that make real headway to decreasing the no-healthcare death-rate.

I ask you to be prepared for Sen. Kennedy’s proposal and, if it really would accomplish near-universal healthcare access, to fight for it. I also invite you to join, support, or sign up for updates from three outstanding groups advocating and organizing for universal healthcare. I have found them great sources for information and ways to act:

* Physicians for a National Health Plan (non-physicians can join, too);

* National Healthcare for the Homeless Coalition;

* Healthcare Now! coalition.

With hopes for real change in our Republic,
Jeremy

* * *
Kennedy Secretly Crafts Health Care Plan

By Jeffrey H. Birnbaum
The Washington Times
Friday, October 24, 2008

From his sickbed, Sen. Edward M. Kennedy has secretly been orchestrating meetings with lobbyists and lawmakers from both parties to craft legislation that would greet the new president with a plan to provide affordable medical coverage to all Americans, a measure he has called “the cause of my life.”

Mr. Kennedy has been sidelined for months with a dangerous form of brain cancer. But despite his disheartening medical prognosis – or maybe because of it – aides and activists say, the Massachusetts Democrat’s decades-long quest for health care reform may now be closer to success than ever.

“There is a serious process moving forward and that augurs well,” said Ron Pollack, executive director of Families USA, a nonprofit health care advocacy group. “There really is a sea change that should not be underestimated in terms of attitude.”

Among those who are receptive to a bipartisan plan and who have participated in the initial talks is Sen. Michael B. Enzi of Wyoming, the ranking Republican on the Senate health committee, which Mr. Kennedy leads.

The meetings “are a testament to how people feel about him,” Enzi spokesman Michael Mahaffey said. “Senator Enzi is looking forward to working with Senator Kennedy on this issue.”

Mr. Kennedy’s goal, his aides say, is to introduce a universal health care bill as soon as the new Congress convenes next year and to push quickly for its passage – a much-accelerated timetable compared with the last time that a health care overhaul was on the agenda, at the start of the Clinton administration.

“Senator Kennedy has spent the last several weeks laying the groundwork for reform so that we can be ready to go in 2009,” said his spokesman Anthony Coley. “This is and has been the cause of Senator Kennedy’s life.”

He also hopes the bill’s fortunes will be helped by the extensive private consultations between his staff and major players in the health care system. His aides have met with representatives of business groups, labor unions, consumer organizations, insurers, physicians, drug companies and hospitals.

President Clinton’s health care initiative faltered 15 years ago largely because he was unable to gain the support of many of these key factions after constructing a plan that kept many Congress members in the dark for months.

Mr. Kennedy is also moving with the knowledge of the presidential candidate who’s now leading in the polls, Sen. Barack Obama, and appears determined not to repeat the Clinton-era mistakes.

While Mr. Kennedy is shooting for universal coverage, the two men running for president – John McCain and Mr. Obama – have their own plans that many analysts say fall short of that goal. An Obama Senate aide sat in on many of the early Kennedy meetings; no McCain aide did.

The wide-ranging talks have taken place behind closed doors on Capitol Hill and have been monitored by Mr. Kennedy through daily telephone updates from his staff, said his aides and several participants.

The discussions, which started in June, included 14 roundtable meetings in the Dirksen Senate Office Building. These were attended not only by Kennedy aides but also by staffers, both Republicans and Democrats, from the Senate committees with jurisdiction over health care. Those include the Budget Committee, the Finance Committee and the committee that Mr. Kennedy leads, the Committee on Health, Education, Labor and Pensions.

Also attending was the entire panoply of interest groups with stakes in the cost and availability of health coverage. These included the AFL-CIO, the Business Roundtable, the U.S. Chamber of Commerce, the National Federation of Independent Business, the National Retail Federation, the Federation of American Hospitals, the American Medical Association, America’s Health Insurance Plans, Families USA, AARP and the Consumers Union.

Mr. Kennedy’s staff has started to meet regularly with a small group of people representing each facet of industry as well as consumers. Kennedy aides said they have not drafted legislation but probably will do so soon.

The conversations are extraordinary for several reasons. First, they have been bipartisan – a rarity in the increasingly polarized capital these days.

The talks also have managed to put in the same room interests that rarely meet – let alone agree with one another. No one is under the illusion that finding a compromise will be easy. Indeed, it remains unclear that a long-elusive consensus can be found. Participants agree, however, that Mr. Kennedy’s active role – particularly during his convalescence – have increased the likelihood of a breakthrough.

“He sets aside several hours each day. He’s calling senators. He’s working tirelessly,” Mr. Pollack said. “He’s making things happen.”

“Kennedy is really seizing the moment,” said Adrienne Hahn of Consumers Union. “He’s a real bridge-builder. He can bring strange bedfellows together.”

Mr. Kennedy’s close relationship with Mr. Obama could prove a boon to those prospects as well.

Kennedy aides say that although they were not working with the Obama campaign on their plan, they also are not considering proposals to which a President Obama would object.

“Were Obama to win, [Mr. Kennedy] will have significant influence on an Obama administration?” Mr. Pollack predicted.

The senator from Massachusetts was an early backer of Mr. Obama’s presidential run, and his speech at the Democratic National Convention in August, which focused on health care reform, was one of the event’s highlights.

“I pledge to you that I will be there next January on the floor of the United States Senate,” Mr. Kennedy told the cheering crowd in Denver. “This is the cause of my life, new hope that we will break the old gridlock and guarantee that every American – north, south, east, west, young, old – will have decent, quality health care as a fundamental right and not a privilege.”

But Mr. Kennedy will not be the only lawmaker to offer a health care package next year. Sen. Max Baucus, chairman of the Senate Finance Committee, also might introduce a proposal, though a Baucus aide said the Montana Democrat plans to work closely with Mr. Kennedy.

The 76-year-old senator received a diagnosis in May of a malignant brain tumor and, after surgery, chemotherapy and radiation treatment, has been recuperating at his family’s compound in Hyannis Port. Insiders say he devotes several hours a day to his health care project.

“Here’s a guy who has made a serious effort on health reform several times in the past and failed,” said John Rother, a top executive at AARP, the senior citizens lobby. “There will be a very strong impulse in the Congress to do things for him, especially things he really cares about, and health care would be at the top of that list.”

“There is this real feeling,” Mr. Rother added: ” ‘Let’s do it for Ted.’ “

Why I Emphasize Congress So Much.

I wrote this earlier today to a group of my progressive high-information-voter friends on Fb, intentionally hoping to hear multiple viewpoints on this issue. I’ve gotten tons of flack over the past few months for the degree to which I’ve pushed the Congressional elections on par with the Presidential one. I do not claim that the Congressional election matters more for progressives, only that it matters as much as electing Obama.

Here’s what I worry about at 3am. I’m putting it on the record now.

1. On the most important policy-matters since the Great Society and the civil rights bills – namely, universal healthcare and a green-jobs / climate-change initiative – Republicans filibuster (and, in the House, coopt the Blue Dog caucus) at every step just like they did with FISA and S-CHIP.

2. This delaying gives time for the health-insurance and high-carbon-output lobbies to mobilize massive pressure against meaningful reform. (Let’s not forget Harry and Louise.)

3. This inside+outside opposition uses up the legislative honeymoon, with one of two broad results.

4a. Either the Dems are forced to accept a halfway / incremental solution that doesn’t accomplish real progressive “change we can believe in” (the FISA scenario).

4b. Or the Dems blink in the face of persistent opposition that leaves no room for compromise, and pull things off the table to try again (the S-CHIP or immigration scenario).

5. Voters no longer blame the Republicans for the lack of real action on UHC and energy independence, because the Democrats have all three houses.

6. Thus, the 2010 midterms return to their longstanding norm and House and Senate majorities become rather tighter – 4-7%.

7. 2010 to 2012 or 2016 resemble a mix of 1994-2000 and 2006-2008.

If steps 1-3 happen, then steps 4-7 seem VERY likely to me. Therefore:

(1) What evidence can be offered that compellingly suggests each of these steps would not likely occur if the previous steps did?

And (2) if Obama, Pelosi, and Reid conference-called you at 3am and asked your advice on how to prevent steps 1-3, what would you say?

-JP

Senate Races: Preventing a Scalia Majority.

WHAT ARE YOU DOING TO PREVENT A SCALIA MAJORITY?
ARE YOU HELPING BUILD A FILIBUSTER FIREWALL?

Look at this picture: Republican appointees are a majority of the Supreme Court, 10 of the 13 Courts of Appeals, and 8 of the 12 sets of district judges.

Today is the first day of the 2008-2009 Supreme Court term. It may well be the last before Antonin Scalia’s ideology becomes the supreme law of the land for a generation. The only firewall against this is to elect 57-60 Democrats to the Senate.

All it takes for Antonin Scalia to triumph is for people like you and me to do nothing.

So much emphasis has been put on the Presidential race, but NOTHING that the 44th President and 111th Congress will do – not even passing universal health care – will have as much impact on the progressive future of our republic as the 110th Justice of the United States.

Obama or McCain will be in office for 8 years at most; the 110th Justice may well serve FOR THE REST OF MCCAIN’S AND OBAMA’S LIVES.

Only one vote is preventing Antonin Scalia’s views from becoming the supreme law of the land. Only one vote keeps Scalia’s judicial activism from, among other things,
- effectively overturning Roe v. Wade,
- eliminating all remedies for past racial injustice,
- destroying what’s left of the New Deal’s worker-protections,
- dismantling corporate and environmental regulation,
- permitting same-gender relationships to be criminalized by states,
- undoing all of the Warren Court’s vindication of absolute criminal-justice safeguards,
- and much more.
(See the recent article below by Cass Sunstein giving a vision of what a Scalia Court could look like.)

We MUST do everything we can NOW to prevent Senate Republicans from filibustering good judicial appointments LATER.

Highly likely wins in VA, NM, CO, NH, and AK would bring the number of Democratic Senators to 55 (counting Sanders but not Lieberman). But we need JEFF MERKELEY in OR and KAY HAGAN in NC to get that number to 57. (Nate Silver at FiveThirtyEight.com gives Merkeley a 54% chance of winning and Hagan a 57% chance.)

Have you done anything in the past 3 months to prevent a Scalia Court? If not, you need to click one of the following links and take some action:

* Donate time to Jeff Merkeley: <https://app.e2ma.net/app/view:Join/signupId:23564>
* Donate money to Jeff Merkeley: <http://www.jeffmerkeley.com/contribute>

* Donate time to Kay Hagan: <http://www.kayhagan.com/action>
* Donate money to Kay Hagan: <https://secure.actblue.com/contribute/page/khagan>

These are the two closest tied Senate races this cycle, and all of the major election-raters (Rothenberg, Cook, Nate silver, CQ) suggest  that the Democrat could win. The next two are harder climbs, and need any hep you can spare: Al Franken in MN and Ronnie Musgrove in MS (57% and 77% chance, respectively). They would bring the Senate number to 59 – one short of the Filibuster Firewall of 60.

* Donate time to Al Franken:  <http://www.alfranken.com/contribute>
* Donate money to Al Franken: <http://www.teamfranken.com/volCenter.php>

* Donate time to Ronnie Musgrove: <http://www.democratsenators.org/o/29/signUp.jsp?key=1170>
* Donate money to Ronnie Musgrove: <http://www.actblue.com/entity/fundraisers/18711>.

Finally, although the poll averages show Republican Minority Leader Mitch McConnell (KY) ahead by 6 points, two of three recent polls show his challenger, Bruce Lunsford only 1 point behind. It would be such a sweet victory to get the 60th, filibuster-proof vote by throwing out Mitch McConnell.

* Donate time to Bruce Lunsford
* Donate money to Bruce Lunsford.

“Change” is about more than electing Obama. Do something for “change” over the long haul.
* *

“McCain’s Court: Change We Don’t Need”
Cass Sunstein, Sep 12, 2008

<http://www.truthout.org/article/mccains-court-change-we-dont-need>

There has been much debate about whether Sen. John McCain is a candidate of change. But in one area, McCain is unquestionably a reformer. He would almost certainly make fundamental changes in the direction of the U.S. Supreme Court.

McCain has said that, should he be president, Chief Justice John Roberts and Justice Samuel Alito “would serve as the model for my own nominees.” He regularly attacks what he calls “activist judging,” and he described a recent ruling vindicating the right to habeas corpus as “one of the worst decisions in the history of this country.” McCain has repeatedly said that Roe v. Wade was wrongly decided and should be overruled.

If McCain is elected, change would clearly be coming to the U.S. Supreme Court. And in constitutional law, the Republican presidential nominee is anything but conservative. Once skeptical of the idea that the court should overrule Roe v. Wade, he now invokes the clichés and code words of the extreme right. His votes have matched his words, for he has been a proud and enthusiastic supporter of President George W. Bush’s most extreme appointees to the courts of appeals.

Recently McCain complained of “the common and systematic abuse of our federal courts by the people we entrust with judicial power. For decades now, some federal judges have taken it upon themselves to pronounce and rule on matters that were never intended to be heard in courts or decided by judges.”

In his view, the “system of checks and balances rarely disappoints,” but “there is one great exception in our day”: the Supreme Court. McCain aims to eliminate that exception. It is more than mere speculation to suggest that with judicial appointments, McCain may well follow the extreme right-wing of his party.

The court is already dominated by Republican appointees, and in the last 20 years, it has shifted dramatically to the right. The next president is expected to be able to appoint at least one – and possibly as many as three – new members. Even a single appointment would likely shift constitutional law in major ways.

The right to choose remains sharply contested within the Supreme Court – and the Republican Party and the pro-life movement have long sought to eliminate that right. The McCain-Palin ticket plans first to “return the abortion question to the individual states” and then “to end abortion at the state level.”

We might well return to a period in which states threatened to subject pregnant women, and their doctors, with jail sentences for exercising the right to choose. Alaska Gov. Sarah Palin opposes abortion even in cases of rape and incest, and there is no doubt that many states would attempt to enact that belief into law.

But abortion is only the tip of the iceberg.

Consider McCain’s astounding statement that the court’s recent vindication of the right to habeas corpus is among “the worst decisions” in the nation’s history. (As bad as Dred Scott v. Sandford, entrenching slavery? As bad as Lochner v. New York, striking down maximum hour laws? As bad as Plessy v. Ferguson, upholding racial segregation?) McCain’s favorite justices – Roberts and Alito – have consistently sided with the Bush administration in cases involving the constitutional authority of the president. Under a President McCain, their dissenting views might well become the law of the land.

The Supreme Court has already struck down provisions of the Americans with Disabilities Act, the Age Discrimination in Employment Act and the Violence Against Women Act. A McCain court would go further. Some Republican appointees have raised constitutional doubts about provisions of the Endangered Species Act, the Clean Air Act and the Clean Water Act. With new members on the court, important environmental laws would face fresh constitutional scrutiny.

In the last decade, Republican appointees to the bench have led a constitutional attack on affirmative-action programs. But in some areas, like education, for example, government is allowed to engage in a modest degree of affirmative action. With an appointment or two by a McCain administration, affirmative-action programs might be banned entirely.

Does the Constitution allow Congress to enact campaign-finance reform? McCain clearly thinks so. But his favorite justices – Roberts and Alito – have severe doubts. Campaign-finance proposals already face acute constitutional doubts. With one or two McCain appointments, most such proposals may well become constitutionally unthinkable.

All this offers merely a glimpse. Some Republican appointees want to restrict citizens’ rights of access to federal courts, to give commercial advertising the same level of protection as political dissent, to provide new protection to property rights (at the expense of environmental law), to narrow the court’s decisions involving sex discrimination, and much more.

There are a major irony here. McCain calls for “strict construction” and “judicial restraint,” and he rejects “legislating from the bench.” But in countless areas, conservative appointees avoid strict construction, and they are all too willing to legislative from the bench.

There is a close connection between the constitutional views of McCain’s his preferred judges and the political views of the extreme right-wing of the GOP. To say the least, it would be a startling coincidence if the best interpretation of the Constitution turned out, fairly consistently, to entrench the political views of one or another side.

When McCain calls for “strict construction” and “judicial restraint” while opposing “judicial legislation,” no one should be fooled. Is it “restrained” for justices to invalidate campaign-finance laws and provisions of the Violence Against Women Act? Is it “strict construction” to strike down affirmative-action programs, to ban Congress from allowing citizens to sue in federal court, to give unprecedented protection to property rights?

When McCain speaks of strict construction and restraint, he is speaking in code. He is signaling his desire to produce large-scale change in the direction favored by the far right – for starters, and above all, by overruling Roe v. Wade.

It is not at all clear that a McCain administration would seek to reorient current practices in domestic arena or in foreign policy. But there is no doubt that in constitutional law, McCain favors fundamental change.

The question remains: Is this really the change we need?

* *

Foucault and Political Capital.

In a choice between analyzing politics with Foucault or Bourdieu (the best exponent of politically and socially mediated forms of capital), I mostly opt for Foucault.

I tend to think of political capital as performatively constituted, not essentially given. The numbers indicate a baseline from every day prior to today’s news cycle. But political capital is made today (whatever day is today), not essentialized from yesterday. Or, to say it better, it’s not just that you have an essential amount of capital from previous days that you spend today: you can also CREATE more capital by today’s actions and the expectations you play with for tomorrow.

With that said, Obama’s baseline capital is looking fine – so the question is what steps could he take that would create even more capital?

- As of today, Real Clear Politics says that, even without MN, WI, NH, NV, FL, or OH, Obama has 249 Electoral College votes. Any two of those states and he wins. If the election were forced today, RCP says Obama gets 348 votes.

- Nate Silver, inventor of baseball’s PECOTA predictor, has much more sophisticated models for weighting and trend-regressing state-level polls. If the election were held today, Silver projects Obama would narrowly win NC, FL, VA, AND OH. He runs 10,000 simulations a day based on all the state-level polls up to that date, and of the 10,000 simulations from yesterday, Obama won the election 85% of the time. Silver is projecting 336 EC votes.

- The Intrade real-money betting contracts concur: Obama wins OH, FL, and VA, and ends up with 338 EC votes.

Yes, We Can … Find a Bailout Alternative.

[UPDATED] At least 13 14 different alternatives to the Paulson/Bush Bailout have been proposed by economists or market experts to make better use of taxpayer money and address the actual causes of the NOT-ENOUGH-CAPITAL CRISIS. Obama needs to listen to them, propose new legislation to address the crisis, and show the policy-making leadership expected of a President. Here’s a quick set of links:

• Nouriel Roubini, NYU, Sep. 25: taxpayers buy bad assets in exchange for preferred stock; taxpayers also refinance mortgages; government orders banks to temporary halt paying dividends.
• Robert Kuttner, The American Prospect, Sep. 26: taxpayers refinance mortgages and buy majority stakes of stock in troubled banks.
• Ernesto Zingales, UChicago, Sep. 21: taxpayers refinance mortgages in exchange for stock.

• Bill King, King Securities, Sep. 26: taxpayers buy major shares of stock in community banks to restructure and decentralize the banking system.
• Charles Calomiris, Columbia, Sep. 19: taxpayers buy preferred stock in troubled banks, matched by common stock for private investors.
• Douglas Elmendorf, Brookings Institution, Sep. 19: taxpayers buy major shares of stock across the banking system.
• Joseph Stiglitz, Columbia, Sep. 26: taxpayers buy preferred stocks and impose a financial-securities tax.
• Tony and Richard Ressler, Ares Private Equity, Sep. 30: taxpayers buy preferred stock, similar to Warren Buffet’s deal.
• William Greider, The Nation, Sep. 26: taxpayers should buy preferred stock under the same terms Warren Buffett got.
• John Paulson, portfolio manager, Sep. 26: taxpayers buy major shares of preferred stock in troubled banks.
• John Birger, Wall Street Journal, Sep. 24: taxpayers buy major shares of nonvoting stock in troubled banks below market rates
• Paul Krugman, Princeton, Sep. 22: taxpayers buy ownership shares of stock in troubled banks.
• Douglas Diamond, Steve Kaplan, Anil Kashyap, Rahuram Rajan, Richard Thaler, UChicago, Sep. 26: taxpayers buy bad assets in exchange for stocks, and government mandates all banks to raise 2% more capital.
• Robert Reich, Berkeley: taxpayers buy bad assets in exchange for stock in troubled banks.

Obama Has Failed Leadership Test.

I tremble to write this, because all of my fellow Obama voters will condemn me for contributing to McCain’s campaign. And, if by chance McCain won, people like me can get tagged for having helped cause the problem. But I’m so pissed right now that I will risk the antipathy of my fellow Obama voters. This is also very rant-y, and falls below my UChicago standards of tightly-argued cogency.

In the single most important test of the entire presidential campaign, Obama has demonstrated a complete failture of leadership.

Obama is the de facto leader of the Democratic Party of the United States. (Evidence: at today’s bipartisan White House summit between Bush and Congressional leaders, when Bush deferred to Pelosi and Reid, they, in turn, deferred to Obama to speak on behalf of Democrats.) Therefore, Obama should be leading a charge to transform this Bush-generated crisis to the advantage of middle- and low-income people.

At a minimum, Obama should blast loud and clear that BUSH AND MCCAIN ARE MAKING UP THE REASONS FOR RUSHING TO JUDGMENT. Yes, the credit system is grinding to a halt, but not so fast that Bank of America, JP Morgan, and Warren Buffett haven’t been able to inject capital by buying up firms at risk of failure.

If massive-scale action must happen now, there are lots of ways to do this better than buying debt without a share in the recovery profits: order all financial institutions to temporarily stop paying dividends; order all financial institutions to offer preferred stock; make massive government buys of preferred stock (do with public money what Warren Buffett did with private money). But Obama has suggested none of these as a better way forward.

Obama, Pelosi, and Reid could have Wall Street by the balls if they wanted: they have the power to release endless amounts of money to save Wall Street, but they can also demand that a Wall Street bailout/buyout be matched dollar-for-dollar with a bailout for Main Street. Hey! – there’s a slogan: A BUYOUT FOR WALL STREET TO SUPPORT A BAILOUT FOR MAIN STREET.

Precisely at the point when Obama can WIN the political argument that a Wall Street bailout should be matched with a Main Street stimulus package, Obama has preemptively scuttled that possibility: “[Obama] also said he told congressional leaders that he did not support including bankruptcy provisions or attaching an economic stimulus package to the bailout package—although he supports separate action on a stimulus bill.”

But imagine if Obama said something like the following on September 20 or 21, before markets opened on September 22: “This is the moment of leadership that will test all of our resolves: either we return to a country where the middle-class dream is realistic for the many, or we accelerate our decline to a country that leaves everyone behind by the few. I will do all I can to ensure that every dollar given to reward Wall Street’s excesses is simultaneously matched by a dollar to help Main Street rebound from its losses. President Bush and Senator McCain want to treat Main Street, USA, like they treated New Orleans, Louisiana, and they want to enrich shareholders on Wall Street like they’ve enriched private contractors in Iraq. The time to act like a PRESIDENT, and not a PROFITEER, is now: I will not rest until we have agreed to do as much or more for folks hurting on Main Street as we are for executives fretting on Wall Street. This is my sacred oath.”

Then imagine if, instead of abstract principles and multiple possibilities, Obama then outlined FIVE CONCRETE, NON-NEGOTIABLE COMPONENTS OF A MAIN STREET BAILOUT (pick any of your favorite five):

• mandatory mortgage restructuring under a new version of the Homeowner’s Loan Corporation;
• an immediate expansion of S-CHIP;
• $100 billion dollars in immediate funding to repair critical infrastructure and build affordable housing;
• a signfiicant bulk-up of unemployment insurance;
• a tax rebate for every dollar middle- and low-income taxpayers spend on carbon-emission-reducing products and services (getting money back to middle-/low-income taxpayers AND promoting carbon-emission-reduction).

Would these pass? Who knows. But these are the sorts of things DEMOCRATS should be fighting for, not executive pay (which isn’t going to help Main Street at all). And if they didn’t pass, introducing them would have the dual effect of (1) slowing down the process (which is good) on account of (2) things that DO help Main Street.

Moreover, Obama could then argue POSITIVELY for the sort of concrete ways he and the DEMOCRATS will help Main Street, rather than arguing NEGATIVELY against what shouldn’t be passed or left out of the Paulson plan. This would put Obama in a position to command the voter-perception field in economics, which is his strong suit and the thing that matters most to the voters Obama most needs to convince.

Most importantly, Obama would be creating a FUNDAMENTAL CONTRAST between what DEMOCRATS want to accomplish and what REPUBLICANS want to do: “They put Wall Street first, we put Main Street first – YOU decide who’s putting the country first.”

Now, why is this fundamental contrast so important? Because that’s what it would take to secure a significant shift in party identification, which is the only way this election could actually become an ELECTORAL REALIGNMENT (or lay the foundation for one). Only economics has any chance of breaking the death-grip of culture-wars and race-wars to build the next Grand Left Coalition.

Obama had a chance to re-generate the Democratic Party’s whole brand – “We do whatever it takes to restore the middle class.” Instead, he stayed on the Bipartisanship Bandwagon – which only serves to dilute any effective contrast between Democrats and Republicans.

Moreover, Obama had a chance to finally bury the hatred against “big government.” He could have argued that, when push comes to shove, even Wall Street wants big government. He could have done what Bill Clinton did not (and perhaps could not): broken the chokehold conservative frames have had around progressive conceptions of governance. That would have been change worth believing in.

Worst of all, he hasn’t taken ANY initiative to help resolve this crisis. No, he’s not even on the Banking Committee. But he has the biggest bullhorn of anyone in the government – he could gather thousands of people instantly for a Rally to Save the Middle Class. He can use his bully pulpit to promote a Main Street Bailout all over the country – so that everyone in Congress has to take the idea seriously. He could threaten a filibuster of anything that doesn’t do as much for Main Street as it does for Wall Street – and dare anyone to cross the cloture line against Main Street. If he actually DID filibuster, his voice alone would ring out day and night across the media – the filibuster would be the only show in town.

Suppose he did filibuster; or suppose at least that he acted in ways that prevented passage of a Wall Street bailout that lacked a Main Street bailout. He would run the risk that people would see him as an obstructionist (though that seems unlikely given the polling on the Paulson plan). But he can keep repeating over and over: Real leadership is knowing who you stick by when the going gets rough – and I’m gonna stick to my (2nd-amendment-protected) guns and stick by Main Street.

I contend that not one of these things brings the risk of losing the election – and therefore that not one of these things can be dismissed out of hand as an electoral fairy tale. And IF the economy really DID nosedive completely, then the only option would be to bring back the New Deal itself – which only the Democrats can do any way.

Finally, I contend that Obama has been acting against his OWN self-interest (ironically, one of community organizing’s cardinal sins) by supporting any outlay of $700 billion: that will severely limit his budgetary maneuvering-room for ANY of the pricey policy-components of “change.” He’s even admitted as much to the press. So that makes it all the more necessary to do whatever it takes to at least prevent any sort of Wall Street bailout that doesn’t earn money back for the taxpayer.

An Alternative to Paulson’s Bailout.

We are in a once-in-a-generation moment in terms of our financial system, and this extraordinary moment demands concerted, swift action by anyone who cares about sharing prosperity or eliminating poverty in this nation. The prospects for either of those goals is fundamentally threatened by the Paulson bailout, because it would leave even less taxpayer money and budgetary maneuvering-room available for the sorts of things that will actually accomplish either.

Congress is under IMMENSE pressure to pass a package before they recess for the election. TODAY may well be the last day before the deal is sealed – today may be the last day when raising your voice could count. Now is the time when we must speak out. I hope you will both read this and send it to those you know who may be interested. (If nothing else, it’s is a useful summary of how things could be other than we are being told.)

I also hope that, after reading this, you will contact your Senator and the members of the Senate Banking Committee (especially Sens. Shelby, Dole, Martinez, and Bunning) today to ask them to pass Senator Dodd’s proposal, which is the best compromise likely to pass in the world as it is (rather than the world as it should be). You can reach any Senator’s office by calling 202-224-3121.

Once more, we face immense uncertainties about our national future. Once more, the President is arguing that the threats we face demand a scale of action not seen for 50 years.

Once more, the President’s Administration is making the case that ONLY the Administration’s plan can protect the interests of the United States. And once more, the Administration is saying there’s no time for a full debate before the plan is voted on and no time for an extensive accountability structure once the plan is put into practice.

This time, we need to say no.

Congress’ auditing agency, the Government Accountability Office, has just reported that since 2001, $807 billion has been allocated by Congress for the War on Terror. The Paulson bailout seeks to spend close to that amount – $700 billion. In other words, we are being asked to sign onto a SECOND plan that seeks to redirect taxpayer money to large corporations. The plans match almost dollar-for-dollar.
<http://www.gao.gov/htext/d081128r.html>

We are being told that there really is no alternative – that some form of corporate bailout is the only way to prevent the mass destruction of our economy. The only option, according to the Administration, is for Congress to buy banks’ mortgage-backed assets, without either accountability or a share in future profits.

As these banks recover and become profitable, taxpayers will not share in any of their profits – they will go only to shareholders (including executives). Even the most pro-market economists have recognized this for what it is: socialized risks for private profit.

But there ARE alternatives that would allow the taxpayers to SHARE in the profit while they SHOULDER the risks. Economists, both liberal and conservative, from The University of Chicago, Columbia, Princeton, and the Brookings Institution, have proposed that Congress pump capital into the financial system (which is the root problem) in the form of a BUYOUT NOT A BAILOUT.

Instead of simply buying potentially bad assets before they actually go bad, Congress can buy shares in troubled corporations, which would give the corporations capital to recover AND allow taxpayers to share in the profit as they do so. This would be socialized risks for public profit. It would be, as one economist put it, just what people who provide capital (in this case, taxpayers) are entitled to – a share of ownership.

Sen. Chris Dodd has proposed a compromise that involves a buyout and a bailout: in exchange for buying mortgage-backed assets, taxpayers would receive shares equal to the amount of the bailout. Although this is not the best case, it is the best compromise realistically available at this moment, when action will happen no matter what.

Dodd’s bill has the virtue of the following additional protections for the public interest: authority for bankruptcy judges to restructure mortgages for homeowners facing foreclosure; additional assistance for low-income homeowners; an oversight board that includes congressionally appointed, non-governmental officials; limits on executive compensation; and an independent inspector general for the program.
- Proposal circulated by Sen. Christopher Dodd, D-CT, 22 Sep 2008: <http://tinyurl.com/Bailout-Dodd>

Below, you will find a summary of arguments in favor of BUYOUT-type solutions rather than a simple BAILOUT. At the minimum, they provide a counter-story for how we can get out of the current crisis. Now is the only time when we can effectively challenge the Administration’s story that “there’s no other way.”

Again, you can reach any Senator’s office by calling 202-224-3121. The members of the Senate Banking Committee are as follows:
Those up for election this year are Sens. Dole (R-NC), Enzi (R-WY), Johnson (D-SD), and Reed (D-RI).
Up for election in two years are Sens. Dodd (D-CT), Shelby (R-AL), Bennett (R-UT), Bayh (D-IN), Bunning (R-KY), Crapo (R-ID), Martinez (R-FL), and Schumer (D-NY).
Not up until 2012 are Sens. Carper (D-DE), Menendez (D-NJ), Akaka (D-HI), Brown (D-OH), Casey (D-PA), Corker (R-TN), Tester (D-MT).
And Sens. Allard (R-CO) and Hagel (R-NE) are retiring this year.

“The decisions that will be made this weekend matter not just to the prospects of the U.S. economy in the year to come; they will shape the type of capitalism we will live in for the next fifty years. Do we want to live in a system where profits are private, but losses are socialized? Where taxpayer money is used to prop up failed firms?”
- Luigi Zingales, UChicago, 22 Sep 2008: <http://tinyurl.com/Bailout-Zingales> (PDF)

I hope you will read and call today.

+ + +
The summary below is arranged under the following questions:
1. Shouldn’t we just go along with what Paulson says?
2. How did things get this bad?
3. What’s the problem with Paulson’s plan?
4. Isn’t this just a new version of the “Resolution Trust Corp” in the S&L crisis?
5. How does a buyout help more than a bailout?
6. What should we do in the long term?

* *
SHOULDN’T WE JUST GO ALONG WITH WHAT PAULSON SAYS?

POINT: PAULSON’S PLAN IS ABOUT CORPORATE WELFARE, NOT THE COMMON GOOD.

§ “Some are saying that we should simply trust Mr. Paulson, because he’s a smart guy who knows what he’s doing. But that’s only half true: he is a smart guy, but what, exactly, in the experience of the past year and a half — a period during which Mr. Paulson repeatedly declared the financial crisis ‘contained,’ and then offered a series of unsuccessful fixes — justifies the belief that he knows what he’s doing? He’s making it up as he goes along, just like the rest of us.”
- Paul Krugman, Princeton, in the New York Times, 22 Sep 2008: <http://tinyurl.com/Bailout-Krugman>

§ “The people who can best afford to pay and the people who have benefited most from Bush’s economic policies are the people who should provide the funds for the bailout.  It would be immoral to ask the middle class, the people whose standard of living has declined under Bush, to pay for this bailout while the rich, once again, avoid their responsibilities.”
- Sen. Bernie Sanders, I-VT, 19 Sep 2008: <http://tinyurl.com/Bailout-Sanders>

§ “It is much more appealing for the financial industry to be bailed out at taxpayers’ expense than to bear their share of pain. Forcing a debt-for-equity swap or a debt forgiveness would be no greater a violation of private property rights than a massive bailout, but it faces much stronger political opposition. The appeal of the Paulson solution is that it taxes the many and benefits the few. Since the many (we, the taxpayers) are dispersed, we cannot put up a good fight in Capitol Hill; while the financial industry is well represented at all the levels. It is enough to say that for 6 of the last 13 years, the Secretary of Treasury was a Goldman Sachs alumnus.”
- Luigi Zingales, UChicago, 22 Sep 2008: <http://tinyurl.com/Bailout-Zingales> (PDF)

* *
HOW DID THINGS GET THIS BAD?

POINT: THE PROBLEM IS THERE’S NOT ENOUGH CAPITAL TO KEEP THE CREDIT SYSTEM GOING.

§ “… even though the illiquidity of the market for mortgage-backed securities, and the substantial markdown in prices of these assets, was responsible for the losses suffered by financial institutions, simply attempting to halt further falls in asset prices will not restore sanity to the financial system. The real problem is the financial system has too little capital.”
- Raghuram Rajan, UChicago, in the Financial Times, 19 Sep 2008: <http://tinyurl.com/Bailout-Rajan>

§ “So let’s try to think this through for ourselves. I have a four-step view of the financial crisis:

1. “The bursting of the housing bubble has led to a surge in defaults and foreclosures, which in turn has led to a plunge in the prices of mortgage-backed securities — assets whose value ultimately comes from mortgage payments.

2. “These financial losses have left many financial institutions with too little capital — too few assets compared with their debt. This problem is especially severe because everyone took on so much debt during the bubble years.

3. “Because financial institutions have too little capital relative to their debt, they haven’t been able or willing to provide the credit the economy needs.

4. “Financial institutions have been trying to pay down their debt by selling assets, including those mortgage-backed securities, but this drives asset prices down and makes their financial position even worse. This vicious circle is what some call the ‘paradox of deleveraging.’”
- Paul Krugman, Princeton, in the New York Times, 22 Sep 2008: <http://tinyurl.com/Bailout-Krugman>

* *
WHAT’S THE PROBLEM WITH PAULSON’S PLAN?

POINT: THIS CORPORATE WELFARE IS A FORM OF TAXATION WITHOUT REPRESENTATION.

§ “Within hours of the Treasury announcement Friday, economists had proposed preferable alternatives. Their core insight is that it is better to boost the banking system by increasing its capital than by reducing its loans. Given a fatter capital cushion, banks would have time to dispose of the bad loans in an orderly fashion. Taxpayers would be spared the experience of wandering into a bad-loan bazaar and being ripped off by every merchant.”
- Sebastian Mallaby, in the Washington Post, 21 Sep 2008: <http://tinyurl.com/Bailout-Mallaby>

§ “But under the current proposal, the government would go out and shop for bad loans. These come in all shapes and sizes, so the government would have to judge what type of loans it wants…. In practice this means the government would make subjective choices about which bad loans to buy, and it would pay more than fair value. Billions in taxpayer money would be transferred to the shareholders and creditors of banks, and the banks from which the government bought most loans would be subsidized more than their rivals. If the government bought the most from the sickest institutions, it would be slowing the healthy process in which strong players buy up the weak, delaying an eventual recovery. The haggling over which banks got to unload the most would drag on for months. So the hope that this ’systematic’ plan can be a near-term substitute for ad hoc AIG-style bailouts is illusory.”
- Sebastian Mallaby, in the Washington Post, 21 Sep 2008: <http://tinyurl.com/Bailout-Mallaby>

§ “The Paulson RTC will buy toxic assets at inflated prices thereby creating a charitable institution that provides welfare to the rich—at the taxpayers’ expense. If this subsidy is large enough, it will succeed in stopping the crisis. But, again, at what price? The answer: Billions of dollars in taxpayer money and, even worse, the violation of the fundamental capitalist principle that she who reaps the gains also bears the losses.
- Luigi Zingales, UChicago, 22 Sep 2008: <http://tinyurl.com/Bailout-Zingales> (PDF)

§ “The Paulson plan calls for the federal government to buy up $700 billion worth of troubled assets, mainly mortgage-backed securities. How does this resolve the crisis? Well, it might — might — break the vicious circle of deleveraging…. Even that isn’t clear: the prices of many assets, not just those the Treasury proposes to buy, are under pressure. And even if the vicious circle is limited, the financial system will still be crippled by inadequate capital. Or rather, it will be crippled by inadequate capital unless the federal government hugely overpays for the assets it buys, giving financial firms — and their stockholders and executives — a giant windfall at taxpayer expense.”
- Paul Krugman, Princeton, in the New York Times, 22 Sep 2008: <http://tinyurl.com/Bailout-Krugman>

§ “A second problem with buying troubled debt is that it provides the most help to the financial institutions that made what are, in retrospect, the worst investment decisions. Banks that stayed clear of this debt or sold such debt at cut-rate prices earlier this year in an effort to move beyond the crisis would receive no direct gain from such a program, while banks that made the biggest commitments to low-quality mortgages and have delayed dealing with their balance-sheet problems would be the biggest beneficiaries. Third, this approach saddles taxpayers with significant downside risk but limited potential upside gain. One crucial feature of the Treasury and Federal Reserve rescues of Fannie Mae, Freddie Mac, and AIG is that taxpayers received substantial equity shares in these companies and could receive solid returns if financial markets rebound.”
- Douglas Elmendorf, Brookings Institution, 19 Sep 2008: <http://tinyurl.com/Bailout-Elmendorf>

* *
BUT ISN’T THIS JUST A NEW VERSION OF THE “RESOLUTION TRUST CORP” FROM THE S&L CRISIS?

POINT: UNLIKE THE 80s, THE ADMINISTRATION WANTS TO BUY BAD LOANS *BEFORE* BANKS GO BANKRUPT.

§ “The plan is being marketed under false pretenses…. [T]he RTC, which was created in 1989 to clean up the wreckage of the savings-and-loan crisis, bears little resemblance to what is being contemplated now. The RTC collected and eventually sold off loans made by thrifts that had gone bust. The administration proposes to buy up bad loans before the lenders go bust. This difference raises several questions…. In 1989, there was no choice. The federal government insured the thrifts, so when they failed, the feds were left holding their loans; the RTC’s job was simply to get rid of them. But in buying bad loans before banks fail, the Bush administration would be signing up for a financial war of choice. It would spend billions of dollars on the theory that preemption will avert the mass destruction of banks. There are cheaper ways to stabilize the system.”
- Sebastian Mallaby, in the Washington Post, 21 Sep 2008: <http://tinyurl.com/Bailout-Mallaby>

§ “Indeed, there is a critical difference between the proposals making the rounds and the RTC. The government, as insurer of failed thrifts, essentially took over their assets and placed them in the RTC. The main task of the RTC was to sell assets in an orderly manner, not buy them. So the RTC did not have to determine a price at which it would buy assets, or support a falling market – at best it had to hold assets off the market.”
- Raghuram Rajan, UChicago, in the Financial Times, 19 Sep 2008: <http://tinyurl.com/Bailout-Rajan>

§ “Remember that in the Savings and Loan crisis, the government had to bail out those institutions because the deposits were federally insured. But in this case the government does not have do bail out the debtholders of Bear Sterns, AIG, or any of the other financial institutions that will benefit from the Paulson RTC.”
- Luigi Zingales, UChicago, 22 Sep 2008: <http://tinyurl.com/Bailout-Zingales> (PDF)

* *
HOW DOES A BUYOUT HELP MORE THAN A BAILOUT?

POINT: A BUYOUT ALLOWS TAXPAYERS TO SHARE IN THE PROFITS WHILE THEY ARE SHOULDERING THE RISKS.

§ “…[I]f the government is going to provide capital to financial firms, it should get what people who provide capital are entitled to — a share in ownership, so that all the gains if the rescue plan works don’t go to the people who made the mess in the first place. That’s what happened in the savings and loan crisis: the feds took over ownership of the bad banks, not just their bad assets. It’s also what happened with Fannie and Freddie. (And by the way, that rescue has done what it was supposed to. Mortgage interest rates have come down sharply since the federal takeover.)”
- Paul Krugman, Princeton, in the New York Times, 22 Sep 2008: <http://tinyurl.com/Bailout-Krugman>

§ “The government should help not by buying banks’ bad loans but by buying equity stakes in the banks themselves. Whereas it’s horribly complicated to value bad loans, banks have share prices you can look up in seconds, so government could inject capital into banks quickly and at a fair level. The share prices of banks that recovered would rise, compensating taxpayers for losses on their stakes in the banks that eventually went under.”
- Sebastian Mallaby, in the Washington Post, 21 Sep 2008: <http://tinyurl.com/Bailout-Mallaby>

§ “An alternative to the government buying certain types of debt from financial institutions is for the government to make equity investments in a wide cross-section of such institutions…. With this approach, the government would not need to determine the appropriate prices and quantities of individual mortgage-related securities, it would not be providing a greater reward to companies that have made the worst investments, and it would gain the opportunity for taxpayers to receive a higher return if the financial system recovers more strongly.”
- Douglas Elmendorf, Brookings Institution, 19 Sep 2008: <http://tinyurl.com/Bailout-Elmendorf>

§ “Since we do not have time for a Chapter 11 and we do not want to bail out all the creditors, the lesser evil is to do what judges do in contentious and overextended bankruptcy processes: to cram down a restructuring plan on creditors, where part of the debt is forgiven in exchange for some equity or some warrants…. As during the Great Depression and in many debt restructurings, it makes sense in the current contingency to mandate a partial debt forgiveness or a debt-for-equity swap in the financial sector.”
- Luigi Zingales, UChicago, 22 Sep 2008: <http://tinyurl.com/Bailout-Zingales> (PDF)

§ “Government injections of preferred stock into banks, advocated by Senator Charles Schumer, inspired by the Reconstruction Finance Corporation’s policies in the 1930s, would be a better choice…. Preferred stock assistance would leave asset valuation and liquidation decisions to the private sector, but would provide needed recapitalization assistance to banks in an incentive-compatible manner to facilitate banks’ abilities to maintain and grow assets. If executed properly, it would limit taxpayers’ loss exposure, and leave the tough decisions of managing assets, and deciding on how to allocate capital assistance from the taxpayers, to the market.”
- Charles Calomiris, Columbia, in the Financial Times, 19 Sep 2008: <http://tinyurl.com/Bailout-Calomiris>

* *
AND WHAT SHOULD BE DONE IN THE LONG TERM?

POINT: PASS SENATOR BERNIE SANDERS’ PROGRAM FOR LONG-TERM SOLUTIONS.

§ “Legislation must be passed which undoes the damage caused by excessive de-regulation. That means reinstalling the regulatory firewalls that were ripped down in 1999…. That means regulating or abolishing various financial instruments that have created the enormous shadow banking system that is at the heart of the collapse of AIG and the financial services meltdown.”

§ “We must end the danger posed by companies that are ‘too big too fail,’ that is, companies whose failure would cause systemic harm to the U.S. economy.  If a company is too big to fail, it is too big to exist. We need to determine which companies fall in this category and then break them up…. We should not be trying to solve the current financial crisis by creating even larger, more powerful institutions.  Their failure could cause even more harm to the entire economy.”

§ “There must be a major economic recovery package which puts Americans to work at decent wages. Among many other areas, we can create millions of jobs rebuilding our crumbling infrastructure and moving our country from fossil fuels to energy efficiency and sustainable energy.”

§ “Further, we must protect working families from the difficult times they are experiencing.  We must ensure that every child has health insurance and that every American has access to quality health and dental care, that families can send their children to college, that seniors are not allowed to go without heat in the winter, and that no American goes to bed hungry.

- Sen. Bernie Sanders, I-VT, 19 Sep 2008: <http://tinyurl.com/Bailout-Sanders>

+ + +

What’s wrong with Obama’s numbers?

Why are national polls (though not state ones, at least not yet) registering such a huge leap for McCain? (According to RCP’s track, the last time McCain beat Obama in poll-averages was April 14, 2008!) Some say it’s the combination of the post-convention bounce and the Palin bounce. Some say it’s the Palin effect mobilizing either Republican evangelicals or women, or both.

I hate to be cliché, but it’s the economy, stupid. To the degree that women are moving to McCain, it’s BECAUSE women bear the brunt of the current economic situation – or at least the brunt of figuring out how to get families through them. Obama has lost the advantage on the the economy:

This race isn’t close because people have forgotten about the economy, it is close because the public is now largely split on who is better able to handle economic issues. Obama is performing worse on the economy than a generic Democratic candidate while McCain is faring better than the generic Republican. In April, the generic Democratic candidate held a 21% edge on the economy, the kind of dominance on the key issue that most assumed would lead either Obama or Clinton to the White House. Yet, Obama now finds himself holding just a 5% advantage on economic issues and, accordingly, the race between he and McCain is very close. (Pollster)

I agree with David Sirota that this is a problem of the campaign’s establishing a distinct fundamental stance:

Because Obama has refused to really focus on the issues that really draw a crystal clear contrast – issues like trade and the Iraq War. Thus, what policy debate that has survived is one over policy details – ie. whose tax plan is better, rather than, say, why McCain is happy telling Ohioans NAFTA is awesome.

This goes back to what I’ve been saying for months.

Obama refuses to answer the fundamental question – that historical question always asked by organized labor: Which side are you on?

… No, the answer on a campaign is yes, go out of your way to shape, build and embrace confrontation in a way that draws a contrast. And in a country whose crises are now so binary – bankers versus homeowners, Wall Street versus Main Street, neocons versus American troops, the wealthy versus the rest of us – Obama’s rhetorical posture suggesting that he can be on everyone’s side doesn’t ring true. It’s not an answer to the question “which side are you on” – it’s a dodge.

And I also find compelling Dick Morris’ argument about the issue Obama must now confront:

The question now is whether Obama’s extra quotient of change — or the different direction that change will take — is worth the risk of electing him….

Is his commitment to income redistribution and increasing tax “fairness” worth the risk his tax plans pose for the economy?

Is his plan to pull out of Iraq and his commitment to multilateralism in foreign policy worth the risk of putting someone with virtually no foreign policy experience in charge of our international relations in the middle of a war? Is his promise to respect the Constitution and ratchet back the intrusions of the Bush homeland security measures worth the extra risk of terror attack?

The answer to these questions will only partially depend on what Obama is proposing and on how sound we think his judgment is. They will also depend on the events that will transpire between now and Election Day.

If Iran moves closer to getting nuclear weapons or Israel attacks Iran to forestall that development, things could change in a hurry. If the current atmosphere of economic uncertainty and impending possible crisis — signaled by the federal takeover of Freddie Mac and Fannie Mae — deepens, it may make voters less willing to risk the high taxes and big spending that Obama will bring in his wake. If Russia continues to assert its imperial right to dominate Eastern Europe and restore a Soviet-style satellite empire, voters will wonder if they can take a chance on Obama.

But if things are relatively peaceful and uneventful, voters may bristle at the stagnation and turn to Obama in the hopes of change.

The key point is that this race is now not about Bush or McCain or Bill Clinton or Palin. It’s all about Obama.

And, of course, Obama MUST beat McCain at ground-game.

Obama can’t make “CHANGE” without the Senate.

Here are two realities of US federal politics that leftists ignore at our peril: (1) IN 2008, THE ELECTIONS FOR US SENATE ARE JUST AS IMPORTANT AS THAT FOR THE PRESIDENCY. (2) BARACK OBAMA CANNOT ACCOMPLISH REAL “CHANGE” WITHOUT A FILIBUSTER-RESISTANT SENATE.

You can look at the Senate website and see the RECORD NUMBER of filibusters used by Republicans in the 110th Congress. You can consider the following issues, all axed by filibuster: children’s health insurance, progressive climate policy, civil-liberties protections in FISA, comprehensive immigration reform.

Or you can imagine the following filibusters in the 111th Congress:

• A center-right nominee confirmed to succeed Justice John Paul Stevens, because progressive nominees were threatened with filibuster.
• Proposals for truly or nearly universal healthcare scuttled by filibuster.
• Meaningful corporate carbon-emissions caps prevented by filibuster.
• The Employee Free Choice Act failed through filibuster.
• Shifting tax burdens from the middle class to the wealthy defeated by filibuster.
• A path to citizenship for undocumented people obstructed by filibuster.

Barack Obama simply cannot accomplish any of the change he has promised without a strongly filibuster-resistant Democratic majority in the US Senate. The magic number of 60 is probably not going to happen, but state-level polls show that 57 or 58 non-Lieberman seats is not impossible. With 57 or 58 seats, there will almost certainly be 2-3 centrist Republicans who could end a filibuster on a given issue.

So it’s time for leftists to start acting for REAL CHANGE by volunteering to support the Senate races where the Democrat is within striking distance. The following candidates will probably do fine on their own: Mark Warner (VA), Jeanne Shaheen (NH), Mark Udall (CO), and Tom Udall (NM). Before Sarah Palin’s nomination, Mark Begich (AK) was a shoe-in, given Ted Stevens’ indictment; he may need some help now. Those five make 54 without Lieberman. So, if you care about progressive change in the US, you should pick at least 1 or 2 of the following FOUR RACES:

• Kay Hagan (NC; contact) – recent poll-averaging has her even against Elizabeth Dole.
• Al Franken (MN; contact) – poll-averaging 3 points behind incumbent Norm Coleman.
• Jeff Merkley (OR; contact) – recently only 6 points behind incumbent Gordon Smith.
• Jim Martin (GA; contact) – also only 6 points behind incumbent Saxby Chambliss.

Even if you don’t live in these states, you can still help in some way – contact the campaign office directly to find out how. And every one of them needs your money as much as Obama does.

Every minute you give is a contribution towards John Paul Stevens’ successor, universal healthcare, climate change policy, tax justice, immigration reform, and worker rights. Do you really want these things? Then it’s time to work for it.