Questioning Obama, McCain & Bush on the Economic Crisis

by Rick Rockwell

Wise folks often know what they don’t know. One of the latest Nobel Prize winners, Paul Krugman seems to qualify as wise, not because he has won the prize for economics, but because he admits what he doesn’t know.

Krugman, unlike most experts and bureaucrats, gives himself some blame for not seeing the current economic crisis. And he’s not completely sure about the answers of how to clean up the mess.

Given a chance to tell us what they don’t know at the end of the last debate, both major party political candidates Senators John McCain and Barack Obama did what politicians do. They hedged. They dodged. And they put their own spin on the question. This, of course, is similar to the response from the current occupant of the White House who was asked during a debate in 2004 what mistakes he had made during his first term and he couldn’t think of one, or admit to one. Although it is quite apparent his presidency is so riddled with errors it will go down as one of the worst in American history.

This week, both Sen. McCain (R-AZ) and Sen. Obama (D-IL) finally unveiled their responses to the economic crisis. McCain, as he did in the last debate, is focusing on mortgages. Obama is pushing a group of proposals aimed at the middle class, including a 90-day moratorium on foreclosures (although if enacted immediately it would have no impact on an Obama administration) and allowing a limited, penalty-free withdrawal of funds from 401K retirement plans. All of these plans may have merits (although the retirement plan proposal seems to be a bit of desperation: isn’t that sacrificing the future and an idea that personal finance experts reject?) but in effect they are ancillaries and amendments to the $700 billion bank bailout Congress approved.

The question remains: if either McCain or Obama wanted to lead this country and demonstrate their leadership abilities, why didn’t they fashion their own plans and truly take the reigns during this crisis? They could have and should have eclipsed George Bush at a time of dire national need. The bailout bill was basically a plan reconstructed in the Senate taking the blueprints of the original idea drawn up by Treasury Secretary Henry Paulson and endorsed by the current president, who most of the country now realizes is incompetent. If McCain and Obama are such powerful bipartisan forces in the Senate, why didn’t they pull their own economic advisors together to forge a plan? Now, that would have been true leadership. (McCain’s short suspension of his campaign to deal with the crisis was just a bit of grandstanding as he did not offer a counter-proposal and in the end he was not the fulcrum that pushed a plan forward.)

Instead, both McCain and Obama deferred to Paulson, Senate Majority Leader Harry Reid, and Speaker of the House Nancy Pelosi. And truly Sen. Chris Dodd (D-CT) who led the Senate through the politics of the bailout came out looking more like a national leader than he ever did during his failed presidential campaign in 2007. Even though, Dodd’s plan ultimately is the wrong one.

But not being an economist, this author may have little credibility when it comes to such analysis. Instead, listen to Krugman. His critique: the $700 billion plan is flawed and far from transparent enough to be an economic rescue plan for a major democracy. His suggestion: look more toward the British and European plans. In the end, with the moves in the past day toward a partial nationalization of major banks in the U.S., Bush and Paulson may slowly be headed in that direction. Krugman seems to be advocating outright bank nationalization, which at least does not reward the greed, corruption and incompetence of the bankers and others in the investment sector, as much of Bush’s plan does.

But finally another question remains: when will this country stop listening to rich and powerful lying incompetents and start listening to people who actually know something? We truly need to know. And soon.

For more posts on the economic crisis and the election, please see these pieces:

(Political graphic © copyright DarkBlack and used with permission. For more material like this, please see DarkBlack's blog.)

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