John McCain claims to be a straight talker, but it is Senator Jim Bunning, Republican of Kentucky, who on Tuesday, in front of Treasury Secretary Henry Paulson and Federal Reserve Board chairman Ben Bernanke, labeled the Paulson/Bernanke $700 billion Wall Street takeover plan “financial socialism.” He also called it “un-American.”
Bunning’s comments, which have been reported widely, have alerted many Americans to the proposed radical transformation of the U.S. economy that is being pushed by the Bush Administration and mostly Congressional Democrats on Capitol Hill.
Bunning’s views are consistent with the 2008 Republican platform, which declares, “We do not support government bailouts of private institutions. Government interference in the markets exacerbates problems in the marketplace and causes the free market to take longer to correct itself. We believe in the free market as the best tool to sustained prosperity and opportunity for all.”
Two weeks ago, in an interview with Bloomberg News, Bunning had denounced the federal takeovers of Fannie Mae and Freddie Mac, saying that Paulson was acting like China’s finance minister. “No company fails in communist China, because they’re all partly owned by the government,” he said. “I sincerely believe that Henry Paulson and Ben Bernanke should resign. They have taken the free market out of the free market.”
At the Banking Committee hearing, Bunning
called the new $700 billion Paulson plan “an attempt to do what we so often do in Washington―throw money at a problem.” He added, “We cannot make bad mortgages go away. We cannot make the losses that our financial institutions are facing go away. Someone must take those losses. We can either let the people who made bad decisions bear the consequences of their actions, or we can spread that pain to others. And that is exactly what the Secretary proposes to do―take Wall Street’s pain and spread it to the taxpayers.”
Senator Richard Shelby, ranking Republican on the committee, said that they had been given “no credible assurance” the Paulson plan will work. “We could very well spend $700 billion and not resolve the crisis. Before I sign off on something of this magnitude, I want to know that we have exhausted all reasonable alternatives,” he said.
It is not exactly clear where Republican presidential candidate John McCain stands. On September 15, he said that he was “glad to see that the Federal Reserve and the Treasury Department have said no to using taxpayer money to bailout Lehman Brothers, a position I have spoken about throughout this campaign.” On September 22, however, McCain endorsed the much larger $700 billion federal takeover plan, with some conditions.
In a development that has badly embarrassed the Republican presidential candidate, McCain senior adviser Steve Schmidt attacked the New York Times as an arm of the Obama-for-president campaign, after the paper had reported financial links between McCain campaign manager Rick Davis, a former registered lobbyist, and failed mortgage giants Freddie Mac and Fannie Mae.
There is no doubt that the paper favors Obama, and the McCain campaign has documented several such instances of Times bias against the GOP candidate, but the story about Davis being paid nearly $2 million by Fannie Mae and Freddy Mac through a front organization was not challenged for factual accuracy by the McCain campaign. Instead, the McCain campaign insisted that Davis was not a lobbyist for those firms.
“From 2000 to the end of 2005,” the Times reported, “Mr. Davis had received nearly $2 million as president of the coalition, the Homeownership Alliance, which the companies created to help them oppose new regulations and protect their status as federally chartered companies with implicit government backing.”
The McCain campaign doesn’t dispute this information, but
points out that McCain did work “to enact, stricter oversight and regulation of both Fannie Mae and Freddie Mac…”
Meanwhile, another prominent “conservative” in the media, in addition to such figures as Fred Barnes and Charles Krauthammer of Fox News, has endorsed the approach of trying to “solve” the financial crisis by spending more taxpayer money, going further into debt, and nationalizing major elements of the financial sector.
Barnes had said, “I love it,” in response to the Paulson plan, and Krauthammer was amazed that Paulson and Bernanke had come up with a modern version of the New Deal in only ten hours.
Now, Republican blogger Hugh Hewitt has
attacked congressional Republicans for opposing Paulson’s socialist plan. He says Republicans opposed to the federal intervention are taking a “gamble” with the nation’s economic future and ignoring the call by “George Bush and the senior leadership of his Administration as well as the best economists in the country [who] are all urging rapid action.”
Hewitt ignored the fact that Paulson has been consistently wrong about conditions on Wall Street.
A response to Hewitt on the comments section of his blog cited the opposition to government bailouts in the Republican 2008 platform.
The Heritage Foundation has also endorsed federal intervention, declaring that this is one of those “rare situations in which a wave of bad decisions in one sector has such dire consequences for the most basic operations of the economy that other sectors are threatened, jeopardizing the functioning of the entire economy.”
In an article titled, “Why Only Bush Could Bring Socialism to America,” economist Bryan Caplan of George Mason University may have been referring to people like Hewitt and institutions like the Heritage Foundation when he said, “If a Democratic president were backing a $700B bail-out, I have to think that Republicans would be crying ‘Socialism!’ But if a Republican president does the same, the bail-out’s natural enemies keep silent out of loyalty or ingroup bias.”
Writing on the conservative website Human Events, William Smith, a former high-level Republican staffer on Capitol Hill, said that “it is difficult to understand why Fannie and Freddie are too big to fail, and why, at least in 2007, twenty-eight thousand business were too small to succeed.” This is the number of small businesses that failed without any intervention on their behalf by Congress.
Senator Christopher Dodd, the Democratic chairman of the Banking Committee, supports the takeover plan but wants to see it greatly expanded. He has produced
a 44-page version of the plan, now posted on the committee website, which would further expand federal involvement in the economy. This approach is expected to garner the support of Democratic presidential candidate Barack Obama.
