Memory Lane on the Paulson/Goldman Stickup: What I wrote Sept 20, 2008 and why it matters today
Because sometimes, I told you so is necessary, in the hope that next time people might listen. This is what I wrote September 20th, 2008:
This is a stickup. Paulson is trying to stampede the Congressional herd into giving him powers and money that he knows they would never give if they had time to think it through carefully. It worked with the Patriot Act. It worked with the AUMF. He’s betting it’ll work again. Create a crisis (or lie one into existence) then demand dictatorial powers and unlimited spending authority to deal with it.
Congress needs to not succumb to fear or to explicit or implicit blackmail. If the crisis was as severe as Paulson makes it out to be, virtually the end of market capitalism, he wouldn’t be quibbling over whether or not CEOs get to keep their golden parachutes.
In effect, that quibble is like you walking into your local bank and saying “I need you to loan me a million bucks. Here are the conditions I must insist are met before I let you lend me the money. First…”
He’s given his tell, that he’s a liar, a thief and a scam artist.
Time for Congress to call his bluff, and to see that the financial crisis is dealt with on their terms, with strict oversight by people they can trust, not by a scam artist and liar like Paulson.
Of course, Congress didn’t call his bluff and Congress did fall for it. But let’s remember our history. The House voted against. Nancy Pelosi indicated that she would not pass TARP unless Republicans voted for it in the same proportion as Democrats. They weren’t going to do that, so TARP was dead.
Then Barack Obama stepped in and started twisting arms. TARP is Obama’s baby. If you like it, or don’t like it, remember, without Barack Obama it would have died.
This is the fundamental problem right now with Democrats. They passed a lousy stimulus, they made TARP Democratic policy by passing it with majority Democratic votes and they are on their way to passing a lousy healthcare bill which won’t even kick in till 2013.
Bad policy leads to bad outcomes. Bad outcomes get blamed on the incumbents (as they should). TARP, the Stimulus, healthcare and the economy become less and less the Republican’s problem every month that passed. Even if they screwed it up, Democrats control the House, Congress and the Presidency. It’s up to them to fix George Bush’s mess, and if they don’t they will be judged as failures, and that judgment will be accurate and deserved.
And the outcomes are going to be bad. The stimulus bill was both badly put together (too many tax cuts, not properly targeted) and too small. The healthcare bill should be single payor, because single payor is proven to work and the witch’s brew that Congress has put together isn’t proven to work and they can’t afford to fail. And TARP was, and is, a piece of crap, but the differences between Bush/Paulson financial policy and Obama/Geithner are so thin as to be largely cosmetic.
Policy has consequences. The “compromise” position between “doing it right” and “doing it wrong” may work sometimes, but it doesn’t work when a nation is in crisis and has spent 30 years digging itself into a hole.
By the time Obama comes up for reelection, Americans won’t have better healthcare and they will have less jobs than before the recession and the stimulus.
That’s what he’ll be judged on, and all because he signed on for Paulson/Bush financial policies, and compromised his key domestic and economic policies to the point where they wouldn’t work.