Sarah Palin's Smile Fades

It's becoming painfully clear that Sarah Palin isn't qualified to be Vice President, and John McCain isn't helping matters.

She delivered a well-scripted speech at the Republican National Convention, and was immediately hidden away, giving only a few interviews in the next few weeks. I had hoped McCain's staff was using the time to get her up to speed on important issues facing our nation. Obviously, this was not the case.

After having her sequestered for several weeks, they let her fly solo in an interview with CBS anchor Katie Couric last week, with disastrous results. Struggling to find an example where McCain supported more regulation (other than for Fannie and Freddie), she finally blurted out "I’ll try to find you some, and I’ll bring ‘em to ya." This, of course, would be impossible, since there aren't any. Trick question by the liberal media!

Her answer to Couric on the question of the $700 financial bailout was incomprehensible: "But ultimately what the bailout does is help those who are concerned about the healthcare reform that is needed to help shore up our economy." OK, so she confused pages 46 (financial crisis) and 72 (healthcare) of her briefing packet.

And why don't they just abandon the absurd notion that being governor of Alaska counts as foreign policy experience? Are they intentionally trying to feed SNL's Tina Fey material?

All of this makes great comedy, but the nation is facing some very serious issues, and McCain let us know what he thinks of Palin's abilities in a follow-up interview with Couric. Watch as McCain explains why Palin took a position identical to Obama's statement on Pakistan in last week's debate:



The fact that he felt he had to be there in the first place speaks volumes. Does Palin really need to have McCain there to answer questions for her? What does whining about "“gotcha journalism" accomplish, other than making McCain look weak and Palin look incompetent?

Sarah Palin isn't unintelligent: she's simply uninformed and unprepared. Unfortunately, in a Vice President (and successor to the President), the result can be equally disastrous.

She may do well in this week's debate with Joe Biden (he can be his own worst enemy), but she's going to have to do more than smile for the camera to demonstrate she's qualified to lead the country.

McCain's Earmark's

With a $700 billion financial bailout in the works, you would think John McCain would have been prepared for the obvious question Jim Lehrer asked in last night's presidential debate: "what you would do as president to lead this country out of the financial crisis?"

McCain launched into his well-worn campaign theme on the "evils of earmarking and pork-barrel spending," McCain sounded sincere, and I was relieved that he didn't cling to his previous claim that he "can eliminate $100 billion of wasteful and earmark spending immediately."

So he accepted the $18 billion figure as more or less accurate, but complained:

"The point is that – you see, I hear this all the time. 'It's only $18billion.' Do you know that it's tripled in the last five years?"

Well it turns out this isn't quite accurate. According to information from Citizens Against Government Waste (CAGW), there was $22.5 billion worth of earmark spending in 2003, and by 2008 the figure had come down to $17.2 billion, a reduction of 24 percent. Taxpayers for Common Sense, a similar watchdog group, estimates that "Congress has cut earmarks by 23 percent from the record 2005 levels."

Well, a 24% reduction isn't really the same as a 200% increase, but slight miscalculations are to be expected from someone who has "never really understood" economic issues. Apparently that also includes math.

McCain also cited an example of $3 million to study the DNA of bears in Montana, included in the 2003 Omnibus Appropriations Bill. A humorous story, but incomplete. Here's the rest of the story, courtesy of FactCheck.org:

"The study in question was done by the U.S. Geological Survey, and it relied in part on federal appropriations. Readers (and politicians) may disagree on whether a noninvasive study of grizzly bear population and habitat is a waste of money. McCain clearly thinks it is – but on the other hand, he never moved to get rid of the earmark."

Surely the ever-vigilant Republicans voted against this piece of pork-barrel legislation, but were overwhelmed by "tax and spend" Democrats. Well, it turns out only 20 Senators voted against the 2003 appropriations bill, including 18 Democrats, one Independent, and one very lonely Republican.

Was it John "Maverick" McCain who stood up against this blatant example of legislative pork? Nope, the only Republican Senator to vote against the bill was Illinois Senator Peter Fitzgerald. McCain voted in favor of the bill along with nearly every other Republican.

Why would McCain vote for such a bill? Maybe it was because the same Bill included $162 million in earmarks for the state of Arizona. Not in the league of Alaska's Republican Senator Ted Stevens, who earned top awards by pulling in $611 for each Alaska resident, but still a respectable showing and a new record for Arizona.

And that, my friends, is why we have so much "pork" in our budgets; you scratch my earmark and I'll scratch yours. It's also why we need someone that can do more than just talk about eliminating government waste.

Another day, another bailout

It was probably necessary, but yesterday's announcement of a $500 billion bailout of the financial system was troubling because apparently no one in the Bush administration saw it coming. Bush's comment to NBC's Bob Costas just last month ("First of all, I don't see America having problems") doesn't sound much like yesterday's statement that "America's economy is facing unprecedented challenges...the gears of our financial system ... were at risk of grinding to a halt."

Add in the previously announced bailouts of Bear Stearns, Fannie/Freddie, AIG, and other banks and we have about a trillion dollars. For good laugh, take a look at the Mid-Session Review, Budget of the United States Government, Fiscal Year 2009 released by the Office of Management and Budget less than two months ago. In a masterpiece of fiction based on unrealistic assumptions, it actually forecasts a budget surplus in just a few years.

Thanks to the miracle of government accounting, we won't need to "pay" for the bailouts right away, and they won't even show up in the National Debt (at least not immediately). Still, I think we can give President Bush credit for a stand-up double in increasing the national debt from $5.7 trillion to just under $10 trillion. If you add in future costs of the bailout and costs of the war in Iraq we haven't yet paid for, this will bring the national debt to over $12 trillion in just a few years. Not the triple achieved during the Reagan years, but a good solid Republican effort nonetheless.

This seems to be the pattern in Republican administrations; tax cuts for the wealthy, deregulation of financial institutions, a soaring national debt, followed by a collapse in financial markets, and a taxpayer bailout. In the late 1980's it was the savings and loan crisis leading to creation of the Resolution Trust Corporation (RTC). The cost of the RTC bailout in today's dollars would be over $200 billion. Small change by today's standards, but it was big news back when we at least pretended to try to balance the federal budget.

It took a few years (and a recession) before we faced the fact that a strong economy depends on tax policy that's in line with spending. The Deficit Reduction Act of 1993 (formally known as the Omnibus Budget Reconciliation Act of 1993) was tough medicine and unpopular (even with some Democrats), but it paved the way for budget surpluses and economic prosperity in the 1990's. As a footnote, I should add that John "Maverick" McCain voted right along with every other Republican Senator against the bill.

As things stands today, the national debt is soaring and we haven't even started to come to grips with Social Security. We just keep building debt and passing it along to future generations. And McCain's pledge of "no new taxes" sounds more like denial than a real solution.

Anyone know where I can get one of those "No Child Left a Dime" bumper stickers?

Fundamentally Unsound

The lack of leadership from the White House is astounding, but this morning President Bush came out of hiding to summarize actions taken in recent weeks by the Federal Reserve and the SEC, and observe that the " the American people are concerned about the situation in our financial markets and our economy." Nothing like a little understatement to start the day.

John McCain has suddenly seen the light, and is now claiming his insistence that the economy is "fundamentally sound" really meant that American workers are the best in the world. And in classic Washington fashion, he offered up the only solution he could think of: appoint a commission to study the problem.

In a stop in Cedar Rapids, McCain even called for the firing of SEC Commissioner Christopher Cox. I actually agree, but McCain conveniently overlooks the fact that Cox was appointed by President Bush because "business interests" were dissatisfied with his predecessor, William Donaldson. I've written on this before (Selling Fannie and Freddie Short ), but Bush was looking for someone who was willing to ignore a few SEC rules here and there, and Cox fit the bill.

McCain isn't saying much about his own role in promoting deregulation over the years. He's apparently forgotten his 1995 push for banking deregulation in 1995, and his claim that regulations were "destroying the American family, the American dream."

He also isn't talking about his vote in favor of the Gramm-Leach-Bliley Act of 1999 (it repealed 1930's legislation that had separated commercial and investment banks) that is directly related to the problems we are having today. This legislation was sponsored by McCain's economic advisor and campaign co-chair, Phil "mental recession" Gramm.

But then it may be hard for someone who claims to be a "maverick" to admit that he voted right along with every other Republican Senator (and not one Democratic Senator) in favor of this legislation. McCain didn't pull the trigger on the financial crisis, but he helped load the gun.

The financial markets are in turmoil, so it's to be expected that presidential candidates will respond to each crisis as it occurs. But what I'd like to hear before going to the polls is an indication that candidates understand the underlying causes, and how the debt we've created by catering to special interests on issues like taxation and spending is part of the problem.

As thing stand, I'm hard pressed to tell much difference between Bush and McCain on most of these issues, and it's clear we need a different kind of leadership.

Republican Mavericks

Sometimes things need to get worse before they get better.

And last night they came very close. The Federal Reserve decided at the last minute to extend an $85 billion secured loan to AIG, the nation's largest insurer. This is just the latest government bailout, and it won't be the last. Had they not stepped in to save AIG, there's a good chance the financial system would have collapsed.

Most of this is just too complex to understand, and this gives the McCain/Palin ticket a chance to keep voters focused on Sarah Palin's designer glasses. With all their efforts to portray themselves as "mavericks," one can almost forget that John McCain has been in the U.S. Senate for 22 years, and has been a tireless advocate for reducing government regulation. As recently as last March, McCain told the Wall Street Journal "I am fundamentally a deregulator".

But with recent turmoil in financial markets, McCain sharply criticized "greed by some based in Wall Street," and is calling for reform (and regulations) to “replace the outdated and ineffective patchwork quilt of regulatory oversight."

What he fails to point out is that much of the problem stems not just from the fact that regulation of our financial system is "outdated," but that many regulatory safeguards were removed or weakened over the past 8 years, including some regulations that were put in place after the Great Depression. Where was Senator McCain while all this was going on?

So now we have McCain/Palin ticket scrambling to portray themselves as "mavericks" that will clean up the damage done by the Republican Party, and take on Wall Street. The "deregulator" is now calling for more regulation, and saying nothing about his role in advocating reduced regulation of our financial system.

It's not difficult to see that this is all smoke and mirrors...even without designer glasses.

Taxpayers Bail Out Fannie and Freddie

It was probably necessary, but the federal government's move to take control of Fannie Mae and Freddie Mac illustrates the flaw in the Bush administration's aversion to regulation: when things go wrong, taxpayers wind up footing the bill. To be more precise, taxpayers of the future will pay the bill, since this will just be piled on the National Debt.

Treasury Secretary Henry Paulson successfully persuaded Congress to give him authority to put taxpayer dollars at risk in July, while downplaying the possibility that he would actually use this authority, saying "if you have a bazooka in your pocket and people know it, you probably won't have to use it." Sunday, he pulled the trigger, and taxpayers are on the hook. The cost will likely run up to $200 billion.

This may achieve the goal of stabilizing the housing market, but the problems of the failed Bush economic policies extend beyond the housing and banking industries. With the federal government's corporate welfare program well underway, we can expect to see other businesses stand in line for a handout.

Automakers Ford and General Motors have already asked for government support, and the Wall Street Journal reported today that GM CEO Rick Wagoner, "will launch a lobbying push this week for billions in government loans to help beleaguered auto makers and their suppliers." They're looking for $50 billion in loan guarantees.

The Fannie and Freddie bailout is important for another reason; to give foreign investors confidence in U.S. bond markets. Under the bailout plan, shareholders of common stock will be wiped out, but bondholders will be protected by the U.S. government (taxpayers).

So, who are these bondholders? Of the $5.2 trillion in bonds issued by Fannie and Freddie, $1.3 trillion are held by foreign investors and governments, including Japan and China, and we cannot let them to take a loss. You see, they're also the largest holders of U.S. Treasury bonds. Japan and China alone hold almost $1.1 trillion in Treasury debt, and the consequences to our economy if they decided to dump U.S. Treasuries would be severe.

With our National Debt approaching $10 trillion, we can't afford to let our foreign "bankers" get upset. Just think of the $200 billion bailout of Fannie/Freddie as a penalty for being a poor credit risk.

Palin's Debut

Last week's Republican speech by 2008 Republican vice presidential nominee, Sarah Palin, was truly impressive. She came across as personable, sincere, and straightforward, and received widespread praise from the press for her performance. She's quickly adopted the Republican mantra, and also demonstrated that she can stretch the truth with the best of them.

Take her retelling of her position on the widely-criticized Gravina Island Bridge (Alaska's "Bridge to Nowhere"). Gov. Palin's version:

"I have protected the taxpayers by vetoing wasteful spending ... and championed reform to end the abuses of earmark spending by Congress. I told the Congress 'thanks but no thanks' for that Bridge to Nowhere."

This might lead you to believe that Alaskans were being forced to accept federal funds for a bridge they didn't need, and that Gov. Palin insisted they return the money. The media has picked up on this little deception, and as AP, USA Today, and other media have reported, Ms. Palin supported building the bridge before it became a national symbol of wasteful spending.

Alaska also didn't return the $48 million federal earmark, but continued to build the 3-mile access highway to where the bridge would have been, and eventually "reprogrammed" the funds to repair local roads, according to the Alaska Transportation Priorities Project website.

Alaskans aren't amused by Gov. Palin's version of the truth, according to Reuters. They are justifiably proud of their ability to receive welfare payments from the federal government, along with royalty payments from Big Oil.

And they are good at it. Very good at it. In recent years, Alaskans have consistently been at the top in terms of federal payments to individual states compared to taxes collected. In 2005, Alaska residents received $1.84 from the federal government for every dollar paid in taxes, according to the nonpartisan Tax Foundation.

Alaska also ranked first in receipt of federal earmarks ($506.34 per capita) last year. Who ranked last? Residents of John McCain's home state of Arizona received a paltry $18.70 per capita. It seems McCain actually believes all the rhetoric about earmarks.

Such largesse from the federal government and Big Oil has eliminated the need for Alaskans to bother with state income taxes, sales taxes, and property taxes. This year Alaska residents will receive record payments from the state through the Alaska Permanent Fund (more on this later).

But all of this comes, directly or indirectly, at the expense of those of us in the other 49 states, so it's difficult to see how Gov. Palin's experience in Alaska is relevant to the country as a whole.

Unless, of course, she has a plan to eliminate federal income taxes, and have the government send us a check every year.