Written by Cliff Kincaid
November 13, 2008
By Cliff Kincaid
Media cheerleading for the $700-billion Wall Street bailout-labeled by House Republican Leader John Boehner a "mud sandwich"-may have come to an end. It was big news on the three network newscasts on Wednesday night that Treasury Secretary Henry Paulson basically admitted that the plan hasn't worked, and that he has changed his mind about what is required to save the U.S. financial system.
Paulson, former CEO of Goldman Sachs, is not only rich; he is supposed to be smart. Our media were surprised by his turnaround. Some are now questioning his credibility and competence. They should go further and demand his resignation.
The plan was to buy troubled assets. Then the money was used to buy shares in banks. Now it's going to be used to support financial institutions offering consumer credit. Democrats in Congress want some of the money to go to the auto industry.
Paulson declared, "When we went to Congress, illiquid assets looked like the way to go. As the situation worsened, the facts changed. I will never apologize for changing an approach or strategy when the facts change. I think the apology should come the other way, if someone doesn't change when the facts change."
Remember that we were told by the media that passage would make things better, not worse. It was officially called a "stabilization" plan but didn't stabilize anything.
"The program is still called the Troubled Asset Relief Program, or TARP, but it will not buy troubled assets," the New York Times reports.
Our media have been calling it a "rescue." But since nothing seems to have been rescued, except for some big banks and corporations, the "rescue" label is starting to wear thin. The media seem to be returning to use of the term "bailout." The problem is that those who get bailed out keep changing.
On the Fox News "Special Report" show on Wednesday night, commenting on the latest Paulson strategy, Fred Barnes of the Weekly Standard declared, "I'm not sure whether it's the right thing to do or not."
This is actually a breath of fresh air from Barnes, who had been a cheerleader for the original bailout package and had declared on the October 2 edition of the "Special Report" program that conservatives in the House of Representatives opposed to it were "nuts" and making "crazy" and "idiotic" arguments.
Among other things, the conservatives doubted that the plan would work as advertised. They wanted more information and details. They also thought that, at $700 billion, it was too costly.
Who's nuts now? Who's crazy now? Who's the idiot now?
Of course, Barnes was not alone. All of his "conservative" colleagues on that program joined him in demanding passage of the Wall Street bailout bill. And many newspapers, from The New York Times to The Wall Street Journal to Investor's Business Daily, editorially endorsed this scheme.
"The new [bailout] plan would commit taxpayer money to buy hundreds of billions of dollars of troubled loans and other mortgage-related securities from banks and Wall Street firms," declared the New York Times in a September 19 editorial. "It is based on the reasonable premise that as long as institutions are stuck with those assets, the flow of credit, the economy's lifeblood, will be constrained, or as in the past week, all but frozen."
On September 22, the paper declared, "Nearly everyone agrees that there will have to be another very big bailout. The financial system, gorged on its own excesses, cannot stabilize without intervention. The $700 billion would be used to buy up the bad assets that are presumably clogging the system."
The fact is that "nearly everyone" did not agree with the bailout. Twenty-five senators and 171 representatives voted against it. Of those 25, 14 were Republicans. Of those 171, 108 were Republicans. And this means that a majority of House Republicans (108-91) didn't want any part of this expensive fiasco.
However, the House GOP Leadership-Reps. John Boehner, Roy Blunt, Adam Putnam, and Eric Cantor-voted for it. They defied the wishes of a majority of members of their own House caucus. Boehner, who called the bailout bill a "mud sandwich," said, "Nobody wants to vote for this." But he voted for it. Now he and some other members of Congress are supporting Bloomberg News in its legal demand that the Federal Reserve provide details of the bailout process.
Blunt and Putnam are stepping down from their leadership posts. But Boehner and Cantor still think they should lead the House Republicans. Rep. Dan Lungren of California is said to be weighing a challenge to Boehner for the top Republican job in the House, but Lungren also voted for the bailout.
Former Republican House Speaker Newt Gingrich, who is frequently on Fox News and Sean Hannity's radio show promoting himself, his websites, and his ideas on this or that, is considered by some a candidate for the position of chairman of the Republican National Committee. But he was against the bailout before he was for it. Then he was against it again. Like Paulson and the House Republican leaders, he has no credibility left.
In terms of damage to the Republican Party, it is interesting to note that the three Republican senators whose races are still in dispute and who are in danger of losing their re-election bids voted for the bailout.
In the Minnesota race, it is Democrat Al Franken who is supposed to be the comedian. But his opponent, Republican Senator Norm Coleman, became a laughingstock for claiming that the Wall Street bailout could actually be profitable for the taxpayers being fleeced to pay for it. "The government could make 10 or 20 times what it pays on this, possibly," Coleman said.
Coleman's claim was based on the Treasury Department buying and then selling the "troubled assets." That is the part of the program that has now been abandoned.
Republican Senator Saxby Chambliss is in trouble in Georgia and has been forced into a run-off for his seat on December 2 because of his support for the bailout. His opponent, Democrat Jim Martin, is hammering away at it.
In Alaska, Republican Senator Ted Stevens has many problems, having been convicted on corruption charges, but he, too, voted for the bailout, and that was costly to him as well.
In Kentucky, in one of the few Republican victories, Senate Republican Leader Mitch McConnell voted for the bailout, while his opponent, Democrat Bruce Lunsford, opposed it, and that caused a tightening in the polls. In the end, McConnell barely won, 53-47 percent, arguing that he had brought a lot of federal pork to his home state. McConnell was not alone; most Senate Republicans, including John McCain, voted for the bailout.
It would be nice if pundits like Barnes came forward to say, "I was wrong and I apologize," and if politicians who voted for this taxpayer rip-off did the same. Of course, apologies won't save us any money.
For their part, our media could belatedly start doing their jobs by demanding that Paulson resign and be investigated for panicking the Congress into passing a bailout that he has so obviously mismanaged.