Owned

President Bush circa 2004.

I appreciate you coming. I love the entrepreneurial spirit of America, don't you? (Applause.) Good job. (Applause.) There's nothing better. There is nothing better, is it, to be in an ownership society. Don't you love the idea of somebody saying, this is my business? How about the fact that home ownership rates in America are at an all-time high. More people -- (applause.) And it's a fantastic statistic. It is a fantastic statistic of our society. It means more people are opening up that front door, saying, welcome to my home. Come into my piece of property.

See, I love an ownership society. It's a hopeful society. It's a society that provides stability in times of change. An ownership society is one where people have a vital stake in the future of this country. And that's important. It's important for people to buy into the future of America. And when you own something, you have a -- you have this vital stake on how this country grows and develops.

I'm wondering whether or not the ownership society was just a weird fetish, the only economic stat that Bush could point to with pride, or a way to push every American's money over to the bankers, knowing full well that if they f-ed things up they'd get bailed out anyway.

Stamping Out Suppression In Mississippi

I really thought that Haley Barbour and his gang was going to get away with it, but the state Supreme Court grew a spine:

The Mississippi Supreme Court ruled Thursday that the special election to replace Sen. Trent Lott (R-MS) – who resigned last December – will appear near the top of the November ballot.

The court ruled 8 to 1 that the ballot layout approved by Republican Governor Haley Barbour violated state election law by listing the race at the very bottom of the ballot. Barbour was chairman of the Republican National Committee from 1993 to 1997 [...]

Many saw Barbour’s choice as a hardball political tactic to discourage voter participation in a close Senate race. Democrat Ronnie Musgrove is within striking distance of unseating former Republican congressman Roger Wicker, whom Barbour appointed last winter to replace Lott.

They're trying to hide this race because Musgrove is a former Governor and proven winner with a compelling story.



But the voter suppression tactics are going to sprout up like daisies as we get closer to Election Day. And that's aside from the potential voter registration database glitches (which could just randomly eliminate people's voter registration) and high turnout on Election Day which could end up with long lines and voters left out in the cold.

Some friends of ours have set up a Voter Suppression Wiki to call attention to a lot of these efforts. I'm certainly going to be checking in throughout the next month or so. Sunlight is the best disinfectant.

WOW - Obama Had Better Step In

The gory details of the Treasury Department's plan to bail out the banks is now up:

But here's all you need to know. Hank Paulson is asking for $700,000,000,000. That's $2,333 from every man, woman, and child in the United States.

In exchange for that money, Paulson is unwilling to accept any demands to make markets more transparent, limit executive compensation, or assist homeowners fighting foreclosure. The sole purpose of that $700,000,000,000 is to bail out Wall Street and only Wall Street, but not to fix it, or our larger economy.

He is asking to be absolutely unbound by any law when he spends that money.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

The only "string" attached is a semi-annual Congressional report--one in which they would have zero leverage to influence his choices.

We are talking about near-dictatorial powers for President Paulson to spend $700 billion in taxpayer money, almost entirely at his discretion. Does Congress exist?

Once again, like with the FISA bill, there's only one man in America who can stop this immediately, and if he doesn't, he'll be a caretaker President:

It is the defining moment in Obama's presidency and he hasn't even won the election. The US Congress is poised to give Hank Paulson, a Bush appointee, 700 billion dollars and dictatorial powers free from judicial review or any constraints, to bail out the banking sector. Ordinary citizens, having gone bankrupt, lose their houses. Banks, having gone bankrupt, will be bailed out, and the same people who caused them to go bankrupt will be left in control of them, so they can run them into the ground yet again.

If Obama does not tell Reid and Pelosi to stop this bill, he will be reduced not just to clean-up duty for the Bush administration, which was always going to part of his job, but he will do that cleanup on Bush's and Paulson's terms. If Obama would prefer that ordinary Americans should also get some help, too bad. If Obama would prefer that bank CEOs who ran their companies into the ground should lose their jobs, too bad. If Obama thinks that reforming the financial system is necessary as a condition of bailing it out, too bad.

It's clear there needs to be some manner of intervention in the markets, mainly because the investment firms will stamp their little feet and refuse to lend money to each other if there isn't. But that must come at a cost - with a reward for the ordinary folks who are going to be hurt by seeing the Treasury drained and the money given to bad actors. There has to be some manner of balance here. People are going to get hurt and need some cover. Thus far Obama has talked about a need for bipartisanship. He needs to know that Bush and Paulson are completely uninterested in that, and if he doesn't speak up he'll get played and spend his first term hogtied by Bush.

Dean Baker has some good thoughts on how to do this responsibly. Key grafs:

1) Every effort should be made to ensure that the financial institutions bear absolutely as much of the cost of these bailouts as possible, thereby minimizing the cost to the taxpayer. This is important not just to protect taxpayers. The managers who got their institutions and the country into this housing and financial crisis exercised extremely bad judgment. They should be forced to face the consequences of their actions. Similarly, the shareholders who benefited on the upside of the housing bubble should be forced to experience the downside that resulted from risky investment strategies.

Without details of the plan, it is difficult to say how best to accomplish this task, but one obvious way is to have an equity stake be the price of admission to the auction system. For example, any company could be forced to sell itself to the government in proportion to the assets it puts up at auction. For example, if the government buys $10 billion of its junk-rated mortgage backed securities, then it gets an equity stake in the company of $2 billion. This would also get around the issue of having foreign financial institutions get into the mix. If UBS or other foreign banks want to sell themselves to the U.S. government, they can be given that option.

We need some outrage whipped up this weekend.

Careful Who You Bail Out

I'm fairly pessimistic that the scared as kittens Democrats will alter the financial bailout plan in any significant way from what President Paulson and Vice President Bernanke want. But Ian Welsh at FDL has come up with a potential plan that's certainly more thought-out than my meandering idea to trickle up the relief:

What the government should do instead is set up a Trust to buy mortgages at a discount, then reset them to 20, 30 or 50 year fixed mortgages with a reduced face amount. If the house is later sold, half of the increase goes to the government, so that taxpayers make a profit. The mortgage cannot be paid off before the end of its term so that financial scavengers cannot come around and, as they did over the last ten years, say "get rid of that mortgage, and take ours. It's better. Honest!", because we know that when they say better, they don't mean better for the mortgage holder. The mortgage is attached to the property and is transfered to any new buyer. And the mortgage cannot be removed from the property, and any new mortgages attached to the property are junior to the government mortgage.

End results:

a) a floor is set for mortgage prices. (Whatever discount the government is buying at. Probably 60% to 70%, but it should be based on what the long run price was in the area before the housing bubble.) This ends the confidence crisis in these securities, because there is now a market price—what the Trust will pay.

b) It helps homeowners stay in their homes.

c) It gets rid of overly complex mortgages and puts in their place a dead simple mortgage that anyone can understand.

d) It punishes lenders, which they deserve, for making loans they should never have made.

e) While it does keep homeowners in their homes, it doesn't let them off scot-free either. In exchange for a good mortgage they can service, they give up some of the future profits on sales in their houses.

f) The government will almost certainly make a long term profit on this. This is important, because it's not fair for people who aren't underwater on mortgages to spend hundreds of billions or trillions bailing out those who are without some expectation that in the end it won't be more than just a transfer of wealth to them and to investors and banks.

The government is likely to make a profit on the current plan in the long term. But the middle class would get squeezed. This is a terrible financial dilemma and something needs to be done about it. But ordinary folks should not be forgotten.

And if they do, you're going to create a scenario where the next President cannot implement any kind of activist agenda. Universal health care? Forget it. Investment in green jobs? Sorry, no room at the inn. I don't know if it's intentional the way Bush I stuck Clinton with Somalia - the markets tend to work on their own calendar. But clearly, a massive bailout would de-fund a progressive agenda at precisely the time when it's ascendant. Democrats have a choice to make that impacts their own future.

Friday Random Ten

Been a long day...

My Four-Leaf Clover - Nicole Willis & Soul Investigators
She Wanted To Leave - Ween
It's Only Divine Right - The New Pornographers
Readymade - Beck
Boys Who Love Girls - The Rosebuds
Elevate Myself - Grandaddy
Blowout - The Crystal Method
Dirty Day - U2
Portland, Oregon - Loretta Lynn & Jack White
Stoppin' The Love - KT Tunstall

The Deregulator

Nobody's buying this reinvented John McCain singing the glories of government regulation of the financial markets and vowing to get the bad guys off Wall Street, are they? If they are, could you have them peek at this, from an article McCain wrote THIS MONTH for a trade publication?

Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.

McCain's been a free-market fundamentalist for a long time. Or at least his advisers are; there is no economic battlefield you can bomb so he likely takes a laissez-faire attitude toward his own opinion as well as the markets at large.

As if the health care system weren't already immoral enough, McCain wants insurance companies to come up with the same kinds of attractive "innovative instruments" that the banking industry was free to do, unencumbered by any oversight. Maybe they can create "MRI default swaps" or "collateral knee surgery obligations" or some other fun packaged security that could be sold to China. After all, why shouldn't they have a say over whether or not you get your medication?

The Old Distract And Dodge

The financial system is a mess. We're about to spend trillions, plural, on paying off super-wealthy executives who made terrible decisions. This is the result of nonexistent oversight and deregulation as well as a policy of expanding inequality and stagnating wage growth, all of which has been championed by John McCain and the Republicans for decades. And Barack Obama knows it.

[McCain] said that he is calling for the firing of the Security and Exchange Commissioner. Well I think that is all fine and good, but here is what I say: In 47 days, you can fire the whole Trickle-Down, On-Your-Own, Look-the-Other-Way crowd in Washington who has led us down this disastrous path. Don’t just get rid of one guy, get rid of this administration, get rid of this philosophy, get rid of the do-nothing approach to problems and put someone in there who is going to fight for you.

So what is John McCain to do? Take Karl Rove's advice and lie his head off.

A day before the Arizona Republican began criticizing Barack Obama for taking economic advice from former Fannie Mae executive Frank Raines - a dubious claim that was challenged even by the source who first reported it - the former Bush strategist urged McCain to do just that.

During an appearance on Hannity and Colmes on Wednesday, Rove outlined what he thought would be the best counterattack for McCain to launch the opposition's way: mainly, tie the current financial and housing market crisis to the Democrats and play guilt by association with Obama.

"I do think that McCain and Palin ought to identify that the source of this contagion, the thing that started these dominos going down was the misbehavior of Fannie and Freddie, who I would remind you are the biggest part of the bailouts," he said. Earlier in the program, he had specifically brought up Raines' name in this context.

A day later, McCain echoed Rove's advice. On Thursday evening, the Senator's campaign released an advertisement declaring that Frank Raines was an Obama economic adviser. "Shocking," declared the ad, citing the mismanagement that occurred under Raines' reign, as well as his large compensation package. Shocking, indeed. The Associated Press and other news outlets reported hours later that the claim was not honest. Raines had even told a senior McCain aide, in a private email, that he was not an Obama adviser.

Nevertheless, Rove's charge made its way into Friday's speech as well, where McCain criticized Obama again for turning to Raines, but also for initially tasking Jim Johnson, another former Fannie CEO, with heading his vice presidential search committee.

It's pointless to start arguing about how McCain has Fannie and Freddie lobbyists on his staff too, far more than Obama, but OK, let's go ahead anyway.

He is, without a hint of shame, attacking Obama for having connections with two former Fannie Mae executives. At the same time, one of McCain's top policy advisors, Charlie Black, was lobbyist for Freddie Mac for 10 years, while his campaign manager, Rick Davis, lobbied to help Fannie and Freddie steer clear of additional federal regulations (which, obviously, would have been pretty helpful in retrospect).

But wait, there's more. Tom Loeffler, who served as McCain's campaign co-chairman, also lobbied for Fannie Mae. Aquiles Suarez, a McCain economic advisor, was a Fannie Mae executive. Dan Crippen, a McCain advisor who helped craft the campaign's health-care policy, lobbied for Fannie Mae (and Merrill Lynch). Arthur B. Culvahouse, who helped lead McCain's VP search committee, also lobbied for Fannie Mae. In all, McCain has 19 people who are either advisors or fundraisers who lobbied for either Fannie Mae or Freddie Mac.

And voters are supposed to be outraged because of Obama's connections to Franklin Raines and Jim Johnson? Why would McCain even start on this subject at all, making the argument that ties to Fannie/Freddie are scandalous, given his own associations?

The point is that this is a dodge. Fannie and Freddie's problems are the result of a larger inattention to the practice of letting anyone with a pulse have a mortgage, and then banks leveraging themselves to the eyeballs to gamble on these people. McCain is vulnerable on the economy and he expects people not to know the intricacies of this byzantine crisis, so he's lying. Again.

What's more, it's a distraction. Instead of having an argument on how we got here and what needs to be done to get us back on our feet, we get inscrutable attacks like this:

My friends, this is the problem in Washington. People like Senator Obama have been too busy gaming the system and haven't ever done a thing to challenge the system. That isn't country first, that's Obama first.

Does anyone know what he's talking about? Gaming the system?

This is the classic Chewbacca defense, a distraction to keep people off balance. At this point, it's McCain's only chance of winning the election. I don't think Obama will bite.

Green Jobs As An Economic Savior For California

We're all still choking on the speed and enormity of the trillion-dollar bailout about to be given to executives on Wall Street instead of to homeowners who got snookered into teaser rates and ARMs. It's important to note that there is another way on this. Faced with a collapse of the financial markets in the 1930s, the solution was not seen in paying off the investor class for the bad decisions they've made, but paying workers to produce and create, and building up the backbone of the economy again, allowing prosperity to trickle up instead of down. We are at another crossroads across the nation and in California, and yet the answer is so clear. We have an imminent fight to mitigate the effects of global warming, and whoever solves this puzzle will not only save the world trillions in collateral damage from the disastrous fallout, but make a tidy profit besides. In fact, as a recent study has shown, the effort here in California will unquestionably improve the long-term prospects for the economy.

Costly as it may seem, California's mandate to cut climate-altering exhausts from vehicles and industry by nearly one-third in the next 12 years actually will boost the economy, a state analysis released Wednesday predicts.

The improvements in fuel and energy efficiency and extra clean-technology jobs needed to achieve the required 30 percent emissions reduction would result in a net household savings of $400 to $500 a year and a net 0.2 percent or $4 billion gain in the total annual output of goods and services, according to the report.

The view that says we have to freeze short-term cash outlays to stop the catastrophic effects of climate change ought to be discredited on this of all days as reductivist and shortsighted. The cost of the kinds of damage you would see from a sustained rise in global temperature is so astronomical that investing in green technology is incredibly efficient in the long run. And it's a jobs program to boot:

Most sectors of the economy, including transportation and warehousing, agriculture, forestry, manufacturing and construction, would by 2020 see moderate increases in employment and production as a result of investing in the more expensive but efficient building designs, lighting, vehicles and equipment, the study said.

The major exception would be the electric power companies that would experience about 16 percent less production and about 14 percent fewer jobs.

Which of course would be more than offset by the increase in jobs in the same sector through solar and wind and biomass and tidal and geothermal production.

The financial mess puts into stark relief the need for a long-view approach to the economic future. Investments that seem unaffordable now hold massive potential in just a few short years. We have to be bold and become the center for green jobs in the United States and around the world. In uncertain times, it's the only way to secure California's future.

Amazing How Refreshing The Lifting Of Consequences Can Be

Stocks soar on the news that stocks are no longer allowed to do anything in the short-term but soar.

In other news, Wall Street executives raced to fill a shortage of dollars they could use to light their cigars.

Would it kill everyone to offer a scrap to those who aren't invested in the market but have to suffer the consequences of this? Can the Wise Men who rule us see beyond those who wear suits for a living for two seconds?

Bradrocket:

It’s times like these where I start getting pitchfork-and-torches angry. Make no mistake, this bailout plan will have a massive opportunity cost. National health care just became that much more difficult because we’re going to be spending $1 trillion to bail out a bunch of irresponsible Wall Street assholes. The sheer amount of shit that the American taxpayer is about to devour cannot be calculated. Our choice boil down to:

• Borrowing a crapload more money from the Chinese and adding God knows how much to our national debt.

• Paying significantly higher taxes and getting precisely nothing in return except for the knowledge that rich people won’t feel bad about themselves.

It’s time to bring back the pillory stocks, my friends. I want Bush, Paulson, Cox, Bernanke and the heads of AIG, Bear Stearns, Lehman Brothers and Fannie and Freddie locked up for years on end so that we may hurl vegetables and feces at them to our hearts’ content. Because hey, if we’re going to be sacrificing our Social Security and our health insurance to save the Wizards of Wall Street, we might as well get *something* out of the deal.

Just another day in the corporatocracy.

Fourthbranch II: The Fourthbranchening

Why am I not surprised?

The Hill reports that it inquired with both Joseph Biden and Sarah Palin about whether they would consider themselves to be part of the executive branch in the next administration. The Hill’s Kevin Bogardus reports, “Sen. Biden (Del.) believes the office he is seeking is solely in the executive branch, according to his staff. But aides to Alaska Gov. Palin did not answer the question”:

[A] spokesman for the Republican presidential campaign did not answer the question. Instead, he e-mailed remarks Palin gave at a campaign rally in Golden, Colo., on Monday.

Palin did not say what branch of government she believes the vice president’s office is part of in those remarks. Instead, Palin said she and Republican presidential nominee John McCain had discussed what responsibilities she would take on as his second-in-command.

Palin is asserting the same vagueness on the subject as Cheney because she wants to play by the same rules as Cheney, which of course are no rules at all. She has obstructed and intimidated the Alaska State Legislature to the point where they're probably a week away from dropping the entire Troopergate investigation, despite the fact that evidence already exists to show at the very least unethical behavior, if not a total abuse of power, in the form of Frank Bailey's phone call urging Walt Monegan to do all but fire Michael Wooten. The McCain campaign has taken over the investigation, and they're openly harassing reporters at home to get them to drop their unfavorable coverage. And the "First Dude," Todd Palin, is refusing to testify in the probe, just because... he doesn't like it. As he isn't a state employee, there's no way for him to invoke executive privilege. He just doesn't want to testify. And so he's not.

This is very dangerous stuff. This woman who could be Vice President is as devious and secretive and abusive as her predecessor. Check this out:

But those who know her say Palin, 44, is uncommonly deft at something else: sensing the mood of her constituents, shaping her public messages and harnessing a remarkable personal popularity to accomplish what she wants. "She has an incredible pulse on the public will," said Bruce Botelho, a Democrat who is mayor of Juneau, the state capital.

"She tends to . . . create a situation where legislators are cornered -- going against her would be political suicide," said John Bitney, who grew up with Palin, was her campaign policy director and became her first legislative liaison.

That's how Cheney took over the White House. This is happening all over again.

Fortunately, her negatives have jumped up as weeks of relentless attacks have taken their toll. And this ad about aerial wolf hunting really hits people in the gut and moves voters. But we have to be vigilant. The country can't afford four more years of Fourthbranch.

Another World Was Possible

This has been a great week for the ownership society. Not only do we all own an insurance company, but now we've got ourselves hundreds of billions in bad debt:

While details remain to be worked out, the plan is likely to authorize the government to buy distressed mortgages at deep discounts from banks and other institutions. The proposal could result in the most direct commitment of taxpayer funds so far in the financial crisis that Fed and Treasury officials say is the worst they have ever seen.

Senior aides and lawmakers said the goal was to complete the legislation by the end of next week, when Congress is scheduled to adjourn. The legislation would grant new authority to the administration and require what several officials said would be a substantial appropriation of federal dollars, though no figures were disclosed in the meeting [...]

“What we are working on now is an approach to deal with systemic risks and stresses in our capital markets,” said Henry M. Paulson Jr., the Treasury secretary. “And we talked about a comprehensive approach that would require legislation to deal with the illiquid assets on financial institutions’ balance sheets,” he added.

One model for the proposal could be the Resolution Trust Corporation, which bought up and eventually sold hundreds of billions of dollars’ worth of real estate in the 1990s from failed savings-and-loan companies. In this case, however, the government is expected to take over only distressed assets, not entire institutions. And it is not clear that a new agency would be created to manage and dispose of the assets, or whether the Federal Reserve or Treasury Department would do so.

President Paulson and Vice President Bernanke make a good case here. We can't allow the financial markets to blow up, and so federal intervention is needed on a big enough scale to stop the bleeding. And the numbers they're talking about are one trillion dollars.

Also, the government is restricting short selling, basically stepping in to ensure the market rises less than 50 days before a general election, and increasing the chances of a major meltdown in the future. The forces that be are telling Wall Street that financial stocks essentially are not allowed to go down anymore.

Kevin Drum writes the post I was about to write before I got tied up this morning.

...if Uncle Sam can afford to spend a trillion bucks or so rescuing Wall Street, it would be nice if they could spend a trillion bucks shoring up all the poor saps losing their homes because they can't make the payments on those option ARMs they were talked into buying during the boom years. We could do it if we wanted to, and the risk wouldn't even be appreciably different from the Wall Street bailout. The feds would have to make distinctions (just as they will with overleveraged banks), and some homeowners would qualify for a rescue package while others wouldn't. The ones who qualified would get loan relief, which most of them would eventually make good on, in the form of restructured financing. People would be helped, the subprime crisis would get attacked at its roots, and although it would cost a lot of money up front, in the long term the price might end up being fairly modest (by present-day brobdingnagian standards, that is). Moral hazard is an issue, but no more than it is for the bank bailout.

That's exactly correct. If you stepped in to bail out homeowners and pay off their restated ARM rates, suddenly they would have more money to spend in retail. The "illiquid assets" that these banks were holding would suddenly have value. The market would go up across sectors because consumer-based businesses would see more robust growth. The economy would expand and the people would see the fruits of it instead of the bankers who mad bad bets in the first place. It may sound unfair, but I don't think anybody would compare it unfavorably to what we're seeing today.

There's a chance that this wouldn't work so smoothly, of course. But the real point is that it doesn't get considered. And that's because the new President and Vice President are the Treasury Secretary and the head of the Federal Reserve. They, and most economists, essentially view financial crises from the standpoint of the banks instead of those who put their money into them. What's more, Paulson used to run Goldman Sachs, and even if he isn't collecting money in stocks from them, he has relationships with those who are.

There is no voice for taxpayers in a situation like this, and so nobody should be very surprised when taxpayers are left with all the burden at the end. The elites snap their fingers, shrug their shoulders and try again with the full backing of the federal treasury, and the workers see nothing but debt as far as the eye can see. This has been the reality in our country for all but only those few years after the Depression, after a global meltdown that could not be stopgapped. The big money boyz are a lot more sophisticated about protecting their own fiefdoms these days, but that doesn't mean they can survive forever. They went to the edge of the cliff this week, and this temporary reprieve doesn't mean they won't fall over.

...Robert Reich agrees. Money quote.

Congress, the Fed, and the Administration shouldn't be giving more help to Wall Street. Policymakers should focus instead on people who really need a safety net right now -- workers who have lost or are about to lose their jobs, who need extended unemployment insurance and health insurance for themselves and their families; homeowners who have lost or are likely to lose their homes, who need additional help meeting mortgage payments and reorganizing their debts; and people who have lost or are in danger of losing their savings or pensions, who need better insurance against possible loss.

The only way Wall Street's meltdown doesn't spill over to Main Street is if policymakers begin to pay adequate attention to the people whose wallets really keep the economy going, and who merit more help than the Wall Street tycoons whose carelessness and negligence have put it in such jeopardy.

Please Forgive The Lateness Of My Reply

Deadline day for me.

So, anything happen since I was gone? Do we own all of the nation's banks yet?

Lies And The Lying Liars Cont'd

Hey, it's Thursday, so it's time for another lying ad from the McCain campaign.



I don't necessarily buy the argument that this is some kind of Jesse Helms situation because it pairs Obama with another black man, but the problem is that Frank Raines, the former head of Freddie Mac, has no involvement with the Obama campaign whatsoever. Here's the campaign statement:

This is another flat-out lie from a dishonorable campaign that is increasingly incapable of telling the truth. Frank Raines has never advised Senator Obama about anything -- ever. And by the way, someone whose campaign manager and top advisor worked and lobbied for Fannie Mae and Freddie Mac shouldn't be throwing stones from his seven glass houses.

Obama's campaign threw together a response ad today. I mean, if you want to talk about advisers...



Fiorina, Gramm and Bush isn't even a good double-play combination, let alone a team of advisers.

But I want to go back to the pathology here. The recently converted Joe Klein had a good piece about the fundamental dishonesty of John McCain.

McCain's lies have ranged from the annoying to the sleazy, and the problem is in both degree and kind. His campaign has been a ceaseless assault on his opponent's character and policies, featuring a consistent—and witting—disdain for the truth. Even after 38 million Americans heard Obama say in his speech at the Democratic National Convention that he was open to offshore oil-drilling and building new nuclear-power plants, McCain flatly said in his acceptance speech that Obama opposed both. Normal political practice would be for McCain to say, "Obama says he's 'open to' offshore drilling, but he's always opposed it. How can we believe him?" This persistence in repeating demonstrably false charges is something new in presidential politics.

Worse than the lies have been the smears. McCain ran a television ad claiming that Obama favored "comprehensive" sex education for kindergartners. (Obama favored a bill that would have warned kindergartners about sexual predators and improper touching.) The accusation that Obama was referring to Sarah Palin when he said McCain's effort to remarket his economic policies was putting "lipstick on a pig" was another clearly misleading attack — an obnoxious attempt to divert attention from Palin's lack of fitness for the job and the recklessness with which McCain chose her. McCain's assault on the "élite media" for spreading rumors about Palin's personal life — actually, the culprits were a few bloggers and the tabloid press — was more of the same. And that gets us close to the real problem here. The McCain camp has decided that its candidate can't win honorably, on the issues, so it has resorted to transparent and phony diversions.

That about says it all. And good for Joe for saying it.

Budget Deal Sealed...Again

CapAlert sez it's all over, and it's marginally better, actually:

Legislative leaders said today that they have reached a deal on the long overdue state budget that will satisfy demands made by Gov. Arnold Schwarzenegger.

The Republican governor has said he would veto the $104.3 billion plan lawmakers passed this week. He demanded that a proposed rainy day fund to help the state though bad economic times be tightened to prevent its balance from being depleted in good times.

And he said lawmakers must remove a maneuver, worth $1.6 billion, that would have increased the amount of withholding tax paid by personal income taxpayers.

Republican leaders and Senate President Pro Tem Don Perata emerged from a meeting this afternoon saying they had agreed to the governor's demands. They have proposed making up the lost revenue by increasing penalties on corporations that underpay taxes. The leaders also agreed to lower the amount of the state's reserve fund from $1.2 billion to $800 million. Under the proposal, corporations who underpay their taxes by $1 million or more would see penalties rise from 10 percent to 20 percent. The deal also assumes a cancellation of a proposed tax amnesty program.

A mixed bag here. I think the rainy-day fund is kind of silly, and the worst part of this is that Schwarzenegger will now get to wield his blue pencil on the budget (last year he struck funding to treat mentally ill homeless people, you recall. How moderate!). But eliminating the interest-free loan all of us taxpayers were going to give to the state against our will is a good thing, especially in return for increasing penalties on corporate tax cheats. The withholding gambit wasn't going to pass the override, because Republican leaders wouldn't have gone along (they somehow snuck it into a party-line vote the first time around).

Of course, that isn't a reliable form of income. And there are still plenty of gimmicks inside this budget. And, the $8 billion dollar chunk that could be siphoned off by judicial mandate to rescue prison health care has yet to be dealt with. So this end result is not exactly wonderful.

The pundits who gave Arnold a tongue bath over having the post-partisan postpartisan-ness to veto the budget ought to take a look at the finished product. It's still a piece of garbage. And that's by design in the dysfunctional budget system, where you practically are destined to come out with an illegal finished product.

The Bay Area Council, a group of high-level executives from around the state, has the right idea - it's time for a Constitutional convention that can blow all of these contradictory and debilitating rules off the table and start anew.

A constitutional convention was used nearly a century ago to wrest California's government from the hands of railroad barons. Today, some say it could help the state out of its current political dysfunction.

The Bay Area Council, which represents the chief executives of Google, Yahoo, Chevron, Wells Fargo and other major San Francisco Bay Area businesses, is leading the charge for a state constitutional convention to revamp state government.

"This year's budget deadlock shows better than perhaps any other recent event that our state needs a constitutional convention to fix a governance system that is hopelessly broken," Jim Wunderman, president of the Bay Area Council, said in a statement.

Among some of the changes being proposed:

Adopt a two-year budget cycle.

California's taxing and spending systems, along with its ties to local government spending.

Remove the two-thirds vote requirement to pass a budget in the Legislature.

The devil's in the details, but the current system doesn't work, and we end up suffering. There are dozens of teachers, health care workers, managers of clinics, public employees, and countless other groups who get hurt every summer by the late budget. The legislators aren't currently allowed to do their job. Reform is desperately needed.

Rachel's Gift

We're into week 2 of the Rachel Maddow Show on MSNBC, and the ratings are strong. She continues to beat Larry King, both in the demo and overall; she's already getting three times the viewers of Glenn Beck; and she actually beat her lead-in Keith Olbermann on Tuesday night. Rachel is nowhere near Hannity & Colmes yet, but the show is only two weeks old.

I've been TiVo'ing it and watching, and I have to say that it's unlike anything else on cable news. Olbermann comes out of the cable tradition, and his internal rivalries with the likes of O'Reilly and Limbaugh set it in a certain shoutfest space (even though he never has on anybody who disagrees with him, which I think is actually a mistake). Maddow's show is completely different. It's relentlessly factual, engaging and while it has a point of view, it uses argument over bluster to make it. It's quite extraordinary, not only because she manages to expose someone like Tom Frank to the cable-watching world, but because it's a show that uses complete sentences and actually foregrounds facts. Not to mention that it shares Maddow's taste for the absurd, like the story yesterday about 10 trillion Zimbabwean dollars being rolled back to $100, for example.

It's a really impressive achievement so far.

All Cox' Fault?

Looks like the GOP has found a scapegoat for the financial meltdown. John McCain said today that he would fire Chris Cox as the chairman of the SEC. Now, Presidents don't have the power to do that, but clearly that showed a lack of trust in Cox on the part of the Republican nominee, and now CNBC is reporting (no link) that Cox will resign at the end of President Bush's term. In a way, McCain got what he wanted. And expect lots of articles about how lax SEC oversight was the proximate cause of this mess.

But how true is that? McCain tried to lay the blame at Cox' feet for the practice of naked short selling, which is when you can bet on a stock to go down without owning it, sort of like playing the ponies without owning the horse. This isn't exactly the best thing for the market, and Andrew Cuomo is launching an investigation to see if it's fully compliant with current law.

New York on Thursday began a probe into possible illegal short-selling in the stocks of Wall Street companies such as Goldman Sachs Group Inc and Morgan Stanley, Attorney General Andrew Cuomo said.

Cuomo said on a conference call with reporters: "I want the short-sellers to know today that I am watching. If it is proper and legal then there is nothing to worry about." [...]

The New York State prosecutor said his office also would look back into illegal short-selling that may have occurred in stocks of Lehman Brothers Holdings Inc and American International Group Inc, two companies at the heart of the crisis.

In the past week, Lehman has gone bankrupt and the insurance giant was rescued by the U.S. government.

Cuomo has asked the SEC for a freeze on short-selling.

But to suggest that this is why the markets are in turmoil is crazy. It's like blaming the guys betting on the horse for the horse carrying 200 extra pounds and stumbling to the finish line. The banks lent money to people who couldn't pay them back, and then hid the debt in all sorts of tricky new assets and securities that they tried to shovel out the door. That's the main problem, and no change in short-selling would alter that. The other problem is leverage, which may or may not be the SEC's fault.

As we learn this morning via Julie Satow of the NY Sun, special exemptions from the SEC are in large part responsible for the huge build up in financial sector leverage over the past 4 years -- as well as the massive current unwind.

Satow interviews the above quoted former SEC director, and he spits out the blunt truth: The current excess leverage now unwinding was the result of a purposeful SEC exemption given to five firms.

You read that right -- the events of the past year are not a mere accident, but are the results of a conscious and willful SEC decision to allow these firms to legally violate existing net capital rules that, in the past 30 years, had limited broker dealers debt-to-net capital ratio to 12-to-1.

Instead, the 2004 exemption -- given only to 5 firms -- allowed them to lever up 30 and even 40 to 1.

Who were the five that received this special exemption? You won't be surprised to learn that they were Goldman, Merrill, Lehman, Bear Stearns, and Morgan Stanley.

You can credibly charge Cox with failing to conduct meaningful oversight and indeed encourage over-leveraging, but that's not what McCain said.

He talked about short selling, which is perfectly legal, thanks to the masters of the universe like Phil Gramm, who encouraged and supported the casino-like atmosphere on Wall Street that led to this mess.

If you want to know what happened to blow up the financial markets, it's relatively simple. The banks let anyone buy a house, securitized the mortgages, and over-speculated and over-leveraged themselves, so that investors were buying worthless pieces of paper that they thought were valuable. The fixes are also simple:

Reform One: If it Quacks Like a Bank, Regulate it Like a Bank. Barack Obama said it well in his historic speech on the financial emergency last March 27 in New York. "We need to regulate financial institutions for what they do, not what they are." Increasingly, different kinds of financial firms do the same kinds of things, and they are all capable of infusing toxic products into the nation's financial bloodstream. That's why Treasury Secretary Hank Paulson has had to extend the government's financial safety net to all kinds of large financial firms like A.I.G. that have no technical right to the aid and no regulation to keep them from taking outlandish risks. Going forward, all financial firms that buy and sell products in money markets need the same regulation and examination. That will be the essence of the 2009 version of the Glass-Steagall Act.

Reform Two: Limit Leverage. At the very heart of the financial meltdown was extreme speculation with esoteric financial securities, using astronomical rates of leverage. Commercial banks are limited to something like 10 to one, or less, depending on their conditions. These leverage limits need to be extended to all financial players, as part of the same 2009 banking reform.

Reform Three: Police Conflicts of Interest. The conflicts of interest at the core of bond-raising agencies are only one of the conflicts that have been permitted to pervade financial markets. Bond-rating agencies should probably become public institutions. Other conflicts of interest should be made explicitly illegal. Yes, financial markets keep "innovating." But some innovations are good, and some are abusive subterfuges. And if regulators who actually believe in regulation are empowered to examine all financial institutions, they can issue cease-and-desist orders when they encounter dangerous conflicts.

The SEC could have handled reform 2, but that's about it. There are also reforms that we can do to ensure that people stay in their homes, which would be novel, protecting ordinary people instead of the executives who caused this. AND, we could actually tax hedge fund managers on their income the way we do any other income-generating American, increasing federal revenue and having the people at least somewhat responsible for this mess partially finance the bailouts, as they are no longer creating public wealth.

This remains a scary time. China could decide that holding US dollars doesn't make any sense and divest, which would lead to what Michael Bloomberg has called a next wave crisis.

But you'll see that short-selling, which actually doesn't affect the market as much as claimed, because on the way down you have to buy the stock to cover the sale, isn't on anyone's reform list. The bottom line is that simple regulation that is actually implemented is much cheaper and more efficient than bailing out everyone on Wall Street with phantom money that is just created out of thin air and ends up becoming debt for our children and grandchildren. John McCain is out of touch with what is needed to soothe the markets, but it sounds manly to "strike forth" and fire a guy you decide is responsible. The responsibility lies with Republican love of deregulation, not any one person. You can scapegoat Chris Cox all you want, but it's a smokescreen.

...funny, too, how McCain can stand up to Chris Cox but not George Bush.

In private late Tuesday evening, the McCain campaign circulated a draft statement on the Wall Street crisis that attacked the Bush administration for a slow and "inconsistent" response, and charged that executives at several financial firms had made "misleading and false" statements.

But the criticism never appeared. After being circulated not only among McCain aides but also major campaign donors who have worked in the investment industry, the language was softened.

CA Campaign Update: CA-04, CA-11, LA Board of Supes

I'm going to try and do these once a day. No promises!

• CA-04: In partial response to the kerfuffle from yesterday's deceitful attack ad, Charlie Brown released two radio spots and a TV ad today. His wife Jan Brown narrates the TV spot, which foregrounds Charlie and his son's military service. (Sorry, not embeddable)

The radio spots are both solid attacks on Venturian Candidate Tom McClintock. Two men, two paths contrasts Brown's service and leadership with McClintock's life in politics, and his record on veterans (including donating 5% of his campaign funds) with McClintock's (voting against veteran's funding). Vote is a humorous spot discussing how McClintock can't vote for himself because he won't move into the district. There's also a lot on McClintock's per diem expenses from the State Senate. "L.A. Tom" is the frame they're going with, and they ask, "if he won't vote for himself, why should we?"

• CA-11: State Senator Ellen Corbett and Assemblywoman Mary Hayashi sent a letter to women in Jerry McNerney's district urging them to reject right-wing extremist Dean Andal. His record on women's issues is really retrograde.

To the Women of Congressional District 11:

If you are anything like us, you want a representative in Washington that not only reflects your values, but who also respects you.

Dean Andal just doesn’t qualify. In fact, Dean Andal’s record on women’s issues shows just how out of touch and extreme his views are.

In 1994, as a member of the State Assembly, Dean Andal opposed a common sense law that would have allowed women to wear pants in the workplace instead of being forced to wear skirts and dresses.

Andal also voted against requiring health insurance plans to cover cervical cancer screenings. He even voted against making sure that information about sexual harassment be included in mandatory workplace anti-discrimination posters.

Yet the most egregious affront to women he offered in his short term in the Assembly was his vote to restrict the definition of rape to exclude attacks where an incapacitated woman cannot resist.

And what’s worse, Andal’s was the only vote in the Assembly against expanding the definition. The only one.

Whether you’re a Democrat or a Republican, all women should be proud of the progress we have made. That's why it's so important that we don't send someone like Dean Andal to Congress. Someone with a record like Andal’s can be counted on to turn back the clock on all we have achieved.

• LA Board of Supes: There's a runoff in this seat between Councilman Bernard Parks and State Senator Mark Ridley-Thomas. While Ridley-Thomas is a solid progressive who understands the fundamental dysfunction of state government and will fight for progressive values on the powerful Board of Supes, Bernard Parks has hired Republican fixer Steve Kinney to help him win the race. Parks, who has a business-friendly record on the City Council, is receiving help from BizFed, a PAC notorious for pushing the same agenda. The wingnuts at the Lincoln Club have reportedly offered him support as well. At least the choice is now clear to voters - one candidate on the side of the corporate vultures, the other on the side of the people.

• Misc. I should note that Chris Bowers' House race forecast is up, and among California races, he lists CA-04 as a tossup, CA-11 as Lean D, and CA-26 & CA-50 as Likely R. I think he's selling a couple races short, but that's a pretty good conservative estimate.

Of Course, He Isn't A Baron Or King Or Anything

Just a lifelong Republican Congressman who's fed up with his party:

Rep. Wayne Gilchrest, a maverick Republican from Maryland, endorsed Illinois Democratic Sen. Barack Obama for president in an interview Wednesday with WYPR, Baltimore's National Public Radio station.

Gilchrest, who lost a primary campaign and is retiring from Congress, has already endorsed the Democrat running for his seat, Frank Kratovil. Justifying his endorsement of Obama, Gilchrest said that "we can't use four more years of the same kind of policy that's somewhat haphazard, which leads to recklessness."

Obama and his running mate, Sen. Joe Biden (D-Del.), "have the breadth of experience. I think they're prudent. They're knowledgable."

Granted, there's no "de" in his name, so this won't garner any kind of media attention.

UPDATE: The fact that Henry Kissinger, Colin Powell and James Baker are tacitly endorsing Obama's foreign policy mindset is notable as well.

WASHINGTON (Reuters) - Five former U.S. secretaries of state said on Monday the next American administration should talk to Iran, a foe President George W. Bush has generally shunned as part of an "axis of evil."

Engaging Iran is important because Washington's military options against Tehran are unsatisfactory, said the diplomats, who worked for Republican and Democratic administrations.

The five -- Colin Powell, Madeleine Albright, Warren Christopher, James Baker and Henry Kissinger -- all said they favored talking to Iran as part of a strategy to stop Tehran's development of a nuclear weapons program.

Do they think Obama is elitist, though? Because THAT would get them on the teevee.

Bottom Of The Ticket

McCain can't hold a crowd in Iowa:

McCain starts speaking 18 minutes into the rally. He begins by reminiscing about the State Fair. "I'm very grateful to be here. We intend to campaign hard across the state of Iowa again...I think we're going to be up late on Election Night, my friends, and we're going to need your help."

I look up, about five minutes into McCain's address and see a steady stream of people walking out of the rally. They just came to see Palin apparently.

The hard-core wingers want their tabula rasa gal at the top of the ticket. The problem for them is that she's divisive and her charm is fading. Markos is right - the intense focus on her made sense to drive up her negatives. Now that the financial ship has hit the iceberg, thoughts turn back to McCain, and his own party faithful don't want to hear from him.

This isn't ending the way the Disney movie would.

...wow, I missed this:



A Palin and McCain Administration?

The Battle For Women

I just got an email from Page Gardner of Women's Voices Women Vote with some polling results:

Gallup recognizes the importance of the marriage gap, and has been polling on the preferences for the General Election and reporting the results by marital status and gender since early June. Be sure to check the WVWV website each week to see the latest results. This week, 57% of unmarried women favor Barack Obama, and 33% support John McCain. Of married women, 54% favor John McCain, and 39% support Barack Obama -- giving Barack Obama an overall 39 point marriage gap.

And yet unmarried women lag behind their married counterparts in registering and voting. Organizations like WVWV are trying to balance that (they have registered over 700,000 voters so far this year) but it's going to take a message as well as registration efforts.

That's why the Obama campaign is amping up their women's outreach.

While Palin makes a historic appeal to women to break the glass ceiling, the Obama campaign will have an equal pay ad airing this week reminding voters of policy differences with the McCain-Palin ticket that vastly impact females.

"More and more families depend on the income earned by working women, so you'd think we'd be united in our determination to help eliminate the unfair pay gap and pay women what they deserve for the work they do. But even now in 2008 Senator McCain has stood in the way of legislation to help close the pay gap... only from the man who repeatedly says the fundamentals of our economy are strong," said Moira Mack, spokeswoman for the Obama campaign.

On Monday, the Obama campaign released a list of major female backers--some there from the start of his campaign, but more important, names of women prominent in the Clinton presidential campaign and some visible females who are just now making a public endorsement. Obama spoke to the group Monday in a conference call, first reported in the Huffington Post.

On Tuesday, Ellie Smeal of the Feminist Majority and Kim Gandy of NOW--the National Organization for Women-- hold a press conference at the National Press Club to make their endorsement of Obama public. These Democratic-allied groups had been in the Clinton camp.

On Wednesday, Michelle Obama and Lilly Ledbetter, a leader in the battle of equal pay for equal work, take part in a roundtable in Richmond, Va. and headline a Virginia Women for Obama voter registration rally.

It continued today with Michelle Obama in North Carolina. You can read about this women's week of action here. The NOW endorsement is unusual, they haven't endorsed in a Presidential race since 1984.

And most crucial, Obama is not hiding his stance on a hot-button culture war issue, but making sure the differences between him and his opponent are clear.

WASHINGTON - Republican John McCain, an abortion rights opponent with a conservative Senate record on the issue, seems content with the public's perception that he's more moderate on the subject.

Democrat Barack Obama, who supports abortion rights, is only too happy to remind voters where McCain stands, but he tries to make his case without attracting too much attention [...]

Obama's radio ad, running in Indiana, Pennsylvania, New Hampshire and elsewhere, features nurse practitioner Valerie Baron telling voters: "John McCain's out of touch with women today. McCain wants to take away our right to choose."

Glossy fliers with the same messages fill the mailboxes of women in Florida, Virginia and other states.

Countering that effort, McCain rolled out his own radio ad suggesting he's not as far right on abortion as Obama makes him seem — though he never mentions that procedure.

Instead, McCain's commercial focused on stem cell research and said he will invest more money in research to prevent disease and find medical breakthroughs to "help free families from the fear and devastation of illness."

Not only is that not likely to work, given that McCain has publicly expressed his "25 year consistent pro-life record," it may end up hurting him with his far-right base. Obama has been consistent as well - he wants to help reduce unwanted pregnancies, but he will not deprive women of their medical options and make them unsafe.

One candidate picked a female running mate to appeal to women. The other picked the right issues. I think the latter is the correct move.

Revenge Of The Neocons

Following up on this bizarre story about John McCain seemingly not knowing the name of the Spanish Prime Minister, the damage control artist Randy Scheunemann has stepped away from his lobbying gigs long enough to offer an explanation, and it's worse than the initial assumption that McCain was just confused:

Zapatero is a center-left politician, but McCain has suggested that as president he would seek to repair relations that have been badly frayed in Europe during Bush's tenure. In an early-April interview with a reporter from Spanish newspaper El Pais, McCain said, "This is the moment to leave behind discrepancies with Spain."

He added: "I would like for [President Zapatero] to visit the United States. I am very interested not only in normalizing relations with Spain but in obtaining good and productive relations with the goal of addressing many issues and challenges that we have to confront together." [...]

McCain foreign policy adviser Randy Sheunemann (sic) said McCain's answer was intentional.

"The questioner asked several times about Senator McCain's willingness to meet Zapatero (and id'd him in the question so there is no doubt Senator McCain knew exactly to whom the question referred). Senator McCain refused to commit to a White House meeting with President Zapatero in this interview," he said in an e-mail [...]

Asked to explain McCain's apparent shift in tone and position since April, Scheunemann gave almost no ground.

"In this week's interview, Senator McCain did not rule in or rule out a White House meeting with President Zapatero, a NATO ally," he said in an e-mail. "If elected, he will meet with a wide range of allies in a wide variety of venues but is not going to spell out scheduling and meeting location specifics in advance. He also is not going to make reckless promises to meet America's adversaries. It's called keeping your options open, unlike Senator Obama, who has publicly committed to meeting some of the world's worst dictators unconditionally in his first year in office."

(That's Prime Minister Zapatero, genius)

The female interviewer basically backs this up, believing that McCain "ducked the question" because the Bush Administration doesn't have good relations with Zapatero.

Wow. I knew the neocons were belligerent, but this explanation makes them sound suicidal. Spain is a NATO ally. We would be obligated to go to war on their behalf if they were attacked. McCain wants to refuse to meet with their leaders?

This is part of a pattern of the McCain campaign trying to cover up a bad moment with an even worse explanation. But it's also worth noting that the neocons are far more invested in McCain than they ever were in Bush, if that's possible. He's a very willing parrot for all of their petty grudges and magical thinking. And they're scheming to indoctrinate the other half of the ticket.

Comments by the governor of Alaska in her first television interview, in which she said Nato may have to go to war with Russia and took a tough line on Iran's nuclear programme, were the result of two weeks of briefings by neoconservatives.

Sources in the McCain camp, the Republican Party and Washington think tanks say Mrs Palin was identified as a potential future leader of the neoconservative cause in June 2007. That was when the annual summer cruise organised by the right-of-centre Weekly Standard magazine docked in Juneau, the Alaskan state capital, and the pundits on board took tea with Governor Palin.

Her case as John McCain's running mate was later advanced vociferously by William Kristol, the magazine's editor, who is widely seen as one of the founding fathers of American neoconservative thought - including the robust approach to foreign policy which spurred American intervention in Iraq.

In 1988, Mr Kristol became a leading adviser of another inexperienced Republican vice presidential pick, Dan Quayle, tutoring him in foreign affairs. Last week he praised Mrs Palin as "a spectre of a young, attractive, unapologetic conservatism" that "is haunting the liberal elites".

Now many believe that the "neocons", whose standard bearer in government, Vice President Dick Cheney, lost out in Washington power struggles to the more moderate defence secretary Robert Gates and secretary of state Condoleezza Rice, last year are seeking to mould Mrs Palin to renew their influence.

They go after everyone. Some of them work out, some of them don't. In the end, they stay in charge. This "twilight of the neocons" idea was vastly overrated.

New Field Poll Shows Continuing Opposition To Prop. 8

Maybe it's all the endorsements (the latest from the San Mateo County Board of Supervisors), or that the anti-equality side has thus far been confined to right-wing zealots and religious forces trying to impose their doctrine on the state, but Proposition 8's chances of passage are getting worse.

Opposition to a California ballot measure to ban same-sex marriage is mounting following Attorney General Jerry Brown's move to change the language on the initiative, according to a Field Poll released today.

The poll found that just 38 percent of likely voters support the measure, while 55 percent intend to vote no. That compares with 42 percent in support and 51 percent opposed in July.

Brown amended the Proposition 8 summary language after the state Supreme Court's decision on May 15 to overturn California's previous ban on same-sex marriage.

The pollsters found the amended language played a role in that growing opposition, especially among the 30 percent of likely voters interviewed who had never heard of Prop. 8.

Those voters were much more likely to oppose the measure when read Brown's wording (58 percent against it and 30 percent for it) than those in the same category who were read the old version of Prop. 8 (42 percent against and 37 percent for it), according to the Field Poll.

Yes, how dare that Jerry Brown put into print what the initiative would actually do, which is eliminate the right granted by the state for same-sex couples to marry. The Yes on 8 folks are whining that Brown "interfered" with the election, when actually, words with meaning did.

You can get the internals of the poll here. The initiative is running weak among DTS voters (56-28 against) and young voters (58-31 against). Hispanics are against it 51-36, which actually is not as solid as whites (55-39 against). And the key stat to me is that among divorced or separated voters, Prop. 8 fails 65-33. That makes perfect sense; those who have lived through a bad marriage have less illusions about how equality would ruin its sanctity.

The way I would view this is the way that California initiative watchers commonly view the "Pro" side of the argument. You have to start out 55% or higher before the negative ads kick in. Right now the Yes on 8 folks are outraising the No side 3:2, mostly with out-of-state checks. They're going to blanket the state with ads and so we should not let our guard down.

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President Paulson, Vice President Bernanke

It is kind of amazing that all of these massive government bailouts have occurred with virtually no input from any elected leader. The Fed and the Treasury Department are really driving the boat. Bush made a statement in the Rose Garden this morning which said, approximately, that's he's aware of the problem and somewhat concerned about it. Some would say he's pulling a Katrina; clearly he's not involved in this at all.

According to The Wall Street Journal, Bush was briefed on the rescue after it was in play. And even then, he was only "briefed." There's been no effort on the part of the White House to even advance the idea that Bush is an engaged participant who's actively signing off on these actions, possibly because suggesting his involvement in a crisis of this complexity would cause the stock market to run and hide in a corner.

Congress, too, has been cut totally out of the loop. The AIG bailout -- in fact, all of the bailouts -- have been conceived entirely without their involvement. Indeed, the Federal Reserve and the Treasury Department have been acting, over the course of this crisis, as if they are the sum total of the government. And that may be the correct approach: Neither the president nor the legislative branch possess the expertise or speed to be involved in the real-time crisis management that Bernanke and Paulson are trying to manage. They could, presumably, reverse decisions after the fact or change the contours of the law, but for now, the ship is being steered by the Chairman of the Federal Reserve, the Treasury Secretary, and an informal working group of Wall Street CEOs and banking powerhouses. And the government, as we normally think of it, has basically accepted their temporary authority. You've heard of martial law? We're currently in a state of market law.

I think Paulson and Bernanke clearly have enough information to know what they're doing, but of course they have a different loyalty than an elected official. Clearly their goal is to save the financial markets. Elected officials would presumably look at how this impacted constituents. There's a significant amount of overlap there, but it's not a monolith. If the Fed is running the show, you will get Fed-friendly policies.

Lawmakers are fairly teed off that they've been pushed out of the loop here, and Nancy Pelosi is seeking to put them back in charge. I think it's fair that a $85 billion dollar bailout of the world's largest insurer comes with some Congressional, and therefore popular, input. Interestingly, the Republicans in the House are the ones talking populist.

"My instincts and my gut tell me they made the wrong move. But I don't have all the information they do," said Rep. Paul D. Ryan (R-Wis.), the senior Republican on the House Budget Committee, who yesterday fielded furious calls from constituents. "People are angry because they see this as their tax dollars bailing out Wall Street speculators. And in some cases, it is." [...]

"Just how long can the poor beleaguered taxpayer be expected to bear all the losses and bear all the risk?" said Rep. Jeb Hensarling (R-Tex.), one of the protest's organizers. "Lehman Brothers must have the worst lobbyist in town, since they are the only ones that appear to have lost out on the bailout mania."

This seems like a cover, something easy to say after the fact without taking responsibility for the environment they helped create. Indeed, the standard-bearer of the party is trying to show his conversion to a corruption fighter and a regulator who will stop the greed on Wall Street, bail out the auto industry and unleash the innovation of the American economy. But it's a fantasy world.



That's brutal. So is Harry Reid.

“Yesterday, nearly 80 years after the Hoover Administration took America with blissful ignorance into depression, the Dow Jones Industrial Average dropped more than 500 points – the biggest one-day decline since trading opened after the attacks of 9/11. With one major investment bank headed for bankruptcy, another sold at a bargain-basement price, and one of the world’s largest insurance companies teetering, investors rushed to sell their shares.

“With our financial markets reeling, the American people are wondering whether they will lose their jobs, whether they will be able to pay their child’s next tuition bill, whether their pension and retirement savings will be safe.

“There is no reason to think we are headed into an economic depression. There is no reason to panic. Yet one Senator – John McCain – woke up yesterday morning, surveyed the state of the U.S. economy, summoned the ghost of his fellow Republican, Herbert Hoover, and declared, ‘The fundamentals of our economy are strong.’

Even his helpers, like Mike Huckabee, aren't helping, recounting his long history against government and regulation.

I don't want Paulson and Bernanke making these huge decisions outside public scrutiny, but I certainly don't want John McCain or his picks doing it, either. Just consider that, in a McCain Administration, the guy with this unbridled power would likely be Phil Gramm.

More on what I think could be done in a bit.

Terrorism Continued As Iraq Slips Away

This embassy bombing in Yemen is scary, mostly because it was a coordinated and sophisticated attack, suggesting that Al Qaeda or its allies are still strong in the Arabian nation. And of course, that's elementary. Because instead of dismantling Al Qaeda networks where they were in the first place, like in Afghanistan and Pakistan and Yemen (USS Cole, anyone?), we re-routed to Iraq and created a militant insurgency that we then had to defeat. That defeat has come at great human cost (7 Americans died in a helicopter crash just today) and has resulted in a Shi'a strongman allied with Iran.

BAGHDAD -- Once dependent on American support to keep his job, Prime Minister Nouri Maliki has consolidated power and is asserting his independence, sharply reducing Washington's influence over the future of Iraq.

Iraq's police and army now operate virtually on their own, and with Washington's mandate from the United Nations to provide security here expiring in less than four months, Maliki is insisting on imposing severe limits on the long-term U.S. military role, including the withdrawal of American forces from all cities by June.

America's eroded leverage has left Iran, with its burgeoning trade and political ties, in a better position to affect Iraqi government policies [...]

"If the next president waits too long, our diminishing leverage will likely disappear altogether, leaving us with two strategic options: resign ourselves to 'ride the tiger' -- that is, accept that we have to simply accept what the Iraqi government does and, at most, mitigate or help buffer the consequences -- or jump off the tiger altogether," said Iraq expert Colin Kahl of the Center for a New American Security.

Well, that was worth it!

...Eric Martin has a great reaction to this. We've not only turned away from trouble spots, but Iraq has become a training ground for terrorists, such that radicals return to their home countries and are better equipped to carry out attacks like this. The "flypaper theory," that if you draw all the terrorists to Iraq you could eliminate them, didn't work.

¡Viva Zapatero!

So John McCain granted an interview to the Spanish newspaper El Pais, which is interesting in itself since he's basically shut out the American press, to the point that reporters staged a rally to get McCain out from the front of the campaign plane (which is completely pathetic).

So he gives this interview, and he's asked about some Latin American hot spots, like Venezuela, Bolivia, and Cuba. And then the reporter turns back to Spain, and... well, look:

Then the interviewer switches gears and asks about Zapatero, the Spanish Prime Minister. And McCain replies -- very loose translation -- that he'll establish close relations with our friends and stand up to those who want to do us harm. The interviewer has a double take and seems to think McCain might be confused. So she asks it again. But McCain sticks to the same evasive answer.

I don't speak Spanish, but you can hear the tape of the interview here. Those who have heard it agree that it sounds like McCain either doesn't know Spain is in Europe, doesn't know Spain is a NATO ally, or doesn't know who Zapatero is. John Aravosis thinks that McCain might have thought he heard "Zapatista" as in the Mexican insurgents.

When asked about Spain and Zapatero, by a Spanish reporter for a Spanish newspaper, McCain responded about Mexico and Latin America. A reader suggested something that Josh had already considered, that perhaps McCain thought the reporter was talking about the Zapatistas in Mexico, the guerilla group. But that's not possible as the reporter clearly said she was talking about Spain and Spain's leader, Zapatero. She told McCain this twice. Let me tell you exactly what she asked McCain (per the translation):

"Senator, finally, let's talk about Spain. If you're elected president, would you invite President Zapatero to meet with you in the White House?"

McCain then gives this odd answer about America's friends and America's enemies. He also, oddly, talks about Mexico (why Mexico? The question was about Spain) and how he'd invite friendly leaders to the White House. She then asks him again, would that invitation include President Zapatero? He says again that he'd have to review relations first, blah blah. She then says again, "so you'd have to wait to see, so would you meet with him in the White House?" He again repeats his weird statement about friends and enemies. McCain also throws in, oddly, to the Spanish reporter, when she's asking him about meeting the Spanish president, a line about the importance of our relationship with Latin America (this is now the second time he answered a question about meeting the president of Spain with an answer about Latin America). She then says to McCain one last time:

"Okay, but I'm talking about Europe - the president of Spain, would you meet with him?"

This time, there was no room for confusion. McCain then gives this very bizarre answer:

"I will meet with any leader who has the same principles and philosophy as us in terms of human rights, democracy, and freedom and I will stand up to those who do not."

Zapatero is a bit of a leftist, but he remains an American ally. Sounds to me like McCain doesn't know who the hell he is. This is supposed to be the experienced warrior who knows the global scene. And he's practically caused an international incident in Spain. Wow.

No wonder he's being hid from the press. He's so deathly afraid of making a mistake. Someone needs to ask the campaign about this.

...there's now an English-language version which has been released.



At first I thought this could have been because of a faulty phone line, but no, the reporter was in the room with McCain in Miami. Clearly he has no idea who Zapatero is. He thinks this it's someone allied with Mexico, and he reverts back to his boilerplate answer about meeting with leaders who respect democracy. He didn't understand that she said "Europe" in her thick Spanish accent.

It sounds really bad.

Constitution Day and Cheneyism

Today is Constitution Day, a commemoration of a document that reportedly once governed the United States of America. At one time, the rules contained therein actually bound politicians and citizens to an agreed set of laws which everybody would follow or suffer consequences.

That was a quaint time.

Today, we know from experience that indomitable will and a talent at evading opponents is sufficient to nullify that Constitution. This week, the Washington Post printed two excerpts from Angler, a new book by Barton Gellman about the Cheney Vice Presidency. Longtime readers probably already know that Fourthbranch has hijacked the government and used it to his own ends, but reading these excerpts (and I'm sure, the book) reveals one head-scratching moment after another. Here's an example:

The command center of "the president's program," as Addington usually called it, was not in the White House. Its controlling documents, which gave strategic direction to the nation's largest spy agency, lived in a vault across an alley from the West Wing [7] -- in the Eisenhower Executive Office Building, on the east side of the second floor, where the vice president headquartered his staff.

The vault was in EEOB 268, Addington's office. Cheney's lawyer held the documents, physical and electronic, because he was the one who wrote them. New forms of domestic espionage were created and developed over time in presidential authorizations that Addington typed on a Tempest-shielded computer across from his desk [8].

It is unlikely that the history of U.S. intelligence includes another operation conceived and supervised by the office of the vice president. White House Chief of Staff Andrew H. Card Jr. had "no idea," he said, that the presidential orders were held in a vice presidential safe. An authoritative source said the staff secretariat, which kept a comprehensive inventory of presidential papers, classified and unclassified, possessed no record of these.

The excerpts cover the time period in March 2004 when a significant portion of the upper leadership of the Justice Department threatened to resign en masse over the illegal spying program, which of course the Democrats were bullied into giving blanket amnesty for earlier this year (a law which the ACLU is continuing to fight, because they're the ACLU). But this violation of the Fourth Amendment is certainly not the end of Cheney's assault on the Constitution. Scott Horton asked 6 questions of Gellman today about his book, and the revelations are amazing. Cheney may have burned VP hopeful Frank Keating by releasing damaging information HE GOT DURING THE SELECTION PROCESS to Newsweek. That's just the kind of guy this is. You can see the parallels to other events. Then there's this very important point:

A lot of critics call Cheney and Addington contemptuous of the Constitution. I think that’s completely wrong–a cartoon that misses something important, because it fails to take them seriously. The vice president has an unyielding conviction, to which he has devoted substantial thought, about what the Constitution means. He occupies an extreme position in the usual separation-of-powers debate, sometimes beginning with widely accepted tenets but carrying them beyond the bounds of accepted scholarship. In his own frame of reference, the Constitution not only permits but compels him to help Bush break free of restraints on his prerogatives as commander in chief and leader of the unitary executive branch. But where Cheney does show contempt is for public opinion, the capacity of the citizenry at large to make rational decisions.

Go back and look at what he says about “opinion polls.” Invariably his message is that a politician who pays them heed is failing to do his job. As Cheney sees it, public opinion is fickle, ill-informed, self-contradictory, emotional–nothing like his own conversation with himself and trusted aides. He speaks disdainfully of critics as “elites,” but his own view of democracy is at the far elite extreme. Voters are entitled to choose a president every four years, he said at the National Press Club, but then they need to let him do his job. The transaction is like hiring a surgeon; pick a good one, and don’t try to tell him where to place the knife. This “trustee” model of democracy is associated with Edmund Burke, the Old Whig philosopher in 18th century England. It is not the model that took root here when the Founders designed a plan of government that derived its authority from the people. If you take Cheney’s view, aggressive efforts at secrecy, for our own good, to prevent us from making the wrong choices or interfering with government’s important work, are a rational response.

That is crucial. If you simply don't care about what anyone thinks of you, there is no barrier. You can state without compunction that "To the extent that the Constitution and laws are read narrowly, as Jefferson wished, the Chief Executive will on occasion feel duty bound to assert monarchical notions of the prerogative that will permit him to exceed the law," because you feel you know better and you must organize your belief of the Constitution around that belief in yourself. You can lie to Congressional leaders boldly, asserting that Iraq has suitcase nukes, because you believe that Saddam is a threat and you organize the intelligence around that belief.

Gellman may think that Fourthbranch has given the Constitution a lot of thought, but I don't. I think he's given his own ego a lot of thought, and he's warped the Constitution to fit around it. And he's secure that this interpretation won't be challenged because he has enough will to steamroll right through anyone who would raise an objection. We're seeing this again right now from the woman who would be Vice President with respect to the "Troopergate" investigation in Alaska. The McCain campaign has sent a lawyer (one of a whole passel) to shut down the investigation and pressure the state Republicans who allowed it in the first place. Subpoenas have been issued for aides and Todd Palin, but the Governor's hand-picked Attorney General has told investigators that they won't testify. And Sarah Palin herself has refused to testify.

This is not about this particular politician. What is significant here is that Cheneyism is LEARNED behavior. Want to avoid a subpoena? Don't show up. Want to break the law? Just plow ahead and do it, and fight like hell to ignore the consequences, saying things like "I can do whatever I want until the courts tell me I can't."

The question becomes how you end Cheneyism before this cancer grows. Russ Feingold has some ideas.

Our next president will face a difficult challenge. He must repair the wreckage the current administration has left, which means renouncing some of the powers the current President tried to amass as he turned a blind eye to the rule of law and separation of powers. No president will want to limit his own power. But if we are to be the nation our founders envisioned when they gathered in Philadelphia more than two centuries ago, we must work together — across party lines and at all levels of government — to protect and defend our Constitution and restore the rule of law.

So does Marty Lederman:

1. A Well-Founded View of Presidential Power. To advance the first commitment, the next President should initiate a process to ensure that the new Administration withdraws and repudiates the reasoning of memoranda and opinions that overstate the President’s constitutional powers and that minimize those of Congress and the courts. We have not conducted a comprehensive review of OLC opinions, nor could we as many are classified or otherwise inaccessible. Thus, we cannot offer an exhaustive list of the opinions that should be withdrawn. We do believe, however, that the list should include the Torture Memos, the DOJ Whitepaper on the Terrorist Surveillance Program, and the September 25, 2001 opinion on war powers.

The next President should also affirmatively adopt a view of presidential power that recognizes the roles and authorities of all three co-equal branches and that takes account of settled judicial precedent. We believe that a model the next President should seriously consider adopting is “The Constitutional Separation of Powers between the President and Congress.”[18] Setting forth the principles that will govern the determination of questions of presidential power will provide a constraint against the sort of result-oriented advice-giving that proved so problematic in instances such as the Torture Memo.

2. Openness and Accountability. To advance the commitment to openness and accountability, we offer several recommendations. OLC should review its procedures for releasing opinions and publicly release guidelines that will govern publication decisions. The goal of the review should be to make sure that OLC’s memoranda and opinions are made available to the public to the maximum extent possible consistent with the legitimate confidentiality interests of the Executive Branch.

Congress, the Courts, and the public are unable to check against abuses of executive power if they do not know about them. In this regard, the experience of the past eight years is instructive. It was only years later and due to leaked information that we learned of highly consequential opinions advising that the Executive Branch was not bound to comply with statutory limits on its power, including opinions relating to the treatment of detainees, the President’s domestic surveillance program, and the use of secret prisons overseas for detention and interrogation [...]

The next President should also commit to review the Executive Branch’s practice in asserting privileges, including executive privilege. The presidential communications privilege is, according to the Supreme Court, a legitimate constitutional privilege rooted in the separation of powers. Nevertheless, this privilege is not absolut e and judicial precedent as well as long Executive Branch and congressional practice recognize that the President’s constitutional interest must be balanced against Congress’s legitimate interests in conducting investigations and oversight. The next President should commit that, when disputes over privilege arise, the executive will seek to resolve them through good faith negotiation and meaningful accommodation. This negotiation and accommodation process must include recognition by the Executive Branch of the legitimate claims to information that the Congress does have in its legislative, oversight and investigatory functions. In a recent and highly relevant case, Judge Bates authored a helpful discussion of Congress’ legitimate interests in information, which in our judgment is largely correct.

3. Structural Safeguards against Abuse of Power. To advance the third commitment to enhance structural safeguards, we suggest that the President instruct the Attorney General to pay particular attention to the procedures of OLC. Together with a number of our former colleagues, we have written a set of guidelines that OLC should foll ow in order to best effectuate its role... Public confidence in the impartial administration of justice must be restored. It is not sufficient that the President and Attorney General themselves be satisfied that they have addressed the problem. Their efforts must be considered credible on bipartisan and interbranch bases.

The Constitution has not become an issue in this election, as much a cause of the failure of the media to cover it as of the candidates to express it. Barack Obama made a strong statement a week or so ago on habeas corpus, but it went into the ether. Joe Biden made noise by appearing to put criminal prosecutions of those who violated the law on the table (he later recanted), but it didn't gather much interest. There are rumblings about a Congressionally-empowered commission in an Obama Administration to study abuses of the rule of law and maybe prosecute down the road. But you're not hearing a lot about it.

I do believe that ending Chenyism in our time is the greatest challenge for the next President. Unless we restore the fundamentals of American government it won't much matter what we do on an economic or foreign policy or environmental level. I would like you to pledge to be a Constitution Voter. The pressure will be immense to bind up the nation's wounds and heal the partisan divide, and then we'll have another disciple of Cheneyism 4, 8, 12, or 16 years down the road. We cannot cede the Constitution because it doesn't hit people in the gut. Democracy is at risk, everyone. That cannot be in dispute. Cheneyism must be rejected. Fully.