by Norman Solomon
Marin Independent Journal
October 1, 2008
SIX YEARS AGO, congressional leaders joined with the president and most pundits to conclude that an invasion of Iraq was necessary to thwart an Iraqi dictator with weapons of mass destruction. We were told that certain experts could be trusted, while those offering different conclusions got short shrift.
This fall, the same administration – along with “the leadership” on Capitol Hill and many high-profile commentators – have insisted on a massive government bailout of Wall Street. The story goes that such a bailout is essential to prevent a full-blown economic disaster.
But a wide range of economists don’t buy it.
“Many of the nation’s brightest economic minds are warning that if the Wall Street bailout passes, it would be a dangerous rush job,” McClatchy Newspapers reported in late September. For instance, economist James K. Galbraith called the warnings of economic disaster in the absence of a swift bailout “more hype than real risk.”
He added: “A nasty recession is possible, but the bailout will not cure that. So it’s mainly relevant to the financial industry.”
A big problem is the spin that has presented Treasury Secretary Henry Paulson as – so to speak – an honest broker. We’re led to suppose that he has the public interest at heart.
But his background and approach strongly indicate otherwise.
“Paulson is the ultimate investment banker,” says author Nomi Prins, a former investment banker who ran the European analytics group at Bear
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Stearns. She notes that “his negotiation, merger and acquisition skills propelled him to the top at the world’s most powerful investment bank, Goldman Sachs.”
At the Center for Economic and Policy Research, economist Dean Baker – who cogently predicted the collapse of the Nasdaq bubble in the late 1990s as well as the recent collapse of the housing bubble – is blunt. He contends: “There is no plausible scenario under which the no-bailout scenario gives us a Great Depression. ... At this point I cannot identify a single good reason to do the bailout.”
When the House of Representatives voted on Sept. 29 to reject the bailout stew that was cooked up with economic chef Paulson, more than two-thirds of the “no” votes came from Republicans.
Forty percent of House Democrats – including Rep. Lynn Woolsey from Marin and Sonoma counties – also voted against the measure.
Wall Street was horrified, and most media commentators voiced strong disapproval. But what’s at stake goes vastly beyond the short-term fate of the Dow or the fulminations of pundits.
Clinging to an ideology discredited by reality, the Republicans voted against the $700 billion Wall Street bailout for the wrong reasons.
Their brand of political doctrine has been scorned by France’s conservative president, Nicolas Sarkozy, who pointed out: “The idea that the market is always right is a crazy idea.” He added: “Self-regulation, to fix all problems, is over. Laissez-faire is over.”
For a long time, Rep. Woolsey has made it clear that she supports a rational approach to regulation that could sustain an economy to serve the public interest instead of just the wealthy and powerful.
Late last month, she wrote to constituents about her work “to develop a set of principles which will ensure that any recovery effort benefits not only Wall Street investment banks, but working family as well.”
Woolsey said that “before we spend a dollar of taxpayer money we must ensure that any final proposal has proper oversight and accountability.” And she asserted: “We need to invest at least $60 billion in programs that promote economic growth and help those most at risk. This includes extending unemployment insurance, helping seniors and low income families with low cost home heating oil, and investing in infrastructure projects that will create millions of good paying jobs.”
In a time of economic peril, that’s the kind of leadership we need.
Norman Solomon of West Marin is founder and executive director of the nonprofit Institute for Public Accuracy. His books include “War Made Easy: How Presidents and Pundits Keep Spinning Us to Death.”
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