Story Transcript
Candidates and the bailout
Producer: Carlo Basilone
CARLO BASILONE, TRNN (VOICEOVER): The markets in New York were rocked again on Monday on doubts as to whether the $700 billion bailout of the financial sector would resuscitate a slumping economy. The Dow Jones Industrials sunk 372 points, as speculators were also nervous that Congress hadn’t signed over the blank check yet. A record one-day rise for oil, up $16 to more than $120 a barrel also spooked the markets with renewed concerns about consumer spending. The presidential candidates both raised doubts on Monday about the Bush administration’s bailout package and demanded conditions that will probably stall quick passage through Congress. McCain cautioned against giving too much power to Treasury Secretary Henry Paulson.
SEN. JOHN MCCAIN, PRESIDENTIAL CANDIDATE (R): I’m greatly concerned about a plan that gives a single individual the unprecedented power to spend one trillion—one trillion—dollars without any meaningful accountability. Never before in the history of our nation has so much power and money been concentrated in the hands of one person, a person I admire and respect a great deal, Secretary Paulson. This arrangement makes me deeply uncomfortable.
BASILONE: In Green Bay, Wisconsin, Barack Obama said the economic bailout should include oversight and accountability, and that something must be done for working people.
SEN. BARACK OBAMA, PRESIDENTIAL CANDIDATE (D): Washington has to recognize that true economic recovery requires addressing not just the crisis on Wall Street but the crisis on Main Street that so many have been feeling in their own lives, long before the news of last week. We need a plan that helps families stay in their homes and workers keep their jobs, a plan that gives hardworking Americans relief, instead of using taxpayer dollars to reward CEOs on Wall Street.
BASILONE: Some prominent economic commentators are skeptical about the Bush administration plan. In a New York Times editorial entitled “Cash for Trash,” Paul Krugman explains, “The financial system will be crippled by inadequate capital unless the federal government hugely overpays for the assets it buys, giving financial firms … and their stockholders and executives … a giant windfall at taxpayer expense.” William Greider, writing in The Nation in an article called “Paulson Bailout Plan: A Historic Swindle,” adds, “It would relieve the major banks and investment firms of their mountainous, rotten assets and make the public swallow their losses … many hundreds of billions, maybe much more. If Wall Street gets away with this, it will represent an historic swindle of the American public … all sugar for the villains, lasting pain and damage for the victims.” Voter anxiety over the US economic turmoil is now the number-one issue in the presidential campaign. It will likely still be an issue when the new president takes office.
RON BLACKWELL, CHIEF ECONOMIST, AFL-CIO: Make no mistake about it: on January 20, when there’s a new president in the White House, we will be in a very serious economic situation, with an employment problem and a housing problem, and we’ll still be working out of this financial crisis, even if everything goes in the best possible way. This is a problem the next president will inherit. They’re going to have to be paying very close attention to what happens between now and then, not just from the point of view of running their campaigns, but in figuring out what they’re actually going to do when they walk into the White House and take the Oath of Office.
PROF. ELLEN FRANK, ECONOMICS, UNIV. MASSACHUSETTS: No. I think that they’re going to be dealing with a very tough economy. And I think the question is—and this is something that Obama has said, and I think it’s a perfectly reasonable thing for the American public to consider. The question is: what philosophy are we dealing with? Are we dealing with the supply-side, deregulate-everything, let-people-take-care-of-themselves philosophy of the Republican agenda? Or are we dealing with an agenda that says the government has an active role to play in making people’s lives better and in protecting people who are vulnerable? And I think that Obama’s philosophy is definitely a more activist philosophy, a more interventionist philosophy. And that, in difficult economic times, is what the American public is going to be looking for and certainly what the economy is going to need.
BASILONE: John McCain’s economic philosophy includes the belief that the free market works best to manage the economy, that cutting taxes spurs economic growth, which benefits the rich, the middle class, and the poor, and he proposes to keep the Bush tax cuts with a top rate of 35 percent, which have mostly benefited upper-income households. He also proposes to cut the corporate tax rate from 35 percent to 25 percent.
MCCAIN: We’re going to put an end to the reckless conduct, corruption, and unbridled greed that have caused a crisis on Wall Street and America. We’re going to put a stop to it.
BLACKWELL: He’s posturing now as a populist. And he can be allowed to do that and talk about greed on Wall Street, and he’s apparently discovered that Wall Street has some greed on it. But he can do that safely with his constituents, because they know he’s not going to do anything about it, it’s just words. And he’s very much firmly associated with all the failed policies that have got us to this place.
BASILONE: Barack Obama’s philosophy includes the belief that government spending initiatives help the economy grow and creates jobs. But he also believes in tax cuts. He proposes a tax credit of up to $1,000 for 150 million low- and middle-income earners, but he would roll back the Bush tax cuts for those making over $250,000 a year. He also proposes to eliminate taxes for seniors making less than $50,000 a year. Though Obama is in favor of more government involvement in the economy and regulating the market, he has on his economic advisory panel Paul Volcker and Robert Rubin, two former deregulators. Volcker was chairman of the Federal Reserve under Ronald Reagan in the ’80s, and Rubin was treasury secretary under Bill Clinton in the ’90s.
BLACKWELL: That’s right, but you’ve got to hope that Barack Obama is not just a deregulator, and that, you know, I think, particularly in the wake of this crisis, it’d be a very poor lesson to learn that what we need right now is more deregulation.
FRANK: Well, I think we live in a capitalist economy, that Obama is a proponent of capitalism. We’re not getting a socialist president this time around. And the question is: are we getting somebody who at least to some degree has the interests of the typical American worker at heart? Or are we getting somebody who has probably never thought about economic policy from the perspective of anybody besides deregulating Wall Street?
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