Tuesday, September 16, 2008

McCain: The fundamentals of our economy are strong

In light of the Lehman Brothers bankruptcy, the AIG worries, and the Dow's 500-point drop, it is refreshing to know that Republican presidential candidate John McCain still believes that the fundamentals of the U.S. economy are still strong--as long as McCain gets to decide what those fundamentals are. From ThinkProgress:

During a campaign stop today in Orlando, FL, Sen. John McCain (R-AZ) attempted to defend his repeated claims that the “fundamentals of our economy are strong” by redefining those fundamentals as “workers and small businesses.” “The American worker and their innovation and their entrepreneurship, the small business, those are the fundamentals of America and I think they’re strong,” he said. Watch it:

As Atrios notes:

McCain has now defined the fundamentals of the economy as "workers and small businesses," so if you suggest something is wrong with the economy you're insulting workers. This follows the Bush strategy of saying that criticizing his Iraq policies is insulting the troops.

The real issue here is that John McCain doesn't have a clue as to how to solve the financial meltdown that is currently taking place on Wall Street. John McCain is running on a Bush economic policy of extending the Bush tax cuts and continuing the government deregulation of everything. Consider this New York Times article, titled In Candidates, 2 Approaches to Wall Street:

On the campaign trail on Monday, Mr. McCain, the Republican presidential nominee, struck a populist tone. Speaking in Florida, he said that the economy’s underlying fundamentals remained strong but were being threatened “because of the greed by some based in Wall Street and we have got to fix it.”

But his record on the issue, and the views of those he has always cited as his most influential advisers, suggest that he has never departed in any major way from his party’s embrace of deregulation and relying more on market forces than on the government to exert discipline.

While Mr. McCain has cited the need for additional oversight when it comes to specific situations, like the mortgage problems behind the current shocks on Wall Street, he has consistently characterized himself as fundamentally a deregulator and he has no history prior to the presidential campaign of advocating steps to tighten standards on investment firms.

He has often taken his lead on financial issues from two outspoken advocates of free market approaches, former Senator Phil Gramm and Alan Greenspan, the former Federal Reserve chairman. Individuals associated with Merrill Lynch, which sold itself to Bank of America in the market upheaval of the past weekend, have given his presidential campaign nearly $300,000, making them Mr. McCain’s largest contributor, collectively.

John McCain may champion himself on the political campaign trail as a reformer and an agent of "change," but his record and earlier statements show this to be a lie. When the Republicans took control of Congress in 1995, McCain "promoted a moratorium on federal regulations of all kinds. He was quoted as saying that excessive regulations were “destroying the American family, the American dream” and voters “want these regulations stopped.” The moratorium measure was unsuccessful.' McCain told the Wall Street Journal last March, "“I’m always for less regulation,” however, "I am aware of the view that there is a need for government oversight” in situations like the subprime mortgage mess. But McCain still stated that, "I am fundamentally a deregulator." In August, McCain gave a speech on the housing crisis, calling for less regulation, saying “Our financial market approach should include encouraging increased capital in financial institutions by removing regulatory, accounting and tax impediments to raising capital.”

And let us also not forget about McCain's closest economic adviser, former Senator Phil Gramm, and his own role in causing this housing crisis:

The general co-chairman of John McCain’s presidential campaign, former Sen. Phil Gramm (R-Texas), led the charge in 1999 to repeal a Depression-era banking regulation law that Democrat Barack Obama claimed on Thursday contributed significantly to today’s economic turmoil.

“A regulatory structure set up for banks in the 1930s needed to change because the nature of business had changed,” the Illinois senator running for president said in a New York economic speech. “But by the time [it] was repealed in 1999, the $300 million lobbying effort that drove deregulation was more about facilitating mergers than creating an efficient regulatory framework.”

Gramm’s role in the swift and dramatic recent restructuring of the nation’s investment houses and practices didn’t stop there.

A year after the Gramm-Leach-Bliley Act repealed the old regulations, Swiss Bank UBS gobbled up brokerage house Paine Weber. Two years later, Gramm settled in as a vice chairman of UBS’s new investment banking arm.

Later, he became a major player in its government affairs operation. According to federal lobbying disclosure records, Gramm lobbied Congress, the Federal Reserve and the Treasury Department about banking and mortgage issues in 2005 and 2006.

During those years, the mortgage industry pressed Congress to roll back strong state rules that sought to stem the rise of predatory tactics used by lenders and brokers to place homeowners in high-cost mortgages.

For his work, Gramm and two other lobbyists collected $750,000 in fees from UBS’s American subsidiary. In the past year, UBS has written down more than $18 billion in exposure to subprime loans and other risky securities and is considering cutting as many as 8,000 jobs.

Gramm did not respond to an e-mail and was unavailable for comment, according to a UBS spokesman. The bank has no official position on the subprime crisis, the spokesman said, but is a member of the Financial Services Roundtable and other industry groups that are actively lobbying Congress on the issue.

Now, some housing experts and economists see Gramm’s thinking in the recent housing proposal from McCain, the Republican Party’s presumed presidential nominee. Gramm is often a surrogate for the Arizona senator, particularly in meetings focused on the economy. And McCain has hinted he’d consider the former Texas senator for Treasury secretary in a McCain administration.

I don't know about you, but I find the hypocrisy of John McCain's calling the fundamentals of the U.S. economy as still being strong, but having a record of continued deregulation and relying on an economic adviser who was responsible for creating this housing crisis, to be disturbing. Again, it is the foxes guarding the hen house.

Do we really want another four years of a disastrous McCain economic policy for the United States?

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