Three weeks before the election -- as John McCain was flailing about for a message to connect with voters to resurrect his comatose campaign, and settled on Nobel Laureate in Economics and also Bad Plumbing, Joe Wurzelbacher, to inspire us all -- Ed Rollins, GOP strategist and CNN commentator, tried to give McCain a clue about what was on people's minds.
"What McCain and his campaign need to understand is that whatever happened in the past is no longer relevant. James Carville's famous slogan in Bill Clinton's 1992 victory over the first Bush: "It's the economy stupid!" can now be replaced with "You morons, what have you done with my money, my life and my kids' future?" Though lacking grace and lyricism, the question begs asking now.
I don't have a Harvard MBA like Henry Paulson, so I was willing (under protest) to set aside my skepticism about the bailout. When he began his Prophet Jeremiah-like fear-offensive, informing us that the only way to prevent a financial tsunami, was to close our eyes and think of America -- while he picked our pockets for $700 billion -- I took him at his word, but with a caveat.
Since there was radio silence from the President, I counted on Congress to ask Paulson basic questions, such as: How will the money we give you help the economy in real terms, rather than in the sunny Mediterranean scenario inside your bald head? What are you going to do with it and why, and what's in it for the taxpayer? Why should we give you and your deputy, Neel Kashkari, an engineer eight years out of B-School, the password to an account holding $700 billion?
I expected Congress to hold Paulson's feet to the fire and spell out in no uncertain terms that this was not business as usual -- that this was not an entitlement program to reward shareholders, or capital for solvent companies to make new business acquisitions. I hoped Congress would remind Paulson that there's nothing that would make American taxpayers more angry -- after Bush's illegal and expensive war -- than hearing about bailout funds spent on million dollar bonuses for TARP company executives and beachfront corporate retreats.
Was it too much to ask Congress to examine this unprecedented government intervention in the free market critically, microscopically, quantitatively, and numerically, before authorizing the Paulson-Kashkari/Goldman Sachs alum transfer of US taxpayer dollars to benefit, surprise, surprise, the finance and banking sector, including solvent companies?
It has been proven repeatedly that when government officials get their hands on taxpayer money, they can't help but spend it like very young children. In his book, Imperial Life in the Emerald City, Rajiv Chandrasekaran reports on the squander of American taxpayer dollars by Paul Bremer's Coalition Provisional Authority at the start of the American occupation in Iraq. Chandrasekaran writes about a young American contractor without any experience in construction, who won a $16 million bid for yes, construction. Unprepared to begin the work he was contracted to perform, he told the CPA that he had no money for start-up. "Bring a duffel bag," the CPA told the entrepreneur with big dreams, little experience, and no capital except the dirt on his neck. When he arrived at the CPA, Chandrasekaran writes, "Two million dollars in shrink-wrapped bricks of brand new hundred dollar notes, flown in from the Federal Reserve of New York, lay on the desk... he packed the bricks into a four-foot-long duffel bag ... a few hours later, he boarded a plane for Beirut to deposit the funds in a Lebanese bank."
The American people set a very low bar for the President and Congress on the bailout -- close the loopholes so we're not robbed by public servants who don't know the meaning or the value of a dollar. President Bush, who evidently won't be satisfied until he has fully plundered our national treasure for the benefit of a few, sneaked in a last-minute insertion to the original bailout bill, a one-sentence loophole, that effectively erases basic restrictions on executive compensation put in place by Congress. In this economic freefall, when churches and synagogues in financial districts are filled at lunchtime with finance and banking workers worried about keeping their jobs, bailout company heads using taxpayer dollars to pay six figure bonuses "to retain talented employees," should be given their last cigars, flogged, and put out to pasture.
How has the bailout helped anyone other than banks, their shareholders, and their six-figure-bonus-earning employees? Like a zen koan which holds that two plus two equals a rhinoceros, the answer is, a slippery eel -- maybe it will, in the fullness of time or when the stars and planets align or on the 12th of Never.
I am intoxicated by the exuberance of Paulson's platitudes. He wants the money "to shore up the economy," "to support financial market stability," "to put the companies on a path to the significant restructuring necessary to achieve long-term viability." He walks between rain drops.
Elizabeth Warren, Chairperson of the Bailout Oversight Panel, appears to be the rare voice making any sense on this issue, cutting through the jargon, deconstructing its complexities, telling us what Paulson and Kashkari are up to, and looking out for the public's interest. There is no consolation in what Warren says. "These are not Masters of the Universe here, they're not omniscient, they're people who are fallible like the rest of us... Throwing billions of dollars at a problem is only going to work if you know what the problem is." And laurel wreaths to Frank Bass, Rita Beamish and Associated Press for their study and report on bailed out banks and their profligate spending: $1.6 billion reward to 600 executives.
Our elected representatives have also been busy -- blogging on the issue and railing against the failures of the bailout. Rep. Barney Frank, chairman of the House Financial Services committee was appalled by the AP report. "Most of us sign on to do jobs and we do them best we can," he said. Actually, you didn't do enough. His colleague, Rep. Brad Sherman added, "The tougher we are on the executives that come to Washington, the fewer will come for a bailout." Bravo, Mr. Sherman, that's the sound of one hand clapping. Thank you for sliding into homeplate after the stadium has emptied, and $350 billion in bailout funds went that way.
Paulson, undeterred by his lack of success in jumpstarting the economy, perhaps because he's still trying to figure out what the problem is and making things up as he goes along, has told Congress, it "needs to release the second half of the S700 billion bailout."
In The Sun Also Rises, Earnest Hemingway's character Bill asks, "How did you go bankrupt?" "Two ways," Mike replies, "Gradually and then suddenly." A decade of reckoning looms.