Friday, September 26, 2008

Wild Meeting At the White House

This Politico story chronicles the "wildest in recent memory" meeting held at the White House yesterday. It seems that McCain actually talked Bush into holding the meeting, but Democrats tried to use it as a trap for McCain. Politically, it's risky for McCain either way, getting heavily involved or ignoring it. At least he seems to be showing off some nice leadership skills (Obama's "call me if you need me" line is priceless). McCain also seems willing to refrain, for the moment, from throwing House Republicans under the bus.

Conventional wisdom seems to say that a McCain seen as delaying the deal will be bad, politically. However, I believe just the opposite is true: House Republicans (and, I bet, many other members of Congress) are receiving numerous calls and emails demanding that they NOT do the Paulson Plan. McCain may benefit greatly if he is seen as stopping a reckless quick-fix deal, one that essentially nationalizes the mortgage industry and sets up more opportunities for seedy politicians and "private" government-appointed CEOs to soak up a little extra cash on the side (since this was, in fact, what got us in the mess to begin with--see Stephen's post for more details).

This analysis, of course, fails to touch the heart of the matter: what is the real solution? What deal should we be rooting for? My conservative instincts tell me that, whatever the solution, the government needs to keep its hands out of the free market. However, it seems that the government has already messed things up to such a high degree that nothing short of "limitless government money" (otherwise known as our money) can effect a turnaround. Paulson and Bush (and several other smart folks) are even saying it should be considered an investment that will one day pay us back and perhaps show a tidy profit . . . for the government. My fear is that we will be out the initial $700B and they will also keep (and spend) the profits, too (if they materialize).

Some have suggested that rolling back capital gains and corporate tax rates will help. Another idea is to repeal some of the more over-zealous post-Enron accounting rules. At the end of the day, Congress and the President will have to do something, seeing as how they have painted themselves into such a tight corner. I have been wondering whether or not I should contact my representatives, but, so far, I have been unable to figure out what I want them to do.

There is one thing I would like to have explained: Just what would happen if we do nothing. Bush says it will be 1929 all over again. I just don't buy that. I could see it being bad for some of the big dogs on Wall Street and in Congress, but how exactly will it be bad for me? Bear in mind, I know nothing about advanced banking policy or the intricacies of our complex economy. Maybe it would be that bad. Maybe I should have bought some of that gold they keep advertising on the radio. Or maybe it would pretty much be okay. As Rush said today, it all comes down to who you trust. It's easier if you ask, Who do you NOT trust? Unfortunately, most of the people on my "don't trust" list are the ones who will be finalizing the deal. Maybe we should just ask them to SLOW DOWN. Take some time to get it right, and give us the time to figure out what that looks like.

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