The more I read about this bailout, the more is stinks. A request for nearly $1 trillion dollars to bail out bankers from their bad gambles. No strings attached, no oversight, and no judicial review. Just trust us, the administration is saying. And this is brought to you by the same crowd that brought you the Patriot Act, the Iraq War, and Katrina. To add insult to injury, the administration, backed by Wall Street lobbyists, is dead set against linking the bailout to new regulatory initiatives or to any sort of assistance to struggling homeowners.
I agree with Glenn Greenwald that this bailout may be the most significant event of the last eight years in terms of defining where we are as a polity. And that says a lot. To watch the Democratic leadership get cowed by the Bush administration’s economic team was nauseating. It was as if the last eight years had never happened.
The progressive Catholic justification for the permissibility of voting Democratic, notwithstanding the party’s support of abortion rights, has always been that the party is better that the Republicans on other issues of great importance to Catholic social thought, issues like economic justice, war and peace, and the death penalty, among other things. In recent years, however, the Democratic party, at least at the national level, has sometimes seemed virtually indistinguishable from the Republicans on the economic front, opening the door to industry lobbyists, turning its back on universal health care, enacting a badly flawed welfare reform, rolling over for deregulation of the financial industry, failing to hold the line against tax cuts for the rich, and refusing to block bankruptcy “reform.”
As today’s Washington Post notes, Obama has chosen to surround himself with the same sorts of Wall Street-friendly economic advisors that populate the McCain campaign. So, while I’m hoping that the Democratic party will grow a pair and stand up against this economic version of the Patriot Act, I’m not really all that optimistic. If this bailout goes down as currently planned, it will be the greatest heist of taxpayers in the history of our Republic… a massive redistribution funded by you and me, and directed towards those who brought us to this pass. If it happens with the cooperation of Democratic leadership or the endorsement of the Obama campaign, my vote will be going elsewhere this November.
UPDATE: The Times reports that Obama had some skeptical words about the Bailout at a rally in Charlotte. According to the report, he suggested linking the bailout with greater regulation of the financial industry. That’s a good start. This story from Politico also suggests that congressional Democrats have learned their lesson. We’ll see. The more I read about this bailout, the more I think that any bailout must include an equity stake in participating companies. In addition, I think any progressive version of this bailout must be linked to assistance for struggling homeowners. Apparently, on the talk shows this morning, Paulson rejected that idea, noting that homeowners who took on more mortgage debt than they could afford should not be bailed out. I guess when you make partner at Goldman Sachs, they remove the part of the brain responsible for grasping the concept of irony.