Sarah Palin and John McCain on AIG

by on September 18, 2008 at 9:50 am in Political Science | Permalink

This was "unscripted", from Sarah Palin:

Disappointed that taxpayers are called upon to bailout another one. Certainly AIG though with the construction bonds that they’re holding and with the insurance that they are holding very, very impactful to Americans so you know the shot that has been called by the Feds it’s understandable but very, very disappointing that taxpayers are called upon for another one.

That’s via Andrew Sullivan.  It’s the phrase "very, very impactful" I object to.  The point about construction surety bonds is actually correct, as indeed AIG did issue them and it doesn’t seem that any regulation or state authority will make good those guarantees (readers, correct me if I am in error but I can find no record of such guarantees).  That means a lot of people bought insurance against adverse construction events and will be left without that protection.

Of course this matters less at lower levels of construction.

The real lesson of this quotation is that the Republicans have no good language for discussing recent events.  They’re not allowed to say anything that sounds like "showing sympathy for Wall Street," so they have to find someone else to show sympathy for but they can’t turn to traditional Democratic rhetoric about how an unregulated capitalist economy is failing us.  Citing the construction bonds is like worrying that the financial crisis will postpone the retirement of many professors.  Yes that is true but it’s odd (though not unprecedented) if that’s the first thing that comes to your mind or for that matter to your talking points.

Here is John McCain on the crisis, again unscripted, from The Today Show:

LAUER: So if we get to the point middle of the week as we heard in that report where AIG might have to file for bankruptcy, they’re on their own?

McCAIN: Well…quote, "on their own"…we have to – we cannot have the taxpayers bail out AIG or anybody else…this is something we’re gonna have to work through — there’s too much corruption, there’s too much access, we can fix it, I believe in America – we can have a 9/11 commission such as we had after 9/11, ’cause this is a huge crisis and we can come up with fixes and we can make sure that every American has a safer future and that is to make them know that their bank deposits are safe and insured.

Here is more of the session.  He did worse than she did and that’s after decades on the national scene.

26 comments

RW Rogers September 18, 2008 at 10:05 am

I thought both answers left much to be desired. It is easy, however, to sit on the sidelines and take pot shots at those forced by the course of events to say or do something about those events. Real life is far more messy and complicated than theoretical models.

Andrew September 18, 2008 at 10:29 am

My narrative would be “It’s not always pretty, but the way our system works is when people get greedy or stupid, they get smashed. Sometimes if they are too greedy and stupid, we (the gov’t) help the resolution process. We try to help the workers transition, but the decision-makers responsible lose. That’s what is happening. The flexibility and resilience of the American system allows us to keep getting up after we’ve been beaten down, just like I was beaten while in captivity (Okay John, enough already). Like I said, it’s not pretty, and the uglier it is, the faster we can work out of it. In other words, we aren’t trying to put lipstick on this pig. We want it ugly and nasty and none of the fat cats are getting away without getting muddy.”

I keep getting the feeling that Obama is toast. He really has nowhere to go from here. He can’t do anything other than pander. McCain can’t win by pandering, but McCain can differentiate himself if he’s smart enough to commit himself to a bold strategy. I think we’ll start seeing the “old” McCain come back in the waning weeks of the campaign when the moderates start paying attention and the base is committed. Crisis doesn’t favor Obama. We’ll see who are the pigs and who are the chickens, because the pigs are committed while the chickens are only involved.

Yancey Ward September 18, 2008 at 10:42 am

We have mountains and mountains of bad debts in the banks and in the government. There is absolutely no mystery here about what has to happen- losses have to be recognized and finally settled and cleared, but no one really wants to do that. They just want to pass the hot potato around, and the prudent taxpayers will end up holding it like always. And if the system survives this crisis, the stage for the next, even larger one will be set, and the play will likely start in 8-10 years.

rcw September 18, 2008 at 11:02 am

Is McCain that clueless? Or, is his high school answer the product of strategists telling him to speak to Johnny and Jenny Main Street?

Assuming McCain is that clueless, then who is worse for the economy: McCain or Obama?

odograph September 18, 2008 at 11:06 am

The elephant in the room for McCain/Palin is … what killed the elephant.

Palin doesn’t address it, and McCain puts it as “corruption.” Well, I think he needs to complete the thought, and say that corruption was enable by lack of oversight, and a free-market pendulum which swung too far.

I’ve argued here and elsewhere, going back years, that a “regulated market economy” brought us American wealth and prosperity. I’ve regarded that as a moderate Republican position. The party strayed though. It is still impossible for “them” to say that even a “lightly” regulated market is necessary for long term health.

Oskar Shapley September 18, 2008 at 11:18 am

Andrew said: “Crisis doesn’t favor Obama.”

But of course it does my little republican friend. Economic crises are the democrats equivalent of 9/11.

Starting with Roosevelt’s New Deal and ending with Clinton’s “it’s the economy, stupid” economic crises give the Democratic candidate plenty of opportunities to call up the party’s past achievements and well known policies.

Obama just needs to hammer away at the fact that this crisis was caused by 1) DEREGULATION and needs to be fixed and is currently being fixed by 2) GOVERNMENT INTERVENTION/NATIONALIZATION.

The sweetest part is that Bush is doing the intervention part already, so McCain can’t even rhetorically argue for the standard Republican talking point of letting the markets fix this by themselves.

Part 3) is where Obama proposes the “NEVER AGAIN – FINANCIAL SECURITY ACT of 2008″ to regulate the financial system or even intervene in the housing market.

It doesn’t even matter that some blame lies with the regular folks who have bought those damn overpriced houses, because you can’t tell that to your voters.

odograph September 18, 2008 at 11:21 am

“The sweetest part is that Bush is doing the intervention part already, so McCain can’t even rhetorically argue for the standard Republican talking point of letting the markets fix this by themselves.”

I believe they do, Oskar. I believe (so far at least) they’ve been able to take the position that they wouldn’t do the bailouts. They get a free-ride when Bush does them.

Andrew September 18, 2008 at 11:36 am

Odograph,

The problem is, the Dem’s don’t have the answer either, and everyone (who’s not a Dem) knows it.

Oskar,

I’m not a Republican, which, I think grants me some objectivitity. We’ll see, but my view is that this crisis favors the steady hand. Maybe if the crisis were to drag on and malaise was the only certainty, as was the case with Hoover (and Carter) then doing something, anything, would hold sway. Obama could play this hand, but he’s not. He keeps playing the change hand. In the midst of a crisis, voters want change like a hole in the head.

Lastly, these aren’t really bailouts. They are workouts. There is still little spillover to the real economy. Obviously that could change fast. But you guys are still basically making the argument that McCain has to apologize for Bush and the whole Republican party and that Obama gets to right on the coattails of the Dem’s stellar economic policy. I simply beg to differ.

odograph September 18, 2008 at 11:42 am

As seen earlier at MR, Obama has most of the economists (“All your economists are belong to us.”). I’d hope that they would steer him to a lightly regulated market economy. At this point I have more faith in that than a Republican position which really, honestly, looks like madness.

Bernard Yomtov September 18, 2008 at 12:32 pm

But you guys are still basically making the argument that McCain has to apologize for Bush and the whole Republican party and that Obama gets to right on the coattails of the Dem’s stellar economic policy. I simply beg to differ.

I don’t understand why you differ. In what sense does McCain represent significant change from Bush? What are his major policy differences? His major philosophical differences? He’s relying on the same (sleazy) campaign operators Bush used. How will his advisers differ from Bush’s, other than perhaps in name, or maybe being worse?

Was Phil Gramm not a leading Republican voice on economics? Do you think he’d make a good Treasury Secretary?

And why shouldn’t McCain be held accountable for Republican failures? He’s been with Bush pretty solidly.

Barkley Rosse September 18, 2008 at 12:46 pm

Andrew,

For better or for worse, foreign affairs crises help McCain, and economic crises help Obama.
The public has a fairly clear view that each of them is better than the other in each of
these areas, and this prejudice will probably not change between now and Nov. 4.

BTW, Obama has been pretty low key on all this, but I would note that this is a point in
time where intelligence and knowledge may be useful. Obama, who was President of the Harvard
Law Review (elitist!) and a law professor at the University of Chicago (even more elitist!),
has behavioral economists aa his closest advisers who were much more open to this sort of
thing happening than the advisers of any of the other leading candidates. Did Phil Gramm
see this coming?

Andrew September 18, 2008 at 12:57 pm

Odograph,

Your second link is great. I’d read the EDGE essay referred to there and I recommend it. But, a lot of the comments below it are on the mark as well.

Tom September 18, 2008 at 1:25 pm

“And why shouldn’t McCain be held accountable for Republican failures? He’s been with Bush pretty solidly.

Posted by: Bernard Yomtov at Sep 18, 2008 12:32:38 PM”

Because Bush wanted better regulation of the GSEs in 2003, warning of problems, and McCain called for the same in 2005, with the same warnings. Both times they were thwarted by the Democrats.

Now who are those who state Obama has a better economic plan? Is that Obama related to the Obama that has received more money in the last three years from Fannie and Freddie than any other politician (save Dodd) has in the last twenty? Moral Authoity anyone?

Tom Hanna September 18, 2008 at 1:55 pm

I have to second what the first commenter said. It’s amazing to see commentary criticizing policy makers who aren’t economists by profession when those who are don’t seem to have any good answers either. This is especially true when the policy makers do seem to have a pretty good grasp on things. McCain and Palin’s comments summed things up pretty well. Events that are unfortunate for the participants, potentially catastrophic consequences for innocent bystanders and beyond the scope of legitimate government involvement…there’s no easy answer.

Johnny Debacle September 18, 2008 at 2:46 pm

“I’m not a Republican, which, I think grants me some objectivitity.”

The tendentiousness of every one of your posts across various threads begs to differ.

Bernard Yomtov September 18, 2008 at 2:52 pm

Because Bush wanted better regulation of the GSEs in 2003, warning of problems, and McCain called for the same in 2005, with the same warnings. Both times they were thwarted by the Democrats.

We can argue about what would have been wise regulation, and who supported what when, but you really can’t claim that McCain’s agreement with Bush proves he’s different than Bush.

CJS September 18, 2008 at 3:00 pm

Bernard,

Here’s a critique of that Bush/McCain talking point:

http://corner.nationalreview.com/post/?q=ZjE0MjYzZmJjNzc0N2YxZTJhN2U1M2IyZmQxNTJlY2U=

It’s also worth noting, that the CQ figure for how often a senator voted with President Bush that underlies the talking point is based on a study of just 22% of all Senate votes during the Bush presidency.

Here’s another look at where Hillary, Obama, Bush and McCain fall on the ideological scale of Congress and the Senate:

http://voteview.ucsd.edu/Clinton_and_Obama.htm

McCain is the centrist…

Tom September 18, 2008 at 3:23 pm

“but you really can’t claim that McCain’s agreement with Bush proves he’s different than Bush. ”

Since Bush was right about this, why would McCain want to be different?

Paul Irish September 18, 2008 at 4:01 pm

Also of note, impactful is not a word.

John September 18, 2008 at 4:32 pm

I just heard Tyler on NPR comparing the US to Ethiopia. Uh oh.

Anderson September 18, 2008 at 6:37 pm

“Pandering politician” is an oxymoron.

I think you meant “a pleonasm.”

N.b. — anyone who watches McCain in action & then sniffs “all Obama can do is pander” … well, you’re a Republican, my friend. Just as a guy who gets off on other guys is gay, whether he admits it to himself or not.

Come out of the closet, Andrew! Lots of people feel safe self-identifying as Republicans! It’s not like the old days! BE YOURSELF!

Anonymous September 18, 2008 at 6:59 pm

“Pandering politician” is an oxymoron.

It was a joke.

Bernard Yomtov September 18, 2008 at 11:03 pm

CJS,

I’m not sure what that article at the Corner is intended to prove. Yes, Obama votes with the Democrats an overwhelming percentage of the time, apparently more often than McCain votes with Bush, a mere 90% of the time.

But so what? Obama isn’t claiming to be a maverick, to be fighting against his party. He’s not trying to distance himself every way he can from Harry Reid.

McCain, of course, is running against his own party, claiming he doesn’t go along with Bush, that he’s an independent thinker, he’s going to clean house, or whatever. He hardly mentions the word “Republican.” The whole theme of his campign is all this “reform” stuff, etc.

If McCain were running a campagn that said Bush had done a great job and he was going to continue in the same direction there would be nothing remarkable about his voting record. It’s the fact that he is saying the opposite that makes it worth paying attention to.

That said, I think the voting record is only part of the story. I don’t see McCain really saying anything concrete in terms of criticizing Bush, or suggesting dramatic policy differences. He mostly is just making vague, all-purpose noises about reform and the “old boy network,” and so on, while continuing to be deeply enmeshed in that network.

aaron September 19, 2008 at 9:05 am

Chicago doesn’t mean good. Cass Sunstein is a chicago boy in name.

Anonymous September 20, 2008 at 4:49 am

what’s funny is that 3/4 of america doesn’t realize that president has very little power and decision making power. if you all want to blame someone for everything, lok at the jokers you voted into congress….they make ALL the decisions

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