Republicans That Ganged up on Geithner Fought Pay Limits

Flashback: It Was Bush, GOP That Opposed Executive Compensation Caps
It is a rather curious spectacle to see congressional Republicans express outrage at the exorbitant bonuses being handed out by bailed-out companies and blame the Obama administration for failing to curb the practice with AIG. Because when the first installment of the Troubled Asset Relief Program was passed it was the Bush administration and GOPers in Congress who were insisting that caps on executive compensation not be part of the legislation.

As the New York Times reported at the time that TARP was being crafted, "Congress and the administration remained at odds over the demands of some lawmakers, including limits on the pay of top executives whose firms seek help."

Former Treasury Secretary Hank Paulson said that while he was upset with the levels of salary afforded to top executives, any cap on such would dissuade companies from participating in the TARP.

"If we design it so it's punitive and so institutions aren't going to participate, this won't work the way we need it to work," he told Fox News Sunday on September 21.

Senator Richard Shelby, the top Republican on the Senate Banking Committee, told CBS news that: "It should be up to the board of directors of a private corporation to set the compensation of an executive; it shouldn't be Congress's role."

Senator Mel Martinez told CNBC that: "While it is very appealing to think about executive compensation as being a part of this, one of the drawbacks to that is perhaps that we would have fewer entities participate in what is essentially a voluntary act."

Media continue to omit Bush Treasury's role in AIG bonus controversy

Media continue to omit Bush Treasury's role in AIG bonus controversy

USA Today and the Los Angeles Times reported Republican criticism of the Obama administration over AIG's employee bonus packages but did not point out that it was the Bush Treasury Department that worked with the Federal Reserve in carrying out last year's bailouts and bought AIG stock notwithstanding the existence of these bonus contracts.

Fox's Steve Doocy - Liar and Clown

Fox's Steve Doocy - Liar and Clown

Fox & Friends' Steve Doocy falsely asserted that President Obama has proposed eliminating the ability of high-income taxpayers to take income tax deductions for their home mortgages. In fact, Obama has not proposed eliminating income tax deductions for any taxpayers; rather, a provision in Obama's budget proposal would, beginning in fiscal year 2011, reduce the tax rate at which families earning more than $250,000 per year can take itemized deductions to 28 percent.

CNN and Cheney Spread Barney Frank and Chris Dodd. Housing Myth

CNN and Cheney Spread Barney Frank and Chris Dodd. Housing Myth

On CNN's State of the Union, host John King did not challenge former Vice President Dick Cheney's false claim that the Bush administration tried "to impose reforms on Fannie Mae and Freddie Mac, and we ran into a stone wall on Capitol Hill in the form of the chairmen and -- of the Banking Committee in the House and the Senate, Barney Frank and Chris Dodd." In fact, Frank and Dodd were not "chairmen" until 2007, after which time Congress passed oversight legislation of Fannie and Freddie.

Defict Spending Unavoidable - Part of the Bush Legacy

Obama's economics guru defends deficit spending
Lawrence Summers, President Barack Obama's closest economic adviser, broke a long public silence on Friday, asserting that today's economic problems stem from an unsustainable financial model, and he defended heavy deficit spending as a necessary evil to restore the economy to health.

Summers, a former Treasury secretary in the Clinton administration, now heads the policymaking National Economic Council inside the White House. He said the current recession was sparked not by the normal business cycle but by excesses such as inflated asset prices and insufficient regulation that had built up over years and finally collapsed.

"On a global basis, $50 trillion in wealth has been erased over the last 18 months. This includes $7 trillion in the U.S. stock market and $6 trillion in housing wealth," Summers said, adding that greed has given way to fear.

"This is the paradox at the heart of the financial crisis," he continued, noting that it "was this transition from an excess of greed to an excess of fear that President (Franklin) Roosevelt had in mind when he famously observed that the only thing we had to fear was fear itself. It is this transition that has happened in the United States today."

Summers also said that after plummeting during the holiday season, consumer spending appears to have stabilized, which he said was "modestly encouraging."

Here's more of what Summers had to say, edited into a question-and-answer format.

Q: Why is Obama moving on healthcare, energy, education and other areas. Shouldn't the focus be on fixing the economy?

A: I can't imagine that it would be rational not to provide assistance to students, not to work on making higher education affordable, not to increase financial confidence in the country by doing the work of getting health-care costs under control, not at a time when there are millions of people unemployed; to be thinking about a sector like energy and the environment, where new jobs can be created. It would seem to me that it would be a manifest abdication of responsibility not, as we thought about recovery, to be thinking about making that recovery as sound and as strong as possible.

Q: Why hasn't Treasury Secretary Timothy Geithner spelled out his plan to get so-called toxic assets off of bank balance sheets so they can lend again?

A: I think that Secretary Geithner has handled this in a difficult and courageous way. The easy thing to do would be . . . to lay out a nine-point plan with illusion of specificity and the sense of certainty about what the future would bring. It's so easy that we saw half a dozen of them from the previous administration; it's just that they were different each month. The right approach, the approach that Secretary Geithner has taken, is an approach that lays out a framework, that, unlike so much of the commentary, actually recognizes the enormous complexities of the problem and the balances that need to be stuck.

Q: What kind of balances need to be struck?

A: The need to address on the one hand the capital markets and on the other hand the banks, and not to do what so many do . . . and fail to recognize the profound interlinkages. The whole question about the toxic assets in the banks has to do with the health of the capital markets and in what way those assets can be sold.

Q: Chinese Prime Minister Wen Jiabao worried on Friday that America may not make good on the $1 trillion in debt it owes China. Does America's stimulus spending risk a debt default?

A: In the short run, the need is to get the economy going again and to get the private financial system working again and to reactivate those markets. And . . . it's not something that will happen automatically simply through patience. You have to be prepared to prime the pump, and if you allow the process of decay, decline and deleveraging to continue, it's much more costly to do it later. The ultimate burdens are . . . much greater and the loss of confidence and ability to attract foreign capital is that much more profound.

Q: Still, our debt is exploding. Won't this have long-term consequences?

A: Look, I think we need to do what's necessary to get us out of the crisis that we inherited. My speech was intended to persuade you of one thing if you didn't agree with anything else — that this was not a set of automatic processes that will automatically fix themselves if you didn't act. If deflation sets in, if the (gross domestic product) collapses further . . . the magnitude of the federal borrowing, as large as it is today, will be dwarfed; will be far larger. So I believe the approach the president is taking is the ultimately fiscal responsible approach, because of the risk it avoids and it contains.

Moving Beyond the Reagan Fairytale

Moving Beyond the Reagan Fairytale

His legacy as a fiscal conservative is as much of a fairytale as his philosophy was. The beacon of small government and fiscal responsibility was actually the man who unnecessarily blew a massive hole in the budget. He's been treated as the Second Coming of Christ on fiscal conservatism, but his record just doesn't live up to the dittohead adulation.

Reagan cut government programs that were helpful to many, and, as you can see below, began an era of reckless spending that was carried on by the Bushes

Obama Inherits Reagan's Socialist Legacy

Reagan's Socialist Legacy
Newt Gingrich is right: "It is European socialism transplanted to Washington." How else to describe an economy in which the government controls the entire financial center and is now supplying life support for the auto industry? That's on top of the existing socialist economy run by the military-industrial complex, which, thanks to George W. Bush, now absorbs upward of 60 percent of the non-entitlement federal budget.
Although we still have a way to go to catch up with the good parts of the European system, including universal healthcare, high-quality public education and decent working conditions, we do have a system that is now as socialist in budget size as Europe's. That part I get when I listen to the right-wingers on Fox News bemoaning the reversal of the Reagan Revolution. But what I don't understand is how in the world they can blame this startling turn of events on Barack Obama.

The vast majority of money allocated so far on President Obama's watch is an extension of Bush's banking bailout, which has committed trillions to failed Wall Street conglomerates. I certainly don't want to defend the bailout and personally think the banks and stockbrokers deserve to go belly up, but what does that mess have to do with Obama, who was in college when the Reagan Revolution launched the deregulation that allowed Wall Street to run wild?

Didn't Obama inherit the current financial meltdown less than two months ago from the Republicans, who for eight years under Bush assured us that the markets were not in any need of tighter regulation? Wasn't it GOP Congressional members led by folks like Gingrich who pushed though the deregulation legislation that enabled the growth of "too big to fail" financial institutions that now have to be saved by the taxpayers?

Nor has Obama demanded anything more in the way of accountability from those Wall Street swindlers than had the Bush administration. Under both presidents a total of $170 billion was given to insurance giant AIG, and, as the Wall Street Journal reported, at least $50 billion of that money was passed on to top foreign and domestic banks without any public accounting. Indeed, the second in command at the Fed told a Senate committee last week that he wouldn't reveal the names of the banks that grabbed our money.

Nor has there been any serious demand put on the banks to use the hundreds of billions in federal funds they received to increase liquidity. Indeed, the banks are raising interest rates and cutting limits on credit cards at a time when the government is hoping consumers will use those cards to pump some life into the retail market. As bank industry analyst Meredith Whitney wrote in a Wall Street Journal Op-Ed article, consumer credit card lines "were reduced by nearly $500 billion in the fourth quarter of 2008 alone." She estimates that credit card limits for consumers will be halved over the next year, mostly on consumers who have not done anything wrong. This will take "credit away from people who have the ability to pay their bills," she notes.

So what we have here is socialism without even the pretense of a soul. Certainly that has been the case with the abject refusal of the banks that received government bailouts to be more aggressive in preventing home foreclosures. And the Obama administration has made it clear that it has no intention of taking over the operation of any of the mega-companies that are in trouble, even when, as in the case of AIG, the government already owns 80 percent of the shares. The reason? Because that would be viewed as nationalization.

So what exactly would Obama's critics do differently? Nothing on the bailout side. Instead, they have settled for carping criticism of the stimulus package, playing games by nitpicking lesser-cost programs while ignoring the big items that most governors, be they Republican or Democrat, eagerly want. The great fear of the GOP seems to be that some of the stimulus program might actually prove helpful to struggling Americans, but the Republicans can't just come out of the closet and say so.

What they have picked up on instead is that Obama's tax cuts provide some redistribution of income to favor the rapidly disappearing middle class at the expense of the super-wealthy, who have profited wildly from Bush tax cuts. Which brings us back to Gingrich's complaint that Obama is importing European socialism. If that means a system of governance in which a robust middle class is rewarded for work with a strong social safety net supported by higher taxes on the most affluent, well, let's get it on.