by cactus

Megan McArdle responds to a post I wrote:

So Obama doesn't count because he's not really a Democrat. But Bill Clinton was. But Richard Nixon--the chap who implemented price controls and massively expanded Social Security and Medicare--was definitely a Republican. Jimmy Carter, who deregulated like mad: definitely a Democrat.

What are these policies that neatly define Democrats to exclude only the ones who happen to have crappy growth? On what metric does Barack Obama register as farther to the right than Bill Clinton? Because from what I remember of the 1990s, I spent most of the decade listening to my genuinely left-wing friends weep that he'd betrayed them. Remember Edelman's resigning in protest of welfare reform?

I thought it was unnecessary at this point to explain the one thing I've pointed out time and again differentiates Republicans from Democrats. I think the first time was here. (I tend not to break out JFK from LBJ, or Nixon from Ford because JFK and Ford only served a short time, but the post that is attached is illustrative of behavior, not performance.)

The difference is the tax burden - that is, the percentage of people's income that gets collected in taxes. Not the marginal rate - the amount people actually pay divided by the amount they make. And there is a difference, a big difference. As an example: George Herbert Walker Bush famously raised marginal rates. It might have cost him an election. But GHW Bush also quietly lowered the tax burden. He did it through the people he appointed to the IRS, through the degree of compliance he sought, through the way his IRS interpreted existing rules and regulations and through how the body of tax rules and regulations changed while he was in office.

Going back to 1952 at least, every Democrat, every single one, has increased the tax burden. Every single Republican raised lowered [h/t Bruce Webb] them. The data in the attached post is from the IRS and goes back only to 1952, but one can wander over to the BEA's NIPA Table 2.1 and compute the tax burden ourselves with National Income data going back to 1929, and whaddaya know, the rule also works for Hoover, FDR, and Truman. Just barely for Truman... but then he is the exception on performance too, right?

Now, I doubt you could find a single person on the right of the political spectrum who would tell you that taxes don't affect economic growth. They all believe taxes affect growth. Of course, the story they tell is that cutting taxes produces faster economic growth. The fact is, however, the Presidents who cut tax burdens tended to produce slower economic growth than those who raised taxes. (I've discussed why in a number of other posts, and I don't feel like rehashing or looking for those posts now. I also note this isn't just true of Presidents. My fellow Angry Bear, Spencer, once pointed out that there are a lot of people out there who seem to think we'd all be better off if the country was Alabama than if it was Massachussetts.)

Unfortunately, tax burden data, like any other bit of real world data, fluctuates somewhat from year to year, so its really going to be a while before we know what direction they're really headed over O's administration. As in, several years. And most of us are impatient. So we'd like to have some leading indicators, so to speak, of what Obama is going to do, of where he's going to fall on the one R v. D divide that really matters. And right now, he's behaving like the folks who have cut tax burdens in the past. He's also talking like them. His bail-out is identical to GW's, and when he talks about taxes, it doesn't sound like Clinton, it sounds like GW. So its reasonable to wonder whether he's going to stick to the R v. D rule. And the next test coming up is healthcare; a D would be putting his political capital on the public option right now. An R wouldn't. What's it gonna be, we'll soon see.

More below the fold.

Now, in Megan's post, she refers to "Cactus and his merry band of madmen." I'm not sure the merry band of madmen over here truly have a leader, much less that I'm the one (Dan is the official grand poobah in charge of the blog, after all!!) but I'm guessing you aren't a part of that merry band of madmen if any of the following apply to you:

1. You do not believe that since 1929 at least, every single D has increased the tax burden and every single R has decreased the tax burden, despite the fact that the data shows precisely this, and despite the fact that it fits the caricature of Ds and Rs to a T, so to speak.
   
2. You do not believe that since 1929, Ds have generally outperformed Rs when it comes to real economic growth, despite the fact that the data shows precisely this.
   
3. You do not believe that administrations that cut the tax burden have also generally been the administrations that grew more rapidly, despite 1. and 2.
   
4. You do not believe that the tax burden could possibly have anything to do with growth.

If you do believe these things, if you believe what the data shows , I'm sorry to say but you're one of us, one of the merry band of madmen. On the other hand, if you fit these rules, there are a whole lot of folks out there, Megan McArdle included, who would consider you sane.

Who said:

The United States participated actively and effectively in the negotiation of the [1984 UN Convention on Torture] . It marks a significant step in the development during this century of international measures against torture and other inhuman treatment or punishment. Ratification of the Convention by the United States will clearly express United States opposition to torture, an abhorrent practice unfortunately still prevalent in the world today.

The core provisions of the Convention establish a regime for international cooperation in the criminal prosecution of torturers relying on so-called 'universal jurisdiction.' Each State Party is required either to prosecute torturers who are found in its territory or to extradite them to other countries for prosecution.

Answer here. Is he rolling over in his grave?

by Divorced one like Bush

I think it's time to reread the World Bank report on what creates wealth because it seems that the arguments against the stimulus are from a mind-set of very narrow thinking about what creates wealth. They all seem focused on what the World Bank report calls “Produced Capital”. Unfortunately, focusing on just that aspect of capital reduces our nation to growth based on 18% of our economic power. And, as far as I have understood the arguments for tax cuts, they are based on effecting this small aspect of what produces wealth in a developed economy like ours.

“The rest of the story is intangible capital. That encompasses raw labor; human capital, which includes the sum of a population's knowledge and skills; and the level of trust in a society and the quality of its formal and informal institutions. Worldwide, the study finds, "natural capital accounts for 5 percent of total wealth, produced capital for 18 percent, and intangible capital 77 percent."

You know what that is? Democratic traditional spending priorities.

“Rich countries are largely rich because of the skills of their populations and the quality of the institutions supporting economic activity," the study concludes. According to Hamilton's figures, the rule of law explains 57 percent of countries' intangible capital. Education accounts for 36 percent.”

Get that? It means tax cuts are just stupid policy if the goal is to stimulate a developed economy as strongly as possible such that the stimulus creates lasting wealth. Is that not the complaint by the republicans and blue dogs, the lack of lasting wealth which means jobs as the stimulus is written? What the World Bank report means is, if you want the biggest bang for your greenback, you have to weigh the heavy side of the stimulus to invest in “human capital, which includes the sum of a population's knowledge and skills; and the level of trust in a society and the quality of its formal and informal institutions.”

You have to load the stimulus to the 77% side and not the 23% side (natural 5% and produced capital 18%). That is 3.4 human capital to 1 natural/produced capital. That means education (all forms and subjects), support for the economically disadvantaged (welfare, medicaid), health care (medicare, national health payment reform, system IT), risk prevention and recovery (law, fire/rescue, FEMA), science (greening energy, environment) and the arts (art districts, museums) to suggest a few.

Beyond that, the intentional campaign to sway public opinion by purposefully lying about the way a stimulus such as is being proposed will function, is to actually predestine our efforts to failure. The reason is because the campaign is producing a lack of trust.

“An economy with a very efficient judicial system, clear and enforceable property rights, and an effective and uncorrupt government will produce higher total wealth.”

As noted above, the level of trust in a society of its institutions is of issue regarding the level of capital available to produce wealth. The greatest harm that is coming from the republican's drive to instill their minority will on the many out of selfish want, is to further the demise of the people's trust. For the blue dogs it is their ignorance of their economic ideology that creates the mistrust. The republicans/blue dogs, and those helping them by lending their "professionalism", think they are only effecting a political strategy. In truth, they are destroying the very basis for the wealth they desire. Their entire campaign for decades to discredit, to instill mistrust in the primary institution we have, the US (We the People) government, has been the primary cause to our economic decline. To increase the level of distrust is to decrease the available “intangible capital” which is 77% of our wealth generating power.

Pushing tax cuts, dear republicans and blue dogs, is actually working against the economic goal you profess to desire for the American people because enacting tax cuts promotes the weakest power of our economy while the promoting of tax cuts is destroying the strongest power of our economy.

Gary Farber (so far only via Facebook) (UPDATE: Now here) finds a reprint from the 8 March 1933 issue of The Nation:

At the risk of gilding the tinsel, let the record be set down finally as The Nation takes leave this week of the "only party fit to rule." American memories are short. Four years from now the public will be asked to restore the Republicans and prosperity.

Let it therefore be recalled, now and henceforth, that four years ago not a cloud even as large as a man's hand had appeared in the heavens. That it was, from the financial standpoint, a clear blue sky may have had a certain prophetic symbolism which was overlooked at the time. Herbert Hoover was about to assume the Presidency....

In his acceptance address the previous August Mr. Hoover had declared:

We in America today are nearer to the final triumph over poverty than ever before in the history of any land. The poorhouse is vanishing from among us. We have not yet reached the goal, but, given a chance to go forward with the policies of the last eight years, and we shall soon, with the help of God, be in sight of the day when poverty will be banished from this nation. There is no guaranty against poverty equal to a job for every man. That is the primary purpose of the economic policies we advocate.

Unfortunately, as Paul Wolfowitz observed, policies should always be evaluated by their results, not their purposes.

Ken Houghton

Christopher Buckley leads the Republican Party to water, and speculates on watching them sink:

...GOP pin-up girl Sarah Palin.

I’ll stipulate that that’s condescending, if my former confreres on the Right will stipulate that had Gov. Palin’s first name been “Bob” or “Chuck,” her surname would still be unrecognizable to 90 percent of the American electorate.

The other pull quote was pulling and sits in the center of the article. While I encourage you to Read the Whole Thing, it really is too delicious not to requote as well. Rendered by Buckley as a parenthetic:

Nexis and Google have so far failed to unearth evidence of any previous candidate for the U.S. vice presidency being called—by their own campaign, no less—a “whack job.”*

Read the Whole Thing, including some of the comments.

*One guesses that memories of Admiral Stockdale, besides whose accomplishments John McCain looks like the inept cadet he was, have escaped Google and Nexus, since he was surely called the equivalent or worse.

Ken Houghton

Christopher Buckley leads the Republican Party to water, and speculates on watching them sink:

...GOP pin-up girl Sarah Palin.

I’ll stipulate that that’s condescending, if my former confreres on the Right will stipulate that had Gov. Palin’s first name been “Bob” or “Chuck,” her surname would still be unrecognizable to 90 percent of the American electorate.

The other pull quote was pulling and sits in the center of the article. While I encourage you to Read the Whole Thing, it really is too delicious not to requote as well. Rendered by Buckley as a parenthetic:

Nexis and Google have so far failed to unearth evidence of any previous candidate for the U.S. vice presidency being called—by their own campaign, no less—a “whack job.”*

Read the Whole Thing, including some of the comments.

*One guesses that memories of Admiral Stockdale, besides whose accomplishments John McCain looks like the inept cadet he was, have escaped Google and Nexus, since he was surely called the equivalent or worse.

Though the claim made may not be true, the sentiment seems real:

Update: Brad DeLong apparently beat me to publishing this one by about 40 minutes. I blame my trying to use a Mac, but it's nice to know neither of us got it from the WaPo website, where it was up yesterday.

Though the claim made may not be true, the sentiment seems real:

Update: Brad DeLong apparently beat me to publishing this one by about 40 minutes. I blame my trying to use a Mac, but it's nice to know neither of us got it from the WaPo website, where it was up yesterday.

Via Dr. Black, we get CNN reporting:

Younger, healthier workers likely wouldn't abandon their company-sponsored plans, said Douglas Holtz-Eakin, McCain's senior economic policy adviser.

"Why would they leave?" said Holtz-Eakin. "What they are getting from their employer is way better than what they could get with the credit."

And why is it better? Because of the tax credit that is going away.

But let's be nice to a man who has, in the past few months, eliminated his credibility to ensure that no ex-GWBush Administration official retains his or her reputation after leaving office.* Let's assume he's telling the truth.

So the young, healthy workers stay with the employer plan (that, miraculously, doesn't go away in a miasma of Moral Hazard**). This leaves the older workers, who no longer get a decent deal from their employer, to find something in the marketplace.

Gosh, guess what happens when your selection group becomes more Adverse? Costs go up.

So let's review what Holtz-Eakin has actually declared, explicitly and by implication:

1. Younger workers will keep the employer-provided health insurance, since it would cost them more to buy on their own
   
2. Older workers won't be provided with insurance, and it will cost them Even More than More to buy health insurance on their own.

Even if we were ignoring that Health Insurance is NOT HEALTH CARE,*** John McCain's proposal, by the admission of his own Economic Advisor, makes the current situation appear Pareto-optimal.

Which leaves us only one question: Why would any economist support it?

*I should probably stipulate positive here. For instance, anyone who followed Condi "I was National Security Advisor on 11 Sep 2001" Rice's prior career wouldn't have expected much from her.

**Using the actual Health Economics definition here, not the generic phrase to describe why we need to give Goldman Sachs and Jamie Dimon $700 Billion.

***Yes, I'm shouting. Claiming to address health care when all you address is health insurance is like claiming to have fixed a smashed-in door by changing the lock on it.

Via Dr. Black, we get CNN reporting:

Younger, healthier workers likely wouldn't abandon their company-sponsored plans, said Douglas Holtz-Eakin, McCain's senior economic policy adviser.

"Why would they leave?" said Holtz-Eakin. "What they are getting from their employer is way better than what they could get with the credit."

And why is it better? Because of the tax credit that is going away.

But let's be nice to a man who has, in the past few months, eliminated his credibility to ensure that no ex-GWBush Administration official retains his or her reputation after leaving office.* Let's assume he's telling the truth.

So the young, healthy workers stay with the employer plan (that, miraculously, doesn't go away in a miasma of Moral Hazard**). This leaves the older workers, who no longer get a decent deal from their employer, to find something in the marketplace.

Gosh, guess what happens when your selection group becomes more Adverse? Costs go up.

So let's review what Holtz-Eakin has actually declared, explicitly and by implication:

1. Younger workers will keep the employer-provided health insurance, since it would cost them more to buy on their own
   
2. Older workers won't be provided with insurance, and it will cost them Even More than More to buy health insurance on their own.

Even if we were ignoring that Health Insurance is NOT HEALTH CARE,*** John McCain's proposal, by the admission of his own Economic Advisor, makes the current situation appear Pareto-optimal.

Which leaves us only one question: Why would any economist support it?

*I should probably stipulate positive here. For instance, anyone who followed Condi "I was National Security Advisor on 11 Sep 2001" Rice's prior career wouldn't have expected much from her.

**Using the actual Health Economics definition here, not the generic phrase to describe why we need to give Goldman Sachs and Jamie Dimon $700 Billion.

***Yes, I'm shouting. Claiming to address health care when all you address is health insurance is like claiming to have fixed a smashed-in door by changing the lock on it.

However, it's just a Republican in California. Who are re-registering people to be Republicans, without their knowledge, on the guise of opposing child molestation. (h/t Laura Rosen)

Will wait patiently for John McCain's attack on Mark Jacoby (not this one).

However, it's just a Republican in California. Who are re-registering people to be Republicans, without their knowledge, on the guise of opposing child molestation. (h/t Laura Rosen)

Will wait patiently for John McCain's attack on Mark Jacoby (not this one).

Ken Houghton

Or at least optimistic.

McCain is going after Medicare and Medicaid.

But Douglas Holtz-Eakin, Sen. McCain's senior policy adviser, said Sunday that the campaign has always planned to fund the tax credits, in part, with savings from Medicare and Medicaid. Those government health-care programs serve seniors, poor families and the disabled. Medicare spending for the fiscal year ended Sept. 30 is estimated at $457.5 billion.

At least he made it official.

Call those Florida relatives now.

UPDATE: PGL beat me to this one by about half an hour and is much nicer about the proposal than I over at Econospeak. (Then again, I'm not a "deficit hawk"—precisely because of reasons like this.)

Ken Houghton

Or at least optimistic.

McCain is going after Medicare and Medicaid.

But Douglas Holtz-Eakin, Sen. McCain's senior policy adviser, said Sunday that the campaign has always planned to fund the tax credits, in part, with savings from Medicare and Medicaid. Those government health-care programs serve seniors, poor families and the disabled. Medicare spending for the fiscal year ended Sept. 30 is estimated at $457.5 billion.

At least he made it official.

Call those Florida relatives now.

UPDATE: PGL beat me to this one by about half an hour and is much nicer about the proposal than I over at Econospeak. (Then again, I'm not a "deficit hawk"—precisely because of reasons like this.)

Let's see. There are a bunch of people ready to riot on the streets—or at least do the White Person version of rioting and vote Republican, mainly because of the lies of several House Republicans.

And there are a precious few people who believe action needs to be taken and—while they might prefer, say, The Swedish Model as both more efficient and more likely to succeed—are willing to give Paulson/Bernanke a chance to be immortalized, even knowing that the odds are rather higher than Brad DeLong hopes that the immortality will be of the James Buchanan/Herbert Hoover variety more than General George Marshall. (Daniel Davies Three Laws have not been repealed, but the wolf really is at the door.)

So what do we see from the Democrats who, one way or the other, are going to be credited blamed with anything that passes? Besides arch-idiocy from the "progressives", there was the rumor that they might actually produce a bill that Democrats can vote for?

You know how this story ends.

Kathryn notes that the Senate bill is even more of a giveaway than the House version was.

[N]ews reports suggest that the plan to be voted on by the Senate involves tax cuts. Tax cuts have no place in a bailout plan of this magnitude. Instead, the repealing of Bush's tax breaks to the wealthy and large corporation should possibly be part of such a plan. Somehow this has to get paid for.

She means reports such as this one:

“I’m optimistic that we’re going to have a significant bipartisan victory on the rescue plan here in the Senate tonight,” said Senator Mitch McConnell of Kentucky, the Republican leader, who Tuesday reached an agreement with Senator Harry Reid of Nevada, the majority leader, to add $100 billion in tax breaks....

“This bill has been packaged with a lot of very popular things to give it even more momentum,” said Senator Jeff Sessions, Repubican of Alabama, an opponent of the measure that is expected to easily clear the 60-vote threshold in the Senate, providing some momentum for the House vote now set for Friday.

But the new items also increase the burden on future taxpayers. The $100 billion in tax breaks, which offer incentives for the use of renewable energy and relieve 24 million households from an estimated $65 billion alternative-minimum tax scheduled to take effect this year, will not be offset by spending cuts or tax increases elsewhere.

and while Kathryn was optimistic about one part of the bill:

I do support some of the smaller scale proposals, such as raising the FDIC insurance level to 250,000.

The Devil in the details makes even this a c.f. of major proportion:

Moreover, the increase in federal deposit insurance will not be financed, as the insurance program now is, by assessing a higher fee on the banks that benefit. Instead, banks will get an open-ended line of credit directly to the Treasury Department — meaning, taxpayers.

and when a chance of sanity appears, the power of the Republican Party is, as usual, never to be underestimated:

House officials spent much of Tuesday considering their own changes, including an extension of unemployment pay and a $1,000 tax credit for less affluent homeowners.

But those plans are not likely to advance, given the Senate decision. While the Senate left the door open slightly to other additions to the bill, such revisions would need the agreement of the full Senate, and the House proposals were likely to be blocked by Senate Republicans.

Right. Because the unemployed and "less affluent" homeowners would actually spend that money and stimulate the economy, and, in turn, the financial services industry.

As it currently stands, the "bailout" makes no sense, especially given the other actions that largely made it unnecessary. (The Financial Services industry will be running no better, but at least they get to gull some investors for a while longer. And those that fail in such an environment have enough cash flow problems that propping them up is a waste of resources.)

Call your Senators; tell them to vote "No."

Let's see. There are a bunch of people ready to riot on the streets—or at least do the White Person version of rioting and vote Republican, mainly because of the lies of several House Republicans.

And there are a precious few people who believe action needs to be taken and—while they might prefer, say, The Swedish Model as both more efficient and more likely to succeed—are willing to give Paulson/Bernanke a chance to be immortalized, even knowing that the odds are rather higher than Brad DeLong hopes that the immortality will be of the James Buchanan/Herbert Hoover variety more than General George Marshall. (Daniel Davies Three Laws have not been repealed, but the wolf really is at the door.)

So what do we see from the Democrats who, one way or the other, are going to be credited blamed with anything that passes? Besides arch-idiocy from the "progressives", there was the rumor that they might actually produce a bill that Democrats can vote for?

You know how this story ends.

Kathryn notes that the Senate bill is even more of a giveaway than the House version was.

[N]ews reports suggest that the plan to be voted on by the Senate involves tax cuts. Tax cuts have no place in a bailout plan of this magnitude. Instead, the repealing of Bush's tax breaks to the wealthy and large corporation should possibly be part of such a plan. Somehow this has to get paid for.

She means reports such as this one:

“I’m optimistic that we’re going to have a significant bipartisan victory on the rescue plan here in the Senate tonight,” said Senator Mitch McConnell of Kentucky, the Republican leader, who Tuesday reached an agreement with Senator Harry Reid of Nevada, the majority leader, to add $100 billion in tax breaks....

“This bill has been packaged with a lot of very popular things to give it even more momentum,” said Senator Jeff Sessions, Repubican of Alabama, an opponent of the measure that is expected to easily clear the 60-vote threshold in the Senate, providing some momentum for the House vote now set for Friday.

But the new items also increase the burden on future taxpayers. The $100 billion in tax breaks, which offer incentives for the use of renewable energy and relieve 24 million households from an estimated $65 billion alternative-minimum tax scheduled to take effect this year, will not be offset by spending cuts or tax increases elsewhere.

and while Kathryn was optimistic about one part of the bill:

I do support some of the smaller scale proposals, such as raising the FDIC insurance level to 250,000.

The Devil in the details makes even this a c.f. of major proportion:

Moreover, the increase in federal deposit insurance will not be financed, as the insurance program now is, by assessing a higher fee on the banks that benefit. Instead, banks will get an open-ended line of credit directly to the Treasury Department — meaning, taxpayers.

and when a chance of sanity appears, the power of the Republican Party is, as usual, never to be underestimated:

House officials spent much of Tuesday considering their own changes, including an extension of unemployment pay and a $1,000 tax credit for less affluent homeowners.

But those plans are not likely to advance, given the Senate decision. While the Senate left the door open slightly to other additions to the bill, such revisions would need the agreement of the full Senate, and the House proposals were likely to be blocked by Senate Republicans.

Right. Because the unemployed and "less affluent" homeowners would actually spend that money and stimulate the economy, and, in turn, the financial services industry.

As it currently stands, the "bailout" makes no sense, especially given the other actions that largely made it unnecessary. (The Financial Services industry will be running no better, but at least they get to gull some investors for a while longer. And those that fail in such an environment have enough cash flow problems that propping them up is a waste of resources.)

Call your Senators; tell them to vote "No."

by Ken Houghton

Brad DeLong lays out the breakdown.

When 2/3 of your party believes that taking the Dow down 600 750+ points is a Good Idea, claims such as "the party of fiscal responsibility"—or even the "party of Wall Street"—fail the free market test Big Time.

If I weren't worried about the coming harvest, I would fully endorse the DeLong proposal.

UPDATE: John Boehner lies with impunity though Julie Hirschfield Davis of the AP wakes up later:

Republican leader John Boehner, R-Ohio, said he and other Republicans were pained to vote for such measure, but he agreed that in light of the potential consequences for the economy and all Americans, "I think that we need to renew our efforts to find a solution that Congress can support."

Why is this a lie? As a correspondent who would probably prefer me not to link to his blog said, "Pelosi delivered about 60% of her caucus for the bill; Boehner
delivered about 30%. Is the House [Republican leadership] incompetent[?]"

Davis returns to reporting a moment later, identifying the party that deflected first:

In the House, "no" votes came from both the Democratic and Republican sides of the aisle. More than two-thirds of Republicans and 40 percent of Democrats opposed the bill. Several Democrats in close election fights waited until the last moment, then went against the bill as it became clear the vast majority of Republicans were opposing it.

So instead of maybe overpaying about $700 billion for assets over the next year, in the hope that banks will loan again now, the Republicans in the House—with John "we need to renew our efforts to find a solution" Boehner pretending to be the Voice of Reason—decided to knock $1,200,000,000,000 out of the stock market in a single day.

Talk about your multiplier effect.

Davis continues by quoting the Minority Leader and the Minority Whip both whining about how evil Nancy Pelosi is—and reporting the truth of the matter:

Republicans blamed Pelosi's scathing speech near the close of the debate...for the defeat. It was not much different from her usual tough words against the president and his party.

"We could have gotten there today had it not been for the partisan speech that the speaker gave on the floor of the House," Boehner said.

Rep. Roy Blunt, R-Mo., the whip, estimated that Pelosi's speech changed the minds of a dozen Republicans who might otherwise have supported the plan.

So the Minority Whip might have been able to deliver almost 40% (78-120) of his party for this bipartisan effort—assuming we believe him—if not for the fact that Nancy Pelosi has a sense of history. Gosh, I'm really impressed now. As is Barney Frank, who notes that "country first" does not appear to be the motto of the Republican House members:

That amounted to an appalling accusation by Republicans against Republicans, said Rep. Barney Frank, D-Mass., chairman of the Financial Services Committee: "Because somebody hurt their feelings, they decide to punish the country."

Presumably, because that worked so well for Newt Gingrich in 1995.

*Title change hat tip mregan in comments. (I've seen it both ways, and guessed wrong.)

by Ken Houghton

Brad DeLong lays out the breakdown.

When 2/3 of your party believes that taking the Dow down 600 750+ points is a Good Idea, claims such as "the party of fiscal responsibility"—or even the "party of Wall Street"—fail the free market test Big Time.

If I weren't worried about the coming harvest, I would fully endorse the DeLong proposal.

UPDATE: John Boehner lies with impunity though Julie Hirschfield Davis of the AP wakes up later:

Republican leader John Boehner, R-Ohio, said he and other Republicans were pained to vote for such measure, but he agreed that in light of the potential consequences for the economy and all Americans, "I think that we need to renew our efforts to find a solution that Congress can support."

Why is this a lie? As a correspondent who would probably prefer me not to link to his blog said, "Pelosi delivered about 60% of her caucus for the bill; Boehner
delivered about 30%. Is the House [Republican leadership] incompetent[?]"

Davis returns to reporting a moment later, identifying the party that deflected first:

In the House, "no" votes came from both the Democratic and Republican sides of the aisle. More than two-thirds of Republicans and 40 percent of Democrats opposed the bill. Several Democrats in close election fights waited until the last moment, then went against the bill as it became clear the vast majority of Republicans were opposing it.

So instead of maybe overpaying about $700 billion for assets over the next year, in the hope that banks will loan again now, the Republicans in the House—with John "we need to renew our efforts to find a solution" Boehner pretending to be the Voice of Reason—decided to knock $1,200,000,000,000 out of the stock market in a single day.

Talk about your multiplier effect.

Davis continues by quoting the Minority Leader and the Minority Whip both whining about how evil Nancy Pelosi is—and reporting the truth of the matter:

Republicans blamed Pelosi's scathing speech near the close of the debate...for the defeat. It was not much different from her usual tough words against the president and his party.

"We could have gotten there today had it not been for the partisan speech that the speaker gave on the floor of the House," Boehner said.

Rep. Roy Blunt, R-Mo., the whip, estimated that Pelosi's speech changed the minds of a dozen Republicans who might otherwise have supported the plan.

So the Minority Whip might have been able to deliver almost 40% (78-120) of his party for this bipartisan effort—assuming we believe him—if not for the fact that Nancy Pelosi has a sense of history. Gosh, I'm really impressed now. As is Barney Frank, who notes that "country first" does not appear to be the motto of the Republican House members:

That amounted to an appalling accusation by Republicans against Republicans, said Rep. Barney Frank, D-Mass., chairman of the Financial Services Committee: "Because somebody hurt their feelings, they decide to punish the country."

Presumably, because that worked so well for Newt Gingrich in 1995.

*Title change hat tip mregan in comments. (I've seen it both ways, and guessed wrong.)

UPDATE: Not even the Wall Street Journal editorial page fell for McCain's "reasoning":

So count us as mystified by Senator John McCain's decision yesterday to suspend his campaign and call for a postponement in Friday's first Presidential debate so that he and Barack Obama can work out a consensus bill to stabilize the financial system. This is supposed to be evidence of leadership?

I was muddling through some papers this afternoon, so I missed everything after John "Coming to the Wry" McCain's decision that, after he got schooled by a comedienne, he needed a excuse to skip tomorrow night's scheduled debate. Fortunately, Brad DeLong covered that part, including the sane reaction to McCain's "I will bring my superpowers to bear" statement:

It's not economic leadership that Senator McCain would bring to these negotiations; it's presidential politics – which is the last thing we need if we really want to solve the serious problems our nation faces.

But the Word of the Day goes to Felix Salmon:

I have a feeling I know what President Bush is going to say in his address to the nation tonight, but the single biggest message has already been sent, thanks to his decision to schedule the last-minute broadcast coming on the same day as John McCain announced he was suspending his presidential campaign to try to wrestle the bailout to the ground. The message is the same as the one sent by Hank Paulson over the weekend, when he asked for unprecedented power and unaccountability in structuring the bailout fund. And the message is not one that politicians should be sending:

Panic!

After saying nice things about Chris Dodd and Barack Obama, who have stayed focussed, Salmon returned to McCain, and used a form of That Word again:

McCain's statement, in this context, was truly unhelpful. This is panicky, not constructive:

It has become clear that no consensus has developed to support the Administration's proposal. I do not believe that the plan on the table will pass as it currently stands, and we are running out of time.

This strikes me as a profound misreading of the public's mood, a bit like Rudy Giuliani's decision to try to extend his second and final term as mayor on the grounds that only he was qualified to do the job. America does not want to elect a politician who can't help construct a bailout package without abandoning a foreign-policy debate. Nor should it.

Meanwhile, I played volleyball while Bush fiddled. Fortunately, Floyd Norris got paid to watch tonight's performance:

President Bush tonight gave a reasonably good explanation of how we got into this “financial crisis,” even if his list of causes was a little selective. His first cause was the willingness of foreigners to lend us money, a problem that we must hope will continue as the Treasury tries to borrow $700 billion to finance this bailout....

If there are any decisions his administration made that helped to worsen the situation, he did not mention them....

In boosting his plan, he took credit for the idea that there should be limits on executive pay, which his administration had opposed until today. It would have been nice if he had conceded that was a change, but you can’t have everything.

Situation Normal, down to the "his lips are moving" moment:

The most jarring part of the speech was his statement that his plan called for the government to buy troubled mortgage assets “at current low prices” and hold them until the value rises. In fact, the basis of the proposal is to buy assets at well above current market value — called fire-sale prices by Ben Bernanke — and thus recapitalize the financial system. They hope the market value will rise above what they pay, but that is not the same as buying at current low prices. Does he not understand that, or does he not want to acknowledge it?

I love questions for which there is no wrong answer.

UPDATE: Not even the Wall Street Journal editorial page fell for McCain's "reasoning":

So count us as mystified by Senator John McCain's decision yesterday to suspend his campaign and call for a postponement in Friday's first Presidential debate so that he and Barack Obama can work out a consensus bill to stabilize the financial system. This is supposed to be evidence of leadership?

I was muddling through some papers this afternoon, so I missed everything after John "Coming to the Wry" McCain's decision that, after he got schooled by a comedienne, he needed a excuse to skip tomorrow night's scheduled debate. Fortunately, Brad DeLong covered that part, including the sane reaction to McCain's "I will bring my superpowers to bear" statement:

It's not economic leadership that Senator McCain would bring to these negotiations; it's presidential politics – which is the last thing we need if we really want to solve the serious problems our nation faces.

But the Word of the Day goes to Felix Salmon:

I have a feeling I know what President Bush is going to say in his address to the nation tonight, but the single biggest message has already been sent, thanks to his decision to schedule the last-minute broadcast coming on the same day as John McCain announced he was suspending his presidential campaign to try to wrestle the bailout to the ground. The message is the same as the one sent by Hank Paulson over the weekend, when he asked for unprecedented power and unaccountability in structuring the bailout fund. And the message is not one that politicians should be sending:

Panic!

After saying nice things about Chris Dodd and Barack Obama, who have stayed focussed, Salmon returned to McCain, and used a form of That Word again:

McCain's statement, in this context, was truly unhelpful. This is panicky, not constructive:

It has become clear that no consensus has developed to support the Administration's proposal. I do not believe that the plan on the table will pass as it currently stands, and we are running out of time.

This strikes me as a profound misreading of the public's mood, a bit like Rudy Giuliani's decision to try to extend his second and final term as mayor on the grounds that only he was qualified to do the job. America does not want to elect a politician who can't help construct a bailout package without abandoning a foreign-policy debate. Nor should it.

Meanwhile, I played volleyball while Bush fiddled. Fortunately, Floyd Norris got paid to watch tonight's performance:

President Bush tonight gave a reasonably good explanation of how we got into this “financial crisis,” even if his list of causes was a little selective. His first cause was the willingness of foreigners to lend us money, a problem that we must hope will continue as the Treasury tries to borrow $700 billion to finance this bailout....

If there are any decisions his administration made that helped to worsen the situation, he did not mention them....

In boosting his plan, he took credit for the idea that there should be limits on executive pay, which his administration had opposed until today. It would have been nice if he had conceded that was a change, but you can’t have everything.

Situation Normal, down to the "his lips are moving" moment:

The most jarring part of the speech was his statement that his plan called for the government to buy troubled mortgage assets “at current low prices” and hold them until the value rises. In fact, the basis of the proposal is to buy assets at well above current market value — called fire-sale prices by Ben Bernanke — and thus recapitalize the financial system. They hope the market value will rise above what they pay, but that is not the same as buying at current low prices. Does he not understand that, or does he not want to acknowledge it?

I love questions for which there is no wrong answer.