Bah Humbug: Both Parties Are Guilty With Respect to the Economy, But Neither Offers Concrete Solutions

The poor state of the U.S. economy will undoubtedly impact this year’s presidential election. Although political scientists quibble about the exact impact of the economy on presidential elections, most agree that some connection exists and that voters typically punish the incumbent or the incumbent’s party for a bad economy. Current polls show that voters’ fears of worsening economic conditions have indeed benefitted Senator Barack Obama and harmed Senator John McCain. After the Republican National Convention McCain took the lead in most reputable polls like Gallup and Rasmussen. But voters shifted dramatically to Obama following days of triple-digit losses on the Dow Jones Industrial Average, the demise of Lehman Brothers, the federal bail-out of AIG, Fannie Mae and Freddie Mac, debate over the $700 billion bail-out package, and rising unemployment. Although other issues probably contribute to Obama’s recent surge in the polls (e.g., Palin’s foibles), opinion polls confirm that a majority of voters blame Republicans more than Democrats for the country’s recent economic troubles.

The relationship between the economy and presidential elections probably relies upon voters exaggerating the significance of presidents in shaping economic activity. While presidents certainly can and do influence macroeconomic conditions, there are so many other factors – both domestic and international – that overshadow a president’s role, but which voters and commentators tend to ignore.

First, there is Congress. The U.S. Constitution gives Congress, not the President, the power to spend and tax. Thus, every dollar of spending allocated from the national treasury requires congressional approval. Also, only Congress can formulate tax policy – including any tax cuts or increases. So, while the president has a great role in shaping the budget, Congress has the ultimate constitutional authority on spending. Accordingly, if the economic downturn results from exorbitant spending and tax cuts during the last eight years, then Congress must share equal if not greater responsibility for the situation than President Bush.

Democrats argue that Republicans have controlled the White House and Congress for the last eight years and that they are fully responsible for the economy. Well, this is simply untrue. Democrats controlled the Senate from June 2001 to January 2003 after Senator Jim Jeffords of Vermont resigned from the Republican party and became a Democratic-voting Independent. That’s why Tom Daschle was Senate Majority Leader for a bit of time. Also, the Democrats have controlled both the House and Senate from 2007 until the present. Outside of the war funding vote (which was really about the war – not money), I have not heard of any systematic effort by the Democrats to reign in government spending during their time as the majority party.

Furthermore, the notion of either party "controlling" Congress in the last eight years is a bit of a stretch, given the closely divided political affiliation of its members. The Senate, for example, presently has 50 Democrats, 49 Republicans, and 1 independent (Lieberman). No party has a majority in the Senate. While the Democrats have a slight majority of 53% in the House of Representatives, the House, like the Senate, has been closely divided throughout Bush’s terms in office. The fact that no party dominates Congress simply mirrors the closely divided state of national politics.

With respect to the credit crisis, most economists locate fault with consumers, banks, and Wall Street – not the president. Indeed, FactCheck.Org, a nonpartisan organization that helps dissect misleading political discourse, has collected the most persuasive and leading arguments among economists that explain the financial market collapse (I have discussed these elsewhere on this blog). Low interest rates, risky lending, securitization of risky mortgages, and consumers overextending themselves to purchase homes and drawing down appreciation – all combined to create this debacle.

Both Obama and McCain keep sparring over some vague notion of "deregulation," when that really had nothing to do with the present state of affairs. If anything, both parties would share responsibility for deregulation because it was accomplished over decades during which Democrats had some control of Congress – and even the White House.

Despite the exaggerated idea of the president’s control over the economy, voters can lay blame on Bush and the Republican Congress for one thing: the soaring budget deficit. Although Clinton’s presidency produced budget surpluses, Bush cut taxes and increased spending, which led, naturally, to deficits. Bush argued that his tax cuts would stimulate economic activity and lead to greater tax revenue, but economic date refutes this argument. In the long run, the Bush tax cuts and increased spending have caused budget deficits, which increases the public debt and the burden on taxpayers. The spiraling public debt also makes it difficult for the national government to implement costly but socially desired programs such as health care reform. For this piece of the puzzle, voters should blame Bush – and Congress. But this is simply one factor shaping the economy, and the deficit does not explain the financial meltdown or the need for the bailout.

Finally, President Bush and/or the Republicans are seen as responsible for sending jobs to foreign countries. NAFTA and other trade pacts are the primary culprits in this argument. Many economists, however, resist blaming NAFTA. Robert Reich, Clinton’s Secretary of Labor and an Obama advisor, for example, argues that jobs left the "rust belt" due to automation and, later, due to the location of labor in China (which has nothing to do with NAFTA). He also says that Democrats should not blast "free trade." Also, to the extent that free trade can explain the evaporation of solid jobs in the U.S., then both Democrats and Republicans share responsibility. President Clinton endorsed and argued for the passage of NAFTA. And while Obama lambasted Clinton for "supporting" NAFTA during primaries in Ohio and Pennsylvania, Joe Biden, his running mate, voted for it. Furthermore, Obama promised not to seek the repeal of NAFTA, arguing that this would actually cost U.S. workers jobs. Instead he promised to "renegotiate" its terms. It is unclear what this means in terms of U.S. jobs. Also, since his time in Congress, Obama has also voted for a trade pact.

The candidates are making a lot of lofty promises about what they will do with the economy, and frankly, I doubt that either will make a big dent. Credit is extremely difficult for consumers and businesses to obtain, and this will lead a sustained slowdown in economic activity. The federal reserve has much more influence over credit markets than the president. Also, neither candidate has offered any concrete regulatory solution for preventing the corporate and consumer behavior responsible for causing the financial meltdown. In addition, it is unclear whether either candidate can actually balance the budget. McCain’s commitment to keeping Bush’s upper-income and corporate tax cuts (some of which were already sneaked into the bailout legislation) will likely result in a deficit, and many experts are unconvinced that Obama can actually accomplish many of his social policy goals, such as health care – and cut taxes for most American families, as his campaign promises. Basically, both parties are offering very grand and ambiguous statements about how they will revitalize the economy. For me, details matter much more than catchy slogans, and so far, I am unimpressed.

Anti-Gay Group Thanks Obama, Seeks to Exploit Black Homophobia to Constitutionalize Bigotry

Earlier this year, the California Supreme Court invalidated a state law that prohibited same-sex marriage. Applying state constitutional law, the 4-3 ruling held that the law unjustifiably denied equal protection to gays and lesbians. In November, voters in California will consider a ballot initiative that would amend the state constitution to prohibit same-sex marriage, which would effectively overrule the court's decision.



Recently, a group pushing for the amendment extended gratitude to Senator Barack Obama as it mobilized voters to support the initiative. Although Senator Obama opposes same-sex marriage, he also opposes the ballot initiative and supports the California Supreme Court decision, a "spinderella" move that Obama and Senator Hillary Clinton both made during the Democratic primaries. Senator John McCain opposes same-sex marriage as well, but in 2004 he also opposed a Bush-sponsored U.S. constitutional amendment banning same-sex marriage. McCain argued that the proposed amendment was "un-Republican" because it would interfere with state autonomy. McCain, however, supports the California initiative. Both presidential candidates are spinning and tip-toeing on the issue because they want to maximize their appeal to moderate and independent voters, but they also must hold on to support from core groups within their respective parties.



Although Obama opposes the California ballot initiative, Project Marriage, an organization that favors the measure, believes his candidacy could help its cause. The organization hopes that Obama will bring out enough black socially conservative and evangelical voters who, though Democrats, are pro-life, antigay, and committed to conservative religious values. Black religious conservatives, unlike white evangelicals, tend to vote for Democrats, due to the party's more liberal record on civil rights in modern U.S. history. But conservative organizations have successfully exploited social conservatism among blacks to advance discriminatory agendas, particularly in the area of gay rights. This has created some highly unusual political coalitions. One black minister from Chicago, for instance, boldly proclaimed that he would march with the Ku Klux Klan in order to protest the legalization of same-sex marriage (yes - this really happened).



Conservative groups also mobilized black opposition to gay rights in order to secure the passage of anti-gay legislation in Ohio and Colorado during the late-1990s. In Colorado, one conservative group released a video called "Gay Rights, Special Rights," which visually contrasted scantly clothed participants in gay and lesbian festivals and the thousands of people who attended the March on Washington. The group sought to portray gays and lesbians as a bunch of privileged, promiscuous, party-goers, who do not need "special" civil rights protection. But if we used this same logic and looked at imagery from Freaknic (an annual party sponsored by black fraternities, known for having heaps of alcohol and "hook-ups") and the March on Washington, then one could legitimately conclude that today's blacks do not deserve civil rights.



Opinion polls show that all racial groups oppose same-sex marriage. So singling out blacks for condemnation on this issue, as some liberal commentators have done, applies a double-standard. But black alignment with conservative political organizations produces specific harms for black people, which makes black homophobia a self-defeating and ultimately dangerous political strategy.



First, when blacks help to legalize anti-gay discrimination they directly harm gays and lesbians who are also black, including many vocal supporters of racial justice. Also, black alignment with conservative political organizations in opposition to gay rights, emboldens social movement organizations that also resist laws and policies that would empower communities of color and strengthen the enforcement of race-based civil rights. Furthermore, the effort to constitutionalize discrimination against disparaged social groups and to restrain their liberty should trouble all blacks, given the roles that legally sanctioned inequality and repression, including sexual abuse and stigmatization, have played in the nation's history of racial oppression. When blacks approve anti-gay discrimination and the denial of liberty to gays and lesbians, they condone the very style of legal power that was employed to harm and which continues to harm blacks and other people of color.



My argument does not seek to equate homophobia and racism (a misguided analogy that gay rights advocates frequently invoke), but rather to demonstrate that they both constitute gross departures from the norms of equal protection and due process that are central to any progressive and anti-racist understanding of the constitution. Because anti-gay laws and policies undermine and erode these norms, black homophobia is inevitably anti-black.



I would also add that when Democratic politicians (regardless of race) oppose same-sex marriage, they too legitimize discrimination. Accordingly, liberal activists should hold them accountable for their positions, rather than giving them a free pass to abandon their constituents. The left, including the loudly anti-Republican and proudly liberal crowds at Daily Kos, HuffingtonPost, and MoveOn have been noticeably silent regarding Obama's opposition to same-sex marriage and his conservative stances on other issues (such as his support of the death penalty as punishment for rape and his recently articulated belief that the Second Amendment protects an individual -- rather than just a state -- right to bear arms). Obama's election will only bring symbolic progress if, as president, he readily abandons or fails to take on progressive concerns. And he will undoubtedly toss aside progressive issues if the left does not engage in any meaningful analysis and dissent. The right holds its governmental leaders accountable, and it often forces Republicans to embrace conservative values (hence McCain picking the solidly pro-life Palin). Democrats on the other hand have earned an often-deserved reputation for being "weak," precisely because they fail to defend liberal values against intense political opposition.



I am not sure that California blacks will provide enough swing votes to secure passage of the proposed amendment, but if religious Latinos, another group that conservative organizations often exploit, join blacks in supporting the amendment, then the strategy might succeed. Persons of color need to realize that their support of discrimination against other vulnerable groups weakens an already fragile and dwindling societal commitment to civil rights agendas, and it harms blacks who themselves are gay or lesbian. Thus, their actions ultimately have a detrimental effect on the very communities they claim to serve.

Related Readings on Dissenting Justice:



The Fallacy of Obama's "Diversity" Defense: Rick Warren's Views Already Have a Place at the Table



Embracing Uncle Good-But-Homophobic: Why "Reaching Across the Aisle" to Rick Warren Does Not Feel Safe to Everyone



New Obama Drama: GLBT Groups Upset That Rev. Rick Warren Speaking at Inauguration



Reactions to Reverend Rick Warren from My Blogger Buddies



Don't Ask, Don't Tell, Don't Hold Your Breath



Stonewalling on Don't Ask, Don't Tell? No Action Until 2010



Robert Gates as Obama's Secretary of Defense: "More of the Same" for Gay Rights?



Progressives Awaken from Obama-Vegetative State



Would Obama Have Won If He Were Black...and Gay?



Black Californians and Proposition 8: Is White Gay Anger Justifiable?

Washington Post Proclaims That "Sarah Palin Picks Ferraro as Favorite Vice President." Shocking -- Yes. Truthful -- No.

I guess I have officially accepted the role of the liberal who has a soft spot for candidates who suffer from media misrepresentation. During this election, I tend to side with Republican fears that behind the screen of objectivity, most people in the so-called "mainstream media," want Barack Obama to win. As a Democrat myself, most people would wonder why any bias in favor of my party would bother me. Well, the old saying "what goes around, comes around" warrants mentioning because in the past, the media have subjected Democrats to questionable treatment as well. I guess this is where I first developed my sensitivity to bias (being black makes me a little nervous about bias as well, but I digress).

I still cringe when I remember how the media laughed at Al Gore's "internet" statement. No -- he was not trying to stake a claim as inventor of the internet. Instead, he was referring to his role in the effort to make the internet available to the public (it had been exclusively a Department of Defense medium at the time). And how can any loyal Democrat forget the theatrical farce of "Whitewater" that plagued the Clinton administration until mud finally stuck, by way of Monica-gate. And Carter was blamed for the recession during his presidency, when really the enormous oil price shocks of the late 70s were largely to blame. Having witnessed Democrats unfairly treated in the media and elsewhere, I appreciate fairness as a general principle, which is why I am moved to write this entry.

While everyone was getting ready to watch the debate last night, the Washington Post posted this zinger on its webpage: Palin Picks Ferraro As Favorite "Vice President." What a headline! I did not hesistate to click the link, because this statement would certainly have been Palin's most damning comment to date. It could have even ended her vice presidential candidacy -- if the rest of the media picked it up and caused a feeding frenzy. So why hasn't such a storm occurred? Because there is a major wrinkle in the story: It is absolutely and unequivocally false and misleading.

Thankfully, the Washington Post blogger embedded video footage from the interview with Katie Couric (enough already?), in which Couric asks both Palin and Biden to name their favorite Vice President. Consequently, the careful reader has the opportunity to compare the Washington Post's representation of the interview with what Palin actually said.

I will start with the blog entry. Here's how the Washington Post 's blog, The Trail, summarized the interview:

When asked to name a favorite vice president, Sarah Palin initially cited failed Democratic vice presidential candidate Geraldine Ferraro.

"That's an easy one for me because she's -- she's the one who first shattered part of that glass ceiling anyway in American politics," the Alaska governor said of the first woman to sit on a major party vice presidential ticket. "So it would be she as a candidate."

The blog text (along with the dramatic title) leaves only one impression: that Palin mistakenly believes Ferraro actually served as Vice President. The tape of the interveiw, however, tells a completely different story:

Couric: What previous Vice President impresses you the most and why?

Palin: Oh my goodness. It would have to be...ah....just a candidate. And that would have been Geraldine Ferraro, of course. That's an easy one for me. She is the one who first shattered part of that glass ceiling...in American politics. So, it would be she as a candidate.

Palin ultimately picks George Bush, Sr. as her favorite Vice President, as the blog entry reports. But the blog omits the passage where Palin says "It would have to be ah...just a candidate." This, however, is crucial language, because without out it, Palin seemingly lacks knowledge of her own place in American history -- that she (not Ferraro) would be the first woman Vice President if McCain wins.

My guess is that Palin was simply stalling while she thought about how to answer the "feel good" question (favorite Vice President -- what does that tell us about a candidate?). It is also worth mentioning that during her first speech after she became McCain's running mate, Palin mentioned the historic candidacy of Geraldine Ferraro. In the Couric interview, she merely reiterates this statement. Palin is simply playing gender politics -- not botching history.

The Washington Post is a venerable institution, and I read it daily. I even stream its RSS feeds on this blog in recognition of the important role it plays in reporting political and policy news. So how could such an honored institution make such a horrible error twice (once in the title and again in the blog essay)? Is it harmless error? Do blogs get less editorial attention? Is there really a biased elite media? What do you think?

CNN and CBS Release Highly Misleading Polls Regarding VP Debate

According to most media accounts, last night's vice presidential debate was a thriller. Sarah Palin received much of the focus due to her lackluster performances in recent television interviews. But I stated in a blog post prior to the debate that pundits should not dismiss Palin, because many of her failings of late could result from her lacking the experience engaging the national media. Also, many Republicans said that Palin had been overly handled but that they were now "freeing Sarah." Well, she certainly seemed more comfortable, poised, and well versed last night, just like she did in some of her earlier outings. Biden pulled in a great performance as well -- given his tremendous experience.

Several polls have emerged since the debate which try to tell viewers "who won." All of these polls are hopelessly flawed.

CNN/Opinion Research

CNN declares on its website that "Debate Poll Says Biden Won, Palin Beat Expectations." The specifics of the poll show that 51% of those polled thought that Biden did better, while 36% gave the nod to Palin. But the poll does not disclose the party affiliation or candidate preferences of the individuals surveyed. Evaluating performance in a debate that lacked any real "knockout" punch will inevitably turn on partisan preferences. So, this poll is absolutely useless without information concerning the ideology and politics of the individuals evaluating the candidates.

This same problem plagued CNN's polling of the presidential debate. Then, the headlines declared Obama the winner, and the national media reprinted the results widely. But if you actually read the full article, rather than the headlines as many people do, the pollster actually conceded that the survey polled far more Democrats than Republicans and that if one adjusted for party affiliation, the result was a "tie." Remarkably, the latest CNN poll does not give us any information regarding the party affiliation or candidate preferences of those surveyed. It simply declares Biden the winner.

CBS News

CBS News also released a poll concluding that Biden won the debate. On the surface, this poll seems to avoid CNN's mistake of not telling the reader the candidate preferences of the individuals polled. Why? The poll purports to provide the opinions of "uncommitted" voters.

Well, like a good lawyer, I read the fine print, and I found that uncommitted includes voters who are truly undecided and voters who have already chosen a candidate, but who "could still change their minds." So, some of the individuals polled are already leaning towards a candidate. The poll fails to provide a breakdown of their choices.

Studies show that people tend not to change their minds this late in an election cycle. So many of these so-called uncommitted individuals are probably sold on a candidate and probably thought that candidate won the debate. Because CBS News does not reveal what portion of the uncommitted voters actually preferred a candidate or the party affiliation of those polled, it is difficult to isolate bias in this survey. Accordingly, the poll is worthless.

Drudge Report and FoxNews

I have seen several websites citing to polls on the Drudge Report and FoxNews.Com. Unlike CNN and CBS, however, these media outlets have not officially released the results of the polls. The Drudge Report poll shows that Palin won by a landslide, while the FoxNews.Com polls shows that Biden won.

This category is very easy to dissect, mainly because both polls are online surveys. First, the polls are just as bad as the CNN and CBS polls because they fail to provide information about the candidate preferences of those who participated. Also, web polls in general are highly biased and inaccurate. You have to own a computer to participate (which could exclude older or poor people). But more relevant in this instance, you have to read the particular web page that conducted the poll in order to vote. Also, it is commonly known that people often "flood" webpages that they usually do not visit in order to influence the results of online polls. Thus, these polls fail to provide random samples and are thefore easily dismissed.

So Who Really Won?

The debate was very interesting, and I think objective commentators, to the extent that such exist, would find that Palin exceeded expectations and connected better to voters in terms of her style, but that Biden was more seasoned and specific. Beyond that, the person you wanted to win probably won. So who needs the polls anyway?

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FactCheck.Org Confirms What Neither Party Will Admit: Bipartisan Blame for Wall Street Woes

When venerable Wall Street institutions like Lehman Brothers started imploding, liberal blogs and newspapers were quick to blame Republicans. Republicans on the other, said that Democrats caused the crisis. Turns out both are wrong. The nonpartisan website FactCheck.Org has concluded, as I did in a previous post on the financial crisis, that neither party can claim innocence with respect to the financial crisis (nor can the public, for that matter).

Democrats typically point vaguely to "deregulation" as causing the banking crisis. When pressed for specifics, they most commonly blame the Gramm-Leach-Bliley Act of 1999, which allowed traditional banks, insurance companies, and investment banks to consolidate. Republicans often accuse Democrats of resisting tighter regulation of Fannie Mae and Freddie Mac. Neither explanation really works.

Let's start with the Democrats narrative. FactCheck nails it by locating the cause of the crisis in the housing and securities markets. Very low interest rates, the risky mortgage, greed among homebuyers who overextended themselves in order to reap the benefits of soaring home appreciation, and the securitization of bad debt caused most of this mess. The Gramm-Leach-Bliley Act did not effectuate this, and even if it did, many Democrats supported the legislation (including Bill Clinton and Robert Rubin).

With respect to the Republican argument, tighter regulation of Fannie Mae and Freddie Mac might have prevented their troubles, but that certainly cannot explain the poor state of US and world markets. They are just one piece of a very large puzzle. Also some of the proposals that Republicans made on this issue came very late in the game, perhaps too late to prevent the crisis .

Because we are in an election year, public officials cannot resist the temptation to distort this important issue with partisanship rhetoric. But that does not change the fact that blame is everywhere.

Update: The RSS feed for FactCheck.Org now appears in the media section on the left side of the blog. FactCheck is truly a vital resource.

Like a Moose Caught in the Headlights? How Will Sarah Palin Do Tonight?

The stakes for tonight's Vice Presidential debate are higher than in the average election. Most opinion polls show that vice presidential candidates usually do not significantly influence the final decisions of voters. Conventional wisdom, however, has not always proven helpful this year.

Initially, John McCain's selection of the virtually unknown and underexperienced Palin brought excitement to his campaign. The conservative base of the Republican party rallied around the ticket, GOP fundraising spiked, and Barack Obama's continual lead in the polls evaporated. Republicans proclaimed that the "Mac was back."

Well, after a series of underwhelming media performances, the luster around Sara Palin is beginning to wear thin. Some conservatives have openly called for McCain to drop her from the ticket. Democrats and late night television have had lots of fun at her expense. McCain now trails in the polls, and voters are not convinced that Palin is qualified to serve as Vice President (and certainly not President -- if the need arose).

So, with all of these developments, tonight's debate is critical for McCain's candidacy. The Obama team has played the typical expectations game, incredulously calling Palin a "terrific debater." Palin has responded in kind saying that Biden is a "great debater." But the edge certainly would go to Biden, given his experience in politics and his comfort with and history of engaging the media.

But Biden should not tread lightly. Many commentators have argued that Biden should not debate Palin too forcefully, lest he appear sexist. But the opposite -- debating lightly -- is sexist. It lowers the bar for a woman. It demonstrates that we should not expect much from women in terms of politics and intellect. Biden should give Palin the grace and respect due any other candidate.

I had similar thoughts during the Democratic primaries when many people passionately (if not neurotically) attempted to shield Obama from even the slightest criticism and distorted the harshness of critiques he received. Many of the arguments that Clinton made during the primaries were typical fodder for elections -- not a violent throwing of the "kitchen sink" or kneecpapping" of a candidate, as many Obama supporters described them. This type of paternalism benefits no one. And it certainly is not antiracist or antisexist.

Based on her interviews with Katie Couric and Charles Gibson, Palin has a tough road ahead. In the best light, Palin's lackluster performances likely result, in part, from her relative newness to the national press -- one that is usually tough during campaigns (probably even tougher with Republicans this year). Her inexperience may make her come across as did James Stockdale, Ross Perot's running mate in 1992. Stockdale, like Perot, had absolutely no experience in politics, but he lacked the charm and charisma of his running mate. His performance during the debate that year was such a disaster that even Dan Quayle emerged looking sophisticated. At one moment, Stockdale told the moderator to repeat a question because he neglected to turn on his hearing aid. It was a mess.

Experienced politicians -- experienced speakers generally -- know how to appear polished; they know how to evade answers, but still give something coherent to listeners; they know how to come across smart or just competent, even when they are completely unprepared. Palin does not have the level of experience on the national stage -- or in politics -- to give her advantages in this area. Coupled with her lack of knowledge of many national and international issues, her performance could destroy McCain's campaign.

Despite her lack of experience and credible political background, one should not count out Palin. I have watched footage of her in prior media interviews (before her vice presidential campaign), and she came across as very poised and knowledgeable. Granted, many of the topics related to Alaska-specific concerns such as state energy policy, in which she is well versed. Nevertheless, she was not stuttering and lost for words. She had a script, but she could deviate from it and offer deeper answers. She seemed sufficiently polished. Also, Palin excellently delivered her speech (admittedly scripted) at the Republican National Convention. If she is "on" tonight, she could help revitalize McCain's sagging campaign and reassure voters. Because the economy has probably done more damage to McCain's campaign than anything else, the current lead by Obama could easily dissipate if Palin can renew excitement in McCain's candidacy.

Many Republican operatives have blamed Palin's poor performances of late on her "handlers." They say that McCain's team has tried too hard to script her and to keep her narrowly tied to the talking points. They say that it is not her nature to speak in that fashion and that, as a result, she comes across as someone who is simply regurgitating materials and who is unable to offer any extemporaneous insights. According to some reports, McCain has assembled a new team for tonight's debate, and the word among "insiders" (unnamed, of course) is that a new Palin will emerge tonight. Although one has to consider the source of these proclamations, Palin's recent interviews do not come close to matching her performance in media appearances during her time in Alaska politics. But despite its proximity to Russia, Alaska politics does not involve foreign policy, and it has not exposed her to some of the important national issues (like the deficit) that a president encounters (due to its energy deposits, Alaska typically has a budget surplus). Nonetheless, I would not rush to conclude that this debate is a slam-dunk for Biden (who has his own issue with "gaffes"). Whatever the outcome, this one should prove very interesting, given the high stakes and uncertainty.

Was GOP's Opposition to Bailout a Clever Ploy? Concessions for House Republicans Could Increase Budget Deficit, Make Plan More Expensive

The decision by the House GOP to reject the bailout plan that Bush, Paulson, and McCain endorsed was truly dramatic. Although many experts viewed the bailout as a necessary tool for stabilizing the economy, many House Republicans opposed it on the grounds that it would reward reckless corporate behavior and because the $700 billion price tag would unduly burden struggling taxpayers. In other words, GOP opposition appealed to fiscal responsibility, corporate ethics, and to populism.

But did this lofty rhetoric conceal a different, less-popular motivation for rejecting the proposed legislation? Perhaps. The Senate is presently working on a compromise bill that offers concessions to the House GOP. But from my review of the negotiations, these concessions would actually make the bailout even more expensive and would augment the federal budget deficit.

The Washington Post, for example, reports that in order to appease House Republicans, Senate negotiators will likely add provisions to the bailout that would increase FDIC caps for one year, revive currently expired corporate tax breaks, and raise the minimum income level that exposes individuals to the alternative minimum income tax. Although the FDIC provision would potentially protect consumers, it also expands governmental liability in the event of bank and credit union failures. Also, the proposed concessions would reduce tax revenue by extending the availability of corporate tax breaks and reducing the number of high-wage earners subject to the alternative minimum income tax.

The proposed revisions do not include any measures that would offset revenue reductions by curbing government spending. Consequently, these concessions would make the proposed legislation more costly to taxpayers and would increase the budget deficit. If the House GOP rejected the initial bailout plan to secure tax cuts for corporations and high-income earners, then they need to come clean with the public.

Let me be clear: I am not opposed to the idea of a bailout, increasing FDIC, or to tax relief -- including corporate tax cuts and a revision of the alternative minimum income tax to reflect the inflationary erosion of real income. I cannot imagine a private sector solution to the financial crisis that would not cause protracted suffering for poor and middle-class Americans. Also, given the impending (or ongoing) recession, reducing taxes is arguably sound policy, and in the past Congress has unjustifiably refused to tie the alternative minimum income tax to inflation. And if you're a supply-sider, tax cuts could ultimately enhance revenue (an idea that many economists strongly contest).

But putting aside the merits of the proposed revisions, the House GOP presented itself as a fiscal watchdog for "the people" and as an opponent to handouts for irresponsible corporations. Now, GOP members apparently want to give these same companies tax breaks, make the bailout even more costly to "the people," and reduce tax revenue without cutting spending. Why didn't they say that in the first place?

Ironically, conservative, or "Blue Dog," House Democrats are threatening to reject the revised bill if it includes tax reductions without any corresponding spending cuts. So the Senate Democrats' efforts to win over House Republicans might ultimately cost them House-Democratic support. The soap opera continues!