McCain, Obama Raise Doubts About Bailout Plan

Sen. Barack Obama (D-Ill.) and Sen. John McCain (R-Ariz.) raised doubts about the Bush administration's $700 billion bailout of Wall Street and demanded conditions that could snag its quick passage through the highly partisan Congress.

Sen. McCain, who only a week ago said the economy was fundamentally sound, now says the U.S. financial system faces a major crisis. Speaking on NBC, the moderate-conservative Republican said, "We are in the most serious crisis since World War II." He also said that despite the ballooning national debt, he would not raise taxes if elected president.

The candidates traded charges yesterdays, each declaring the other unprepared to handle the U.S. financial meltdown that looms over the next American president. They likewise said there were too few assurances of oversight and guarantees that Treasury Secretary Henry Paulson's unprecedented bailout would assist beleaguered citizens.

Sen. McCain cautioned against granting unchecked authority to Secretary Paulson, saying he is "greatly concerned that the plan gives a single individual the unprecedented power to spend $1 trillion on the basis of not much more than 'Trust me.'" Sen. McCain urged the creation of a bipartisan oversight board to review the government bailout rather than entrusting Secretary Paulson with complete power to craft it. He said the board should be headed by a trusted financial steward like billionaire financier Warren Buffett, and said former Massachusetts Gov. Mitt Romney and New York City Mayor Michael Bloomberg should be involved as well.

Sen. Obama ticked off seven conditions that he believed should be imposed on the Paulson proposal, joining some fellow congressional Democrats in raising warning flags and signaling the bailout mechanism might not make it out of the legislature by week's end as demanded by the Bush administration. Sen. Obama said any bailout must include plans to recover the money, and protect working families and big financial institutions and be crafted to prevent such a crisis from happening again. "This plan can't just be a plan for Wall Street, it has to be a plan for Main Street. We have to come together, as Democrats and Republicans, to pass a stimulus plan that will put money in the pockets of working families, save jobs, and prevent painful budget cuts and tax hikes in our states," the liberal Democrat said during a campaign stop in North Carolina.

My response: Has everyone forgotten about the early 1980s, which was economically dismal with 8%+ (almost 20% for black folks) unemployment and double-digit inflation? The late 1970s, with its stagflation? While certainly not optimal, this is not the worst economic time that we've seen since the Great Depression. The statistics so far don't back up that claim. Folks are having selective memories, probably for partisan reasons. I'll repeat my argument from last week again: no bailout, which is corporate welfare and rewards mediocrity. Let the ship sink, which provides strong incentives to prevent similar actions in the future.