|September 16, 2008|| |
by Faiz Shakir, Amanda Terkel, Satyam Khanna, Matt Corley, Benjamin Armbruster, Ali Frick, Ryan Powers, and Pat Garofalo
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The McCain Economic Council
This weekend, the U.S. financial system faced what the Washington Post called its "gravest crisis in modern times." The securities firm Lehman Brothers filed for bankruptcy, "becoming the largest financial firm to fail in the global credit crisis." At the same time, "the credit crisis claimed another of America’s oldest financial companies," as Merrill Lynch sold itself to Bank of America for $50 billion. The insurance giant AIG, meanwhile, "made an unprecedented approach to the Federal Reserve seeking short-term financing," and had its credit rating downgraded, leading to "urgent talks to put together a $75 billion line of credit." On the same day that news of this financial turmoil broke, Sen. John McCain (R-AZ) argued that "the fundamentals of the economy are strong." Looking at the members of McCain's "economic council those who advise the campaign on economic issues -- it becomes clear why he is so divorced from the bad economy. Some of his economic advisers helped create the housing crisis, some abused corporate loopholes to hide billions in corporate profits, and some simply refuse to admit that there is anything seriously wrong with the economy. A look at some of McCain's economic gurus:
THE 'ECON BRAIN,' PHIL GRAMM: Former senator Phil Gramm is known as McCain's "Econ Brain." Recently, he has called America "a nation of whiners" who are in a "mental recession." While in the Senate, he was behind the Commodity Futures Modernization Act and the Gramm-Leach-Bliley Act. The former made legal "the mortgage swaps distancing the originator of the loan from the ultimate collector," while the latter "destroyed the Depression-era barrier to the merger of stockbrokers, banks and insurance companies." As The Nation wrote, "those two acts effectively ended significant regulation of the financial community." After leaving Congress, Gramm worked for the Swiss bank UBS. Politico reported that while at UBS, "Gramm lobbied Congress, the Federal Reserve and the Treasury Department about banking and mortgage issues in 2005 and 2006. During those years, the mortgage industry pressed Congress to roll back strong state rules that sought to stem the rise of predatory tactics used by lenders and brokers to place homeowners in high-cost mortgages." McCain has also voted against discouraging predatory lending practices.
THE OUTSOURCER, CARLY FIORINA: As CEO of Hewlett-Packard (HP), Fiorina exploited a corporate loophole to hold more than $14 billion in profits overseas, a loophole that McCain is against closing. She was forced out of HP after a merger with Compaq failed to bring Hewlett the profits that Ms. Fiorina had forecast," resulting in tumbling shares. She is also a defender of outsourcing, which she calls "right-shoring," and has said that "there is no job that is America's God-given right anymore." "It's hard on people, but I don't understand how you pick and choose among the jobs you want to save and protect against and not expect people to do the same to you," she said. While McCain has recently condemned "golden parachutes" -- excessive compensation for exiting CEOs – by saying, "CEOs that led us into this mess are walking away with over $20 million, and we're not going to let that happen as president…They deserve nothing," Fiorina walked away from HP with a $21 million severance package, which, with another $21 million in options, brought her $42 million. In a 2007 interview with Fortune, Fiorina said that “what we ought not to do is regulate or legislate CEO compensation."
THE CHIEF LOBBYIST, RICK DAVIS: After the bailout of Fannie Mae and Freddie Mac, McCain and his running mate, Gov. Sarah Palin (R-AK), published an op-ed in the Wall Street Journal that called lobbyists "primary contributors" to the crisis. One of these lobbyists though, is McCain's own campaign manager, Rick Davis, who " served as president of an advocacy group led by Fannie Mae and Freddie Mac that defended the two companies against increased regulation." Davis challenged even the smallest reform measures intended to make sure that Fannie Mae and Freddie Mac were being held more accountable for their actions. This helped the mortgage giants, "consistently [beat] back congressional efforts to increase oversight, even after a major accounting scandal in 2003 resulted in a $400 million fine for Fannie.
THE IDEOLOGUE, DONALD LUSKIN: Like McCain, Luskin believes that "things today just aren't that bad," and everyone should "quit doling out that bad-economy line." In a Washington Post op-ed last Sunday, he wrote that "we have surely become a nation of exaggerators" regarding the economy, despite agreeing that "the foreclosure rate is the worst since the Great Depression." Luskin claimed that "unemployment is up a bit," when it is at a five-year high of 6.1 percent. He also asserted that the housing crisis is "over." As evidence of the economy's strength, he pointed to last quarter's GDP growth of 3.3 percent, yet "somehow fail[ed] to mention that the quarter before, it was 0.9%, and the quarter before that, -0.2%." Luskin also failed to note that one of the primary reasons for the growth was the "$90 billion in economic stimulus payments that reached taxpayers during the quarter."