ECONOMY
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

Under the Radar

IMMIGRATION-- BUSH ADMINISTRATION FORCING HPV VACCCINE ON IMMIGRANTS: In July, U.S. Citizenship and Immigration Services quietly amended its list of required vaccinations for immigrants applying to become citizens. One of the newest requirements was Gardasil, which vaccinates against the human papillomavirus (HPV), the most common sexually transmitted viral infection in the United States. The problem with this regulation is that the HPV vaccine is not mandatory for U.S. citizens. Therefore, U.S. citizens are allowed to weigh the costs and risks associated with Gardasil, but immigrants are forced to pay-out-of-pocket for a vaccine they might not want to take. Without health insurance, the three-shot vaccine can cost $162 per dose, making it the most expensive vaccine on the market. "Given Gardasil’s high cost, and the fact that there does not seem to be a public health justification for this particular mandate, I’m concerned that its real purpose is to create a financial barrier for immigrant women who seek to lawfully enter this country," said Jessica Arons of the Center for American Progress. 
 
CLIMATE -- REGIONAL CAP-AND-TRADE INITIATIVE SET TO BEGIN IN NORTHEAST: Starting on Sept. 25, 10Northeastern states from Maryland to Maine will "undertake the nation's most serious effort yet to tackle climate change, putting limits on carbon dioxide (CO) emissions from utilities and making them pay for each ton of pollutants." The Regional Greenhouse Gas Initiative, or RGGI, will cap emissions for 233 plants by "putting a price on the carbon dioxide they emit" to give "plants a financial incentive to clean themselves up, with the proceeds channeled to energy-saving and renewable energy programs in each state." However, the emissions cap was "based on overestimates of carbon dioxide output." leading to worries that the program may fail to reduce CO2 output substantially. Nevertheless, the program plans to hold "carbon emissions to 188 million tons annually through 2014, and scale them back by 2.5 percent each year through 2018." The cap takes effect Jan. 1, 2009, in New York, New Jersey, Delaware, Maryland, and all six New England states -- Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont.

KATRINA -- CHENEY TURNED DOWN PRESIDENT'S REQUEST TO OVERSEE KATRINA RECOVERY: Just after Hurricane Katrina struck the Gulf Coast in 2005, Vice President Dick Cheney refused President Bush's request to head up a "cabinet-level task force" aimed at speeding the recovery effort, writes the Washington Post's Barton Gellman in a still-embargoed section of his new book, Angler: The Cheney Vice Presidency. When asked by Bush if he would "at least go do a fact-finding trip for us," Cheney responded saying, "That'll probably be the extent of it." Gellman writes that former White House counselor Dan Bartlett "came to see Cheney's demurral 'quite frankly as pretty good judgment.' Cheney 'doesn't do touchy-feely,' Bartlett said." Cheney's refusal to lend the weight of his office to the Katrina recovery effort is not surprising, as he has a record of underestimating the seriousness of Katrina's devastation. As the storm hit, Cheney was reluctant to cut his vacation short to return to work. Within weeks of the hurricane, Cheney commented dismissively, "I think we are in fact on our way to getting on top of the whole Katrina exercise." During his fact-finding trip to the affected region, Cheney was famously insulted on live television. Since then, Cheney has reportedly "tried to kill proposals to increase...aid for Hurricane Katrina victims."

Think Fast

The Dow Jones industrial average "dropped 504.48 points, or 4.4 percent, as a record volume of more than 8 billion shares traded hands on the New York Stock Exchange. It was the biggest decline since Sept. 17, 2001 -- the day the index reopened after the 9/11 terrorist attacks -- when it fell 7 percent, or 684.81 points."

The Senate will likely vote Tuesday on an amendment offered by Sen. Joe Lieberman (I-CT) "that includes language touting the success of the troop buildup that began last year." Sens. Carl Levin (D-MI) and Jack Reed (D-RI) have offered an alternative "that would offer a more nuanced assessment of the security situation in Iraq."

Former House Majority Leader Richard Armey (R-TX), "who was wavering on giving President Bush the authority to wage war in late 2002, said Vice President Cheney misled him by saying that Iraqi President Saddam Hussein had direct personal ties to al-Qaeda terrorists and was making rapid progress toward a suitcase nuclear weapon." There was "no intelligence to support" Cheney's assertions.

Five former secretaries of state -- including Colin Powell, Madeleine Albright, and Henry Kissinger -- urged talks with Iran yesterday. "I agree with Madeleine, and I suspect my other colleagues, that we should try to talk to them," Powell said during a forum hosted by The George Washington University.

The House is expected to vote today "on a comprehensive energy package that would open most of the U.S. coastline to offshore drilling." A proposal offered by Democrats "would give states the option to allow drilling between 50 and 100 miles off their shores."

AIG -- the nation's largest insurer -- "faces a cash crunch that grew more severe last night when the major credit-rating agencies warned investors that the company could have greater difficulty in meeting its obligations." New York state is allowing AIG to use “$20 billion from its own insurance subsidiaries" as collateral for loans to "run its day-to-day operations," while the Fed says it will not offer AIG any "direct injection from the government."

The bankruptcy of Lehman Brothers -- "the biggest in US history" -- will have repercussions for South Florida. The investment bank controlled "nearly $2 billion in large loans throughout the region." In late August, former Florida Gov. Jeb Bush (R) was reportedly hired "as an advisor to its private equity business."

On Monday, a federal judge ruled that "the Bush administration's plan to allow more than 500 snowmobiles a day into Yellowstone and Grand Teton National Parks not in keeping with the National Park Service’s responsibility to protect the parks."

And finally: Are Americans too addicted to their BlackBerrys? A new poll of 6,500 traveling executives finds that "35 percent of them would choose their PDA over their spouse." One person interviewed responded, "That’s a tough call."Approximately 84 percent said they check their e-mails right before they go to sleep, and another 80 percent said they check them as soon as they wake up.

Good News

"Violent crime in the United States fell slightly last year, reversing the upward swing of the previous two years, according to statistics released by the FBI yesterday."

State Watch

NEW JERSEY: "Fallout from the Wall Street crisis that's left two prominent financial institutions with bleak futures will extend beyond Manhattan and into New Jersey, said Gov. Jon S. Corzine."

CALIFORNIA: "As the state Senate approved a bipartisan budget package and the Assembly prepared to vote on it," Gov. Arnold Schwarzenegger (R) was threatening a veto. 

PENNSYLVANIA: "A state grand jury is investigating whether state House Republicans used an expensive, tax-funded computer system for political purposes."

Blog Watch

THINK PROGRESS: Cheney aide David Addington signed Alberto Gonzales's name to re-authorize warrantless wiretapping program.

WONK ROOM: "Clean Skies" front group pushes natural gas subsidies.

YGLESIAS: The Secretary of Transportation doesn't consider bicycling to be transportation.

CLIMATE PROGRESS: Charles Krauthammer foolishly inspires conservatives to become "global warming agnostics."

Daily Grill

"Americans are not addicted to oil. Americans are addicted to freedom."
-- Former senator George Allen, 9/15/08

VERSUS

"America is addicted to oil."
-- President Bush, 1/31/08