Election '08 -- Highlights From 'That One'

October 8, 2008

by Faiz Shakir, Amanda Terkel, Satyam Khanna, Matt Corley, Benjamin Armbruster, Ali Frick, and Ryan Powers

ELECTION '08

Highlights From 'That One'

Last night, Sens. John McCain (R-AZ) and Barack Obama (D-IL) participated in a town-hall style debate at Belmont University in Nashville, TN. The debate came after a week in which the financial crisis seemed to be worsening and on a day when the Dow lost over 500 points, despite the recent passage of the $700 billion Wall Street bailout package. Given the economic turmoil, the two candidates focused primarily on domestic issues including the economy, safety net programs, and health care. McCain used the debate to seemingly abandon his previous opposition to mortgage relief for struggling homeowners and to play up false fears of crisis-level budget problems in federal entitlement programs. The AP notes that McCain's American Homeownership Resurgence Plan bears a striking resemblance to a plan proposed by the Center for American Progress, which has "been pushing a similar idea for some time." Unfortunately, McCain has spent the better part of the last few weeks working with his conservative allies to kill any effort to pass such a proposal.

A MODEST PROPOSAL: McCain's campaign said in a statement that the plan is designed "keep families in their homes" and "stabilize the housing market" by purchasing mortgages "directly from homeowners and mortgage servicers" and replacing them with "manageable, fixed-rate mortgages." It is still unclear exactly which homeowners would benefit from his plan, how he would pay for it, or why he had previously rejected similar mortgage relief efforts. But as the AP notes today, the few details of the plan McCain does provide suggest that he is now embracing an approach to alleviating the financial crisis put forward by CAP in December 2007. At the time, Andrew Jakabovics, the Associate Director of CAP's Economic Mobility Program, explained that while a variety of mortgage relief programs already exist at the federal level, there are a significant number of families with "decent credit" who don't qualify for mortgage relief because their mortgages are "under water" --in other words, the housing market decline has left them owing more on their mortgages than their homes are worth. Jakabovics proposed reviving the New Deal-era Home Owners Loan Corporation in the form of a new institution, the Federal Foreclosure Rescue Corporation (FFRC). As CAP envisioned it, the FFRC would be empowered to buy "up the old adjustable-rate mortgages from lenders and investors and replacing them with new, tax-friendly government-rated bonds equal to the current value of these homes," while issuing "new fixed-rate mortgages to those borrowers facing default."

FALSE THREATS: As a segue into the social safety net portion of the debate, moderator Tom Brokaw claimed that "in a bipartisan way, everyone agrees" that entitlement programs are "a big ticking time bomb that will eat us up maybe even more than the mortgage crisis." McCain echoed Brokaw's sentiment saying with regard to Social Security, "We know what the problems are, my friends, and we know what the fixes are," but declined to name either the "problems" suggest any "fixes." Despite Brokaw's alarmism and McCain's empty rhetoric, there is no Social Security crisis. As economist Paul Krugman lamented recently, "No matter how many times you try to kill the mythical Social Security crisis, it just keeps coming back." With regard to Medicare, McCain said, "[W]e are not going to be able to provide the same benefit for future retirees that we have today." He called for a "commission...come up with recommendations" on how to address those declining benefits. Earlier this week, McCain's economic adviser Douglas Holtz-Eakin admitted that the reason why McCain believes the United States will be "unable to provide" the same level of Medicare benefits in the future is because he needs to slash $1.3 trillion from Medicare and Medicaid to pay for his radical health care plan.

FORTHRIGHTNESS IN FOREIGN POLICY: In the foreign policy portion of the debate, McCain distinguished himself by making several puzzling misstatements and false claims. He began by arguing that if U.S. forces had withdrawn from Iraq, Iranian influence would have increased and al Qaeda would have ballooned. In reality, both of these things happened because we invaded Iraq. McCain argued that the U.S. needs to execute the "same" surge strategy in Afghanistan as we've had in Iraq, but Gen. David D. McKiernan, the new top U.S. commander in Afghanistan, "stated emphatically that no Iraq-style 'surge' of forces will end the conflict there." McCain incorrectly referred to Gen. David Petreaus, the commander of Central Command, as the "chairman of the joint chiefs of staff." McCain also chastised Obama for "announcing" that he would strike Osama bin Laden in Pakistan without Pakistan's permission, if need be. Just recently, however, McCain defended his running mate, Gov. Sarah Palin (R-AK), when she said essentially the same thing.

IRAQ -- SEN. KENNEDY REQUESTS RAND CORPORATION STUDY ON WITHDRAWING TROOPS FROM IRAQ: The Hill reports today that "a little-noticed earmark tucked into the 2009 defense-spending bill by Sen. Edward Kennedy (D-MA) would fund a $2.4 million independent study on withdrawing troops from Iraq." The RAND Corporation has been assigned to conduct the study, "which is expected to be completed within four months to coincide with the inauguration of a new president." Though the provision does not describe exactly what the study would entail, both Kennedy and Senate Appropriations Committee Chairman Robert Byrd (D-WV) "suggest the study would determine the impact of withdrawing troops from Iraq." "Sen. Kennedy believes that the best way to protect our troops and our national security is to set a realistic timetable that encourages Iraqis to take responsibility for their own future," Kennedy spokesman Anthony Coley told The Hill. "This analysis will provide an objective and independent perspective on how best to do that." "This new RAND study will publicly and independently help chart the responsible course ahead," said Byrd in a floor speech on Sept. 27. Though "the outcome of the study would not be binding," it could give ammunition to withdrawal proponents while putting "pressure on the Pentagon to accelerate its plans on withdrawing troops." Read the Center for American Progress's report on how to redeploy from Iraq here.

CIVIL LIBERTIES -- DOCUMENTS SHOW MILITARY WARNED PENTAGON ABOUT AMERICAN DETAINEES' SANITY: Documents obtained through a Freedom of Information Act request by the Yale Law School show that the military "warned Pentagon officials that an American detainee was being driven nearly insane by months of punishing isolation and sensory deprivation" while held in a military brig off the coast of South Carolina. The administration ordered the military to treat Yaser Hamdi, an American, the same way Guantanamo bay prisoners were treated -- outside the reach of the U.S. Constitution. "These documents are the first clear confirmation of what we've suspected all along, that the brig was run as a prison beyond the law. There was an effort to create a Gitmo inside the United States," Jonathan Hafetz of the ACLU's National Security Project in New York said. The documents show military officers growing increasingly uncomfortable with the treatment of the Hamdi. "I fear the rubber band is nearing its breaking point here and not totally confident I can keep his head in the game much longer," one officer wrote in 2003. Another requested an "an incentive program" to reward Hamdi's good behavior. The Bush administration had ordered these Americans held "indefinitely without charges, without bail and without access to lawyers." Defense lawyers for Guantanamo detainees have described the difficulty of defending someone driven "insane" by his captivity.

ETHICS -- AIG EXECUTIVES WENT ON LUXURIOUS RETREAT ONE WEEK AFTER RECEIVING $85 BILLION BAILOUT: Yesterday, the House Oversight Committee revealed that just one week after the federal government bailed out insurance giant AIG, company executives went on a retreat to a luxury resort. The executives spent nearly $500,000 on manicures, facials, pedicures, and massages, among other things. During a hearing today, Rep. Elijah Cummings (D-MD) asked, “Have you heard of anything more outrageous?" "AIG spent $200,000 dollars for hotel rooms. Almost $150,000 for catered banquets. AIG spent $23,000 at the hotel spa and another $1,400 at the salon. They were getting manicures, facials, pedicures and massages while American people were footing the bill. And they spent another $10,000 dollars for I don't know what this is, leisure dining. Bars?" Cummings said. Earlier this week, Lehman Brothers CEO Richard Fuld admitted to Congress that he has taken home over $300 million since 2000, "some $60 million in cash compensation." Furthermore, "executives who feared for their bonuses in the company’s last months were told not to worry," even as Lehman plead for a federal bailout. Oversight Committee Chairman Henry Waxman (D-CA) revealed that "“the board give three departing executives over $20 million in ‘special payments.'"

The Congressional Budget Office's top budget analyst said that the prolonged downturn in the stock market "has wiped out about $2 trillion in Americans’ retirement savings in the past 15 months, a blow that could force workers to stay on the job longer than planned, rein in spending and possibly further stall an economy reliant on consumer dollars."

"The federal budget deficit hit a new record in the just-completed 2008 budget year under the latest estimates from the CBO. The record $438 billion shortfall for the budget year that ended last week is up from $162 billion posted last year. The previous record of $413 billion was posted in 2004." Next year's deficit was recently projected to be as high as $600 billion.

Nearly one in six American homeowners owe "more on a mortgage than the home is worth, raising the possibility of a rise in defaults -- the very misfortune that touched off the credit crisis last year." So many homeowners "under water" is "likely to mean more eventual foreclosures" and increased pressure on an economy already in a downturn.

Gen. David Petraeus, the soon-to-be commander of U.S. Central Command speaks at the conservative Heritage Foundation today at 11 a.m. ET. You can watch live online here.

A U.S. military investigation has concluded that American airstrikes on Aug. 22 in an Afghan village killed 30 civilians -- far more than the five to seven casualties that American commanders there has previously acknowledged. The Afghan government has insisted that 90 civilians died in that attack.

The Treasury Department is moving quickly this week to "start outsourcing the management of up to $700 billion in troubled securities, using special contracting authorities that enable it to retain private portfolio managers, custodians and other financial services consultants without following standard acquisition procedures."

Deputy Secretary of State John D. Negroponte said Tuesday that "American and Iraqi negotiators were close to resolving issues” that have kept to two sides from an agreement “governing the continued presence of American troops in the country."

And finally: Let's learn judo with Vladimir Putin. After being pictured fishing shirtless and "shooting a tiger in the Siberian forest," the Russian Prime Minister has now released a 90-minute DVD instructing young people in the Japanese martial art of judo. In the video, Putin, a black belt champion, talks "about the history and philosophy of judo" and demonstrates "moves against a practice partner."

"Congress will give the American Red Cross $100 million in emergency funding to replenish its disaster relief reserves, which were depleted as the charity plunged into debt to provide shelter, food and other services during a string of hurricanes this summer."

THINK PROGRESS: U.S. debt grows too big for National Debt Clock.

WONK ROOM: There's no good way to sell an occupation.

YGLESIAS: Debate moderators and the Herbert Hooverism that seems to have taken over American journalism.

GRISTMILL: Analysis of the House Energy and Commerce Committee's draft of potential climate legislation.

OHIO: Roughly 94 percent of all eligible voters in Ohio are registered

TEXAS: New computer program to enroll low-income residents in state aid programs is in the works.

WEST VIRGINIA: Gov. Joe Manchin's (D) office "is working to start a secure social networking forum for West Virginia youth on the state's Web site."

Q Do you think the U.S. economy is in a recession?
PERINO: You know I don't think that we know."
-- White House Press Secretary Dana Perino, 10/7/08

VERSUS

"Two-thirds say the U.S economy is in recession or will be by the end of the year — up from a little over half of those surveyed in May."
-- MSNBC, 10/6/08, on a National Association of Business Economists poll

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Highlights From 'That One'

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