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Sunday, March 22, 2009

The Bush-Obama Plan

During the election, the Obama campaign made a strenuous effort to connect John McCain and President George W. Bush in the minds of voters. This was smart politics - Bush was, and remains, tremendously unpopular.

I wouldn't be surprised if a large number of voters in the last election voted for Barack Obama because they believed that McCain represented a continuation of Bush policies and Obama represented a break with those policies.

Well, if these same people examine the Obama plan to handle the so-called toxic assets on bank balance sheets, they have to be asking themselves whether they didn't accidentally confuse exactly which candidate it was that represented a continuation of Bush policies.

When it comes to adressing the banking cirisis the Obama approach is identical to the Bush approach. Here is the New York times from March 20th on the plan:

The plan to be announced next week involves three separate approaches. In one, the Federal Deposit Insurance Corporation will set up special-purpose investment partnerships and lend about 85 percent of the money that those partnerships will need to buy up troubled assets that banks want to sell.

In the second, the Treasury will hire four or five investment management firms, matching the private money that each of the firms puts up on a dollar-for-dollar basis with government money.

In the third piece, the Treasury plans to expand lending through the Term Asset-Backed Securities Loan Facility, a joint venture with the Federal Reserve.

The goal of the plan is to leverage the dwindling resources of the Treasury Department’s bailout program with money from private investors to buy up as many of those toxic assets as possible and free the banks to resume more normal lending.

But the details have been treacherously difficult, politically and financially, and some of the big decisions are the same as those that bedeviled the Treasury Department under President George W. Bush last year.
Sound familiar? This was the approach taken last fall by then-Secretary Paulson. I guess since Geithner was closely involved in the plan from his position at the New York Fed, no one should really be surprised at the nearly seamless transition. Someone might want to let Obama know that the plan was too difficult for Bush and Paulson to implement and nothing came of it other than the catatonic nature of the economy over the last six months.

I have yet to see anything from Obama and Geithner that would lead me to believe that they would be any better at making this plan work.

It is quite possible that Obama defense policies, carried out by Bush-appointed Robert Gates, differ more from the previous administration than does the Obama response to the financial crisis, which is crafted and implemented entirely by Obama appointees.

Liberal advocay group Move On has a website called the Bush-McCain challenge which was intended to demonstrate and reinforce the similarities of those two men, in order to prevent McCain from being elected.

If they haven't already, some smart Republican activist should start their own version of this game, the BushBama Banking Bailout.

1 comment:

Steve said...

Yes, the Bushbama plan for bailout start from the same premise: the U.S. economy must have certain institutions continue if the economy is to recover. The question still remains whether it will work. Does anyone else have a better plan? Unless one adheres to the platitude heard in rural America (at least I know here in Arizona)"they should just let them all fail, I haven't heard of a better plan.