Have I Entered a Parallel Universe?

Last night as I was falling asleep I caught a few minutes of the film "Bowfinger," particularly the scene where the Hollywood star played by Eddie Murphy becomes convinced that aliens are determined to swoop down and steal his reproductive organs for scientific study.

Turns out it was a fitting way to end the day. For what I witnessed today had me truly wondering whether I had entered a strange alternative universe, one that looked and felt very much like ours except for the fact that every living soul had irretrievably lost his marbles (but, thankfully, not his privates).

First, I finally got around to viewing a bit of Sarah Palin's interview with Katie Couric, particularly the passage lampooned on Saturday Night Live this past weekend by Tina Fey. I am simply flabbergasted. The video speaks volumes. Watch it here.

This woman simply is not qualified to serve as vice president. I have no other words to describe my utter incredulousness in the face of her candidacy.

Of course, we have the freedom to not vote for Palin. What our elected leaders in the House of Representatives did today by voting down the $700 billion bailout package that the Bush administration and congressional leaders hammered out over the weekend is an example of ineptitude and malice on the grandest of scales — and, unfortunately, there is little we can do about it in the near term.

With giant, blue-chip financial institutions falling like dominoes on a daily basis, countless others on the brink of failure, credit markets seized up and securities markets plummeting worldwide, a majority of House members stared into the abyss this afternoon and said "Bring it On!" The stock market responded with its worst day in two decades. We are in uncharted financial territory here. People are worried that the money in their savings accounts will disappear. The price of oil plummeted on widespread fears of a deep global recession.

Legislators, after scuttling the bailout for craven political reasons last week, had a second chance to behave like adults who cared more about their country and their fellow human beings than about their re-election prospects, and they blew it. Republican or Democrat, it does not matter. Our leaders have failed us and have thrown the United States and the rest of the world within a hair's breadth of a serious economic depression. Citizens should punish every last legislator who abandoned his country today by voting them out of office at our very next opportunity.

Barney Frank's CEO Pay Fantasy

I think Barney Frank is a good man with fine intentions. But he is dead wrong to have insisted upon attaching limits on financial executives' pay to the $700 billion plan reached yesterday to bail out the country's troubled financial institutions. Frank, chairman of the House Financial Services Committee, is wrong not only about the wisdom of the government regulating what private companies pay their CEOs, but also about Congress' history of meddling with private-sector paychecks. 

"This is the first time in the history of the United States that anything has been done by the Congress to curtail excessive CEO compensation," Frank said about the plan yesterday. 

Wrong. 

Set aside for a moment the quite thorny issue of how to define "excessive" — as well as the general consensus among our elected leaders that the bailout is an unfortunate, if necessary, incursion by government into the free market — and consider the following: 

In 1993 Congress enacted legislation that drastically altered the tax law surrounding executive compensation, rescinding the tax-deductibility of any cash compensation over $1 million. Supporters of the measure thought it would force companies to curb runaway executive compensation. Instead, it prompted smart people in private sector, chiefly in Silicon Valley and on Wall Street, to begin granting executives gobs of stock options, which were not subject to the new tax. 

So, rather than keeping executive pay down, this measure contributed to the orgy of options grants in the late 1990s and early 2000s that fueled the dot-com bubble and a wave of accounting frauds involving companies such as Enron, WorldCom, Tyco International and Adelphia Communications. In many of these cases CEOs and other top-level executives had so much financial gain riding on their stock prices that they succumbed to accounting chicanery that would artificially inflate those stock prices. The collapses of these corporations and the collateral damage to financial markets cost investors — including mutual fund shareholders and beneficiaries of union pension plans, 401(k)s and IRAs, the very Joe Sixpacks that Frank and other Democratic members of Congress are pandering to with this addition to the Paulson bailout plan — tens of billions of dollars.  

Frank is right to complain about the prolonged failure of government to sufficiently regulate the financial-services sector, a failure that contributed greatly to the crisis from which we are now struggling to emerge. He and his peers should push for more sensible oversight as part of a broad restructuring of our financial-regulatory infrastructure, once the dust settles from this bailout. I believe firmly that a limited dose of thoughtful, balanced government regulation of the private market is absolutely necessary to prevent capitalism, the best organizing principle mankind has yet devised, from eating itself. But attaching unrelated, willy-nilly limits on the free market such as this harebrained executive-comp measure — and then claiming such nonsense as an unprecedented victory for the Little Guy against The Man — is disingenuous at best and, indeed, as the history of legislative unintended consequences illustrates, potentially harmful to our country.  

Irresponsible. Reckless. Dangerous. McCain.

I know this is supposed to be a non-partisan, fair-minded blog. I'm really, really, really trying to keep it that way. But I'm getting angry. Very angry. 

As I write this stock markets around the world are plummeting in response to Washington's failure to agree on a rescue package for the badly battered global financial system. 

My reading of the events of the past few days leads me to the conclusion that McCain is primarily to blame for this outcome. 

The market crisis deepens with every hour: today the federal government seized Washington Mutual, which has so many bad mortgages on its books it can no longer fund itself. This is the biggest bank failure in American history. 

Treasury Secretary Hank Paulson unveiled his bailout plan on Sunday. In an interview on Tuesday McCain said he couldn't say whether he supported it or not because he'd not yet read it:

Hmmmmmm. He hadn't had a chance to see it "on paper" yet. Well, what if we try "The Google?"

Hold on, be right back. 

There. In 0.31 seconds I found the text of the plan in an article from Sunday's New York Times

Senator, the plan is two and a half pages short. It took me about three minutes, just now, to read from beginning to end. So, in less than four minutes, while writing this post, I learned more about the plan than you did in the two days after its release. 

As a United States Senator, and ranking member of the Commerce Committee, shouldn't you have been paying more attention? Granted, you're not particularly facile with them newfangled computers, but I'm willing to bet 1,000 shares of WaMu that Paulson probably would have picked up the phone and read the whole plan to you, the old-fashioned way, had you thought to ask. 

Yet on Wednesday we were supposed to believe that you had grown so concerned with the imminent threat to the economy that you had to suspend your campaign, including Friday's debate with Senator Obama, and rush to Washington to fix things. (But not before an interview with that hard-hitting journalist Katie Couric, a sample of whose award-winning work is embedded below).

 

Then, on Thursday, House Republican leader John Boehner, during the White House photo-op you and your party orchestrated so that you might somehow glom the credit for a bailout that already looked all but certain to pass, announced that his caucus could not support the bailout plan. Why? Because they felt that the Democrats wanted to speed up announcement of the agreement to head off your brazen attempt at exploiting this crisis for political gain. 

So, in summary, our leaders in Washington had finally come to their senses and appeared ready to behave like adults for a fleeting moment to solve a major crisis and you, Senator McCain — the self-styled problem solver who is supposedly above politics-as-usual — have singlehandedly derailed that effort. 

Congratulations on undoing an entire career of honorable service to our nation. 

A Rare McCain Interview

Thanks to a Citizen in Maine for passing along this link to an interview with John McCain by a local TV news anchor there. 

I'll mostly let you all judge his statements for yourselves, but I thought the two most interesting lines were:

1. The interviewer asks what qualifications Sarah Palin has to help McCain fight what he has defined as the world's foremost challenge: Islamic extremism. To paraphrase McCain: "Hey, can we talk about the economy instead?" Hope he does better than that if he decides to show for the foreign-policy-bee in Mississippi tonight. 

2. McCain on his running mate: "She knows probably more about energy than anybody else in the United States of America." 

Discuss.

 

Talk To Me

"What must I do

What does it take

To get you to

Talk to me?"

—Bruce Springsteen, "Talk to Me" (From the 1978 Southside Johnny & the Asbury Jukes album Hearts of Stone).

I'm getting lonely in here. 

Sure, it's fun for me to express my thoughts on this blog. But I want it to be more than just an outlet for me. 

I know that several of the folks I email my posts to have become regular readers. Some have been kind enough to share the blog with their friends and family, and to email me back with their thoughts on whatever I'm going off about at the moment. To those of you who have done so, thanks. I appreciate it.  

But for this thing to really work you need to tell me and everyone else who reads Citizen what you think. Post a comment. Keep a dialogue going. We can learn from one another and be better citizens but it just takes a little bit of effort. 

At least one of my readers has said it's "intimidating" to respond with comments. Hogwash. No law requires you to attach your name to your comments. Post anonymously. If you have something to say, say it. It doesn't have to be profound. Pretend we're at a cocktail party and say what you'd say there. 

As Frasier Crane would say, I'm listening...

Don't Call Us, Sarah, We'll Call You

Imagine for a moment that you're a hiring manager about to interview a job candidate. You've never met him before and he's somewhat intriguing, but you have some pretty serious concerns about whether he's qualified for the position. Some of the claims on his resume appear dubious based on what you've learned about him from others. He shows up for the interview, only to announce that he will be giving a prepared speech, and then going home. 

"But I have a lot of questions I need to ask you!" You might respond, perplexed and frustrated. 

"Sorry, no questions will be allowed," replies the candidate, retreating to his SUV, enveloped by a coterie of unctuous handlers. 

Would you hire this person?

Didn't think so. 

So why should we hire Sarah Palin? She's interviewing for the second-most-powerful job in our government, but refuses to answer questions about her qualifications for the position. Palin has been crisscrossing battleground states giving her stump speech, but the McCain campaign is enforcing a strict no-questions-from-the-media policy at every one of these events. 

This is a great strategy for a campaign that is worried about what Palin's unscripted remarks might reveal about her capacity to serve as Vice President of the United States. Palin gets her picture in the papers and on the Web, plus bites of her canned address on TV and radio news throughout the country, all without having to answer a hard question from an actual journalist. The campaign is using the same strategy to protect McCain, who used to hold court daily with the press on the Straight Talk Express. McCain has not given a press conference in 40 days. Palin has yet to give one as a member of the ticket. 

Today, the campaign went as far as to try to prohibit any journalists from accompanying the pool cameraman assigned to follow Palin on her meetings at the UN with various world leaders, including Afghanistan's Hamid Karzai. 

This strategy is an insult of the highest order, directed squarely at the American people. The fact is, McCain and Palin are interviewing to work for us, the citizens of the United States. How can we possibly decide whether they are qualified if they won't submit to questions from the press? 

I know. You may be wondering, "How did the press get appointed guardian of the people's questions?" Well, it's an imperfect system, but that is the way it has worked in America since its birth. Our founders regarded the press as one of the most important checks on power, and an essential watchdog that reports about government on the citizenry's behalf. The press trifles with this sacred trust on a daily basis, but the fact remains that citizens do not have the time, access (or, sadly, the inclination) to individually question our elected representatives and candidates for elected office. So the press is an imperfect surrogate, for sure, but the best one we've got. So, by giving reporters a perpetual Heisman, McCain and Palin might as well be flipping us all the bird. With both hands. And with a really mean look on their faces.

Here's where it gets really rich: McCain campaign manager Rick Davis has said that Palin will make herself more available to the press only if it shows her the proper "deference." 

Deference?! 

Really?! 

Deference?! Didn't we throw off the shackles of monarchy in 1776? Palin, McCain, Obama, Biden, Bush, Cheney, Pelosi, Reid, the whole lot of them -- they should defer to us, not the other way around. The people and the rule of law are sovereign in the United States of America, not any public official, no matter how powerful. 

Certainly a mere candidate for vice president, who hasn't been elected by anyone save for 114,697 Alaskans, can't possibly have the titanium-plated cohones to think she's above answering to the people she proposes to serve? 

Can she?

Don't call us, Sarah, we'll call you. 

Calling all "Populists": Time to Take Econ 101

Government usually overreacts to financial crises. 

Here's what happens: waves of speculative excess periodically build in our economy, then crash, flooding otherwise high ground. Few understand the causes of these crises, but when they hit, politicians sense opportunity — not to learn from what happened and ensure it doesn't reoccur, but opportunity for personal gain. 

As the damage radiates from Wall Street to Main Street, politicians prey on the average citizen's fears and resentments. Members of Congress who do not understand how financial markets work forward ill-conceived plans to "strike back at the fat cats" who got us into such messes. A lot of these reforms either don't work or, worse, have negative unintended consequences that must again be dealt with down the road. 

Eliot Spitzer, the disgraced former governor of New York, is Exhibit A here. As Attorney General of New York, Spitzer seized on the dot-com crash of 2000 and railroaded big Wall Street brokerages into a settlement of charges that they issued biased investment research. The settlement forced these firms to spend $1.6 billion on restitution, investor education and providing "independent" research to clients. After the deal was struck Spitzer forgot about it and rode his heightened popularity to a win in the gubernatorial election. 

The settlement didn't work, and Spitzer didn't care. Hundreds of millions of dollars from the settlement were subsequently diverted from investor restitution and instead were used by state politicians to plug their budget gaps. The $55 million investor education fund mandated under the settlement disbanded without spending a dime on teaching people how to stay out of trouble in the next bubble. The money was instead transferred to an organization owned by the very brokerage industry Spitzer was supposed to have punished. The $460 million, five-year independent research program was a wasteful fiasco and a giant subsidy for research firms that weren't necessarily any better at picking stocks than the big, conflicted brokers that Spitzer targeted. Most investors weren't even aware that it existed. Spitzer himself was too busy soliciting the services of high-end call girls to pay much attention. 

This brings me to the current, $700 billion bailout the Treasury Department is proposing for our financial industry. Unfortunately, the move is necessary, in large part because the government was not vigilant enough over the past decade about regulating Wall Street. The government should follow the bailout with a well-researched, sensible reform of the financial regulatory structure. Instead, I fear that politicians will Spitzer us, seeking seemingly populist reforms that are good for their name recognition and re-election prospects but bad for our country. 

Take for example the desire of Democratic congressional leaders to attach to the bailout plan some provisions for capping executive compensation of private-sector companies. I don't think that folks who bankrupt their companies should run away with big severance packages, but I also don't think it's the government's business to decide what shareholders should pay the managers of corporations. If these guys get big golden handshakes, well, that's the fault of their shareholders, who should have insisted on better corporate governance. It has little, if anything, to do with how this crisis started and what is the best way to fix it and prevent it from reoccurring. 

Instead of spewing populist pablum, Democrats in Congress should vote for the bailout then come together with Republicans and private-sector leaders and put together a well-informed, balanced plan to fix our financial regulatory system. Most importantly, we must fix only what is broken, not what isn't, no matter how irresistible the political opportunity.  

Citizens should insist upon nothing less from their leaders and punish those who put their own interests above the national interest. 

Register and Vote

Voter-registration deadlines for the Nov. 4 presidential election are fast approaching. 

Our right to vote is a sacred privilege, earned through the blood and ingenuity of our founding fathers and preserved by subsequent generations of war veterans. It is a right that so many elsewhere in the world, to their grave detriment, do not enjoy. 

Yet, sadly, so many of us fail to exercise it. 

In the 2004 election fully 36 percent of eligible Americans failed to vote, according to the U.S. Census Bureau. 

Every citizen who is eligible should vote. Plain and simple. If you don't like the major-party candidates, vote for someone else. Even yourself. But vote. And urge your friends and family to do the same. We owe it to one another and all who have come before us that built our country and made it great.  

For a list of voter-registration deadlines for the Nov. 4 election, click here. If you're not registered, I urge you to do so. It's easy. 

When Did McCain Turn Into the Town Bully?

Something that John McCain has been saying for the past couple of weeks has really gotten under my skin. 

On several occasions, typically when asked about the outrageous lies he's spreading about Obama (and about his own record, his positions on issues, even the size of the crowds at his rallies and — amazingly — about being responsible for the existence of the Blackberry), Senator McCain replies that if only Obama had agreed to hold a series of joint town hall meetings with him, the "tenor of the campaign" would somehow have turned out differently. 

I see. So McCain wants to play the game a certain way (a way that favors his style and disadvantages Obama, unsurprisingly), and if his opponent does not play by his rules, it's OK to switch from Straight Talk to Shameless Slander?

This just isn't an honest answer. 

I used to like John McCain. As I said in a previous post, at one time I felt comfortable with the idea of perhaps voting for him — or of not being upset if he became president in spite of my voting against him. He was once an honorable man. No longer. His recent conduct insults our intelligence and disrespects the founding spirit of America. It's just plain shameful. 

Yes! We Got a McCain Voter!!!

Finally, a John McCain supporter has voiced his or her opinion in the Citizen presidential election poll (on the right-hand panel of the page for those who haven't seen it). 

I have to admit I'm not shocked that so far the vast majority of those who have responded to the poll plan to vote for Obama. Most of you probably either already know, because you know me, or have figured out by reading the blog that I am an Obama supporter. If you didn't, now you do. Many (though certainly not all) of the friends that were among the group I chose as a kind of beta test audience for Citizen I also knew to be Obama supporters.

However, I take pains when writing to not favor one candidate or party over the other, because I really want Citizen to be a place where people of varying beliefs can come together and learn from one another. In my posts thus far I've criticized the McCain campaign and the GOP but also chided Obama and his campaign, as well as other Democrats. A good citizen keeps an open mind, and above all wants to help solve the nation's problems through active engagement in the political process. Blind partisanship and slavish devotion to ideological purity are not looked upon kindly here. 

So I'm very glad that a McCain voter has visited and voted in the poll. I hope more McCain supporters show up regularly -- and that they and others contribute to Citizen by posting comments. The exchange of ideas will only help all of us be better citizens. 

Your News Diet: White Castle or Wheat Germ?

I'm moved to write this morning after noticing a young woman on my commuter train reading a copy of In Touch magazine. 

For those who aren't familiar with this publication, it specializes in celebrity gossip, addressing such burning questions as "Has Scarlett Turned Into a Diva?" and providing the latest must-know intelligence about the hairstyles, romances, marriages, pregnancies, babies, diets, infidelities, divorces, addictions, plastic surgeries and eating disorders of the Hollywood set. The entire celebrity life cycle, one might say. 

Before my diatribe, a disclaimer of sorts: I am loath to judge the tastes and pleasures of others. I realize that in any diet, including one's consumption of media, there must be bits of candy and saturated fat complementing whole grains and roughage. And celeb rags like In Touch, along with reality TV and publications, broadcasts and websites covering sports and hobbies, are like the White Castles and Haagen-Dazs to which otherwise healthy eaters occasionally treat themselves.

But the popularity of what I'll call junk media also troubles me, for two reasons. 

One is that some people read and watch only the junk, without also partaking of the public-affairs vegetables that we must consume to be good citizens. Another is that celebrity "news" unfortunately has come to compete with and influence the content of mainstream media, crowding out serious journalism. National newspapers, network and local news broadcasts are losing ground to bubble-gum media and consequently have become unduly preoccupied with the latest celebrity scandals or missing white women instead of the real news. They also devote precious news airtime and page space to promoting their own candy-and-fat programs or affiliated content -- such as Fox's local and national news channels airing "news stories" about American Idol, or CBS News interviewing Big Brother contestants on their news shows, or ABC news "covering" Disney films and other products. And when they do cover politics, they treat it like entertainment, focusing on the latest poll numbers, gaffes, mean-spirited attacks and manufactured controversies rather than on where candidates stand on issues or how their campaigns propagate lies and exaggerations. 

During times like these, when so much of the news is so discouraging, it's understandable that people will seek to be entertained rather than informed. But as citizens, it is our duty to seek the information we need to provide our leaders with guidance about where we want them to take us, and hold them accountable for their actions. Our troops and their families are sacrificing much as we prosecute two wars. Millions of hardworking people are sacrificing to endure lost jobs and health care coverage. The least the rest of us can do is commit to be minimally engaged in the affairs of our country. In so doing we will honor our founders' vision of an informed citizenry that helps leaders surmount national obstacles, instead of being a disengaged populace that perpetuates and worsens our problems. 

So go ahead, enjoy that frozen Butterfinger bar. But not before you eat your Brussels sprouts.  

The Role of Regulation: Was FDR a Conservative?

The headlines emanating from Wall Street over the weekend and into this morning reveal just how fragile our financial system has become — and how much we need government to play a role in regulating private enterprise. 

Lehman Brothers, a revered investment bank that was worth nearly $60 billion in February 2007, is filing for Chapter 11 bankruptcy this morning. Its collapse comes barely 6 months after regulators narrowly averted the failure of a similar firm, Bear Stearns, by arranging a federally-backed rescue buyout by J.P. Morgan Chase. And it came just a week after the U.S. Treasury took over the private mortgage lenders Fannie Mae and Freddie Mac. 

During a series of crisis-management meetings over the weekend government officials also helped engineer the acquisition of Merrill Lynch, another storied-yet-troubled firm that many thought was next in the bread line behind Bear and Lehman, by Bank of America. Also on the ropes: AIG, which has seen its market value decline from nearly $200 billion last year to $36 billion at Friday's close, and Washington Mutual, the country's biggest savings and loan institution.  

What Bear, Fannie, Freddie, Lehman, Merrill, AIG and WaMu have in common is ownership of assets that quickly plummeted in value, creating a crisis of confidence that they would be able to honor their debts and raise the capital necessary to meet day-to-day operations. Most of these assets were related to residential and commercial mortgages, which Wall Street financial engineers packaged into "structured securities" -- bonds and loans backed by pools of other bonds and loans. 

The idea behind structured securities sounded good: a debt backed by lots of other debts would spread risk, making it easier to lend money to people and businesses with poor, or subprime, credit. 

What actually happened: structured securities successfully spread risk, but they also increased it exponentially. This is because they sundered the traditional relationship between lender and borrower. In the old days a bank would lend to a homeowner or business and keep the loan on its books -- which meant that if the borrower didn't pay, the bank lost money. Over the past decade or so, intermediaries like Lehman, Bear and Merrill bought oodles of loans from banks and packaged them into securities they then sold to institutional investors like pension funds, mutual funds and hedge funds. These investors thought the bonds to be very safe because they were backed by pools of diverse loans -- some high-quality and some subprime — and typically received AAA ratings from credit agencies like Standard & Poor's (that's a topic for another post). 

Structured securities meant that banks were off the hook if their loans defaulted. Investors would take the hit, not them. As a result, they had an incentive to lend as much as possible, without regard for whether the borrowers could repay the loans. Subprime mortgage issuance ballooned, as did "no-documentation" loans. Then, they defaulted en masse and continue to do so. Holders of these securities — including the investment banks who underwrote them and typically held a portion of the new issues on their books — took gigantic losses.

This is how we got to the point where esteemed, centuries-old institutions simply were unable to raise enough capital to offset the billions in losses they were taking on bad loans and structured debt.

Well, it's part of the story. 

The other part is that the federal government provided a huge assist to those who created the current crisis. The 1999 Gramm-Leach-Bliley Act tore down the wall Congress erected between investment banks and banks that took public deposits following the Great Depression. This separation of riskier activities like investment banking from the taking of deposits from ordinary Americans and using that money to make bank loans helped to prevent the "runs" on banks that occurred following the Crash of 1929. Savings banks (and insurance companies like AIG) were supposed to stay out of the investment banking and brokerage businesses, so that another crash would not threaten the nation's savings. 

Tearing down this wall has had disastrous consequences. It encouraged the culture of reckless risk-taking that fueled the boom in structured securities, enabling the mortgage mess and credit crisis that has taken down four of our biggest financial institutions and counting. 

The point here is that some government regulation of private markets is absolutely necessary to keep capitalism — undoubtedly the greatest system ever devised to provide humankind with the wealth and resources it needs to survive and thrive — from unceremoniously eating itself. Today, the government must step in and clean up an historic mess because it failed to adequately assert itself — in ways that would have been far less intrusive and disruptive to the private sector — in the past.

All this reminds me of a seminar I took in graduate school on the creation of welfare states in industrialized countries. I came away from that course convinced that Franklin Delano Roosevelt, despite the general reputation he has for being the grandfather of the big-government liberal movement in the United States, was actually a conservative. 

Not in the perverted sense that "conservative" is used today, mind you. In its literal sense. He was trying to conserve what was best about America -- free-market capitalism -- by experimenting with massive government intervention in private markets, in response to the unprecedented economic dislocation of the Great Depression. During the Depression there were many radical movements that wanted the U.S. to follow Russia's example and become a communist country. These movements became popular with the working class, preying on their justifiable fears and insecurities, and threatened the continued existence of the U.S. as our founders conceived it. 

FDR positively abhorred this idea, so he used the levers of government to try to soften capitalism's roughest edges, so that it would survive. He created Social Security and unemployment insurance. And he created the Securities and Exchange Commission to police the financial markets and require that companies and brokers disclose important information to investors. And Congress at that time put up a wall between banks and brokerage firms that served the country very well until Big Finance lobbyists pushed to tear it down, giving way to the events you read about in today's papers. 

Incredibly, even as it was not regulating enough, government also was too involved in some aspects of the financial markets. Members of Congress, primarily but not exclusively Democrats, were positively in the pockets of lobbyists from Fannie Mae and Freddie Mac. These companies were created by the federal government many years ago to spur mortgage lending to working-class Americans, but were later permitted to privatize while retaining the valuable public perception that the U.S. Treasury would back their debts and prohibit them from failing. Every time Congress or a presidential administration tried to rein the companies in or eliminate them entirely, their lobbyists would cry foul, accusing the reformers of "opposing homeownership," even though Fan and Fred had moved far beyond their original missions of backing loans to people of modest means. 

The result? Fan and Fred were able to float bonds at more attractive rates than banks and lend at the same rates, making bigger profits because of their association with the government. So they grew their balance sheets with abandon and also bought up huge swaths of the mortgage-backed securities I discussed earlier. And now we own them -- you and me, the taxpayers of America -- because the government did indeed bail them out when widespread mortgage defaults essentially rendered them insolvent. 

In both cases — breaking down Depression-era protections and encouraging the growth of the Fan and Fred time-bombs — politicians time and again chose political expediency or allegiance to ideology over the proper course of action for our country. Let us learn from this example and insist that our leaders do better by us in the future. 

Truth and Taxes: I Want My $12

Often when I discuss the presidential race with friends and family, someone will say "Obama is going to raise your taxes."

That is certainly a popular perception, fueled by the McCain campaign and its surrogates. Unfortunately, it is at best seriously misleading and at worst an outright fabrication. 

Here are the facts. 

According to the non-partisan Tax Policy Center, Obama's plan would reduce the average tax bill for Americans making less than $227,000 annually. His plan provides bigger breaks than does McCain's for those earning less than $112,000 per year and smaller reductions than McCain's for those making $112,000-$227,000 -- but reductions nonetheless. Obama would raise taxes on anyone making more than $227,000. But, significantly, his tax hikes are overwhelmingly targeted at those with annual incomes of more than $603,000. 

In fact, the average tax bill for those with incomes between $227,000 and $603,000 annually would rise by just $12 under Obama's plan. McCain would cut taxes by an average of $7,871 for this group. A good summary of the data can be found in a recent CNN/Money article. You also can read the full Tax Policy Center report here. 

So, in summary, if you make more than $603,000 a year, yes, Obama will raise your taxes significantly. If you make less than that, odds are Obama will cut your taxes, in many cases more than McCain would. 

If you make less than $603K but more than $227K, you'll have to fork over to Uncle Sam twelve bucks more than you do today — about a quarter of a tank of gas. If this scares you, then don't watch this video:

I don't have all the data in front of me but I'm pretty confident that the vast, vast majority of American voters earn substantially less than $603,000 a year (for an informal straw poll see the right-hand column of this page). So blanket statements that "Obama will raise your taxes" are both false and irresponsible. 

As citizens we certainly can evaluate and discuss the relative merits of various tax policies. Some favor cutting aggressively across the board, which naturally yields bigger aggregate tax reductions for those whose incomes are highest. Supporters of this stance typically argue that reducing taxes in such a way best stimulates economic growth by providing incentives to work harder, start businesses, create jobs, etc. Others believe in tax policy that skews benefits to lower-income workers, believing it a necessary check against capitalism's tendency toward unequal wealth distribution. 

Regardless of what you believe and support, our debates and decisions must be based on facts, not misinformation. 

Remembering What We Have Lost

Every day on my way to work I pass through a mass graveyard. 

Most mornings I simply try not to think about it. But today, of course, was different. 

I'd already stiffened a bit and taken some deep, reflective breaths when the train conductor announced, "World Trade Center, next stop." Next to me was a Port Authority cop, in full dress uniform, preparing to join his fellow public servants and the families of those who lost their lives here seven years ago in the ceremony marking the seventh anniversary of the 9/11 attack. 

The train slowed as we approached the station and I saw the police and firefighters lining up in the pit, its giant ramp festooned with the flags of other nations supporting our memorial. The escalator spat me out onto the street and there was a middle-aged couple, stepping deliberately, hand-in-hand, toward the site — a poster-size photograph of their 20-something son, lost on this day seven years ago, grievously hanging from each neck.

I've worked in New York for many years, but until I switched jobs recently it was always further uptown. Walking the streets near Ground Zero this morning I couldn't help but wonder: Why isn't September 11 a national holiday? 

There are good arguments against making it one, of course. The most convincing of these holds that we must go on with life, commerce and governing, because suspending these activities would provide comfort to those who attacked us. Nevertheless, as I navigated the maze of grieving loved ones, security personnel and press on the way to my office this morning, I wished there was some way to shut down lower Manhattan on September 11 every year, simply to provide a more peaceful, intimate environment for the thousands whose deep, unquenchable grief moves them to this place on this date and likely will for many years to come. It is, of course, practically impossible to shut down a slice of New York that is home to so much that is so vital to local and national institutions without also shutting down the rest of the country. Given that similar, if smaller, remembrances occur annually in Washington and Shanksville, Pennsylvania, making 9/11 a holiday deserves consideration.

In a minute or two I will finish this post and proceed with my day. But seeing what I saw this morning reminded me of the New York — indeed, of the America — that existed for a fleeting moment seven years ago. Chaotic, frightened, wounded and angry, yes. But also humane, philanthropic, pure of spirit and united. On that day we were all Americans, and the world joined us in kinship. In citizenship. Much has been lost since then, but today I am reminded that it is not too late to get it back.   

Who Does Charlie Rangel Think He's Kidding?

And now, still more proof that politicians will persist in thinking the American public is flat-out stupid until we show them otherwise. Charlie Rangel, one of the longest-serving and most senior members of the House of Representatives, is claiming that "cultural and language barriers" kept him from finding out how much he owed in taxes on a Dominican Republic rental villa he bought as part of a speculative real-estate development many years ago.  

"Every time I thought I was getting somewhere, they'd start speaking Spanish," he told reporters at a press conference today. 

Gee, you think Charlie could have found a translator somewhere in his Harlem district? Is no one on his staff bilingual? No friends that could have helped him out if he was really interested in knowing what his income and tax liability were? 

Uh-huh, that's what I think, too. 

This episode comes on the heels of revelations that Rangel accepted four rent-stabilized apartments at far-below-market rents from a New York real-estate developer and used one of them as a campaign office, in violation of state rules requiring the units to be used as primary residences. Together, all of this suggests that Rangel has grown quite accustomed to exploiting all the, er, perks of his office. And when you're chairman of the House Ways and Means Committee — which, ironically, writes the U.S. tax code — there are an awful lot of perks. Now the question is, will his constituents throw the bum out? 

Palin, Pit Bulls, Lipstick and Pigs

If Sarah Palin were truly interested in campaigning honorably and solving the nation's problems rather than subjecting us to silly Clintonian-Rovian games, she would come out immediately and make a simple statement. She would say plainly that she did not take personal offense when Barack Obama described the Republicans' presentation of their economic plan as "putting lipstick on a pig." She would make it clear that in no way did she think the comment was directed at her personally, even though she disagrees strongly with his argument. She might further counter that argument with reasons why she and Senator McCain would be better economic stewards than would the Democratic ticket.  

But she hasn't. Instead she has permitted her campaign to intimate, with what Obama has rightly called "false outrage," that somehow he was putting her down personally, manufacturing an imbroglio where none should exist and instantly conjuring out of thin air a big news story that distracts voters from what really matters in this election. In fact, she hasn't taken questions from the media at all since becoming McCain's running mate nearly two weeks ago. Voters should expect more from someone who wants to hold the second-highest office in the land. Politicians work for us, not the other way around. That said, the national media should also be ashamed of itself for taking the bait on the "lipstick" non-story, and for not more aggressively hounding Palin for unscripted answers to the people's questions. 

To be fair, Obama should also stop intimating that McCain thinks that the definition of rich is someone who makes $5 million a year. It is obvious that McCain was joking when he said this at the Saddleback Church forum. It wasn't a very good joke, but that's beside the point. Obama has plenty of material with which to attack McCain on the economy without resorting to such distortions. 

This kind of childish behavior on the part of our leaders and the media prevents us from fully exercising our civic duty. Only when we demand better — and punish those who refuse to provide it — will we receive it. 

Is It Warm In Here?

Upon reading the news this morning that OPEC is responding to the recent decline in crude oil prices by cutting output, and is close to an agreement to strengthen its ties with Russia, I couldn't help but wonder: when will our country begin to take seriously the huge economic and national-security threat posed by our addiction to oil?

Note that I didn't say "foreign oil."

Nope, it's just oil. Period. 

Yes, the security of free nations around the world, including ours, is increasingly endangered by petro-autocracies like Saudi Arabia, Iran, Russia and Venezuela. Some have suggested that immediately opening up our own shores to increased oil drilling would free us from our hazardous dependence on these regimes. 

This is simply not true. A 2007 report by the U.S. Energy Information Administration (an official agency of the federal government that is controlled by the Bush administration) concludes that increased U.S. offshore drilling would not have an effect on the prices of crude oil or natural gas until 2030. 

I and other citizens first learned this fact many, many weeks ago, yet somehow the most popular chant at the GOP convention earlier this month (next to "USA, USA," the official Republican National Committee response when protesters reared their patriotic heads in St. Paul) was "Drill Baby Drill." Even Obama now says he would support some drilling as part of a comprehensive alternative-energy bill, thus giving further credence to the lie. This is the answer to the problem of our dependence on oil? Excuse me while I clean the doo-doo from my ankles, because we are in it very deep, my friends.

The real issue is simply that we consume too much oil, regardless of where that oil comes from. And the longer we delay implementing policies aimed at reducing overall energy consumption and replacing fossil fuels with renewable resources like wind and solar, the deeper the planetary doo-doo gets. And the stronger the petro-autocrats like Putin, Chavez and Ahmadinejad grow, because their economies rise and fall with oil revenues. 

It won't be easy — no real solution to a major problem ever is — but America needs to summon the courage and political will to do something viable about this problem instead of offering gimmicky non-solutions designed to snooker a gullible voting public. The solution begins with all of us knowing the truth and refusing to accept anything short of it from our leaders.

Lies

Part of being a good citizen is knowing when your leaders and would-be leaders are lying to you. 

Unfortunately, this happens all too often in our political culture today. For example, the disengagement of our populace from public affairs has contributed to the success of the "permanent campaign" tactics espoused by the Clintons in the 1990s and perfected by the Bush-Cheney-Rove GOP machine over the past 8 years. This school of politics is characterized by a simple philosophy: When governing, never let The Right Thing To Do get in the way of doing what will help you most politically. And campaign ruthlessly, usually by telling blatant, manipulative lies to the public, secure in the confidence that most people won't know — or care to find out — the truth.  

It is incumbent upon all patriots to expose these lies.  

With this in mind, I turn to the Republican National Convention. Following the Romney-Huckabee-Giuliani-Palin insult-fest on the convention's second full night last week, I couldn't help but vent to some friends and family via email. Here is a slightly updated version of that email:

Yes, it is beyond question that both parties play games with the truth in the midst of hard-fought election campaigns. But the Republicans have elevated prevarication into a fine, though distinctly malodorous, art form. For some truly stunning examples, take a look at this Associated Press story from September 3. I'll highlight and comment upon some of the most reprehensible of these canards now: the Huckabee line about Palin getting more votes for mayor of Wasilla than Biden did for President (Huckabee was off by nearly 5,000% yet said this with the straightest of faces); the false suggestion that the middle class will have a lighter tax burden under McCain, debunked beyond question by the non-partisan Tax Policy Center; and Palin's Kerry-esque "I was for it before I was against it" flip-flopping on the Bridge to Nowhere. 

Sarah Barracuda did a great job in her convention address of exceeding the lowest of carefully managed expectations and rallying the Angry Right, but nothing in her speech — and certainly not in Rudy Giuliani's mean-spirited, immature diatribe — is going to win over moderate, undecided voters. The Republicans were panicked, and it showed. 

One more thought on the GOP's pathetic attempt to mask this ticket's ample and obvious deficiencies by setting up the media and "coastal elites" as straw men to knock down. They need to hide the fact that McCain has transformed himself from a self-styled maverick, who frequently clashed with his own party, into a lockstep Bush-Cheneyite after being Roved out of the GOP nomination in 2000. They need to conceal the credibility-killing reality that Tucker Eskew, the man who helped direct the 2000 Bush-Cheney-Rove smear campaign against McCain in South Carolina, which intimated to voters that McCain had fathered a black child out of wedlock (referring to Bridget McCain, the Bangladeshi daughter the McCains lovingly adopted many years ago — and who must have been holding back vomit as she sat with her family in St. Paul watching Bush speak last week) is the very same person who McCain hired to shape the speech Sarah Palin delivered at the convention. They need to deflect mainstream voters' attention from Palin's extreme right-wing, very Bushian views and utter lack of the necessary qualifications to be a heartbeat from the presidency (this, after all, is a woman who last year said that her duties governing a state with one-quarter the population of Brooklyn had so occupied her that she hadn't gotten around to formulating a position on the war in Iraq — a fair enough statement for someone who wants to be the best possible governor of Alaska but not for one who wants to be vice president of our great country). So they conjure up a false enemy in the media (but not the likes of Hannity, O'Reilly, Dick Morris and the other Fox News talking-pointers who are as elite as elite can be). The words of Mark Twain are appropriate here: "Never pick a fight with a man who buys his ink by the barrel." It's also more than a tad preposterous that the campaign of Senator John McCain, who once referred to the media as "my base," is now demonizing that same media. 

After watching McCain himself speak on the convention's final night, I have to admit I liked many of the things he said. I remember at one point several years ago thinking that even though I vote Democratic more often than I vote Republican (though I absolutely have and will continue to vote for members of both parties) and am positively horrified with what Bush & Co. have done to the country, I could be happy with a President McCain because he would do what he thought was right for the country and not what was expedient politically. It is, of course, not impossible that McCain might still govern that way if elected. At 72 he is unlikely to serve a second term, and could fill his cabinet with solution-minded, bipartisan leaders while reaching out to Democratic legislators. But his near-complete abandonment, since losing the nomination to Bush in 2000, of so many of what he had previously set out as unshakeable principles — combined with the Palin selection — have damaged his credibility seriously and perhaps permanently. 

Welcome to Citizen

Welcome to Citizen, a blog that I hope will serve as a forum for fair-minded discourse about public affairs. 

I created Citizen because I believe that many of the United States' problems stem from an ill-informed, disengaged general populace. Our system of government only works when we fulfill our duties as citizens — by staying current on the news, forming opinions on events and issues and making our voices heard to our elected representatives. Absent this engagement our leaders will pursue policy that takes us down the wrong path — and who can blame them? 

I sincerely hope that Citizen will become a place where people can not only express their opinions about public affairs but also add to the sum total of knowledge, and perhaps even wisdom, that we all must pursue to truly fulfill our obligation to those who created our constitution and founded this great country, the United States of America. I'll be posting my thoughts, hopefully on something of a regular basis as work and family obligations permit, and encourage all visitors to do the same. I don't expect Citizen to be completely above partisanship, and certainly my own posts are likely to be rather, um, passionate from time to time. But I do expect that it will be above pettiness, bickering and personal attacks. One rule of thumb I hope everyone will aspire to follow: instead of trying to win political points, strive to provide insight and work toward solutions. We are all Americans and we owe one another our best. Let's make it fun, but not mean-spirited. I think we're all getting very tired of that. 

Thanks, and please come back often.