Friday, September 26, 2008

Sarah Palin's Very Bad Interview

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The first half of the Katie Couric interview with Sarah Palin did not start off well. It was a complete disaster in fact.

It’s like watching a train wreck, she seems to have no idea what she is talking about.

But hey, people sometimes get off on the wrong foot. It couldn’t get any worse right? She just probably needed to find her rhythm, right?

Well, no. If the first half of the interview was bad, well then the second half of the interview was much, much worse.

From Ryan Powers over at Think Progress:

During the interview, Couric asked Palin why she believes the Wall Street bailout is needed. Palin responded incoherently by claiming that the bailout would "help those who are concerned about health care reform." Palin then appeared to look down at her notes and said, "Oh, it’s got to be all about job creation":

COURIC: Why isn’t it better, Governor Palin, to spend $700 billion helping middle-class families struggling with health care, housing, gas and groceries? ... Instead of helping these big financial institutions that played a role in creating this mess?

PALIN: Ultimately, what the bailout does is help those who are concerned about the health care reform that is needed to help shore up the economy- Oh, it’s got to be about job creation too. So health care reform and reducing taxes and reining in spending has got to accompany tax reductions

"She’s not always responsive when she’s asked questions," Couric said of Palin. "It was a really interesting experience for me to interview her yesterday," she added.

Well, people make mistakes. But that has to be the worst of it right? Nope, as Steve Benen over at the Washington Monthly reported:

Earlier, I suggested Sarah Palin’s response to Katie Couric’s question on the bailout was a low point in Palin’s brief career as a candidate for national office. I spoke too soon.

As regular readers know, almost immediately after Palin was added to the Republican ticket, a number of conservatives, including McCain himself, argued Alaska’s proximity to Russia necessarily amounts to foreign policy experience. I’ve been having some fun with this, because, well, it’s the dumbest argument I’ve ever heard.

In the second part of the CBS interview with Palin Couric, to her enormous credit, asks Palin to explain what this talking point means:

COURIC: You’ve cited Alaska’s proximity to Russia as part of your foreign policy experience. What did you mean by that?

PALIN: That Alaska has a very narrow maritime border between a foreign country, Russia, and on our other side, the land -- boundary that we have with -- Canada. [...]

COURIC: Explain to me why that enhances your foreign policy credentials.

PALIN: Well, it certainly does because our -- our next door neighbors are foreign countries. They’re in the state that I am the executive of. And there in Russia --

COURIC: Have you ever been involved with any negotiations, for example, with the Russians?

PALIN: We have trade missions back and forth. We -- we do -- it’s very important when you consider even national security issues with Russia as Putin rears his head and comes into the air space of the United States of America, where -- where do they go? It’s Alaska. It’s just right over the border. It is -- from Alaska that we send those out to make sure that an eye is being kept on this very powerful nation, Russia, because they are right there. They are right next to -- to our state.

Usually, candidates for national office get better as time goes on. Palin is clearly getting worse.

I mean, really, think about Palin’s argument here. She has foreign policy experience because Russian leaders flies over Alaskan air space on their way to the U.S.? Seriously, that’s what Palin told a national television audience.

First, it’s probably not true. Moscow is in Western Russia, and if a Russian leader were flying to the U.S., he or she would probably fly over the Atlantic. But geography aside, what does this have to do with foreign policy experience? If a head of state flies over you, you necessarily gain a background in international affairs?

I’m afraid Sarah Palin is not only embarrassing herself, she’s quickly become a national joke.

It’d be funny, if it wasn’t so painful to watch.

Bailout Backlash: Five Surprising Things That Happened on Thursday

Even news junkies had a hard time keeping up with a flurry of events on September 25 on Wall Street, Washington and the presidential campaigns. Here’s a round-up of what happened:

1. Outrage over the bailout spreads across the Internet and to Wall Street

The Internet is flooded with angst about Treasury Secretary Paulson’s proposed $700 billion bailout:

A lot of the online rage is channeled in the form of signatures on petitions and electronic letters to members of Congress. Senator Bernie Sanders (Independent-Vt.) is circulating a popular one on the left-wing blog Huffington Post. The 1.9-million member Service Employees International Union is also circulating a sign-on letter to Congress that reads in part: "No deal. No blank check." reasons: "A bailout tells responsible Americans that they are suckers."

The anger is coming from right-leaning groups as well. The National Taxpayers Union’s "No More Bailouts!" petition reads: "Bailouts that keep mismanaged organizations afloat delay natural corrections to unsound business practices . Enough is enough. No more bailouts. Not with my tax dollars."

The conservative site features a similar petition. Right-wing blogger Patrick Ruffini, meanwhile, urges Republicans to vote against the bailout, since "God Himself couldn’t have given rank-and-file Republicans a better opportunity to create political space between themselves and the Administration."

And as Steven Wishnia reports for AlterNet, protesters took to New York’s financial district:

Enraged by the prospect of $700 billion of their taxes going to reimburse Wall Street speculators for their dubious investments, about 500 protesters paraded through Lower Manhattan’s financial district Thursday afternoon, their chants of "You broke it, you bought it" reverberating through the narrow office building canyons and off the flag-draped wall of the New York Stock Exchange.

2. White House pow-wow flops

The White House summit originally billed as a bipartisan, non-partisan effort to come to a deal on Treasury Secretary Hank Paulson’s proposed $700 billion bailout plan ended bitterly. With the entire Senate and House leadership along with Barack Obama and John McCain in attendance, Paulson apparently got down on one knee at the end of the meeting and begged the Democratic congressional leaders not to publicly disclose how poorly the session had gone:

Inside the White House session, House Republican leader John Boehner announced his concerns about the emerging plan and asked that the conservatives’ alternative be considered.

Financial Services Chairman Barney Frank, the feisty Democrat who has been leading negotiations with Paulson, reacted angrily, saying Republicans had waited until the last moment to present their proposal.

McCain, who dramatically announced Wednesday that he was suspending his campaign to deal with the economic crisis, stayed silent for most of the session and spoke only briefly to voice general principles for a rescue plan.

"If money isn’t loosened up, this sucker could go down," Bush apparently warned as the meeting broke up. Republican Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee summed up the White House meeting, saying there was "obviously no agreement."

3. The entire bailout discussion implodes entirely

As the Washington Post reports, "A renegade bloc of Republicans moved to reshape a massive bailout of the U.S. financial system yesterday, surprising and angering Bush administration and congressional leaders who hours earlier announced agreement on the ’fundamentals’ of a deal":

Democrats accused Boehner of acting on behalf of GOP presidential candidate Sen. John McCain (Ariz.) in trying to disrupt a developing consensus

Democrats say they would not approve the legislation without a significant number of Republican votes to share in any political fallout from the controversial proposal, which comes just weeks before the November election. "We are working to try to get this bill ready, but if House Republicans continue to reject the president’s approach, then there’s no bill," said Rep. Barney Frank (D-Mass.), an architect of the bailout legislation. "We told Paulson the whole thing is at risk if the president can’t get his own party to participate."

Marc Ambinder of the Atlantic Monthly reports that there are less than 100 of the 202 GOP house members who would support the Paulson plan.

4. Obama says he’ll host a townhall meeting if McCain doesn’t show up

Sam Stein of the Huffington Post reported on Thursday, "Barack Obama is committed to hosting a public, televised event Friday night in Mississippi even if John McCain does not show up," according to an Obama official. "In McCain’s absence, the Senator is willing to make the scheduled debate a townhall meeting, a one-on-one interview with NewsHour’s Jim Lehrer, or the combination of the two, the official said."

Interestingly, Mississippi governor and former chair of the Republican Party Haley Barbour also said Thursday that he believed the debate would continue as planned. And later in the day, McCain spokesman Tucker Bounds implied that the McCain campaign was going into the debate.

5. John McCain’s fake campaign suspension

On Wednesday, McCain said he would "suspend" his campaign and return to Washington to work on the bailout proposal. But it was soon clear that this was a gigantic political stunt. As Think Progress reports, "Five hours after McCain said he would suspend his campaign, aides Nancy Pfotenhauer, Tucker Bounds, and Mike Duhaime appeared on Fox News and MSNBC five times, frequently criticizing Obama and Democrats."

The Huffington Post also reported that:

Across the country, McCain campaign offices are up and running, accepting volunteers, conducting phone banking, literature dropping and other GOTV activities. This held true on a local, state, and even regional level. The Huffington Post called up 15 McCain-Palin and McCain Victory Committee headquarters in various battleground states. Not one said that it was temporarily halting operations because of the supposed "suspension" in the campaign. Several, in fact, enthusiastically declared the continuation of their work. Others hadn’t even heard that the candidate for whom they were devoting their time had officially stopped campaigning.

Broken US promises undermine North Korean nuclear agreement

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By Peter Symonds

The six-party agreement on the denuclearisation of North Korea is threatened with breakdown after Pyongyang took a series of steps this week to restart the plutonium reprocessing plant adjoining its nuclear reactor at Yongbyon. While the US and international media have focussed attention on North Korea, its actions clearly have been taken in response to the US administration’s refusal to meet Washington’s commitments under the deal.

According to the International Atomic Energy Agency (IAEA), North Korea is planning to introduce nuclear material into the plant next week. IAEA inspectors completed the removal of seals and surveillance cameras from the facility on Wednesday, as instructed by North Korean authorities, and will be barred from the plant, but not at this stage from the reactor and other facilities at the site.

US officials immediately criticised North Korea’s decision. Secretary of State Condoleezza Rice warned on Wednesday that the step would only heighten Pyongyang’s international isolation. At the same time, she dismissed the suggestion that six-party talks, involving China, Russia, South Korea and Japan, as well as the US and North Korea, were dead, declaring: “By no means. We’ve been through ups and downs in this process before.”

The deal has been fraught with difficulties since it was initially reached in February 2007. In the first phase, North Korea agreed shut down its reactor and reprocessing plant at Yongbyon, allow IAEA inspectors and provide details of its nuclear programs, in return for 50,000 tonnes of desperately needed heavy fuel oil. In the second stage, finalised in October 2007, Pyongyang agreed to disable its nuclear facilities under the supervision of US experts and provide a full list of its nuclear programs, in return for a schedule for providing another 900,000 tonnes of fuel.

Apart from vague commitments to ending economic sanctions and establishing normal diplomatic relations, the only US pledge was to remove North Korea from its list of state sponsors of terrorism and end the application of the Trading with the Enemy Act. The US has maintained punitive economic sanctions against North Korea since the end of the Korean War in 1953 and has no diplomatic relations with Pyongyang.

North Korea carried out the process of disablement but only handed over a 60-page report on its nuclear programs in June, nearly six months after the December deadline, due to disagreements with Washington about its contents. As a demonstration of good will, Pyongyang demolished the cooling tower of its nuclear reactor in front of TV cameras, even though it was not immediately required by the agreement.

President Bush initially welcomed the steps and announced that the US would end North Korea’s listing under the Trading with the Enemy Act and commence the 45-day process for removing North Korea from the list of state sponsors of terrorism. He made clear, however, that the two actions would be little more than symbolic, as “North Korea will remain one of the most heavily sanctioned nations in the world”. Even so, the Bush administration was denounced by right-wing extremists such as former ambassador to the UN, John Bolton, who proclaimed the “final collapse of Bush’s foreign policy”.

By August, the Bush administration had reneged on its agreement to remove North Korea from the terrorist list and raised new demands for “a protocol of verification” of the contents of Pyongyang’s report. Quite legitimately, the North Korean regime interpreted the decision as a sign of bad faith—the agreement had all along been premised on an “action for action” approach. In return for shutting its nuclear facilities and disabling its reactor under international supervision, North Korea had received nothing but relatively small amounts of fuel oil. The ending of the country’s status as a sponsor of terrorism, while symbolic, was nevertheless a first step toward easing the economic blockade that has crippled its economy.

In mid-August, the North Korean regime called a halt to work on disabling its nuclear plant and warned that it would “consider a step to restore the nuclear facilities in Yongbyon to their original state,” adding: “The United States is gravely mistaken if it thinks it can make a house search in North Korea as it pleases, as it did in Iraq.” Last Friday, Pyongyang declared that it no longer expected or wished to be removed from the US terrorist list and announced its intention to restart its nuclear facilities.

There is undoubtedly a certain amount of bluster in North Korea’s statements, as it has nothing else to bargain with, except its potential nuclear weapons capacity. But as Joseph Cirincione, president of the Ploughshares Fund, told Australian Broadcasting Corporation (ABC) radio on Thursday, North Korea was not “rushing pell mell” into restarting its facilities. Instead, it was “practically begging us to come back to the negotiating table”. He estimated that it would take Pyongyang at least a year to restart its reactor. Starting the reprocessing plant will only enable the extraction of about 6 kilograms of plutonium from existing spent reactor fuel rods.

North Korea’s announcement has, however, prompted a flood of speculation in the US and international media about the reasons behind its “provocative” act. Attention has been focussed on rumours about the ill-health of North Korean leader Kim Jong-il who failed to appear at a military parade held earlier this month to commemorate the regime’s 60th anniversary. Various analysts have speculated, with little in the way of facts, that Pyongyang’s “hard-line” stance may reflect a decision-making logjam while Kim recovers from a stroke.

A deliberate US provocation

It may be that the North Korean leader is sick. It is also possible that there is a sharp political crisis in the Stalinist regime, which confronts major economic problems. But as far as the uncertainty surrounding the six-party nuclear agreement is concerned, it would be far more legitimate to ask why the White House has provocatively refused to take a very limited step in keeping its side of the bargain. Divisions within the Bush administration, rather than a crisis in Pyongyang, are likely to be the real reason behind the stalling of the nuclear agreement.

Earlier this month, Secretary of State Rice, who pressed for the six-party talks and a deal with North Korea, rather absurdly declared that the administration’s diplomacy on Iran and North Korea was evidence that it would leave the non-proliferation issue “in far better shape than we found it”. In fact, under the influence of Vice President Dick Cheney and US Secretary of State for Non-Proliferation John Bolton, the Bush administration immediately ended Clinton administration’s rather tentative diplomatic opening toward Pyongyang and rapidly undermined the previous Agreed Framework under which North Korea’s nuclear facilities were frozen.

Tensions rapidly escalated as the US accused North Korea of maintaining a secret uranium enrichment program then effectively pulled out of the Agreed Framework by halting promised supplies of fuel oil. Pyongyang responded in late 2002 by expelling IAEA inspectors, restarting its nuclear reactor and reprocessing plant, and withdrawing from the Nuclear Non-Proliferation Treaty. The attitude of the Bush administration was summed up by Bush’s inclusion of North Korea in a so-called “axis of evil” with Iran and Iraq. The White House made clear its strategy was one of “regime change” not negotiations.

However, as the occupation of Iraq turned into a quagmire in 2003, the Bush administration tentatively accepted the start of six-party talks brokered by China. The move was always bitterly opposed by the most militarist elements of the White House, who sought on a number of occasions to obstruct negotiations. An initial deal in 2005 effectively collapsed after US Treasury officials secured the freezing of $25 million of North Korean funds in the Macau-based Banco Delta Asia (BDA) bank and abruptly pulled out of talks. The negotiations were only resumed after Pyongyang exploded a small nuclear device in October 2006.

In his comments to ABC radio, analyst Cirincione pointed to the divisions in the Bush administration between “pragmatists” such as Rice and “hardliners” led by Cheney, saying that he suspected the latter were “behind the decision not to take North Korea off the [terrorist] list”. After noting the earlier steps to freeze North Korea’s bank assets, he added that he saw the refusal to end North Korea’s terrorist status “as the hardliners intervening again to put a stick in the spokes of these negotiations”.

The fact that the Bush administration as a whole is now undercutting the North Korean agreement underscores the tactical character of the differences between the contending factions. One can only speculate as to the motives of the Bush administration as it reaches the end of its second term of office. But it does again raise the possibility that the embattled White House is preparing further provocations in the lead-up to the US presidential elections in a desperate bid to deflect attention from the worst financial crisis since 1929 and to bolster the fortunes of the Republican campaign.

Chrysler 1979: Lessons from an early corporate “bailout”

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By Tom Eley

In 1979, Chrysler Corporation, the third largest US automaker, hovered on the verge of collapse, a victim of sharply declining revenue and cash-on-hand that had reached the level of threatening daily operations. In August 1979, President Jimmy Carter’s Treasury Secretary, G. William Miller, proposed a government intervention in the form of $1.5 billion in guaranteed loans. The sum was considered an astonishing total. It was by far the largest government bailout in US history. On September 7, 1979 Chrysler formally petitioned the US government for the loans, and on December 20, 1979 Congress ratified the appropriation in the “Chrysler Corporation Loan Guarantee Act,” which Carter subsequently signed into law.

The loans stipulated major concessions from Chrysler’s workers, represented by the United Autoworkers Union (UAW). The political and media elite had successfully shifted blame for the corporation’s collapse—and by extension the overall decline of US capitalism—onto the working class. The UAW and the AFL-CIO buckled to the concession demands, a capitulation that cleared the path for an onslaught on working class living standards that has continued to this day.

There were profound pressures at play in the near-bankruptcy of Chrysler. The reemergence of the US’s capitalist rivals, especially Japan and Germany, was felt keenly in the auto industry through declining market share. Even the more immediate cause of Chrysler’s demise—the oil shocks of the 1970s that reduced demand for the large and inefficient vehicles that had been Chrysler’s stock-in-trade—testified to the declining influence of the US, which was reflected in its inability to dictate production quotas to the oil states.

Now, in the midst of the proposed bailout of the entire US financial industry, the experience of Chrysler in 1979 holds critical lessons for the working class.

The Chrysler bailout set in motion processes that have only intensified to this day. First, the working class would henceforth have to foot the bill for the decline of US capitalism through its own impoverishment, carried out in the name of “competitiveness.” Second, the corporate and financial elite, who bore primary responsibility for this decline, would henceforth reap windfall profits not only in spite of this decline, but precisely because of it.

These processes found embodiment in Chrysler CEO Lee Iacocca, who soon after the bailout was making millions of dollars, even as he ruthlessly axed tens of thousands of jobs.

A special place of shame must be given to the national media and political elite. In 1979 they raised a hue and cry about the need for Chrysler’s workers to “sacrifice” and extolled the virtues of the free market. Today they offer few such sermons to the financial elite responsible for the current crisis. But they continue to insist, as they did in the days of the Chrysler bailout, that the working class must pay the bills for the failures of American capitalism. The working class is being asked to fork over trillions of dollars—the sum would have been unfathomable in 1979—to bail out a criminal financial aristocracy that has bankrupted American capitalism, and very nearly the state itself.

The Chrysler bailout

When the bankruptcy of Chrysler appeared imminent, an intense debate developed within the ruling elite over how to approach what was viewed as the most disastrous sign to date of the decline of US capitalism. Should the nation’s third largest automaker and tenth largest industrial employer be allowed to fail? Or should there be a bailout? And, if so, under what conditions should Chrysler be “rescued”?

Ultimately a bailout prevailed over what had been quite intense Congressional opposition. The new consensus in favor of federal intervention was based on pressing wage and benefit concessions on Chrysler workers.

By late October 1979, UAW President Douglas Fraser had already agreed to substantial concessions. The UAW would allow Chrysler to defer $200 million in payments to the union’s pension fund, and it would hand over nearly all of the UAW’s $850 million pension fund to Chrysler as a loan. He also indicated that the UAW might accept a pay cut.

But in November, as the bill to bail out Chrysler hung in the balance, Alfred E. Kahn, chairman of the Carter Administration’s Council on Wage and Price Stability, testified before the Senate Banking Committee that the proposed $1.5 billion loan would be almost totally consumed by the UAW’s three-year contract with Chrysler. Kahn’s testimony was considered quite surprising, inasmuch as it appeared to undermine his own administration’s proposed bailout.

In fact Kahn was supplying the Senate with a new rationale for supporting the bill. In his testimony, he took the position—shared by the Carter Administration—that Chrysler workers had to sacrifice still more in the way of wages, benefits and conditions in order to rescue the corporation’s profit margins. The leading Democrat and Republican on the Senate Banking Committee, William Proxmire of Wisconsin and Jake Garn of Utah, who had previously opposed the bailout, then fell in line. Soon the Banking Committee was proposing stipulations to the package that included a renegotiation of the UAW contract, $525 million in concessions from workers, and a three-year wage freeze.

As New York Times correspondent Judith Miller put it in 1979, “there was widespread agreement ... that workers must make sufficient ‘sacrifices’ to help their employer recover.” The senators bullied, cajoled, and blackmailed the UAW, Garn threatening the union—in words eerily similar to current Treasury Secretary Henry Paulson—that “if they’re not willing to act in response to an extreme situation quickly, then let Chrysler go.”

In the weeks that followed, the national media and leading politicians launched a propaganda campaign demanding that Chrysler workers “sacrifice” in order to “save” Chrysler. The Times editorial page weighed in on December 10 (“What Price Chrysler Jobs?”), sanctimoniously declaring that “Chrysler workers should contribute significantly to their own rescue.” “The possibility of corporate failure,” the Times lectured, “is crucial to the health of a free economy. Without the market’s discipline, incentives for efficiency and innovation disappear.”

If Chrysler were to collapse, the editorial continued, “some workers would lose their jobs; most would be forced to renegotiate their wages downward. But the economy as a whole would benefit: Chrysler’s inefficiency would be removed as a drag on productivity... [i]t makes no sense to put the taxpayers at greater risk than Chrysler’s workers. If saving jobs is the most important rationale for a bailout, surely the public should expect major sacrifice from those with the most to gain.” The editorial then went on to denounce the UAW concessions already on the table as insufficient, warning that if the union “really prefers bankruptcy to a wage freeze, the public would have no reason to decide otherwise.”

(The Times’s idolatry of the free market, as expressed in 1979 when Chrysler workers’ jobs were at stake, is in noticeably short supply in 2008 as the government intervenes to bail out wealthy financiers—albeit once again at the expense of the working class!)

Out of this increasingly belligerent environment, a “compromise plan” was ultimately worked out that required, in exchange for the $1.5 billion guaranteed loan to Chrysler, $462.5 million in wage cuts and benefit concessions from workers.

Lessons from history

The 1979 Chrysler bailout was a significant turning point in US history.

Chrysler had been a major and iconic presence of US industry for decades. Its collapse was a milepost in the long-term decline of US capitalism, which had resulted from the reemergence of major capitalist rivals and the enormous quantities the US spent on its military and related industries. The reemergence of Europe and Japan was the outcome of long processes that had been set in motion much earlier, when in the wake of World War II US capitalism—as a means of forestalling world revolution—rebuilt its major rivals.

At the helm of Chrysler stood Lee Iacocca, the human embodiment of another new historical process: the celebrity CEO whose personal wealth and prestige grows in inverse proportion to the decline of the corporation that he nominally represents.

At the helm of the country was the Democratic Party, which controlled the presidency and Congress. In the bailout, the Democrats joined with the Republicans in isolating the UAW. In so doing, they distanced themselves from the limited reformist agenda that the party had championed between the 1930s and 1960s. Since the 1970s the Democratic Party has been an equal partner with the Republicans in the steady rollback of the social gains and democratic rights won by the working class in the preceding decades.

Finally, the capitulation of the UAW and the AFL-CIO without a fight in order to “save jobs” gave the green light to what has been a three-decades-long assault on the living standards of the working class. The UAW’s plan to “save jobs” has failed miserably—hundreds of thousands of auto jobs have been wiped out since 1979—but much like Iacocca and the managerial elite, the bureaucracy has prospered in spite of its pitiful track record. The Chrysler concessions were a major step toward the open conversion of the bureaucracy into a profit-making enterprise, a process that has come to full fruition in the UAW’s recent ascension to the management of the auto industry’s enormous health care liabilities.

The Bulletin, the forerunner to the World Socialist Web Site, warned in 1979 that “there is one essential question that arises out of the Chrysler bankruptcy: Who is to pay for the breakdown of the capitalist profit system, the working class or big business? The answer of big business, the banks, the Democrats, the Carter administration and the UAW bureaucracy is, of course, the working class.”

Democrats push for quick adoption of Bush plan to bail out Wall Street

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By Barry Grey

The turn of events at the White House summit announced Wednesday night by President Bush and held Thursday to press for bipartisan agreement on his plan for a bailout of Wall Street has underscored the cynical and reactionary role being played by the Democratic Party and its presidential candidate, Barack Obama.

Bush called the meeting, bringing together Obama, Republican presidential candidate John McCain and the congressional leadership of both parties, to signal rapid passage of legislation authorizing Treasury Secretary Henry Paulson to spend at least $700 billion in taxpayer money to purchase virtually worthless financial assets from banks and other financial institutions, enabling them to offload their bad debts and losses at the expense of the American people.

The meeting was called for Thursday afternoon, in the expectation that by that time the Democratic Party would have already signed off on the deal, along with the Republicans in the Senate. As for the House of Representatives, the Republican minority leader, Rep. John Boehner, had joined with the Democratic speaker of the house, Nancy Pelosi, to issue a statement pledging support for a bipartisan bill that would conform to the basic provisions of the proposal first broached by Paulson the previous Friday.

Early Thursday afternoon, prior to the White House summit, the heads of the banking and finance committees of the House and Senate emerged from talks to announce that they had arrived at an agreed framework for a bailout plan which, with minor amendments, accepted the principles of the scheme proposed by Paulson.

Christopher Dodd, the Democratic chairman of the Senate Banking Committee, spoke for the group, saying, “We’re giving [Paulson] authority that he will need in order to act and the funding that he will need.” He predicted that a final bill would pass both houses of Congress within a few days.

But the White House meeting turned into a contentious affair and ended in disarray. Boehner, with the tacit support of McCain, raised objections to the deal that have been voiced by a large number of right-wing House Republicans, and announced that he had a counterproposal. His intervention blindsided the Democrats, who emerged from the meeting denouncing Boehner and McCain and pledging to continue the push for rapid passage of the Paulson plan.

Ever since Paulson presented his bailout plan last week, the Democrats have taken the lead in the drive to pass the necessary legislation. They have lavished praised on Paulson and Federal Reserve Board Chairman Ben Bernanke, who testified before the House and Senate banking committees on Tuesday and Wednesday to promote the deal.

After Bush spoke Wednesday night, the Democratic chairmen of the banking committees went out of their way to praise him, presenting the spectacle of leaders of the nominal opposition party hailing the most hated president in modern American history for his efforts to carry out one of the most antidemocratic and reactionary measures in the history of the country.

Christopher Dodd, the chairman of the Senate Banking Committee, welcomed Bush’s speech as a “quantum leap forward” in gaining passage of the bailout.

Obama, for his part, has made the principal task of his campaign assuring Wall Street of his support for the bailout and his overall reliability as a defender of the interests of the financial elite.

This has opened the door for McCain and right-wing House Republicans to posture as opponents of Wall Street and identify themselves with massive popular opposition to the bailout. The faction of House Republicans who have denounced the measure represents right-wing libertarian elements within the party who identify social spending and government intervention in the capitalist “free market” with what they consider the ultimate evil—socialism. They base themselves on appeals primarily to middle class layers, utilizing anti-tax and nationalist demagogy as their stock in trade.

In opposing the bailout, they are, moreover, responding to bitter opposition to the windfall for Wall Street among their constituents. The media and politicians of both parties have acknowledged that there is massive popular opposition to the bailout scheme.

The Los Angeles Times on Thursday called the proposal “wildly unpopular.” The New York Times reported that the “delicate” negotiations between Paulson and congressional leaders were “complicated” by pressure on rank-and-file legislators “who were fielding torrents of complaints from constituents furious that their own money was going to be spent to clear up a mess created by high-paid financial executives.”

The newspaper gave several examples of lawmakers who have been inundated with hostile emails and phone calls over the past week. “Senator Barbara Boxer, Democrat of California,” it noted, “has received nearly 17,000 email messages, nearly all opposed to the bailout, her office said. More than 2,000 constituents called Ms. Boxer’s California office on Tuesday alone; just 40 favored the bailout. Her Washington office received 918 calls. Just one supported the rescue plan.

“Senator Sherrod Brown, Democrat of Ohio, said he had been getting 2,000 email messages and telephone calls a day, roughly 85 percent opposed.”

What neither the media nor the politicians have pointed out is the brazen violation of any conception of democracy, even by the eviscerated and restricted standards of the American two-party system, represented by the enactment of such a momentous measure, which will impose massive burdens on the American people for decades to come, on the eve of a national election by a lame duck president and a Congress nearing the end of its tenure.

The Democrats’ rush to pass the bailout is driven by the most cynical calculations. They want the decision to be taken before the November elections, so that in the event they win, an Obama administration, with an increased Democratic majority in both houses of Congress, can claim that its hands are tied and it has no alternative but to pursue a right-wing policy of austerity, including savage cuts in social spending.

The Socialist Equality Party completely rejects the bailout of Wall Street and the entire framework within which the Bush administration and the Democratic Party seek to deal with the financial crisis. Our opposition has nothing in common with that of some of the most right-wing sections of the Republican Party.

The responsibility for the economic crisis rests with the capitalist system. The near-collapse of the American banking system has exposed not only the economic bankruptcy of the profit system, but also the fundamentally unrepresentative character of its political system.

This crisis is the product of the unbridled greed and criminality of the financial elite. More fundamentally, it is the outcome of the long-term decline and decay of American capitalism.

There is no progressive or democratic solution within the framework of this system. If the resources of the country must be mobilized to resolve the economic crisis and prevent a catastrophe, then they must be taken out of the hands of the financial parasites and placed under the democratic control of the working people.

The working class must be mobilized as an independent political force, in opposition to both parties of Wall Street, to establish a workers’ government and carry out the socialist nationalization, without compensation, of the banks and finance industry, so that the financial resources of the country can be allocated to meet to social needs of the people, rather than the money-mad strivings of a financial aristocracy.

Only on this basis can the urgent need be met for decent-paying jobs, retirement security, education, health care and high-quality housing for all.

This is the program of the SEP and our candidates for president and vice president, Jerry White and Bill Van Auken. We call on all those who agree on the need for a socialist alternative to support our election campaign and join the SEP.

To find out more about the SEP campaign, visit or contact us.