Thursday, September 18, 2008

A quantum of solace? No: a Gramm of discomfort.

The one that got away:
When the economic history of these years comes to be written (the clatter of Ph.D. keyboards grows by the day), there will be an episode on the lunacies of deregulation.

How did we get into this mess?

Cue Phil Gramm.

Back in December 2000, things in Washington, DC, were somewhat feverish:
  • There was the small matter of Bush v. Gore, recently settled at the Supreme Court.
  • The "holiday" recess ("Christmas" being a forbidden word in the land of the First Amendment) was coming up.
  • The Republican majority in Congress was, again, toe-to-toe over the budget with the (now lame-duck) President Clinton.
Let's stick with that last one.

The issue at dispute was a spending bill, to the tune of £384 billion. Billion, note. At the last moment, Senator Phil Gramm slipped in a measure (262 pages in length) entitled the Commodity Futures Modernization Bill. This had been drafted by Gramm's associates on Wall Street, giving pretty-well unlimited scope to invent new money-making wheezes, without any risk of scrutiny or surveillance. Even Gramm was taken aback that it passed without more ado.
That was Malcolm's start for a rant.

He intended to demonstrate conclusively
  • that the Gramm-Leach-Bliley Act was the root-cause of the present melt-down;
  • that Gramm was a personal beneficiary, beyond the dreams of avarice, of the grateful largesse of the financial corporations (Enron in one particular, of which Gramm's wife was a Board member0;
  • that Gramm's personal involvement continued (after Enron had blasted his Senatorian progress) as a Vice-Chairman of UBS, while he lobbied and machinated for looser regulation of the financial markets;
  • that there was and is a direct and continuing link between Gramm and John McCain.
At which point he diverted his attention to other matters of concern: bootlegs of Bob Dylan and a promising teccy by Jill Paton Walsh.

No prizes for coming in second

All of which was made pretty redundant by an article by Alexander Cockburn in this morning's First Post, which made all of those points eloquently, and in the context of a sweeping condemnation of American social and economic policies:

Over the past quarter-century the US manufacturing economy went offshore. Lately the so-called new economy of the 'Information Age' has been moving offshore too. Free trade has left millions without decent jobs or prospects of ever getting one above the $15 an hour tier.

Below a thin upper crust of the richest people in the history of the planet, there's the rest of America which, in varying degrees of desperation, can barely get by. Millions are so close to the edge that an extra 25c on a gallon of fuel is a household budget-breaker.

Wages have stagnated. For decade after decade the bargaining power of workers has dwindled. We've had the macabre spectacle of US-based workers ordered to train their overseas replacements before being fired.

(By-the-by, Malcolm now sees that neither he nor Cockburn had squatters' rights here. The marvellous Mother Jones has been ploughing this furrow since mid-summer. Paul Krugman, op-eding in the New York Times, was on the case as early as March.)

Follow the money trail

Which leaves Malcolm with just these thoughts:

  • what exactly is the McCain policy in this crisis?


  • how close are he and Gramm these days?
Those may not be wholly-separate questions.

McCain's wobbles

Gramm, a fellow Texan, was McCain's cheerleader, "top economic adviser" and chair of the McCain campaign -- until an interview with the Washington Times.

That interview was Gramm's shop-window to promote:
a detailed program to revive dynamic growth with dramatic tax and spending reforms.
From what we know above, we can assume that "detailed program" amounted to licensing the market to yet greater over-reaching.

Unfortunately, Gramm then fingered the culprits responsible for "the sluggish economy". They were none other than the Great American Public:
weighed down above all ... that economic conditions are the worst in two or three decades and that America is in decline.

"You've heard of mental depression; this is a mental recession," he said, noting that growth has held up at about 1 percent despite all the publicity over losing jobs to India, China, illegal immigration, housing and credit problems and record oil prices. "We may have a recession; we haven't had one yet."

"We have sort of become a nation of whiners," he said. "You just hear this constant whining, complaining about a loss of competitiveness, America in decline" despite a major export boom that is the primary reason that growth continues in the economy, he said.

"We've never been more dominant; we've never had more natural advantages than we have today," he said. "We have benefited greatly" from the globalization of the economy in the last 30 years.
As the derision set in, the McCain first instinct was to close ranks. Gramm's Panglossian self-delusion was the McCain position. A statement went up on the Politico website, quoting a McCain aide:
Mr. Gramm was simply saying that we are laying out the economic plan this week. The plan is comprehensive, providing immediate near-term relief for Americans hurting today as well as longer-term solutions to get our economy back on track, secure our energy future and deliver jobs, prosperity and opportunity for the next generation. We're laying out that plan this week with an emphasis on the critical importance of job creation, and it's been a great success so far.
When general ridicule exploded, Gramm was then swiftly evicted from Starship McCain via the nearest airlock. Overnight, that previous statement disappeared from Politico, and the direction of travel totally reversed:
Phil Gramm's comments are not representative of John McCain's views. John McCain travels the country every day talking to Americans who are hurting, feeling pain at the pump and worrying about how they'll pay their mortgage. That's why he has a realistic plan to deliver immediate relief at the gas pump, grow our economy and put Americans back to work.
Enter, and exit, the Old Girl from Channing School

Another blast from the past, another Texan, was loosed to make the economic running. Carly Fiorina was on the stump:
John McCain has proposed a clear pro-growth agenda that will jump-start our economy and create millions of jobs ...
Americans know how to succeed. They need a government that creates an environment to unleash the creativity and ingenuity of the American people to create jobs, not more programs from Washington...

He'll also keep America competitive in the global economy by reducing taxes on businesses and giving a tax credit for the hiring of research and development workers. America levies the second-highest business tax rate of any industrialized country. To attract jobs here, that has to change.
Which sounds like the recipe for further deregulation and subsidy for Big Business.

Alas, in the course of true Texan love did not run smooth: Fiorina would follow Gramm through the air-lock.

She questioned the suitability of Mrs Mooseblaster for the Veep slot -- indeed the suitability of McCain and all-comers -- , and was decidedly more liberal on girly matters. Is it relevant here that Fiorina had been floated, not least by herself, as a name to share the McCain ticket? Malcolm notes, too, that Fiorina might not be the best arm-candy for McCain at this precise moment: she was, after all, the recipient of (allegedly) a $42 million golden parachute when she previously was decanted from Hewlett-Packard: that doesn't chime to well with the Mooseblaster manifesto:
Shortly after McCain promised he would "clean up" Wall Street, Alaska Governor Sarah Palin, his running mate, appeared at a Colorado rally on Monday morning and proclaimed that "John McCain and I will put an end to the abuses in Washington and Wall Street that have resulted in this financial crisis." She promised a McCain administration would "reform the way Wall Street does business."
That hardly amounts to a cogent, coherent policy; and leaves us that enduring mystery:

Where is Phil Gramm these days?

He was certainly back on board, just a month after his eviction: we have the word of the Wall Street Journal for that:
Ousted John McCain campaign co-chairman Phil Gramm is back with the campaign’s top advisers this weekend, as the campaign gathers top supporters for a series of briefings in scenic Aspen, Colo. ...

Gramm was seated in the front row, with other top supporters, this afternoon as McCain addressed the Aspen Institute in a “conversation” with Walter Isaacson, president of the institute and a former editor of Time magazine.

Asked what his role in the campaign is now, Gramm said in an interview, “I’m a supporter.” As for whether he continues to advise McCain, he said, “We’re friends. I haven’t stopped being his friend. If he asks me, I’d give it to him.” He added, “I’m not an official adviser.”
As late as last Wednesday (10th September), the fine Italian hand of Gramm was still drafting the script, according to AP:
Republican Rep. Ron Paul, the libertarian-leaning Texas lawmaker who attracted a devoted following in the GOP primaries, said Wednesday he rejected an appeal to endorse John McCain's presidential bid.

Paul said the request came from Phil Gramm, the former McCain adviser and ex-senator...

Speaking to reporters at a news conference, Paul said Gramm called him this week and told him, "You need to endorse McCain." The Texas congressman said he refused.
Ordure! Ordure!

Just a few days ago, the newsprints were hailing the great turn-around in the fortunes of John McCain, following his public embrace of Mrs Mooseblaster. Now, once again, it has all turned sour.

This has reached even the attention of the Times:
John McCain embarked on a desperate – but defiant – damage-control exercise yesterday as he sought to justify his claim that despite violent convulsions in America’s financial markets the “fundamentals of our economy are strong”.

His Democratic rival has pounced on the comment as proof that the 72-year-old Republican nominee is “out of touch” not only with the plight of investors on Wall Street, but also the pain of homeowners and workers on Main Street.
Lies, damn lies, and statistical presentation

To make its point, the Times illustrates McCain's problem with a graphic derived from the Diageo/Hotline daily poll (which, in itself, provokes Malcolm's curiosity: what has a drinks giant to do with political polling?)

It is instructive to compare the original:

with what the Times has done to it:

Now what Murdochian sub-text is being conveyed there?

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