Thus far, Sarah Palin's comments on the AIG bailout have been confined to a sad show of empathy for the American taxpayer. "Very, very disappointing that taxpayers are called upon for another one," she sighs. Surveying this insightful response, Tyler Cowen makes a good point: "The real lesson of this quotation is that the Republicans have no good language for discussing recent events. They're not allowed to say anything that sounds like 'showing sympathy for Wall Street,' so they have to find someone else to show sympathy for but they can't turn to traditional Democratic rhetoric about how an unregulated capitalist economy is failing us." Hence the put-upon taxpayer. And true enough: It is a shame that the taxpayer has to bail out AIG. But the language here is an odd attempt to grab hold to the traditional economic lifeline of Republican candidates: High taxes. AIG will need to be bailed out. That takes federal money. That means taxpayers. Which means higher taxes (or spending cuts, or borrowing). So in a way, the real problem here is that tax rates are too high, and who do you trust to cut them: Liberals? Or John McCain and Sarah Palin? Meanwhile, McCain's response made Palin's commentary look like a model of analytical clarity. "We have to - we cannot have the taxpayers bail out AIG or anybody else...this is something we're gonna have to work through -- there's too much corruption, there's too much access, we can fix it, I believe in America - we can have a 9/11 commission such as we had after 9/11, 'cause this is a huge crisis and we can come up with fixes and we can make sure that every American has a safer future and that is to make them know that their bank deposits are safe and insured." As Cowen says, "he did worse than she did." Insofar as corruption and access played a role, it was in talking to Senators who dismantled the regulatory state and wrote the legislative language ushering these new financial instruments into existence. Legislators like John McCain's good buddy and trusted economic adviser Phil Gramm, who repealed Glass Steagall and wrote the amendment that "forbade federal agencies to regulate the financial derivatives that greased the skids for passing along risky mortgage-backed securities to investors." In other words, McCain's take on the crisis is that he won't let his friends, advisers, or ideological allies make any more policy.
