The bailout, however it eventually ends up passing, will have repercussions for the next president's agenda that each campaign and voter ought to consider. Time magazine's David von Drehle does everyone an odd sort of service by writing an article that explains how not to go about this task. Drehle mocks the real concerns both candidates have about the bill without considering why they have those concerns or what the bill would look like without them. Drehle argues that neither candidate took enough action, despite the fact that right now it's the job of the Fed, the Department of Treasury, and appropriate congressional leaders to solve this problem.
But leave all that behind for a moment. The really strange part is when the article deals with the potential consequences of the bailout for each candidate's potential presidency. While admitting that Barack Obama's economic policies would be better in the long term, Drehle argues that it will be impossible to fulfill any of them because of the bailout -- at least until the country is taught "thrift." (Presumably, the classic president as home ec teacher role.) And the article doesn't mention any of the policies that Obama has put forward on dealing with the lending problems that underlie this crisis and seem to make up the root of the thrift concept.
Drehle also somehow thinks that McCain's panicky week of economic flip-flops was more attractive than Obama's cool response. He also thinks that McCain's corporate tax cut actually gets at the root of the crisis -- it doesn't. Corporate tax rates have almost nothing to do with the crisis, which comes from, as I'm sure readers of this blog are tired of hearing, the over-leveraging of dubious financial instruments that deregulation made possible. I'm not even sure that McCain himself is marketing his tax cuts as the solution to this crisis.
The author's main concern is that neither candidate plans on deficit reduction! Oh noes! Boss of bosses Bob Kuttner pointed to the welcome lack of emphasis on deficit reduction in the bailout debate in his piece yesterday, but apparently there are still some hold-outs. It's clear that it will be more difficult for either candidate to push through as ambitious a policy agenda as they'd like, but to focus on cutting the deficit as we are entering, or experiencing, a recession is not an economically sound policy. McCain's tax cuts would have little effect on the economy and balloon the deficit. Obama's economic plan, which lowers the taxes for a majority of Americans but raises them for people who make more than $600,000 a year, will hopefully allow for wise spending that will improve the economy.
--Tim Fernholz
