Today's McCain conference call had Rudy Giuliani saying all kinds of wild stuff. First, he took the spending freeze that McCain suddenly proposed during last week's debate -- which would be a terrible and destructive idea, especially for seniors -- and made it into a spending cut: "John McCain recommended exactly this on Friday night in answer to Jim Lehrer's question. I would do across the board cuts of government agencies with the exemption of military." He then mocked Obama for suggesting that spending might help alleviate a recession. I'd say that Giuliani had forgotten his Keynes except that I doubt Giuliani has ever read Keynes -- now that's an East Coast Elitist put-down! But seriously, government spending to alleviate economic crisis is a necessity.
This is even funnier considering that John McCain is proposing huge tax cuts that would go on top of the series of huge Bush administration tax cuts that McCain originally opposed. He was against the cuts before he was for them, and guess what: tax cuts are spending too. They don't raise revenue, and they will cost as much as, if not more than, Obama's ideas but without improving the economy. It's just as ridiculous as the idea that cuts in the capital gains tax will remedy the financial crisis -- the problem isn't the incentives that lowered taxes might provide, it's the failure of the over-leveraged toxic assets.
Then Giuliani went on to claim that McCain had negotiated the bailout bill, which was basically finished before he came to Washington. Anytime a GOP surrogate says something like, "These are the things that John McCain ... didn't alone have put into the bill, the things he worked on to have put in the bill to make it not a bailout but a work out and a recovery program," recall that he did not attend any negotiating sessions, except one where he was silent. All of the things that made the bill a "recovery program" were put in by Chris Dodd and Barney Frank in response to Paulson's original program. The only other additions to the bill, such as expanding FDIC insurance, were supported by both presidential candidates, or added after the bill first failed in order to sweeten the pot for the next vote, tonight in the Senate.
I had to get off the call before Q&A time and apparently I missed out on the real fun.
-- Tim Fernholz
