Sunday, October 5, 2008

McCain And Gramm: Still Deregulators After All These Years

Phil Gramm famously commented that the country is undergoing a "mental recession" and are a "nation of whiners." During his psychological evaluation of the American people, Gramm also stated, "We've never been more dominant. We've never had more natural advantages than we have today."

Doesn't that sound like a certain presidential candidate who repeatedly insisted, "The fundamentals of our economy are strong"?

Both Gramm and McCain are out of touch regarding the impact of today's economy on the majority of Americans. At the same time, the forces of deregulation that they unleashed are in great part responsible for our current financial turmoil. 

Despite the fact that Gramm stepped down from his position with the McCain campaign, it's not a stretch to consider whether he would be appointed treasury secretary in a McCain administration. David Shuster of MSNBC wondered about the same thing and asked McCain spokesman Tucker Bounds, who refused to answer:

Regardless of McCain's false stance as a populist during the current financial turmoil, no one should believe that he will ever embrace needed governmental regulation and oversight of the financial industry. The Nation, in "Crashing The Election" (10/6/08), pointed out McCain and Gramm's shared bond as deregulators:

Only in a personality-driven, contentless climate will John McCain be able to pass off his two-faced promises of reform as a populist crusade. Railing against "multimillion-dollar payouts to CEOs," McCain now promises to bring "regulatory oversight" to Washington and "transparency and accountability to Wall Street." But his rhetoric is just lipstick on a pig. In March McCain told the Wall Street Journal that he is "always for less regulation," and in April--perhaps inspired by his longtime economic guru Phil Gramm, who said in July that a nation of "whiners" was in a "mental recession"--McCain described the country's economic crisis as "psychological." Now faced with a global financial crisis, McCain proposes a psychological solution--belief in his image as a maverick reformer.

Puncturing McCain's newfound Teddy Roosevelt persona will require brutal honesty from Barack Obama and his campaign. In his initial response to this latest economic breakdown, Obama called it "the most serious financial crisis since the Great Depression" but then said, "I certainly don't fault Senator McCain for these problems...I do fault the economic philosophy he subscribes to." Obama's statement was gallant but missed the mark. In fact, Senator McCain--along with every Republican and Democrat who pushed financial deregulation--is responsible for today's economic woes. McCain voted for the Gramm-Leach-Bliley Act, signed by Bill Clinton in 1999, repealing the Glass-Steagall Act, which since 1933 had kept a wall between commercial and investment banks. When that wall came tumbling down, and when the Internet bubble burst, the housing frenzy took off, as financiers sought new ways to create paper profits.

No comments: