Thank Goodness!

June 5, 2008

Clinton to End Bid and Endorse Obama

By ADAM NAGOURNEY and JEFF ZELENY

Senator Hillary Rodham Clinton will endorse Senator Barack Obama on Saturday, bringing a close to her 17-month campaign for the White House, aides said. Her decision came after Democrats urged her on Wednesday to leave the race and allow the party to coalesce around Mr. Obama.

Howard Wolfson, one of Mrs. Clinton’s chief strategists, and other aides said she would express support for Mr. Obama and party unity at an event in Washington that day. One adviser said that Mrs. Clinton would concede defeat, congratulate Mr. Obama and proclaim him the party’s nominee, while pledging to do what was needed to assure his victory.

Her decision came after a day of conversations with supporters on Capitol Hill about her future now that Mr. Obama had clinched the nomination. Mrs. Clinton had, in a speech after Tuesday night’s primaries, suggested that she wanted to wait before deciding about her future, but in conversations throughout the day on Wednesday, her aides said, she was urged to step aside.

“We pledged to support her to the end,” said Representative Charles B. Rangel, a New York Democrat who has been a patron of Mrs. Clinton since she first ran for the Senate. “Our problem is not being able to determine when the hell the end is.”

--Snip--

More at the NYT

Looks like the fat lady is finally clearing her throat. Please let this be true!

Divided They Stand

By PAUL KRUGMAN

It is, in a way, almost appropriate that the final days of the struggle for the Democratic nomination have been marked by yet another fake Clinton scandal — the latest in a long line that goes all the way back to Whitewater.

This one, in case you missed it, involved an interview Hillary Clinton gave the editorial board of South Dakota’s Argus Leader, in which she tried to make a case for her continuing campaign by pointing out that nomination fights have often gone on into the summer. As one of her illustrations, she mentioned that Bobby Kennedy was assassinated in June.

It wasn’t the best example to use, but it’s absurd to suggest, as some Obama supporters immediately did, that Mrs. Clinton was making some kind of dark hint about Barack Obama’s future.

But then, it was equally absurd to portray Mrs. Clinton’s assertion that it took L.B.J.’s political skills to turn Martin Luther King’s vision into legislation as an example of politicizing race. Yet the claim that Mrs. Clinton was playing the race card, which was promoted by some Obama supporters as well as in a memo by a member of Mr. Obama’s staff, achieved wide currency.

Why does all this matter? Not for the nomination: Mr. Obama will be the Democratic nominee. But he has a problem: many grass-roots Clinton supporters feel that she has received unfair, even grotesque treatment. And the lingering bitterness from the primary campaign could cost Mr. Obama the White House.

To the extent that the general election is about the issues, Mr. Obama should have no trouble winning over former Clinton supporters, especially the white working-class voters he lost in the primaries. His health care plan is seriously deficient, but he will nonetheless be running on a far more worker-friendly platform than his opponent.

Indeed, John McCain has shed whatever maverick tendencies he may once have had, and become almost a caricature conservative — an advocate of lower taxes for the rich and corporations, a privatizer and shredder of the safety net.

But elections always involve emotions as well as issues, and there are some ominous signs in the polling data.

In Florida, in particular, the rolling estimate produced by the professionals at Pollster.com shows Mr. McCain running substantially ahead of Mr. Obama, even as he runs significantly behind Mrs. Clinton. Ohio also looks problematic, and Pennsylvania looks closer than it should. It’s true that head-to-head polls five months before the general election have a poor track record. But they certainly give reason to worry.

The point is that Mr. Obama may need those disgruntled Clinton supporters, lest he manage to lose in what ought to be a banner Democratic year.

So what should Mr. Obama and his supporters do?

Most immediately, they should realize that the continuing demonization of Mrs. Clinton serves nobody except Mr. McCain. One more trumped-up scandal won’t persuade the millions of voters who stuck with Mrs. Clinton despite incessant attacks on her character that she really was evil all along. But it might incline a few more of them to stay home in November.

Nor should Obama supporters dismiss Mrs. Clinton’s strength as a purely Appalachian phenomenon, with the implication that Clinton voters are just a bunch of hicks.

So what comes next?

Mrs. Clinton needs to do her part: she needs to be careful not to act as a spoiler during what’s left of the primary, she needs to bow out gracefully if, as seems almost certain, Mr. Obama receives the nod, and she needs to campaign strongly for the nominee once the convention is over. She has said she’ll do that, and there’s no reason to believe that she doesn’t mean it.

But mainly it’s up to Mr. Obama to deliver the unity he has always promised — starting with his own party.

One thing to do would be to make a gesture of respect for Democrats who voted in good faith by recognizing Florida’s primary votes — which at this point wouldn’t change the outcome of the nomination fight.

The only reason I can see for Obama supporters to oppose seating Florida is that it might let Mrs. Clinton claim that she received a majority of the popular vote. But which is more important — denying Mrs. Clinton bragging rights, or possibly forfeiting the general election?

What about offering Mrs. Clinton the vice presidency? If I were Mr. Obama, I’d do it. Adding Mrs. Clinton to the ticket — or at least making the offer — might help heal the wounds of an ugly primary fight.

Here’s the point: the nightmare Mr. Obama and his supporters should fear is that in an election year in which everything favors the Democrats, he will nonetheless manage to lose. He needs to do everything he can to make sure that doesn’t happen.

Success Breeds Failure

By PAUL KRUGMAN
Published: May 5, 2008

Cross your fingers, knock on wood: it’s possible, though by no means certain, that the worst of the financial crisis is over. That’s the good news.

The bad news is that as markets stabilize, chances for fundamental financial reform may be slipping away. As a result, the next crisis will probably be worse than this one.

Let’s look at the story so far.

After the financial crisis that ushered in the Great Depression, New Deal reformers regulated the banking system, with the goal of protecting the economy from future crises. The new system worked well for half a century.

Eventually, however, Wall Street did an end run around regulation, using complex financial arrangements to put most of the business of banking outside the regulators’ reach. Washington could have revised the rules to cover this new “shadow banking system” — but that would have run counter to the market-worshiping ideology of the times.

Instead, key officials, from Alan Greenspan on down, sang the praises of financial innovation and pooh-poohed warnings about the growing risks.

And then the crisis came. Last August, as investors began to realize the scope of the mortgage mess, confidence in the financial system collapsed.

I believe we’ve been lucky to have Ben Bernanke as Federal Reserve chairman during these trying times. He may lack Mr. Greenspan’s talent for impersonating the Wizard of Oz, but he’s an economist who has thought long and hard about both the Great Depression and Japan’s lost decade in the 1990s, and he understands what’s at stake.

Mr. Bernanke recognized, more quickly than others might have, that we were in a situation bearing a family resemblance to the great banking crisis of 1930-31. His first priority, overriding every other concern, had to be preventing a cascade of financial failures that would cripple the economy.

The Fed’s efforts these past nine months remind me of the old TV series “MacGyver,” whose ingenious hero would always get out of difficult situations by assembling clever devices out of household objects and duct tape.

Because the institutions in trouble weren’t called banks, the Fed’s usual tools for dealing with financial trouble, designed for a system centered on traditional banks, were largely useless. So the Fed has cobbled together makeshift arrangements to save the day. There was the TAF and the TSLF (don’t ask), there were credit lines to investment banks, and the whole thing culminated in March’s unprecedented, barely legal Bear Stearns rescue — a rescue not of Bear itself, but of its “counterparties,” those who were on the other side of its financial bets.

It’s still far from certain whether all this improvisation has resolved the crisis. But it was the right thing to do, and for the moment things seem to be calming down.

So two cheers for Mr. Bernanke. Unfortunately, his very success — if he has succeeded — poses another problem: it gives the financial industry a chance to block reform.

We now know that things that aren’t called banks can nonetheless generate banking crises, and that the Fed needs to carry out bank-type rescues on their behalf. It follows that hedge funds, special investment vehicles and so on need bank-type regulation. In particular, they need to be required to have adequate capital.

But while our out-of-control financial system has been bad for the country, it has been very good for wheeler-dealers, who collect huge fees when things seem to be going well, then get to walk away unscathed — indeed, often with large severance packages — when things go wrong. They don’t want regulations that would stabilize the economy but cramp their style.

And now that the financial clouds have lifted a bit, the pushback against sensible regulation is in full swing. Even the Fed’s very modest proposal to curb abusive mortgage lending with new standards is under fire, and there are worrying signs that the Fed may back down.

Maybe a Democratic sweep in November can revive the cause of financial reform, but right now it looks as if we’ll soon return to business as usual.

The parallel that worries me is what happened a decade ago, after the hedge fund Long-Term Capital Management failed, temporarily causing the whole financial system to freeze up.

Through luck and skill, that crisis was contained — but rather than serving as a warning, the episode nurtured the false belief that the Fed had all the tools it needed to deal with financial shocks. So nothing was done to remedy the vulnerabilities the L.T.C.M. crisis revealed — the same vulnerabilities that are at the heart of today’s much bigger crisis.

And if we don’t fix the system now, there’s every reason to believe that the next crisis will be bigger still — and that the Fed won’t have enough duct tape to hold things together.

Self-Inflicted Confusion

By PAUL KRUGMAN

After Barack Obama’s defeat in Pennsylvania, David Axelrod, his campaign manager, brushed it off: “Nothing has changed tonight in the basic physics of this race.”

He may well be right — but what a comedown. A few months ago the Obama campaign was talking about transcendence. Now it’s talking about math. “Yes we can” has become “No she can’t.”

This wasn’t the way things were supposed to play out.

Mr. Obama was supposed to be a transformational figure, with an almost magical ability to transcend partisan differences and unify the nation. Once voters got to know him — and once he had eliminated Hillary Clinton’s initial financial and organizational advantage — he was supposed to sweep easily to the nomination, then march on to a huge victory in November.

Well, now he has an overwhelming money advantage and the support of much of the Democratic establishment — yet he still can’t seem to win over large blocs of Democratic voters, especially among the white working class.

As a result, he keeps losing big states. And general election polls suggest that he might well lose to John McCain.

What’s gone wrong?

According to many Obama supporters, it’s all Hillary’s fault. If she hadn’t launched all those vile, negative attacks on their hero — if she had just gone away — his aura would be intact, and his mission of unifying America still on track.

But how negative has the Clinton campaign been, really? Yes, it ran an ad that included Osama bin Laden in a montage of crisis images that also included the Great Depression and Hurricane Katrina. To listen to some pundits, you’d think that ad was practically the same as the famous G.O.P. ad accusing Max Cleland of being weak on national security.

It wasn’t. The attacks from the Clinton campaign have been badminton compared with the hardball Republicans will play this fall. If the relatively mild rough and tumble of the Democratic fight has been enough to knock Mr. Obama off his pedestal, what hope did he ever have of staying on it through the general election?

Let me offer an alternative suggestion: maybe his transformational campaign isn’t winning over working-class voters because transformation isn’t what they’re looking for.

From the beginning, I wondered what Mr. Obama’s soaring rhetoric, his talk of a new politics and declarations that “we are the ones we’ve been waiting for” (waiting for to do what, exactly?) would mean to families troubled by lagging wages, insecure jobs and fear of losing health coverage. The answer, from Ohio and Pennsylvania, seems pretty clear: not much. Mrs. Clinton has been able to stay in the race, against heavy odds, largely because her no-nonsense style, her obvious interest in the wonkish details of policy, resonate with many voters in a way that Mr. Obama’s eloquence does not.

Yes, I know that there are lots of policy proposals on the Obama campaign’s Web site. But addressing the real concerns of working Americans isn’t the campaign’s central theme.

Tellingly, the Obama campaign has put far more energy into attacking Mrs. Clinton’s health care proposals than it has into promoting the idea of universal coverage.

During the closing days of the Pennsylvania primary fight, the Obama campaign ran a TV ad repeating the dishonest charge that the Clinton plan would force people to buy health insurance they can’t afford. It was as negative as any ad that Mrs. Clinton has run — but perhaps more important, it was fear-mongering aimed at people who don’t think they need insurance, rather than reassurance for families who are trying to get coverage or are afraid of losing it.

No wonder, then, that older Democrats continue to favor Mrs. Clinton.

The question Democrats, both inside and outside the Obama campaign, should be asking themselves is this: now that the magic has dissipated, what is the campaign about? More generally, what are the Democrats for in this election?

That should be an easy question to answer. Democrats can justly portray themselves as the party of economic security, the party that created Social Security and Medicare and defended those programs against Republican attacks — and the party that can bring assured health coverage to all Americans.

They can also portray themselves as the party of prosperity: the contrast between the Clinton economy and the Bush economy is the best free advertisement that Democrats have had since Herbert Hoover.

But the message that Democrats are ready to continue and build on a grand tradition doesn’t mesh well with claims to be bringing a “new politics” and rhetoric that places blame for our current state equally on both parties.

And unless Democrats can get past this self-inflicted state of confusion, there’s a very good chance that they’ll snatch defeat from the jaws of victory this fall.

The Self-Loathing "Liberal" Media

By Arianna Huffington

I've been thinking some more about CNN hiring Tony Snow as a commentator.

Coming in the wake of Newsweek's hiring of Karl Rove, and the New York Times' hiring of Bill Kristol, the mainstream media's embrace of these unabashed propagandists has revealed a self-loathing streak a mile wide.

What is it with these media outlets? Have they been so cowed by the Right's relentless branding of them as "liberal" that they feel compelled to show they're not sleeping with the enemy? And make no mistake, Rove, Kristol, and Snow are the enemies -- of honesty, truth, facts, reality, and the public's right to know. Anything.

Rove's commitment to deception is legendary. His entire career was built on it. Kristol is neoconservatism's crown prince. He was a prime mover in the push to invade Iraq, and his claims about the war's progress (or, rather, lack thereof) have been discredited again and again. His reward: a conservative slot on the Gray Lady's Op-Ed page. The Times might as well have given a weekly column to Jayson Blair.

Now CNN, the self-anointed "Most Trusted Name in News," has thrown its arms around Snow and handed him its international megaphone.

Are the cable network's execs all suffering from amnesia? Do they not remember the extremely distant relationship Snow had with the truth during his time as Bush's mouthpiece? (In the end, of course, the crux of this problem isn't Snow, who has been hospitalized, and to whom I wish a speedy recovery. It's about the people who hired him -- and Kristol and Rove -- and their reasons for doing so.)

The prerequisite for any TV pundit is credibility. Viewers won't agree with every opinion expressed; but they do need to trust that the opinion expressed is not some pre-packaged PR pitch cooked up in the White House to keep us in the dark.

This was always Snow's specialty - along with a glib dismissiveness that made him the poster child for the Bush administration's brand of Callous Conservatism.

When the U.S. death toll in Iraq hit 2,500 in June 2006, Snow commemorated the news by saying: "It's a number."

When it was announced that in order to have enough troops for "the surge" a number of U.S. brigades would have to forego the customary preparatory training in the Mojave Desert, Snow shrugged it off: "Well, but they can get desert training elsewhere, like in Iraq."

Snow regularly displayed a gift for obfuscating rhetoric. In August 2006, faced with a rash of bombings and killings that had left 3,400 Iraqi civilians dead, Snow insisted "There is not a civil war going on" and chalked the carnage up to "a number of sectarian violence operations going on."

In December 2006, trying to put a positive spin on the highly critical nature of the Iraq Study Group, Snow insisted the report agreed with Bush's "goal" in Iraq. Reminded that the report found that the president's policies in Iraq were "not working," he replied: "No, what they said is that you need a new policy."

And he never let little things like the facts get in the way of his mission. For instance, in September 2006, just days after a Senate report unequivocally concluded there had been no pre-war relationship between Saddam Hussein and al-Qaeda terrorist Abu al-Zarqawi, Snow insisted that such a relationship did exist, continuing to falsely link Saddam to 9/11 -- evidence be damned.

Misinformation accomplished.

The fanatical right has put a modern media twist on Lenin: "Self-loathing liberals will hand us the microphone with which we will bludgeon them."

Loans and Leadership

By PAUL KRUGMAN

When George W. Bush first ran for the White House, political reporters assured us that he came across as a reasonable, moderate guy.

Yet those of us who looked at his policy proposals — big tax cuts for the rich and Social Security privatization — had a very different impression. And we were right.

The moral is that it’s important to take a hard look at what candidates say about policy. It’s true that past promises are no guarantee of future performance. But policy proposals offer a window into candidates’ political souls — a much better window, if you ask me, than a bunch of supposedly revealing anecdotes and out-of-context quotes.

Which brings me to the latest big debate: how should we respond to the mortgage crisis? In the last few days John McCain, Hillary Clinton and Barack Obama have all weighed in. And their proposals arguably say a lot about the kind of president each would be.

Mr. McCain is often referred to as a “maverick” and a “moderate,” assessments based mainly on his engaging manner. But his speech on the economy was that of an orthodox, hard-line right-winger.
It’s true that the speech was more about what Mr. McCain wouldn’t do than about what he would. His main action proposal, as far as I can tell, was a call for a national summit of accountants. The whole tone of the speech, however, indicated that Mr. McCain has purged himself of any maverick tendencies he may once have had.

Many news reports have pointed out that Mr. McCain more or less came out against aid for troubled homeowners: government assistance “should be based solely on preventing systemic risk,” which means that big investment banks qualify but ordinary citizens don’t.
But I was even more struck by Mr. McCain’s declaration that “our financial market approach should include encouraging increased capital in financial institutions by removing regulatory, accounting and tax impediments to raising capital.”

These days, even free-market enthusiasts are talking about increased regulation of securities firms now that the Fed has shown that it will rush to their rescue if they get into trouble. But Mr. McCain is selling the same old snake oil, claiming that deregulation and tax cuts cure all ills.
Hillary Clinton’s speech could not have been more different.

True, Mrs. Clinton’s suggestion that she might convene a high-level commission, including Alan Greenspan — who bears a lot of responsibility for this crisis — had echoes of the excessively comfortable relationship her husband’s administration developed with the investment industry. But the substance of her policy proposals on mortgages, like that of her health care plan, suggests a strong progressive sensibility.

Maybe the most notable contrast between Mr. McCain and Mrs. Clinton involves the problem of restructuring mortgages. Mr. McCain called for voluntary action on the part of lenders — that is, he proposed doing nothing. Mrs. Clinton wants a modern version of the Home Owners’ Loan Corporation, the New Deal institution that acquired the mortgages of people whose homes were worth less than their debts, then reduced payments to a level the homeowners could afford.
Finally, Barack Obama’s speech on the economy on Thursday followed the cautious pattern of his earlier statements on economic issues.

I was pleased that Mr. Obama came out strongly for broader financial regulation, which might help avert future crises. But his proposals for aid to the victims of the current crisis, though significant, are less sweeping than Mrs. Clinton’s: he wants to nudge private lenders into restructuring mortgages rather than having the government simply step in and get the job done.

Mr. Obama also continues to make permanent tax cuts — middle-class tax cuts, to be sure — a centerpiece of his economic plan. It’s not clear how he would pay both for these tax cuts and for initiatives like health care reform, so his tax-cut promises raise questions about how determined he really is to pursue a strongly progressive agenda.

All in all, the candidates’ positions on the mortgage crisis tell the same tale as their positions on health care: a tale that is seriously at odds with the way they’re often portrayed.

Mr. McCain, we’re told, is a straight-talking maverick. But on domestic policy, he offers neither straight talk nor originality; instead, he panders shamelessly to right-wing ideologues.

Mrs. Clinton, we’re assured by sources right and left, tortures puppies and eats babies. But her policy proposals continue to be surprisingly bold and progressive.

Finally, Mr. Obama is widely portrayed, not least by himself, as a transformational figure who will usher in a new era. But his actual policy proposals, though liberal, tend to be cautious and relatively orthodox.
Do these policy comparisons really tell us what each candidate would be like as president? Not necessarily — but they’re the best guide we have.

Copyright 2008 The New York Times Company