History repeats itself? 1932 failure and then passage of big legislation is instructive

Jim Oleske has a post on dailykos with a history lesson.

In 1932, Congress tried to pass a new tax since government funds were all drying up. There was a Washington consensus around a sales tax. But the people said no, and the Members of Congress rebelled against their leaders to reject the proposal. A few months later, they passed a progressive income tax which helped build the largest middle class the world has evern know.

Now, with the defeat of an investment bank windfall bailout, what's the progressive opportunity?

A transaction tax to pay for Wall Street abuse, past and future?

Re-regulation to finally end the failed Reagan Revolution of anti-government government?

It's a good post, but more importantly, a good reminder that we must demand more from our government than a stupid massive bailout of stupid investment bankers with our money.

I'm glad the bailout of investment banks did not pass

I hope it doesn't.

Yes, the bill that just went down is much better than the absurd plan the President put forward a few weeks ago. But it isn't nearly good enough.

If the financial sector is the problem, then a tax on financial transactions (like a stock fee) is the way to pay for the solution, not from general revenues.

Let the investment banks fail. They can get their ten or twenty cents on the dollar on their bad loans. And if we need a lot of liquidity pumped into the credit market, then we can do that in lots of other ways instead of using general revenues to prop up stupid investment bankers' companies.

Take your time, Congress. Keep working on this. If it waits until next week or next month, so be it.

No bailout of investment banks. Or at least use a Wall Street tax to pay for it.

The problem is that banks became investment banks (and insurance companies and every other financial instrument seller they could). So when they started buying stupid investments, like mortgages that the homeowner could never pay for, the stupidity spilled over into non-stupid things, like running a bank. 

Well, it looks like most of the big investment banks are turning into just regular banks and containing their losses. Or, they go out of business. Too bad for their stockholders and their bondholders, but it doesn't cost the taxpayer anything, so not such a tragedy. Businesses end all the time. That's capitalism.

So why exactly do we taxpayers need to buy these horrible loans? Why can't the investment banks just take a bath, take a loss, take the hit and move on? 

Good question.

Do you have any idea how much money $700 billion is?

There are 300 million Americans, counting infants, immigrants and everybody else in this country at this time.

$700 billion is more than $2,000 per person.

Guess what -- if you want an economic stimulus, send me a $2,000 check. I'll stimulate the economy. And I'll bet with that amount of money in every American's pocket, the banks that weren't so stupid to invest in those mortgages will be able to collect those checks as deposits and make loans to businesses.

Washington Mutual just went bankrupt. And life goes on.

Let the big banks that were dumb enough to invest in those mortgages go bankrupt. 

And if there's something fundamental I'm missing here about the financial industry where only the government can rescue the entire sector of the economy, then at the very least have the financial industry pay for their own bailout with a transaction fee for every stock or bond bought or sold. Representative DeFazio from Oregon is pushing for a Wall Street tax of 25 cents per transaction to pay for this bailout. 

Wall Street should pay for their own mess. I don't want to.

When will McCain answer the "divided Republicans" question

One of John McCain's biggest rivals for the Republican presidential nomination, Congressman Ron Paul, just formalized his rejection of the McCain/Palin ticket in favor of the Constitution Party's presidential campaign of Chuck Baldwin.

Congressman Paul was earning up to 25% of the votes of Republican primary-goers in the second half of the campaign (after McCain clinched it). That's a lot of unhappy conservatives!

After Senator Clinton held an event in Unity, New Hampshire and aggressively and enthusiastically endorsed Obama -- along with every single one of the other Democratic candidates -- isn't it time for some stories on how the Republican/conservative base is more divided than the Democratic base?

A Republican Member of Congress and second-tier but not inconsequential Republican presidential candidate rejecting the Republican nominee in favor of a third party is a rather big deal. 

Obama Administration: Pragmatic above all else (my quote in the New York Times)

I appear in a story in the New York Times Sunday Magazine today on what lessons can be drawn from Professor Barack Obama of the University of Chicago Law School. He was my professor for Voting Rights in 1999 so I was quoted as part of today's story.

Here is the end of the piece:

Dan Johnson-Weinberger studied voting rights with Obama two years after
Turbes did. He remembers Obama as an able observer of the allocation of power in
the American democratic system. As Obama shepherded students through the
evolution of how Americans elect their representatives, Johnson-Weinberger told
me, he emphasized how important the rules of the game were in determining who
won elections.

That background in voting law, the former student said, played a factor in
Obama’s primary triumph over Senator Hillary
Rodham Clinton. “He understood how important the caucus states would be, and
he grasped that voters in African-American Congressional districts would have a
disproportionate impact in selecting the nominee,” he said. “I think one of the
reasons he said yes to this race is that he grasped the structural path to
victory.”

Johnson-Weinberger, who has championed alternative electoral systems like
proportional voting in Illinois, found Obama’s practical approach to be a
welcome respite from traditional law-school fare. His former professor, he
speculates, would bring a similar mind-set to the White House. “I don’t think
he’s wedded to any particular ideology,” Johnson-Weinberger told me. “If he has
an impatience about anything, it’s the idea that some proposals aren’t worthy of
consideration.”

Johnson-Weinberger has long been an Obama fan. He volunteered for Obama’s
losing 2000 primary challenge to Representative Bobby Rush and his triumphant
Senate run four years later. But even he is a little stunned by how rapid
Obama’s rise has been. “If I had told him then that he was going to be the
Democratic presidential nominee in 2008, he would have laughed,”
Johnson-Weinberger said.

The rest of the article is worth a read, particularly because I think it sheds some light on how Obama is likely to govern as a 'ruthless pragmatic' if the electorate decides not to put McCain -- another deregulation ideologue who constantly pushes for the same economic policies that led to this week's financial meltdown and then inevitable bailout of the biggest banks and financial companies that were deregulated to make bad decisions -- into power. On the economy, there's no question that John McCain will bring more of the same.

(For a bit more on how "free market" -- doesn't look so free now, right? -- policies lead to years of huge profits for companies and then massive bailouts paid for by you and me when we should have just kept reasonable regulations in place to avoid all this ridiculous excess, see this column in the Tribune by John McCarron. The best way to maintain economic growth is with Democratic policies, not Republican deregulators who create these huge messes that put us into recessions).

Another $85 billion for the bankers? Do you know how much high speed rail we could build for that?

It's unbelievable. Money is no object when the banks are in trouble.

$85 billion for an insurance company loan.

We could make a loan to a private company for $85 billion to build and operate the best high speed rail network in the world and within five years, have trips like Chicago-New York City trip in under five hours all over the country. That's what Spain is doing now. We could do that too if we made an $85 billion commitment to it.

And the high speed rail operator would have as much chance of paying that loan back as the insurance company that just got the $85 billion loan. Which is to say, more than zero and less than 100 percent. That's good enough for the insurance company, so it ought to be good enough for high speed rail.

When they say the government doesn't have the money, they aren't telling the full story. They are saying the government doesn't have the money for your idea. The government always has the money for something that is deemed important enough for the sake of the country.

On that note, Congress just spent $8 billion from the general revenue fund on highway spending.

Eight billion dollars.

That's enough to build most of the Midwest high-speed rail network.

We should stop spending money on highways and start spending it on high speed rail and transit.

It's all about priorities. And it's time for us to make smarter spending (like high speed rail instead of insurance company and bank bailouts) a much higher priority with much bigger dollars on the good investments.

Toe-to-toe with the Barack's Swift Boaters tonight on WGN

I was fortunate enough to be invited to appear on the Milt Rosenberg show (streaming now on www.wgn720.com) on WGN 720 am to defend the idea of truth and honesty on the other side of the table from David Freddoso, the author of a hatchet job on Barack Obama. This from the same publisher who put out one of the Swift Boat books against John Kerry -- and part of the problem in modern politics.

If you can download the podcast, let me know how I did.

Our common purposes: Meeks, black students and New Trier education

The best part of Senator Obama's acceptance speech was the second half when he returned to the theme of his political career. He reminded us that we've lost a sense of common purpose in the partisan wars. We're losing the idea that we are all in this together and that our government -- the only institution that we all belong to -- can and must help all of us live better lives.

That's the spirit that should take hold among wealthier white people as hundreds of parents of poorer black children try to enroll their kids in one of the best public schools in the nation today, even though the government says those kids do not belong.

I'm a graduate of New Trier High School. I grew up in Winnetka surrounded by children of fantastic wealth and some of us of more modest means. The mansions of Winnetka were taxed to fund New Trier and feeder schools (like Washburne Junior High and Hubbard Woods Elementary) and many of them had to pony up $15,000 every year to operate those schools of excellence. The owners could afford to pay that tax (or, like my family, paid it until the last kid was a senior in high school to buy that excellent education and then left for cheaper pastures).

I recognize that my career and current earnings would not have been possible without my public education. Because the taxpayers invested in me as a child, I am today a far happier and much more productive adult. My family -- raised by our mother without a college degree, one child constantly in and out of the hospital, and a persistent rebellious streak among the boys -- ended up successful, largely because of our education. But if we were in a gang-infested school with mediocre teachers and nothing happening after school, I know our lives today would be much worse. New Trier's education -- the after school programs every day, the culture of achievement -- significantly improved my life.

But many, many children today are not allowed to attend New Trier. They don't live among mansions. They live in Robbins. Or Dolton. Or Calumet City. There, the hard-working families of modest means aren't lifted up by an excellent public school. Instead they are burdened by mediocre schools. And their lives suffer as a direct result.

What will we do for the children of Calumet City? Will we call Senator Meeks a flamboyant clown for staging a protest where hundreds of students try to enroll in a school far, far better than their own? Perhaps we'll shrug our shoulders and say that it isn't really about the money, but about the parents or about the culture, or we'll think of mediocre schools in our county and in our state stunting the lives of poorer children every year as something regrettable but out of our control, like a hurricane.

The motto of New Trier High School is "Minds to Inquiry, Hearts to Compassion and Lives to the Service of Mankind." Elegant, isn't it? To their credit, the New Trier Administration has embraced Senator Meeks and the hundreds of families of New Salem Baptist Church, likely recognizing their common purpose to educate all our children.

It isn't easy to find a way to instill a culture of academic achievement (I remember as a sixth grader writing in my assignment notebook "Work Harder" as a stern note to myself -- this was not uncommon among my peers) and break altogether the nagging culture of anti-intellectualism and anti-achievement that still penetrates too many pockets of our county and state. And it isn't easy for the taxpayers who already pay for excellent schools in their communities (where the schoolhouse doors are literally barred to students who live 30 miles away but in a different and poorer suburb) to shoulder the additional burden of paying more for schools filled with poorer children. It isn't easy to balance local control and performance standards to improve the capacity of the school board members of poorer suburbs who, almost by definition, have less time and expertise and personal wealth to manage their schools as well as school board members from wealthy communities.

But as Barack might say, don't tell me that we can't find a way to provide the children of Senator Meeks' community with the resources and accountability and culture of academic achievement that we already do the children of Winnetka if we try.

That's our common purpose, especially in state government. That's our challenge as Illinois citizens. And this year is our time to meet Senator Meeks' families and devote more children's minds to inquiry, hearts to compassion and lives to the service of mankind.