For All the Marbles

By Howard Kurtz
Washington Post Staff Writer
Wednesday, September 17, 2008 9:25 AM

On a normal day, we'd all be buzzing about the McCain adviser's tone-deaf claim that his man practically invented the BlackBerry.

But this is not a normal day, or a normal week. The domino-like collapse of one Wall Street institution after the next -- Bear, Fannie, Freddie, Lehman, Merrill, and now the huge bailout of AIG -- has grabbed our collective attention, along with the whack upside the head of a one-day, 500-point plunge in the Dow.

I've been amused watching John McCain and Sarah Palin say "Washington" was asleep at the switch in this financial crisis. Both are presumably familiar with who's been in charge of the White House the past eight years.

Don't get me wrong -- I think both parties bear responsibility for the mess. Both parties allowed a shadow banking system to develop that created all these exotic mortgage instruments that made a lot of people a lot of money but avoided the regulatory constraints placed on banks. Both parties, pressured by lobbyists, failed to rein in Fannie Mae and Freddie Mac despite years of warnings. But a president must take the lead on some issues, and this has been a fundamentally deregulatory administration headed by a man who wanted to push retirees to put some of their Social Security savings into the stock market. (Remember when Enron was going to lead to lasting reform?)

On balance, then, the collapse on Wall Street should favor Obama, if only because a throw-the-bums-out message should be simpler. But he has had trouble driving an economic message all year. Much of the country doesn't know Obama wants to cut taxes for 95 percent of Americans. Much of the country doesn't know what he means by "change." He's got lots of proposals and position papers but no story, no narrative, no slogan to help him connect to working-class voters.

I caught Obama yesterday saying he had called for "a new, 21st-century regulatory framework." Zzzz. That's not lunchbucket language. McCain's out there talking about "greed." Obama needs to find a way to punch it up.

But if Obama constantly attacks McCain for calling the economy "fundamentally sound," as the Illinois senator does in a new ad (critiqued here), he runs the risk of sounding too pessimistic.

We're now plunging into a blame-game debate, though at least the subject is far more important than lipstick or the tanning bed that Palin had installed in the governor's mansion.

"With the Wall Street crisis deepening, the major presidential candidates took divergent approaches in their appeals to anxious voters yesterday," the Boston Globe reports, "with John McCain casting himself as an outspoken populist outraged at corporate greed and Barack Obama hammering what he called a Republican-led climate of deregulation that McCain championed."

A NYT analysis says that McCain's "record on the issue, and the views of those he has always cited as his most influential advisers, suggest that he has never departed in any major way from his party's embrace of deregulation and relying more on market forces than on the government to exert discipline . . .

"Mr. Obama set out his general approach to financial regulation in March, calling for regulating investment banks, mortgage brokers and hedge funds much as commercial banks are. And he would streamline the overlapping regulatory agencies and create a commission to monitor threats to the financial system and report to the White House and Congress.

"On Wall Street's Republican-friendly turf, Mr. Obama has outraised Mr. McCain. He has received $9.9 million from individuals associated with the securities and investment industry, $3 million more than Mr. McCain."

Meanwhile, Carly Fiorina is a big help, isn't she? Do you think Sarah Palin has the experience to run a major company like Hewlett-Packard?

"No, I don't."

Having dug that hole -- and she's out there as the surrogate, remember -- she tells MSNBC that McCain, Obama and Biden don't, either.

I mean, they're only running for president and vice president of the United States.

And by the way, Carly got dumped by H-P. So her experience wasn't all that great either.

Slate's John Dickerson is unsure that the Dems get the edge here:

"For Obama to take advantage of this moment, he has to convince voters he's going to change their lives. He can't use it as merely another opportunity to paint McCain as out of touch . . .

"What about McCain's policies on the specific topic of the recent market turmoil? He's going to clean the mess up, he promises. If voters see him as the action candidate, perhaps they'll take his word for it. On the specifics, though, he's not in a very strong position. Though he offered a new ad today touting his 'experience' to handle the crisis, he doesn't have much of a record at all. When McCain talks about eliminating earmarks, his record is a mile long. When he talks about cutting CEO pay and regulating the financial industry, his aides can provide only one amendment to an accounting-reform bill to show his history on the issue. He offered it six years ago.

"Still, Obama can be pushed around on the economy because voters don't know what he's for. Yes, he's for change -- but what does that mean when it comes to their daily lives? Yes, he's for a middle-class tax cut--but a July poll showed that nearly 50 percent of the country was unfamiliar with his economic policies. In this vacuum, McCain has been able to mischaracterize Obama's position on taxes. McCain says Obama will raise taxes, which isn't true for the majority of Americans. Yet in a recent ABC/Washington Post poll, 51 percent of respondents said Obama would raise their taxes, while only 34 percent said McCain would."

That's a failure by Obama, but also of the easily distracted media.

Marc Ambinder examines the tone problem:

"Both McCain and Obama have to strike a balance between acknowledging the crisis and using their authority to convince Americans not to run on their banks and head for the hills. That's what McCain was doing when he said the 'fundamentals' of the economy are strong; Obama will strike a different balance."

Okay, let's roll up our sleeves and look at what each side is saying about the candidates' track records, starting with the left. Josh Marshall:

"Let me get this straight. John McCain's top economic advisor, former Sen. Phil Gramm, is the guy who authored the deregulation law that most agree is the ultimate cause of today's financial meltdown. Tomorrow's and probably next week's too. But let's not get ahead of ourselves. John Thain, CEO of Merrill Lynch, which swirled into brokerage oblivion today, is one of McCain's top economic advisors too. And now McCain says he's going to clean up the mess by putting in tighter regulations and oversight even though he's always supported lax oversight and his top economics guy is the one who loosened the rules in the first place."

Josh must be part of Gramm's "nation of whiners."

At Time's Swampland, Joe Klein weighs in:

"McCain has been a happily orthodox Republican when it comes to financial regulation these past 26 years. He's against it. He's against Washington telling you how to run your business. The unseen hand of the market and all that...

"This has been the long-standing Republican bait and switch--scaring small businesses with the threat of new regulations if the Democrats win, commiserating with larger businesses about the evils of environmental and plant safety rules, while lifting as many regulations as possible governing the financial titans whose credit should be at the heart of new economic development. But that hasn't been happening: the financial titans have been going for the quick buck rather than the sound one. Money and creativity have been redirected during the Reagan-Bush era away from substantive loans to real businesses into a Ponzi scheme of borrowing by investment bankers, so they could engage in the most irresponsible, if lucrative (for them) speculative lending imaginable."

Time now to turn it over to the right. Pejman Yousefzadeh at Red State:

"This problem now has a political dimension to it, with Barack Obama claiming that this situation is directly the result of Republican economic policies and that it represents the worst fix since the Great Depression. Of course, one strains to figure out how it is possible that the Bush administration can be responsible for the fact that various investment banks decided to try to get a piece of the subprime mortgage pie, but under the leadership of the 'reality-based community,' we are supposed to believe that the government has the power to influence private sector investments -- or that it should. Amusing.

"On the 'Great Depression' point, perhaps Obama has forgotten the Carter years, when inflation, unemployment and interest rates were in double digits. But then, since every Republican president is accused of being a latter-day Herbert Hoover -- really, don't they have a macro for this accusation by now? -- this latter non-substantive talking point should come as no surprise whatsoever."

At Pajamas Media, Rick Moran says the left is overdramatizing the bad news:

"Obama-supporting websites had access to an online thesaurus or two which they were able to comb for exactly the right apocalyptic language that would freeze the blood while getting the point across that John McCain was at fault by reason of his association with George Bush and that it was time to make sure the windows on those Wall Street skyscrapers were suicide-proofed . . .

"I suppose a little hyperbole can't be helped when the situation is unprecedented. But to read some commentary by partisans on the left, one would think the apocalypse is upon us and it's just a matter of time before Mr. Potter takes over the Building and Loan while we're all thrown out on the street with nary a farthing to our name."

Hot Air's Ed Morrissey blames . . . Barney Frank:

"What many do not recall is that Bush wanted to tighten oversight with a new regulatory board for Fannie Mae, Freddie Mac, and other government recipients for the express purpose of addressing bad loan practices -- and Democrats blocked it."

He cites news coverage from five years ago: " 'These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. 'The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.' . . .

"It was the Bush administration that wanted to rein in the madness in the credit markets, and the Democrats who wanted to extend the Clinton policies that created the crisis we have now."

At the time, the GOP ran Congress and Barney Frank was in the minority. Last year, Frank and others introduced a bill to create a regulatory agency with such broad powers as determining how much capital Fannie and Freddie must maintain as a cushion, forcing them to shed assets if necessary and putting them in receivership if they become severely undercapitalized.

What about the folks around McCain? Jonathan Cohn takes a look in the New Republic:

"John Goodman is a conservative economist who thinks all the fuss over people without health insurance is just hooey. As Goodman explained to a reporter from The Dallas Morning News last week, everybody can get medical care from an emergency room, so why not just stop tallying the uninsured altogether? 'Voila,' Goodman quipped. 'Problem solved.'

"Like many far-right policy experts, Goodman had said such things before. But, unlike many far-right policy experts, Goodman isn't just some random wonk. As the Morning News noted, Goodman had helped craft McCain's health care plan. In other words, he is a McCain adviser.

"Or, at least, he used to be. When Goodman's quote got the attention of reporters, a McCain spokesman issued a terse statement: 'John Goodman is not an adviser to this campaign.' When that position became untenable--it turns out Goodman had identified himself as an adviser not only to the Morning News but also in a recent Wall Street Journal op-ed, to which the McCain campaign never objected -- the official story changed. Yes, Goodman had offered advice to McCain. But it was on an unpaid, voluntary basis, and McCain had since made clear that Goodman's input was not necessary."

Rich Lowry invokes my "media are mad" column in arguing that journos, having been dumped from the Straight Talk Express, are rooting for McCain to lose:

"With the end of the running bull sessions, a trial separation began with the press that became a divorce that became a feud. The enduring scandal of the McCain campaign is that it wants to win. The press had hoped for a harmless, nostalgic loser like Bob Dole in 1996. In a column excoriating Republicans for historically launching successful attacks against Democratic presidential candidates in August, Time columnist Joe Klein excepted Bob Dole -- not mentioning that Dole had been eviscerated by Clinton negative ads before August ever arrived.

"The press turned on McCain with a vengeance as soon as he mocked Barack Obama as a celebrity. Its mood grew still more foul when the McCain campaign took offense at Obama's 'lipstick on a pig' jab . . .

"The lipstick controversy indeed represented a silly bit of grievance-mongering. But had the Obama camp's tendentious interpretation of Bill Clinton's 'fairy tale' put-down as a racial slight generated similar push-back from the media? Had Obama's ridiculous depiction of Geraldine Ferraro as a quasi-racist? Had Obama's repeated contention -- with no evidence -- that Republicans were attacking him for looking different?"

All right, we can't leave without checking on McCain's visionary leadership getting credit for the BlackBerry-- made, in case you forgot, by a Canadian company.