Bush's Conservative Socialism
Friday, October 17, 2008; 12:22 PM
President Bush paid a visit this morning to the high temple of American free enterprise -- the U.S. Chamber of Commerce -- in part to give another pep talk to the nation, but mostly to reassure his immediate audience that he hasn't really become a socialist.
His central message: The $700 billion bailout plan, the partial nationalization of the nation's biggest banks, the federal takeover of insurance giant AIG and mortgage giants Fannie Mae and Freddie Mac -- these are just fleeting measures to ensure a glorious future for democratic capitalism, "the greatest system ever devised."
As a general pep talk, it was typically flat and most likely ineffective. "To help the American people is the goal of this plan," Bush said. "In the long run, the American people have -- can have confidence that this economy will recover." The president has virtually no credibility left in either political or financial circles.
He is most believable these days when lowering expectations, which he also did a bit of today, stating: "It took a while for the credit system to freeze up; it's going to take a while for the credit system to thaw."
What Bush was mostly taking on, however, is the increasingly common belief that the moves of the last month signify the end of fiercely unregulated American-style capitalism. So, while taking credit for "an extraordinary response to an extraordinary crisis," he was simultaneously stressing how limited all these massive interventions really are.
"I know many Americans have reservations about the government's approach, especially about allowing the government to hold shares in private banks. As a strong believer in free markets, I would oppose such measures under ordinary circumstances. But these are not ordinary circumstances," he said.
"Some have viewed this temporary measure as a step toward nationalizing banks. This is simply not the case. This program is designed with strong protections to ensure the government's involvement in individual banks is limited in size, limited in scope, and limited in duration.
"The government's involvement is limited in size. The government will only buy a small percentage of shares in banks that choose to participate, so that private investors retain majority ownership.
"The government's involvement is limited in scope. The government will not exercise control over any private firm. Federal officers will not have a seat around your local bank's boardroom table. The shares owned by the government will have voting rights that can be used only to protect the taxpayers' investment, not to direct the firm's operations.
"The government's involvement is limited in duration. It includes provisions to encourage banks to buy their shares back from the government when markets stabilize, and they can raise money from private investors. This will ensure that banks have an incentive to find private capital to replace the taxpayers' investment, and to do so quickly."
The White House issued a " fact sheet" echoing those points.
Despite growing concern about government intervention from his base, Bush was warmly welcomed at the chamber, where executive vice president for Government Affairs Bruce Josten praised him for acting "quickly, decisively and in a bipartisan manner to prevent a systemic collapse of our financial system."