BCT Editorial – 3/26/09

This page was last updated on March 29, 2009.

Bailout bucks; Editorial; Beaver County Times; March 26, 2009.

The editorial subtitle is “Popular or not, Obama White House had no good options on toxic assets.”

Below is a detailed critique of the subject editorial.

“One way to understand the Obama administration’s plan to buy up banks’ toxic assets in an attempt to free up lending is to compare it to the troop surge in Iraq.

“It might not be popular, but the administration really didn’t have any good options. Because the situation was so dire, it had to do something, even if it boiled down to picking the best from a bad lot.

“And like the surge in Iraq, buying up these bad loans in an attempt to open up the credit market is the direct result of blunders made during the Bush administration.”

[RWC] This is amazing. You should recall the Times opposed the surge and claimed it would not work. You can find links to those editorials in my critique of “Troop support.”

As for the “blunders made during the Bush administration,” you’ll note the editorial provides no details. It’s just another drive-by accusation.

“On Monday, the White House announced it plans to create the Public-Private Investment program to help purchase as much as $1 trillion in toxic assets that are on banks’ books.

“The Associated Press reported the plan will use the resources of the $700 billion bank bailout fund, the Federal Reserve and the Federal Deposit Insurance Corp. The initiative will seek to entice private investors to participate by offering billions of dollars in low-interest loans to finance the purchases. The government will share the risks if the assets fall further in price.

“If it has a familiar ring, it should. The federal government did something similar to this to dispose of bad real estate assets in the savings-and-loan debacle in the 1980s.

“Although the S&L bailout was successful, there is no guarantee that history will repeat itself. Taxpayers could lose money.

“But unless the critics come up with a better plan and are willing to take responsibility for the consequences of their decisions — something that’s unlikely on both counts — this is what it is.”

[RWC] Critics have come up with an alternative plan. It’s called bankruptcy.

“As for the critics, Republican hypocrisy continues to know no bounds. One reason this country is in this mess is their fiscal profligacy, governmental irresponsibility, regulatory laxness and general indifference when they were in power, especially during the first six years of the Bush administration when they controlled the executive and legislative branches of government.”

[RWC] You have to give the Times “credit” for having the chutzpah to accuse anyone of “fiscal profligacy.” Did Republicans spend too much? Yep, but the Times can’t credibly complain because its editorials constantly lobbied for more spending on just about every proposal that came down the pike.

Other than the spending, once again we have drive-by accusations without any backup. To date, Times editorials have avoided getting into the details of how we got into this mess. If the Times could have put a Republican face on it, we would have seen a continuous stream of “news” articles and editorials providing all the details. Instead, we get drive-by accusations.

I’ll be accused of nitpicking, but Republicans didn’t control “the executive and legislative branches of government” “during the first six years of the Bush administration,” only most of it. Democrats held the majority in the Senate from May 2001 to January 2003.

“The troop surge stabilized the precarious situation in Iraq, and Americans can only hope President Obama’s plan has the same effect on the economy.

“But like the short-term success of the surge, this bailout will do no good unless it leads to long-term gains.”

[RWC] As I noted in my critique of “The dark side,” the Times grudging admission the surge succeeded is a new development for the Times.