Warner, Gilmore Debate

Mark Warner and Jim Gilmore squared off in a debate on Friday night in Roanoke and, of course, the hot topic was the Wall Street bailout. It’s on everybody’s mind as the economy flat lines and goes on life support. Gilmore came out swinging and declared his opposition to the just passed bailout bill. As the Washington Post reported:

Gilmore attacked Warner for his support of the emergency economic plan signed by President Bush, and he told a statewide television audience that he would have saved taxpayers' money by not handing it to "Wall Street high rollers."

"The next bailout is on the way," Gilmore said. "Who is going to stand up for the taxpayers?"

The Post also reported this exchange between Gilmore to Warner:

“Don't talk down to me," Gilmore snapped at Warner at one point. "Don't tell me I don't understand. You don't understand."

Warner accused Gilmore of being too partisan to be an effective voice in Washington.

"The last thing Washington needs is one more over-the-top, my-way-or-the-highway, partisan ideologue in the Senate," Warner said.

Actually, Warner is right about Gilmore being too over the top in partisanship and Gilmore is wrong when he claims that he understands the economy. Dead wrong.

Let’s start with the fact that this is the man whose intransigence in the face of a $6 billion budget shortfall during his administration left our commonwealth in shambles and almost tattered our AAA bond rating. It reminded me of all the reasons why the Republicans were turned out of the governor’s mansion in the subsequent election. When it came to Governor Gilmore’s policies, nobody wanted more of the same.

But once again, Jim Gilmore demonstrated two things. The first is that he doesn’t actually understand economics. And second is that he will continue to put ideology over common sense. When confronted with a fiscal crisis of epic proportion, Gilmore would opt for the tired anti-government shibboleths and faux populism of the most conservative wing of the GOP.

Of course, nobody who is a real populist, left or right, is in favor of saving the hides of the greedy Wall Street boys and girls, who indeed created the financial mess we’re in. But refusing to provide the money to buy up the mortgage backed debt that is causing the credit markets to contract is counter productive. An analogy that Miami Herald columnist, Fred Grimm, came up with likened it to passengers on a cruise ship who refuse to launch the lifeboats because it means saving the incompetent crew who caused the ship to sink. Yeah, but refusing to save them means everybody goes down.

Here, briefly, is why we actually need the bailout to keep us all afloat.

Banks are failing in record numbers, creating a panic in the stock market, which means companies with good solid performance and profit statements are losing value, not because their businesses are worthless but because investors have lost faith in the market. Businesses are not able to get basic credit to conduct their day to day operations, like buying the raw products they need to produce their goods. Consumers are losing their purchasing power as their credit shrinks. That means banks won’t give them loans for mortgages, which reduces a shrinking housing market further and puts it in deeper crisis. It also means borrowers can’t get other kinds of loans, including school loans; new credit cards; or capital to start a business. Here, I’m talking about people with good credit ratings who could repay their debts. Everybody is affected. And the domino effect is that all markets – housing, stock, consumer goods – they all contract. That means loss of jobs. The economy already shed 159,000 jobs in September and the unemployment rate is already at 6.1 percent. (Some economists estimate it could go as high as 7 percent this year – an unprecedented figure not seen since the 1980s and early 90s, which was also the last time there was a Republican administration in office for a sustained period.)

All of that is what a no vote on the bailout produces, just to make a point about irresponsible bankers, predatory lenders, and Wall Street CEOs. Sorry folks but the barn door is wide open and the horses have already fled. It’s past time to rein them in, but letting the largest banks and corporations fail isn’t the way to do it because even if the businesses fail, the top dogs will still float safely to the ground on their golden parachutes because it’s in their contracts. A company will file for Chapter 11 and the CEOs will make out fine. But the poor schmuck who loses his job won’t. In the reorganization after a declaration of bankruptcy, he will lose his pension. He’ll lose his insurance. And unemployment insurance will be barely adequate to replace his salary.

So Mr. Gilmore can spare us the phony populism. In fact, it’s almost amusing how the GOP version of populism can always tap into the real and justified anger of the common man but somehow end up actually benefitting the upper class. They know how to wage class warfare effectively. It’s a guerilla war where they wear camouflage and disguise themselves as ordinary people who hate the elites while the top one percent always ends up richer and the rest of us lose ground. Yeah, it’s almost amusing. Except not now.