The Thought Refuse

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Breaking Down The First Presidential Debate: Lead Question #1 – The Bail Out Package

with 3 comments

Rather then discussing how Barack Obama and John McCain presented themselves to the American public in their first presidential debate, an examination of the content of the debate is far more productive, in terms of mapping policy issues then impulse, surface impressions.  With that in mind, I will explore each leading question and give an analysis of what was said by each candidate.

The Economy – Bail Out Package

Although the first presidential debate was scheduled to cover foreign policy, the first half was devoted to the economy which, given the current crisis, was not unexpected.  The first question concerned the candidates stance on the financial bail out package.

Obama centered his arguement around the deregulation policies towards Wall Street, and placed the blame squarely on the shoulders of “eight years of failed economic policies promoted by George Bush, supported by Senator McCain.”  He always made a point to relate the economic woes to the American voter.  On occassion these closed loops were unrelated, such as the several attempts Obama linked the current state of health care to our economic woes.  Never-the-less, Obama made a concrete connection with the average voter and expressed his overriding desire that the “middle class is getting a fair shake.”

McCain, in response, attempted to shift blame to the failure of the regulatory agencies in doing their job through the lack of accountability.  Rather then pinpoint the blame on the reduction of regulation, McCain called for greater scrutiny of “various regulatory agencies that weren’t doing their job.”  He also acknowledged there are “fundamental problems in the system” while giving a pep talk to the American voter with phrases like his “belief in the goodness and strength of the American worker.”

While neither candidate expressly gave their support to a bail out package, each acknowledged it’s necessity.  However, McCain was walking a slippery slop on the topic of a bail out package, and could have very well buried McCain on the issue.  Earlier in the year, McCain said in March of 2008 that “it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers.”  He even tried to distribute part of the housing market problems on the American home owner when they “bought homes they couldn’t afford, betting that rising prices would make it easier to refinance later at more affordable rates.”  For whatever reason, Obama passed on the oppurtunity to give a stark constrast between his concern for the average American’s economic plight by supporting a bailout package against McCain’s previous statements intimating that he would not support a bail out package.

There are holes in Obama’s line of reasoning albeit minor.  Politicizing Wall Street deregulation was off base.  The two primary deregulation laws passed that are widely attributed to the conditions that lead to the home mortgage securities crash are the Commodity Futures Modernization Act and the Gramm-Leach-Billey Act. Both bills were introduced by Republicans, but both laws were both eventually supported by Democrats and signed into law by Democratic President Bill Clinton.  In fact, the Gramm-Leach-Brilley Act was agreed to by Democrats on the condition that the Community Reinvestment Act by strengthened.  The CRA purpose is to ensure that banks and lending institutions offer credit to all possible borrowers, specifically those that typically underrepresent low and middle income families.  More over, in 1995 Clinton and Democrats amended the CRA to relax capitol-to-investment backing requirements that Freddie Mac and Fannie Mae.

Both parties share a certain level of blame in the deregulation debate, but McCain specifically championed the passage of both the CFMA and the Gramm-Leach-Brilley Act.  Politicizing aside, McCain bears a greater responsibility for deregulation then Obama.

My other minor qualm with Obama’s stance is his proclaimed foresight into the oncoming housing disaster.  He stated that two years ago we were “going to have a problem and tried to stop some of the abuses in mortgages that were taking place at the time.”  Obama actually gave his warning in August of 2007, one year ago.  This was well past the height of subprime loan issuances which began in 1999 and eventually peaked in 2004.  Obama was not a leading edge opponent of subprime loans.  Experts and media outlets were already reporting in 2005 of the subprime loan risks.  The causes that lead to the eventual market crash began nearly a decade ago – the popularity of subprime loans, deregulation leading to the trading of mortgage backed securities, and the historical rise in housing values.  The table was set years before Obama made his concerns, and it was years too late to make any difference.  All the compenents were in place for a historic crash, and was only a matter of waiting for housing prices to take a precipitous drop to bring us to where we are now.

Despite having a couple holes in his handling of the first lead question, Obama offered up a considerably more anayltical perspective, where as McCain offered little to the matter.  McCain spoke in such pluralities that there was little to disect.  He was essentially handcuffed on the issue because of his previous, contrary stances on the issue.  All he could do was toss around nonspecific banalities, and pray Obama didn’t throw a knock out punch by citing McCain’s voting record and comments in opposition to a bailout package.

Obama shined, as expected, in addressing, what has become the biggest voter concern, the economic bailout package.  He clearly resonated with the audience much more then McCain’s generalizations about greed and responsibility.  Obama’s clarity and concise points give him the advantage in the first, and most relevant, lead question in the debate.


Written by huxbux

September 27, 2008 at 10:14 pm

3 Responses

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  1. […] Continue here: Breaking Down The First Presidential Debate: Lead Question #1 – The Bail Out Package […]

  2. A truly in depth breakdown, well written, analytical and, I have to say outstanding. One thing I have to ask though, is how do you NOT politicize something which has moved so completely into the mainstream political (AND MEDIA) arena? Barney Frank, John “The complainer” Boehner, Hank Paulson, Chris Dodd and the like have been on Television more than dust the last two weeks, I can’t see how something as deeply politically based, for lack of a better term, can be anything but politicized.

    You’re knowledge on both the business and political end of the spectrum is head and shoulders above what I know. impressive.



    September 28, 2008 at 9:56 am

  3. Thank for the comment Mike.

    Your right. It’s impossible to not politicize deregulation given the circumstances. My only problem was it being leveraged as a political blackmark against McCain when there’s enough political blame to go around for both parties.


    September 28, 2008 at 12:04 pm

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