Reidblog [The Reid Report blog]

Think at your own risk.
Thursday, July 10, 2008
Phil Gramm thinks you're delusional
John McCain's chief economic adviser is not only the author of the Enron loophole, he's also an idiot. Let's go to the Moonies for more on that:

In an interview with the Washington Times, Phil Gramm, a former Texas senator who is now vice chairman of UBS, the giant Swiss bank, said he expects Mr. McCain to inherit a sluggish economy if he wins the presidency, weighed down above all by the conviction of many Americans that economic conditions are the worst in two or three decades and that America is in decline.

"You've heard of mental depression; this is a mental recession," he said, noting that growth has held up at about 1 percent despite all the publicity over losing jobs to India, China, illegal immigration, housing and credit problems and record oil prices. "We may have a recession; we haven't had one yet."

"We have sort of become a nation of whiners," he said. "You just hear this constant whining, complaining about a loss of competitiveness, America in decline" despite a major export boom that is the primary reason that growth continues in the economy, he said.

"We've never been more dominant; we've never had more natural advantages than we have today," he said. "We have benefited greatly" from the globalization of the economy in the last 30 years.

Mr. Gramm said the constant drubbing of the media on the economy's problems is one reason people have lost confidence. Various surveys show that consumer confidence has fallen precipitously this year to the lowest levels in two to three decades, with most analysts attributing that to record high gasoline prices over $4 a gallon and big drops in the value of homes, which are consumers' biggest assets.

"Misery sells newspapers," Mr. Gramm said. "Thank God the economy is not as bad as you read in the newspaper every day."

Yeah, those 1 million homes in foreclosure? The millions of Americans who are out of work, out of gas money, and behind on their bills? An optical illusion!

McCain. of course, say he "strongly disagrees"...
Questioned whether Gramm, who has been rumored as a potential Treasury secretary for McCain, would still have a position in his administration, the GOP candidate underscored his unhappiness with his former colleague's comments without directly answering the question.

"I think Sen. Gramm would be in serious consideration for ambassador to Belarus," McCain said with a broad smile. "Though I'm not sure the citizens of Minsk would welcome that."

But in comments clearly prepared for the anticipated Gramm question that would open the press conference, McCain underlined his disagreement.

"I believe that the person here in Michigan who just lost his job isn't suffering from a 'mental recession,'" McCain said, citing Gramm's remarks published in the Washington Times. "I believe that the mother here in Michigan, around the country trying to get enough money to educate her children isn’t 'whining.'"

America, McCain made sure to note, "is in great difficulty."
Thanks, Mac. Phil, meanwhile, is not going out like a punk:
Former senator Phil Gramm -- under fire for saying the United States has "become a nation of whiners" -- said in an interview today that he meant the nation's leaders were whiners, not its citizens.

But the top adviser to Sen. John McCain repeated his assertion that the economy is not in recession, and he declined to retract the comments quoted yesterday in the Washington Times.

"I'm not going to retract any of it. Every word I said was true," Gramm said.

Yeah, boy! Way to not help out your candidate by backing down!

The real trouble for Mr. Straight Talk is that Gramm's remarks aren't just reflective of his own evil inner core, they're also revelatory of his candidate. Marc Ambinder explains:

McCain has baggage. Begin with his own statements about not undering economics; add to that a few reversals on policy, a very odd phrase about Social Security, a party linkage to President Bush, and pressure from professional conservatives to adopt an approach to economic problems that is more tough-love than lovey-dovey. Phil Gramm is not just an adviser; he's been a close adviser for years, and has influenced McCain's economic policies. Go back to the fundamental paradox of conservatives and economic crises: in many instances, the proscribed solution is to do nothing; the political imperative is exactly the opposite. Usually, a compromise takes the form of half-measures that will pacify the public and not weaken the fundamental architecture of the economy.

Today, Gramm has given voice to an idea that is not uncommon among ideologically conservative economists: the recession is as much a creation of our anxiety about the future as it is a reflection of economic fundamentals.

"Look, the economy is bad. It is far below what we Americans have a right to expect, but we are not in a recession," he said. "We may or may not have one in the future, but based on the data we are not in a recession. But that does not mean all this talk does not have a psychological impact."

Gramm represents one distinct force that is pulling at McCain: orthodox, academics who experience the world through graphs, charts and data. The other is represented on the campaign by policy chief Doug Holtz-Eakin, who experiences the economic world through the language of politics. Holtz-Eakin is more of an Eisenhower Republican than a Kemp Republican, although Gramm has always been a big proponent of a balanced budget. Gramm generally wants government to get out of the way and lets crises work their way out through the market, believing that interventions distort the market. Holtz-Eakin's economic bent is more applied; politics demands that leaders offer solutions, even if solutions are more about quelling anxiety than they are about fixing a problem.

These two approaches have ranked McCain before; Gramm's fingerprints were all over McCain's first attempt to explain the housing crisis: measured, incremental and market-oriented. Didn't work. McCain looked like an ogre, although professional conservatives cheered. Two weeks later, Gramm had little to do with McCain's second swing of the bat, a specific set of proposals designed to help families hit hardest by the crisis. There were echoes of the Grammar, if you will, in the second speech, but the tone was softer and less academic, the proposals were more generous, and the message was unambiguous: McCain understands the pain.


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posted by JReid @ 4:27 PM  
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