The Executive Privilege Trap

Republicans are pretty confident they've got Obama right where they want him on the issue of Karl Rove's subpoena. They are betting in a face-off between the current Congress and the Bush administration, Obama will have no choice but to side with Bush on executive privilege in order to protect his own administration from the inevitable GOP backlash down the line.

The issue is likely to come to a head soon. The Justice Department is due to state its position on executive privilege to the U.S. Court of Appeals in a few weeks in response to the House's attempt to enforce its previous subpoenas for Miers and Bolten, who were subpoenaed to turn over documents relating the U.S. attorneys firings. Both refused to comply, or even show up—relying on the Bush Justice Department's sweeping position on "absolute immunity" from testifying before Congress.

Few legal observers expect the Obama Justice Department to endorse that position, but it remains an open question how the new administration will define the scope of presidential privilege. Bush's attempt to assert privilege even after he leaves office throws a new wrinkle into the dispute.

The GOP is confident that Obama will leave so many loopholes in his own administration's view of executive privilege that it will be a de facto win for Rove...and for Bush.

How will Obama respond?

Bla-gone-jevich

Blago is Bla-gone, a unanimous vote in the Illinois Senate to impeach.

Bye, Rod.

Your Zero And One Seventy-Seven Republican Party

As the Dow gives back all of yesterday's gains and then some, John Cole and the guys at Balloon Juice point out that the Republican party is now 100% committed to the failure of the American economy in order to make political gains in 2010.

Let's stop and consider this plan. They have decided that the best way for the GOP to regain their political power is to hope that millions of Americans lose their jobs, their homes, and their livelihoods just so they can blame it on Obama.

Think about that. This means in fact the Republicans are basically convinced that the economy is going to fail so badly that they believe that the risk involved in this bald-faced partisan attempt to sink the President's measure and any hope of rehabilitating the economy is less than the risk of voting for the President's measure.

As tristero puts it over at Hullabaloo:

The rejection of bipartisanship by the Republicans should be perceived in terms of their long term strategy. They know that the depression has just begun. The worse is yet to come. How bad will it be? Far worse than anyone so far has imagined, and we've all imagined it as pretty bad. It will exceed our most extreme fantasies. (In fact, my father, who turns 100 next month (!) said this is shaping up as much worse than the thirties; I think he may be right.) The GOP knows that no feasible stimulus plan, no matter how large or well-crafted, can avert catastrophe. They intend to refuse to go along with anything Obama proposes, wait until disaster hits,and then - counting on the country's short memory span as well as the complicity of the media - blame Obama, Democrats, and liberalism for destroying the economy.

In other words, the GOP is as pessimistic about the economy as I am, if not more so. They are now married to the idea that there will be a Second Great Depression, and that they are washing their hands of the economy and the American worker just so 18 months from now they can say "See, Obama destroyed this country. When the GOP was in charge, this country was wonderful!"

And I fear that tristero is absolutely right. It's one thing for me to predict the gloom and doom of another economic depression. It's quite another thing entirely to see an American political party absolutely counting on one happening in the next two to four years. So tristero continues:

Obama also knows that economic disaster cannot be avoided and that it will be far worse than anything anyone alive - other than centenarians like my Dad - has ever seen; that's why his inaugural address was so grim. He also knows that no stimulus plan will work. And he knows he will be blamed for it when the misery adds up. Therefore, he is trying like hell to get the GOP to sign up, at least partially, for his proposal so he can spread the blame, This is after all, a time-honored political tactic, used by Bush, for example, to claim bipartisan authorization for the invasion of Iraq.

Since the GOP won't ever play - they're not stupid about their self-interest, after all - what is to be done? First, like Duncan, I think the Obama administration must propose the most responsible stimulus package they can, focused entirely on serious efforts to prop up the economy rather than appeasing the Republicans' special interests. Furthermore, they must propose legislation that protects as much as possible the middle class and the poor from the economic tsunami the Bush administration unleashed on this country and that has only begun to be felt. It may not work in staving off an economic collapse, but the crash will be so bad that any amelioration of its effects will be useful.

Naturally, Obama needs to take the high road and continue to call for "bipartisanship." But, as the GOP continuously refuses to go along, the Democratic party, and progressives, must attack on two fronts. First, they must accuse the GOP of lack of patriotism, of refusing to support the president in a time of extreme crisis. Second, they must never, not for a single news cycle, let the country forget that a Republican president, and a Republican legislature is to blame for the dreadful shape of the US economy.

And really, that goes a long way towards explaining why Obama is so keen on bi-partisanship, and why the GOP is so keen on making sure Obama owns the economy over the next four years.

Eventually, somebody's going to have to level with the American people. Whoever does it first, and does it best, will be in charge once the smoke clears. Obama and the Democrats must keep that in mind.

[UPDATE] BooMan reminds us that this vote was meaningless for the GOP as it wasn't the final House vote on the plan. Where tristero opines the GOP is playing no for the long haul and playing long term, BooMan thinks the GOP is playing short ball games strictly in the short term because they have zero long term strategic moves left and are pretty much done for. The bill has to go to the Senate next week where it will be voted on, and then it must be reconciled with the House version, requiring a second House vote on the reconciled bill in February. BooMan is convinced a couple dozen GOP members will go with the Democrats on the reconciled bill, effectively ending the GOP's influence in the House during the Obama era after roughly three weeks, after which John Boehner becomes the biggest joke in Washington.

This theory too has a lot of things going for it. The House vote on the final, reconciled bill will tell us a lot. I just think that vote is going to be zero Republicans.

After all, this is the same House GOP group where all but three of them voted against the Ledbetter Fair Play Act. Maybe they're just insane and enjoy losing.

There Is Awesome, There Is Win...

...and there is this.



Obama needs to hire these guys. I don't know for what yet, but he does. He just does.

Zandar's Thought Of The Day

So, the GOP House contingent has decided that it will be the party of no quarter, no compromise, no retreat, and no surrender.

And the party of no chance of winning, too. "We voted against trying to fix this because America is perfectly fine."

I too welcome the larger Democratic majority in 2010.

Self-Defeating Prophecy

Obama signed into law today the Lily Ledbetter Fair Play Act, which among other things:

"...covers pay discrimination based on gender, race, national origin, religion, age and disabilities."

Of course this is a major problem because...

Some Republicans and business leaders have expressed concern the measure could trigger an explosion of lawsuits based on old claims, discourage employers from hiring women and undermine efforts to stem the recession.

So, Republicans argue that a law mandating among other things gender equality is bad and unneccesary in the free market because, and if I'm reading this correctly, there's already so much existing gender discrimination ingrained in the workplace that employers will have no choice but to break the law and discriminate against people based on gender in the future.

What a great bunch of guys, those Republicans.

Helpful Governor Is Helpful

Oh look, Blago's defending himself at his impeachment trial today.

He said there's been a "rush to judgment and an evisceration of presumption of innocence."

The governor said the prosecution has not proven the allegations, which are based on a criminal complaint released by federal authorities in December, when he was arrested on federal corruption charges.

"How can you throw a governor out of office on a criminal complaint, and you haven't been able to show or prove any criminal activity?" he asked.

Well, there is the whole "conduct unbecoming the Governor" thing. If they decide to impeach you on that, your appearance on The View this week pretty much cements that right there.

If It's Thursday...

...it must be time for a record number of Americans on the unemployment rolls and the worst drop in new single-family home sales in 15 years.

We're nowhere near the worst of times, folks. Not yet.

In Which Zandar Answers Your Burning Questions

Jennifer "Low-Hanging Fruit" Rubin asks: "Why do Democrats insist on dressing down in the White House?"

Zandar's answer: "Because it annoys conservatives who imply that Obama is somehow lessening the prestige of the office of the Presidency by not wearing a jacket unlike the moron who actually profaned said office over the last eight years by not following the Constitution he was sworn in to protect."

By Jove He's On To Something

Josh Marshall takes a look at this morning's NY Times story on Obama's "bad bank solution" to the financial crisis and plays the chessboard ahead a couple of moves (emphasis mine).

The message they're clearly sending is: we're not going to 'nationalize' the banks.

What I wonder, though, is whether or not we're running into a semantic dead end that is obscuring some more pertinent questions.

The core problem is that many, perhaps most of our major financial institutions are insolvent. They have more liabilities than assets. A functioning financial system requires solvent banks. And only the government has the resources to manage the massive recapitalization to get the key institutions back on their feet. At that level of generality, the issue assumes a degree of clarity.

You'd think that, but the reality is clarity is the enemy of the current financial system and the evidence is that the Obama financial team agrees with that assessment. Clarity in this situation is in fact the last thing the guru of Obama's current financial team wants to see. Former Clinton Treasury Secretary Robert Rubin was the mentor of Tim Geithner and was the guy behind the curtain for getting Clinton to sign the Gramm-Leach-Bliley Act.

Rubin's latest complaint? Telling the truth about the sharply decreasing value of toxic derivative assets banks are holding, which is basically the accounting practice of valuing these assets at what the market last paid for them, is known as "mark-to-market". And Rubin apparently is blaming this practice for the economy right now.

Robert Rubin, who quit his post as senior counselor at Citigroup Inc. this month, said an accounting rule forcing companies to mark down assets every quarter to reflect market value has “done a great deal of damage.”

“I spent my whole life at Goldman Sachs believing in mark- to-market accounting, and having said that, if you look at the experience from the last two years, I think mark-to-market accounting has led to terrible vicious cycles in asset prices,” Rubin, the former U.S. Treasury secretary, said during a discussion at the 92nd Street Y late yesterday.

Companies including Citigroup and American International Group Inc. say mark-to-market, also known as fair-value accounting, doesn’t work when few buyers are willing to trade assets like subprime mortgages. Proponents such as the U.S. Financial Accounting Standards Board say the rule adds to transparency and gives investors information about companies.

Rubin joined Citigroup in 1999. Earlier this month, he announced he won’t stand for re-election to the board. Rubin, 70, proposed that a “reserve” accounting standard be adopted, which drew applause from the audience.

Citigroup received a $45 billion bailout from the U.S. government after reporting more than $85 billion of credit losses and writedowns from investments tainted by the subprime-mortgage crisis.

People ask me "Zandar, why do you think Obama's stimulus package is going to fail?" The answer? The people giving Obama economic advice are the people who learned the game from guys like Robert Rubin. If Rubin says "Gee, wouldn't it be great if banks and other companies could pretend the toxic derivative crap on our books was worth what we think it should be worth and not the actual market value" and invent billions, if not trillions of assets out of thin air, then you have to honestly consider that Obama's crack team of financial nerds will try to convince the President that this is somehow a really, really good idea.

If Obama buys that idea, our economy is over. As it is, the 'bad bank" idea already on the front burner is a terrible one, because as Josh Marshall points out:

What that sounds like is that we'll nationalize most of the banks because we have no choice. But we'll allow the current management to run the nationalized banks and the current shareholders to own the nationalized banks.

What am I missing?

Nothing, really. That is most certainly the "logical" endpoint of the plan, banks that have their bad debts nationalized and assets privatized, under private control, with privately held stockholders.

But you combine Bad Bank with the end of mark-to-market, and the results would be catastrophic. The government under bad bank would have no choice but to overpay for the toxic crap on banks' books, and then the banks can turn around and get themselves right into the exact same mess again. Meanwhile, the American taxpayer gets stuck with a government bank full of exactly nothing. It's a back-door bailout of the banks...again.

As I've said time and time again about Obama's econ team, they are made up of the people who helped get us into this mes over the last decade or so. What makes anyone think they will be able to provide an objective solution that's good for the American people, much less a solution that actually works?

Not me. When Bad Bank fails, what then?

StupidiNews!

• The Postal Service is considering going to a five day delivery schedule.
• Russia's Vladimir Putin has some strong words for the US at Davos.
• Obama's decision to name former The Hartford exec Neal Wolin as economic legal counsel is causing an ethics stir.
• JP Morgan Chase CEO Jaime Dimon wants you to shut up about nationalizing banks already.
• Today's kids multitask more, but have more limited critical reasoning skills according to one study.