Sell Out, not Reform

Few Americans clain to be economic experts. Most can reasonably manage their own household accounts, purchase insurance and investments, and keep track of their banking and credit card balances. However, on the national scale, most haven't a clue about commercial and investment banking or insurance company finances.

In recent years, financial concerns have clouded the American dream. As housing values plummet, the housing market dries up, and APRs skyrocket, financial news becomes increasingly worrisome. For the majority of middle class Americans, their house is their largest investment. Soon, everyone feels the pinch of higher food and gas prices and energy bills. Wages are stagnant. The failure of huge mortgage companies and financial giants, Fannie Mae, Freddie Mac, and Bear Stearns, serves as a rude wake up call. Something is going seriously wrong. Fears are confirmed when the government offers bailouts to prevent even more home foreclosures. Then, with last week's U.S. government's $7 billion bailout of three Wall Street giants, even the most economically challenged American begins to see the need for a crash course in economics.

Since Friday's grim-faced announcements, by the President, Finance Chairman, and Congress, about the additional $7 billion corporate bailout, controversy has increased. Some talk about the need for urgent action to prevent a repeat of The Great Depression. Others criticize the socialization of American finance. Everyone blames greed and corruption on Washington and Wall Street. No one can fathom such a staggering figure. The burden of $1 trillion suddenly heaped on American taxpayers becomes outrage. Both presidential candidates weigh in on the crisis with some denial, reassurance, meetings with economic advisors, and then stinging accusations of their opponents. How could this happen in America? Whom is to blame? What are the fixes? When will we know more? Whom do we believe?

This weekend, John McCain is making a big show of criticizing the government's bailout of giant insurance company AIG (American International Group), but there is more here than meets the eye. For nearly three decades, John McCain fought for deregulation and small government. After his failed bid for the presidency in 2000, he created the Reform Institute, a non-profit think tank commited to campaign finance reform. As a non-profit organization, the Reform Institute is not subject to the regulations and disclosures of federal election law (FEC). The Reform Institute accepts "soft money," subsidies from foundations and corporate donors with issues before the Commerce Committee. For three years, the organization was headed by lobbyist Rick Davis, a longterm member of McCain's inner circle and his 2008 campaign manager. As president for three years, Davis received $395,000 in salary. During that time, he also headquartered his lobbying firm, Davis Manafort, in Reform Institute offices. Davis is just one of many lobbyists who have passed through the "revolving door" of the Reform Institute.

The Reform Institute is a front organization designed to funnel dollars to John McCain's political career. A decade ago, McCain floated a bill to ban insurance giants, like AIG, from overcharging federal projects, such as the Big Dig in Boston, and reaping windfall profits from investment of those dollars. McCain eventually killed the bill. Later, AIG donated more than $50,000 to the Reform Institute. Maurice Greenber, a McCain backer who ran AIG, has since been forced to relinquish the company under threat of criminal prosecution. Why would AIG donate so much money to a think tank whose work has nothing to do with the interests of insurance companies? Perhaps it was to gain access to John McCain.

McCain stepped down from the Reform Institute in 2005, but he remains solidly linked to the organization. What forced the $85 billion bailout of AIG, one of the largest donors to McCain's pet think tank? The fact is that, in the worst business deal in U.S. history, our government is buying the debt of McCain's backers. Earlier this month, Martin Feldstein, top McCain campaign advisor and board member of AIG, reported that part of McCain's proposed economic reform plan is to cut taxes further and shift healthcare costs from employers to employees in a "tax credit" scheme. As the largest insurance conglomerate, AIG stands to gain.

John McCain supported the Gramm-Leachy-Bliley Act of 1999, deregulation that repealed the Glass-Steagall Act, a law that had prevented a bank from offering a combination of investment, commercial banking and insurance services. The bill was sponsored by Senator Phil Gramm, until quite recently John McCain's 2008 top economic advisor, who later joined UBS as a lobbyists in 2004. Glass-Leachy-Bliley allowed commercial and investment banks to consolidate, and it legalized these mergers on a permanent basis. With no regulation, no checks and balances, greed and corruption took over. Executives and brokers earned tens of millions of dollars in commissions and bonuses while Americans lost their homes, their savings, and their investments. Now John McCain proposes that Americans invest their social security in the stock market!

In his book, John McCain called his involvement in the Keating 5 savings and loan scandal the worst mistake of his life. He vowed to never again sell out the public interest to high rollers, to never again besmirch the honor of his office, and to turn away from lobbyists and donors. Yet, with the AIG bailout, McCain has virtually underwritten the bankrupt company, and the American taxpayers will pay. Their $50,000 contribution to the Reform Institute bought AIG an $85 million dollar insurance policy. As I see it, in this manure pile of cronyism, Americans find John McCain deeply entrenched in the middle, and they both stink.

Vote Obama-Biden '08!