No one is contemplating that $700 billion will simply be given away.

Boy, I'm not so sure. I wish I could share his confidence about the government's restraint when given a blank check to play with the taxpayers money.

Health care, education, and energy reform FIRST.

THEN, if there is any money left over, THEN we can talk about bailing out failed billionaire bankers.

All through the 90's Larry Summers, Robert Rubin and their bond-trader buddies told us that if we just cut, cut, cut spending on frivolities like government aid to the neediest and most vulnerable families in our country, then we would get the deficit under control, then we would be able to have all sorts of great things like health care and education spending LATER.

Well, that worked out great, huh?

Well, FUCK YOU, SUMMERS. Go back to peddling your pseudo-scientific theories of female biological inferiority or whatever you do when you're not trying to swindle a trillion dollars from the working poor of America.

We're not going to let Lucy pull the football away -- or she's going to get her fucking CUNT KICKED IN.

They will be lying.

I don't get it. Are you using Summers' distraction to try to convince people opposed to the bailout that it won't hurt the chance for future, desperately needed funding of social programs? I hope not b/c that's really creepy. The theory would only work if we expect that we'll be dealing with sane people in the future. The people who block funding human needs programs don't do that according to an adherence to some economic theory. They defund these programs b/c they hate those programs and want them to die. We could have a $10T surplus and they still wouldn't fund them.

And why would they care if we know they are lying? They lie constantly with impunity. And even if they didn't have the full-throated support of every establishment media outlet in the world in this effort, the "balance the budget" nonsense has been internalized by all of us since Clinton beat us to death with it. (As you once wrote, it took Clinton to realize Reagen's dreams.)

But no matter, Larry Summers, in the middle of a desperate push to loot the Treasury of $1.5T, says that taking that money won't hurt funding programs in the future. We're supposed to do what with that? Bookmark it and haul it out when Head Start is cut another 7%? I've tried that. It doesn't work.

This bailout will most definitely be used with stunning efficacy to curtail social spending and investment in a real economy for the next decade at least. That's not the only reason to oppose it but it's a good one.

House Republicans and others opposed to action on these issues will pretend that the bailout somehow extinguishes our ability to act,

Those others include the Dem leadership. If you need proof then look no further to Reid allowing the silent (in more ways than one) filibuster of the economic recovery package that would have addressed some of the needs you listed, when funding them would, w/o doubt, bolster a struggling economy, to say nothing of decreasing human suffering. Maybe they just needed to hear from Larry Summers on the subject.

Precisely. The question of saving the bacon of financial corporations has been a total distraction from our real problems. There is a recession, there will be a deep, profound economic slow down, label it however you want. Bailout or no bailout, this will happen. We have much more important things to do with our money than lubricate the credit markets, which only effects the short term trajectory of events. Long term, we need to invest in solving the real problems that confront the nation and the planet.

Short term, yes, people will lose their jobs, businesses will fail, hunger and want will grow in the land. But this will happen regardless, because we have been borrowing money from foreigners in order to live beyond our means for a long time. That had to end. Now we have to live in the real world. Better to lance the boil, better to take the hit, get it over with and look ahead with greater wisdom. This is not a problem to be avoided, or prevented, but to be endured, and ultimately surmounted.

Let the banks go broke, let the Ayn Rand worshiping greedheads go down with them, and let's do what we must to take care of the hard working people who will be collateral damage and then build a sound, sustainable future.

This recession/bailout is likely to delay any meaningful energy reform indefinitely (or at least for 4 years) but for health projects and other entitlements the case is less clear. I can't imagine any expensive progressive policies passing if their intended goal is anything other than creating jobs or increasing consumer spending. Conservatives need to realize that while economic distress helps democrats there are compromises republicans can make to minimize long term damage. For instance focusing on infrastructure and public works can easily be temporary. As can stimulus packages given to needy and training programs for low-skilled workers. If conservatives would only set ideology aside for a few years they could regain popularity and avoid another new deal or great society.

a family that buys a $500,000 home is only poorer if it overpays

There's the thing: I think if the bailout had gone through, we would have been that family.

I would just point out that from the original proposal from Paulson and crew, it wasn't at all clear that they weren't contemplating just giving it away. Even the modified version of the plan, which I support, all things considered, didn't seem exactly air tight in terms of preventing give aways.

Ezra --
I've been in favor of th4e bailout because the risks of doing nothing seemed too great and my grandmother told me in great detail what the Great Depression was like.

I am also struck that I am now just about the age she was in 1929, early sixties, and like her, anticipating a comfortable, if not luxurious, retirement. She lived the last decades of her life in poverty, having to live with her children and be supported by them. (She was thrilled in the early 1950's when she was "grandfathered" into social security and got a small, entirely inadequate, check every month that was all her own.)

My perception of the evening, however, was that I and my wife, like my grandmother, could lose our entire life's savings. Or most of it. On thinking about this, I realized that we could live on social security alone (income about half what we had been planning on), if SS survived. Not great, no more vacations in Europe every three or four years, no more eating out so much, no more buying a new pair of hiking boots on a whim, rare gifts for the boys, but we'd live.

But, my thought went on, if there were really national health care, that might be quite comfortable. Social security would seem a lot bigger if health payments were small. It would really make a difference to us, and an even bigger difference for others who had not had as good earnings during their lives as we had.

So you're right, particularly if the coming recession-depression devastates pension plans and retirement savings. Health care is more important, to more people, than it was before.

Oh, you have to love the chutzpah of that Summers.

But moreseriously, his economics obfuscate and ignore politics completely.

You see, rarely does economics act in a scientific vacuum outside of politics Quite the contrary.

The perceived largess of this none too popular bailout will only fuel peoples' concerns about government overreach and their anxities about government spending considerably on healthcare.

In other words, it is perfect ammunition for Republicans, blue democrats, and well, most democrats to harp about fiscal responsibility, deficit spending and the like.

But really seriously. Are you seriously using Summers, a prime suspect in the deregulation that besets us, to bolster your case.

Lets get the cookie monster to tell us about the health benefits of subsidizing nabisco?

Want to see what really was afoot with the Paulson plan, even as modified and voted on? Read
http://www.nakedcapitalism.com/2008/09/mussolini-style-corporatism-in-action.html
and be appalled.

Whether with fiscal and economic stimulus, or with equity injections or both, the Dems, with Obama and his team in the lead, must take control of this NOW!

Health care reform could gain traction if it focused first and foremost on cost, that Obama, Clinton or McCain have failed to do at this point. The 210 billion we plunk down every year for defensive medicine would have paid for alot of bailouts over the past 15 years or so. It's a whole lot easier to promise every thing to everyone and forget about the cost, when you are getting cash from the insurance companies and trial lawyers

This is a joke, right: "No one is contemplating that $700 billion will simply be given away. All of its proposed uses involve purchasing assets, buying equity in financial institutions or making loans that earn interest." The main point of the plan was indeed to use the money to "purchase assets" but with the peculiarity that the assets in questions were worthless, or at least bought above their market value. That was the centerpiece of the plan and to argue that this is not a gvieaway is brazen.

As to the argument with the family buying that 500k house: even if that family didn't overpay, they could find themselves very well to be over-indebted and realize that they can't afford other things they might need. The problem about the US economy is that everybody at the moment is over-indebted - consumers, businesses, banks, and the government. Your "think positive" attitude assumes that you will always be able to borrow more money to pay for yesterdays debts. You need to get back to the real world, where the laws of conservation still hold, and where free lunches have to be paid for by somebody.

And yes, the money pumped into financial system "assets" will not be spent on urgent infrastructure upgrades, or education, or alternative energy, or relief for those victims of the crisis that are not big banks. This holds true even if those asets could be turned back into money a few years down the road. Think about it.

>> a straightforward Keynesian case for increased investment

Except for the fact that the GOP in general, and their candidate for POTUS specicially recommends cutting spending (and taxes to boot)--even in this case.

They either have no concept of this economic theory (and past economic history here in the US) or they simply don't care, and continue to shriek their siren song of economic doom.

Shroter Ezra: "Here are some arguments that make what's understood not what it seems so it's easier to cram a bailout down the throats of the little people."

Whether with fiscal and economic stimulus, or with equity injections or both, the Dems, with Obama and his team in the lead, must take control of this NOW!

They have no interest in doing that. That's why they let the bill that would have done it be killed by silent filibuster over the weekend. They could have forced the debate. Obama could have screamed about it - in the cool, professorial way he does. They didn't. They don't care and probably wanted it to happen that way.

We have no allies in power on the Hill. If you want something good to happen, get ten of your friends to stand outside a Congressional office with you and tell some reporters that you'll be there and what your message will be.

700 billion....

'Social Justice' is expensive, isn't it?