Sunday, September 28, 2008

Sunday night wrapup

1. Looks like my post on NDP fiscal irresponsibility was timely:

NDP platform pledges billions for child care

And billions more for First Nations. Billions for affordable housing and energy retrofitting programs. Another billion in $1000 grants for all first year university students.

Look, all this is great. But how does the NDP plan to pay for it? Apparently, by reversing corporate tax cuts and pulling out of Afghanistan. Since the Conservatives have pledged to withdraw from Afghanistan within a couple years anyway, that leaves the corporate tax cuts.

The NDP loves to attack big business and side with unions and "working families", but the simple fact is that outside of Alberta, our economy is hurting. Anyone who thinks higher corporate taxes are the answer doesn't know what they're talking about. Sure, they may help pay for the billions of dollars in new government spending. This year. But what about next year, when those same corporations that the NDP loves to rail against ship jobs overseas where the corporate taxes are lower? What happens when Layton's "working families" are no longer working and tax revenues fall? How will he pay for his new social programs then?

To me, the NDP represents the unrealistic and naive Left. The Left where everything is possible, nothing is too expensive, corporations are the villains and workers are the heroes, and complete social justice is achievable. The Liberals represent a much more pragmatic Left; sympathetic to many of the same principles, but much more responsible managers of the economy. There's a reason why Canadians have never entrusted the federal government to the NDP, and it isn't because we don't like child care benefits or grants for students or affordable housing. It's because we aren't all Kool-aid drinkers.

2. Excellent editorial by Frank Rich, summing up the absurdity of the McCain campaign.

3. Looks like they've agreed to a compromise on the bailout. Still $700 billion to buy out toxic assets, but the added provisions look good:

- The $700 billion would be disbursed in stages, with $250 billion made available immediately for the Treasury's use.

- Curbs will be placed on the compensation of executives at companies that sell mortgage assets to Treasury. Among them, companies that participate will not be able to deduct the salary they pay to executives above $500,000.

- An oversight board will be created. The board will include the Federal Reserve chairman, the Securities and Exchange Commission chairman, the Federal Home Finance Agency director and the Housing and Urban Development secretary.

- Treasury is allowed the option to take ownership stakes in participating companies under certain circumstances.

- Treasury may establish an insurance program - with risk-based premiums paid by the industry - to guarantee companies' troubled assets, including mortgage-backed securities, purchased before March 14, 2008.

-One provision requires the president to propose legislation to recoup losses from the financial industry if the rescue plan results in net losses to taxpayers five years after the plan is enacted.

The incremental nature of the bailout will allow for some evaluation of how well the plan is working before flushing more taxpayer dollars down the tubes.

Curbing the compensation packages of company executives is a very populist and, dare I say, appropriate step to take, given that the irresponsibility of these same people created this mess.

I'd like to see some more info on just how the "insurance program" being spoke of here is supposed to work, but it looks like they're leaving the door open for the government (and by extension, the taxpayer) to avoid losing vast sums of money, both by taking ownership stakes under "certain circumstances" and possibly legislation to "recoup losses". Though what those "certain circumstances" are and what the legislation would amount to is not immediately clear.

And I know that it's not what this specific bill was all about, but some tightening of the regulatory framework is the obvious next step unless we want the same thing to happen 10-15 years down the road. Those who fail to learn from their mistakes are doomed to repeat them.

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