BOOK REVIEW: The Oil Crisis of 1973-1974 by Karen R. Merrill, Ph.D., St. Martin's (2007), 192 pages

Reviewed by Gregory Hilton
1973 was not a good year for America’s prestige and psyche. Problems involving Vietnam, Watergate and inflation were looming, but the most significant long term obstacle is described in The Oil Crisis of 1973-1974 by Karen R. Merrill. A key turning point occurred 37 years ago today when President Richard Nixon signed legislation which would dominate political debate for the next 8 years.

BOOK REVIEW: “The Last Campaign: Robert F. Kennedy and 82 Days That Inspired America” by Thurston Clarke, Henry Holt (2008).

 

If Robert Kennedy had lived, would he won the Democratic nomination?

This is the third memoir I have read of Robert F. Kennedy’s 1968 campaign, and they are all well written. The other two were by journalists Jack Newfield and Jules Witcover who covered the campaign. This book was written four decades later but it serves as the most definitive account.
All of three books unquestionably have a liberal bias. Thurston Clarke does not pretend to be objective. He clearly idealizes Kennedy. He portrays the late Senator as a great moral teacher who was always in the forefront of efforts to combat poverty, racism and the Vietnam War.
Many of the authors claims can be easily rebutted by conservatives, but this book is still interesting because of the detail it provides regarding the campaign. To understand the story of 1968 you have to begin with the New Hampshire primary and the Tet Offensive.
A slate of electors pledged to President Lyndon Johnson won the 1968 New Hampshire Democratic primary, but the results were devastating for the incumbent. LBJ was challenged from the left by Sen. Eugene McCarthy (D-MN), and the focal point of the campaign was his opposition to the Vietnam War.
When 1968 began the war appeared to be going well and Johnson had a significant lead in the polls. McCarthy was not considered a serious contender, and the Gallup Poll showed him at 12%. The news media portrayed him as a heroic but grossly underfunded peace candidate.
The massive Viet Cong Tet Offensive of January 31st changed everything. It involved attacks on practically every major city and town. Public perceptions about the war were reversed and negative stories about Vietnam dominated news media coverage. The public began to think the Vietnam War might not be winnable. McCarthy had not attacked Johnson directly up to that point, and the Senator made his first visit to New Hampshire just six weeks before the primary.
The political establishment was stunned by the news out of the Granite State on March 12, 1968 which showed Johnson defeating McCarthy by a slim 49% to 42% margin. When Republican write-in votes were later counted, McCarthy had come within 230 votes of upsetting Johnson.
New Hampshire changed the political landscape. Five days later Senator Robert F. Kennedy (D-NY) entered the Democratic contest. This book focuses on the 82 days of the Kennedy campaign. He was only 42 years old and GOP frontrunner Richard Nixon watched RFK’s announcement from Portland, Oregon hotel room. He thought Kennedy would be the Democratic nominee.
The ten week campaign was filled with drama. At the end of March, Johnson withdrew as a candidate. Martin Luther King was assassinated on April 4th, and riots erupted throughout the nation. Vice President Hubert Humphrey entered the campaign on April 27th, but he refused to enter the primaries. He would not give permission to have his name placed on primary ballots.
Kennedy won in Indiana and Nebraska, while McCarthy defeated the Johnson slate in Wisconsin. RFK refused to debate Senator McCarthy which damaged him in the Oregon primary in late May. McCarthy won and Kennedy reversed his position. He agreed to a televised date on June 1st, and California became a “must win” primary. The debate robbed McCarthy of his major issue, which was Kennedy’s reluctance to confront him.
The debate moderator was ABC’s Frank Reynolds who said “There doesn’t seem to be too many differences between Senator McCarthy and Senator Kennedy on anything, really.” Three days later RFK won his greatest victory in California. The next stop was the June 18th New York primary, and Kennedy never had the opportunity to make his pitch to party regulars.

The historian Ronald Steel said:

I think Bobby Kennedy continues to haunt our imagination because he represents what might have been. We can never be disillusioned, because it’s always in the unfulfilled future. He never failed, because he was denied the chance, of course. But he opened the sense of possibilities of change…. He spoke in a language that people could find their hopes, and their dreams. And so, I think we’ll always read in Bobby Kennedy, not what was, or what failed to be, but what might have been.

The general election between Nixon and Vice President Hubert Humphrey was very close, and many pundits argue that Democrats would have won if Kennedy had been their nominee. We will never know the answer. The Senator was assassinated the night of his California victory, June 4, 1968,  the results were as follows:

California

Sen. Robert F. Kennedy (D-NY): 46.3%

Sen. Eugene McCarthy (D-MN): 41.8%

Attorney General Thomas Lynch (D-CA): 12% (Humphrey stand-in)

New Jersey

Sen. Robert F. Kennedy (D-NY): 38%

Sen. Eugene McCarthy (D-MN): 35%

South Dakota

Sen. Robert F. Kennedy (D-NY): 53%

Sen. Eugene McCarthy (D-MN): 30%

Delegate Projections as of June 6, 1968

Majority Needed For Victory: 1313

Vice President Hubert Humphrey (D-MN): 1030

Sen. Robert F. Kennedy (D-NY): 890

Sen. Eugene McCarthy (D-MN): 250

Unpledged: 456

The nomination process was far different in 1968 than the system we know today. Even if Kennedy had won all of the primaries it is still doubtful he would have won the nomination.  The primaries determined only 19% of the delegates. Humphrey needed just 300 delegates to secure the nomination and he had the united support of DNC members, the AFL-CIO, big city machines and party regulars. The exception was Chicago’s Mayor Richard Daley who was undecided. McCarthy demonstrated considerable hostility toward Kennedy and threatened to throw his 250 delegates to Humphrey. To win, Kennedy would have to convince a number of Humphrey supporters to switch sides.

Wendell Willkie Defeats The Isolationists: The Most Dramatic Moment in GOP Convention History

 

GOP nominee Wendell Willkie is shown on August 17, 1940 in Elwood, Indiana. He remains the only native Hoosier to be nominated by a major party for the presidency. Willkie captured the nomination despite receiving just 3% support from Republicans seven weeks prior to the start of their convention.

“If we want to talk about freedom, we must mean freedom for others as well as ourselves, and we must mean freedom for everyone inside our frontiers as well as outside. . . When we talk of freedom and opportunity for all nations, the mocking paradoxes in our own society become so clear they can no longer be ignored.” – Wendell Willkie, the first major political figure to address the NAACP.

Wendell Willkie was the 1940 Republican nominee for President. He was the only major-party nominee who never held elected office, a Cabinet position, or high military rank. Willkie, an attorney and utility company executive, had been a delegate to the 1924 Democratic convention, and changed his registration only a year earlier. According to the Gallup Poll, he was receiving just 3% support from Republicans seven weeks before the start of their 1940 nominating convention.

Public opinion completely changed during that time period because of the rapid German invasion of France, and the nation clearly realized WW II was no longer a “phony war.”  Many Republicans thought they would be foolish to nominate staunch isolationists such as Senators Robert Taft (OH) and Arthur Vandenberg (MI), who later changed his viewpoint.  France surrendered to Germany one day after the opening of the GOP convention.

Willkie’s nomination on the 6th ballot is still regarded as one of the most dramatic moments in convention history. Columnist Joe Alsop said Willkie’s bandwagon was a demonstration of grass roots power, while Alice Roosevelt Longworth retorted that the candidate had actually come from “the grassroots of ten thousand country clubs.”

His campaign to secure the nomination had the support of many establishment figures within the party, and they made sure the Republican Platform called for the integration of the armed forces. This never happened while President Franklin Roosevelt was in office. In the general election Willkie was defeated by Roosevelt who won an unprecedented third term. The GOP nominee received 45% of the vote and carried 10 states.

Willkie helped to break the isolationist grip on the Republican Party. He was always a civil rights champion, even though it was not politically popular. Roosevelt not only carried all 16 states of the “Solid South,” but won them by huge majorities.

Willkie temporarily put partisanship on the back burner after his defeat. He campaigned for passage of the Lend-Lease bill to help Britain, even though it significantly increased FDR’s power. Willkie said Lend-Lease was needed to help the war effort:

I am greatly concerned about the Republican party. . . Whether we like it or not America cannot remove itself from the world.  Much as we would like to withdraw within ourselves and much as we would like to disregard the rest of the world—we cannot. We cannot be indifferent to what happens in Europe. We cannot forget the fighting men of Britain. They are defending our liberty as well as theirs.

If they are permitted to fail I say to you quite deliberately that I do not believe liberty can survive here. I take issue with all who say we can survive with freedom in a totalitarian world.  I want to say to you even though some of you may disagree with me, and I say it to you with all the emphasis of my being, that if Britain falls before the onslaught of Hitlerism, it will be impossible over a period of time to preserve the free way of life in America.

There has been a bill introduced in Congress to give the President quite extraordinary power to deal with the present crisis. . . . If Republicans are presented as the isolationist party, they will never again gain control of the American government. I beg of you—I plead with you—please do not act in blind opposition.  Do not act because of the hate of an individual.

Of all persons in the United States I have least cause to hold a brief for him. Republicans of 1941, you who gave to me the rarest privilege that could come to any man, the privilege of leading the greatest cause of this century —I call upon you now to rise to the opportunity of preserving the blessed principles of freedom . . . If during this critical period we play a wise and proper part, America in the near future will call us into power. Let us not fail.

Willkie died in 1944 at age 52 after suffering 20 heart attacks. His running mate, Senate Republican Leader Charles McNary (OR), had died six months earlier at 69. This was the only occasion where both members of a major party Presidential ticket died during the term for which they sought election.  During his 2004 keynote address to the Republican National Convention, Sen. Zell Miller (D-GA) said:

“Shortly before Willkie died, he told a friend, that if he could write his own epitaph and had to choose between ‘here lies a president’ or ‘here lies one who contributed to saving freedom,’ he would prefer the latter.”

Now They Agree With Us: Obama Debt Commission is George W. Bush’s Vindication

 

“Protecting social security” proved to be the most effective 2006 issue for Democrats. They rejected the Bush administration’s reforms, but the problem is even more serious today. In this photo, outgoing House Speaker Nancy Pelosi (D-CA) is shown with defeated Rep. Dina Titus (D-NV) and soon to be ex-House Majority Leader Steny Hoyer (D-MD). They are shown during an event to mark the 75th anniversary of the Social Security Act on July 28, 2010 outside the U.S. Capitol.

“Every penny — every buck we spend, we’re borrowing 41 cents.  If you really want to trim the deficit, you have to go to the meat of the matter. Social Security and Medicare are running out of money.” – Former Sen. Alan Simpson (R-WY), Co-Chairman of the Obama Debt Commission (the National Commission on Fiscal Responsibility and Reform) describing their $3.8 trillion budget fix.

“We must pass reforms that solve the financial problems of Social Security once and for all. . . I know that none of these reforms would be easy. But we have to move ahead with courage and honesty, because our children’s retirement security is more important than partisan politics.” – President George W. Bush, State of the Union Address, February 2, 2005

The 2010 election mandate was clear and far different from the past. For 75 years lawmakers bragged about “bringing home the bacon,” but in this election new federal spending was no longer a winning issue. The Chairmen of the Armed Services, Budget and Transportation Committees who promoted new spending were defeated, and other budget busting senior Chairmen retired when they were confronted by angry protesters.

No one knows if a divided Congress will now be able to agree on serious deficit reduction. The incoming Republican House of Representatives will certainly pass legislation calling for major budget cuts, but all of their efforts could well be dead on arrival in either the Democratically controlled Senate or at the White House.

The encouraging part is that both liberals and conservatives say the present fiscal path is unsustainable, and the problem is on the spending rather then the revenue side. This is emphasized by the $1 trillion dollars in interest costs the nation will be paying on the debt by 2020.

In the past, Congress addressed fiscal problems by taking money away from Social Security, and they were effectively kicking the can down the road.  In his 2004 debate with Sen. John Kerry (D-MA), President George W. Bush said these tactics had to stop.

After his re-election victory he devoted 18 months to promoting Social Security reforms, and his effort was a tremendous failure. Now many of his proposals have been revived, and for first time some senior Democrats are agreeing that reform is essential.

These liberals heard the mandate loud and clear, and they know the spending has to stop. The Bush reforms are once again being reviewed, and now members of President Obama’s commission are saying these initiatives would make Social Security solvent for the next 75 years.

Several moderate Democrats attempted to reform Social Security, but they made no progress. Former President Bill Clinton spoke of increasing the retirement age. Former Senator John Breaux (D-LA) suggested discouraging early collection of Social Security benefits.

The late Senator Daniel Patrick Moynihan (D-NY) recommended changing the way benefits were calculated.  George W. Bush said all of those ideas had merit. He backed them but no Democrats wanted to negotiate. They preferred to have a winning campaign issue.  It was a successful tactic, but the problems continued to fester.

“Saving Social Security”

In his 2005 State of the Union Address, Bush was loudly booed and heckled by Congressional Democrats when he said Social Security “is headed toward bankruptcy”:

For younger workers, the Social Security system has serious problems that will grow worse with time. Social Security was created decades ago, for a very different era. In those days, people did not live as long, benefits were much lower, and a half century ago, about 16 workers paid into the system for each person drawing benefits.

Our society has changed in ways the founders of Social Security could not have foreseen. In today’s world, people are living longer and therefore drawing benefits longer. And those benefits are scheduled to rise dramatically over the next few decades.

And instead of 16 workers paying in for every beneficiary, right now it’s only about three workers. And over the next few decades, that number will fall to just two workers per beneficiary. With each passing year, fewer workers are paying ever- higher benefits to an ever-larger number of retirees.

So here is the result: Thirteen years from now, in 2018, Social Security will be paying out more than it takes in. . . By the year 2042, the entire system would be exhausted and bankrupt.

The only difference is that now the Social Security trust fund will run out in 2037 instead of 2042. In his new book Decision Points, Bush describes the inaction on Social Security as his greatest failure. Speaker Pelosi and Senate Majority Leader Harry Reid (D-NV) both dismissed the White House proposals and preferred to do nothing. They said Social Security was sound and there was no need for any significant reforms.

They effectively used Social Security scare tactics to recapture control of the House and Senate in 2006, but all of Bush’s warnings have proven to be prophetic. Now the Debt Commission agrees with many, but not all, of Bush recommendations. The benefit cuts he recommended for upper-income wage earners are included, but private accounts for young people are not.

The vote on the recommendations of President Obama’s Debt Commission is set for December 1st, and the outcome is uncertain. The controversial recommendations would involve considerable pain, and passage requires the approval of 14 of the 18 Commission members.

The Commission set out with a goal of reducing spending to 3 percent of GDP. The recommendations pending before the Commission would bring spending down to 2.2 percent of GDP, but the new gas tax and Pentagon, Medicare and Medicaid reductions are meeting stiff resistance on Capitol Hill.

Liberal lawmakers are saying it is impossible to increase the Social Security retirement age by one year in 2050. This would only impact people who are now 28 or younger, but Democrats will not agree.  It was easy for GOP candidates to criticize Obama’s stimulus and other spending proposals, but it is difficult to advocate cuts in Medicare and Medicaid. Many Democrats are certain to campaign again on the “saving Social Security” theme.

What Can Be Cut?

Rep. Paul Ryan (R-WI), the new Chairman of the House Budget Committee, believes the Pentagon is already stretched thin while the Commission ignored numerous savings in the health care area. Simpson says the package will include real tort reform and $500 billion in discretionary budget reductions over the next decade.

The GOP Congress will definitely have additional proposals. The Debt Commission is important because it is seen as the best opportunity to pass spending reductions in the Democratically controlled Senate. Republicans are firmly committed to the extension of all the Bush era tax cuts, but the new Congress will be debating proposals to trim charitable deductions, mortgage-interest deductions, as well as deductions for state and local taxes.

All of these proposals are highly unpopular but advocates emphasize that if they are eliminated, income-tax rates could be brought down to 8 percent, 14 percent, and 23 percent. 

Fixing the Deficit: Our Biggest Test

The current issue of Time magazine contains an article by Fareed Zakaria entitled “Fixing the Deficit: Our Biggest Test.” He concludes:

The crucial arena is not the economic realm but the political one. . . will this conversation turn into the usual demagoguery, with each side tearing apart the things they dislike and ensuring that the deficit commission becomes one more sad story about Washington’s inability to grapple with our long-term problems? We’ve seen the political process break down and avoid dealing with immigration reform, energy policy and Social Security. Will we fail again, this time on the biggest test?

 

Answering The Isolationists: Why Has Congress Never Officially Declared War Since 1941?

 

This was the last time America officially declared war.

What is not conservative about saying, ‘Don’t go to war unless we go to war properly with a full declaration of war, and no other way?’ Unconstitutional wars cost a lot of money, they undermine our constitutional principles.” – Rep. Ron Paul (R-TX), Address to the Conservative Political Action Conference, February 19, 2010

“Congress is about to circumvent the Constitution and avoid the tough decision of whether war should be declared by transferring this monumental decision-making power regarding war to the President. Once again, the process is being abused. . . A declaration of war limits the presidential powers, narrows the focus, and implies a precise end point to the conflict.  – Rep. Ron Paul (R-TX), debate on the “Authorization for Use of Military Force Against Terrorists” in Afghanistan, October 3, 2002 

As usual, the truth is the exact opposite of what is being claimed by Ron Paul, Libertarians and the Constitution Party. The U.S. Constitution explicitly does grant Congress the power to declare war, and the last time this occurred was in December of 1941. America responded the day after the Japanese attacked Pearl Harbor, and three days later the U.S. Congress reacted again when Nazi Germany declared war on the United States.

No other nation has adopted a war resolution specifically against America since that time. The Korean War (1950 – 1953) and 1991’s Operation Desert Storm in Kuwait were military actions pursued under a United Nations mandate. If President George H.W. Bush had insisted on a declaration of war, he would have received it. He did not feel it was necessary, and the fighting lasted for only 100 hours. Republicans wanted a formal declaration but the Democratic majority did not want to give Bush any additional power.

Why Doesn’t Congress Declare War?

A declaration of war only requires a 51% majority vote in Congress. The “Declare War” clause of the U.S. Constitution (Article I, Section 8) does not spell out any exact powers, and Presidents have taken a broad mandate after the passage of a war resolution. The presidents war powers have been recognized numerous times, and most recently by the Supreme Court in the Hamdi v. Rumsfeld decision of 2004.

Since World War II, the Congress has preferred to use an Authorization for the Use of Military Force [AUMF]. This serves a very different role from a formal declaration of war. By passing an AUMF instead of a declaration, Congress is limiting the scope of power given to a president.

Past legislative history under a declaration of war gives the president broad inherent constitutional powers to deploy U.S. armed forces into combat abroad without specific authorization from Congress. The AUMFs passed by Congress signal support for the military actions but they do not go so far as to cede lawmaking power to the president. A declaration of war has been viewed by the Supreme Court as ceding legislative power by Congress.

What Has Happened in the Past?

Only two Senators voted against the Vietnam Gulf of Tonkin Resolution in 1964, and it passed the House unanimously. Only one lawmaker in the entire Congress opposed George W. Bush’s 2002 “Authorization for Use of Military Force Against Terrorists” in Afghanistan.

Of the more than 220 situations in which the U.S. armed forces have been used (half of them involving fighting for less than 30 days), only five have involved declarations of war: the War of 1812, the Mexican-American War, the Spanish-American War, World War I and World War II.

Any of our post war presidents could have easily obtained a declaration of war. There was very little Congressional opposition at the outset of the post WW II conflicts. Instead, the Congress used a process called authorization of forces rather than war declarations.

The presidents would have preferred war declarations which once again significantly expand their power. Ron Paul’s claims that a war declaration limits the president is totally false. As I indicated, the Congress prefers AUMF’s because they increase the stature of the legislative branch.

Why Does Congress Insist on an AUMF Rather Than a War Declaration?

By using an AUMF, if Congress wishes to oppose military actions pursued by the Commander-in-Chief, it can do so in several ways. It can revoke any resolutions supporting the President. The Congress did that in 1970 when it revoked the Gulf of Tonkin Resolution.

Congress can also cut off appropriations for Presidential war making. During the Vietnam War, it barred troops from engaging in operations in Thailand and Laos (1969) and from using ground forces in Cambodia (1970) and bombing Cambodia (1973).

America Was Not Tricked Into The Vietnam War

Another false claim made by the isolationists concern the Vietnam War. They say America was tricked into this conflict. The 1964 Gulf of Tonkin Resolution was passed after the attack on the U.S. destroyers Maddox and C. Turner Joy. Everyone could see the visible damage on the USS Maddox. It was later discovered that a radar mistake was responsible for the USS C. Turner Joy’s response. Nevertheless, the attack on the Mattox took place.

Freshmen Orientation: New Members Have No Idea How Lucky They Are

Former Rep. and Mrs. Thomas Foley (D-WA) and shown in January of 1965 with then House Speaker John McCormack (D-MA) and his wife. Foley served on Capitol Hill for 30 years before his defeat in the GOP landslide of 1994. He was House Speaker from 1988 until 1994. McCormack served from 1922 until 1970. He was Speaker of the House from 1962 until 1970. He was the last person to serve as Speaker who lacked a high school education.

Members of the House of Representatives freshman class will begin their official orientation session tomorrow, and many of them have no idea how lucky they are. New lawmakers in years past were never given the courtesies and opportunities which are now being extended to the incoming 112th Congress.

Frank Sinatra and Ava Gardner: Their $267,000 First Date

1949: The Ambassador Hotel, Los Angeles.

Movie actress Ava Gardner, one of the most beautiful women of the 1940’s and ’50s, was associated with many famous men. According to Time magazine, she was the most photographed woman in the world during the World War II era. She was 5′ 6″, a size zero, and had an 18 inch waist, 36-18-36. Gardner never won an Academy Award but the American Film Institute lists her as one of the top 25 greatest stars of all time.
Her best known films are Show Boat, The Snows of Kilimanjaro, The Barefoot Contessa, The Sun Also Rises, On The Beach, Seven Days in May, The Night of the Iguana and Mogambo, for which she received an Academy Award nomination for Best Actress.

2012 Redistricting: Liberals Release New Software Which Greatly Benefits Conservatives

The GOP could gain anywhere from 10 to 25 Congressional seats through redistricting and reapportionment in 2012.

Political junkies similar to myself will enjoy an outstanding new redistricting application which was updated yesterday. A link to this free program appears below, and users will be impressed with the wide variety of current data which is already available. I have spent many hours playing with this application and I highly recommend it.
It is a lot of fun, but the serious point is that the GOP could gain anywhere from 10 to 25 Congressional seats in 2012. The gains would come through reapportionment and redistricting alone, and this would not involve defeating a single Democratic incumbent.

George W. Bush Looks Back at TARP: His Most Difficult Decision Point

 

The Decision Point: As Senators John McCain and Barack Obama listen, President George W. Bush announces the TARP program on September 25, 2008.

In his new memoir, Decision Points, George W. Bush recounts the battle over the Toxic Assets Recovery Program (TARP) which is still having an impact in GOP politics. He quotes Sen. Jim Bunning (R-KY) as saying TARP would “take away the free market and institute socialism in America.”  A full page ad sponsored by Americans for Tax Reform and its president, Grover Norquist, simply said “Dear President Bush: No.”

The TARP critics said it was better to let the American banking system fail even if the nation had to endure a depression. Former Gov. Mitt Romney (R-MA) disagreed, said the critics had no realistic alternative, and supporting TARP “was the correct and courageous thing to do.”

The legislation was also endorsed by the conservative magazine National Review.  This week talk show host Rush Limbaugh asked the former President: “If you had it to do over, would you do the TARP bailout?” Bush responded: “Yeah, I would have. I didn’t like it at all, but when you’re president you get faced with stark choices, and I couldn’t have lived with myself had the country gone into a deep depression, and people’s lives would have been affected.”

In Decision Points he says:

The strategy was a breathtaking intervention in the free market. It flew against all my instincts. But it was necessary to pull the country out of the panic. I decided that the only way to preserve the free market in the long run was to intervene in the short run. It helped spare the American people from an economic disaster of historic proportions. I had to safeguard American workers and families from a widespread collapse. . . It was a hell of a lot better than a financial collapse.

The Bush Administration’s outlay of $350 billion in TARP funds will certainly break even, and the government has already  made $28 billion in profits. All the major financial institutions which received funds from the Bush administration were  eventually able to meet requirements established by the Treasury Department.

The remaining investments in banks are small. Even the Obama administration has a fairly admirable record on TARP. They will be able to demonstrate that 90 percent of the original $700 billion will not have been spent or was returned to the taxpayers.

All six of the biggest U.S. credit-card issuers have returned their bailout money, and these initial TARP funds were repaid about a year after their distribution. Citigroup was one of the hardest hit banks and received $45 billion in bailout money, more than any other financial institution. The Treasury paid $3.25 a share for its stake in the bank during the 2008 credit crisis. The good news for the taxpayers is that the shares increased steadily in value, and the government received a hefty profit of over $9 billion.

This is a far different outlook than what was predicted during the final weeks of the 2008 campaign. At that time many politicians were predicting TARP would lose $700 billion. Without TARP, many people with pension funds and annuities would have lost everything. TARP unfroze the credit markets in November and December of 2008, restored confidence in the banking sector and stopped any further runs on the dollar. In his recent TARP testimony, Treasury Secretary Timothy Geithner said:

The program was essential to averting a second Great Depression, stabilizing a collapsing financial system, protecting the savings of Americans and restoring the flow of credit that is the oxygen of the economy. It achieved all that at a lower cost than anyone expected. . . The much less severe savings and loan crisis of the late 1980s and early 1990s cost 2 1/2 times that as a share of our economy. . .

The U.S. financial system has been completely overhauled and is in a much stronger position today than before the crisis. In fact, the weakest parts of the system are gone. Of the 15 largest financial institutions before the crisis, four are no longer independent entities. Five were forced to restructure. Two are subject to much stricter federal oversight. Ten have seen major changes in senior management and boards of directors.

A Washington Post editorial on the day TARP ended, October 3, 2010, noted:

TARP, reviled by populists of the left and right, produced more benefit for the U.S. economy at lower cost to taxpayers than even its strongest initial supporters expected. . . There is no denying that TARP is not the sort of thing the U.S. government should normally undertake.

Still, the costs of TARP — tangible and intangible — have to be considered in the context of the unprecedented emergency that faced the policymakers who adopted it. They must be weighed against the costs of not intervening. Financial stability is a public good, but it isn’t free. TARP helped save the United States from an economic collapse and bought time to get America’s house in order under calmer circumstances. Goodbye, TARP. Good riddance — and thanks.

Inside the RNC: The Race for Chairman Begins

Former State Treasurer Sarah Steelman (R-MO) was narrowly defeated in the 2008 GOP gubernatorial primary. She deferred to Sen-elect Roy Blunt this year, but is now exploring a 2012 campaign.

The Next RNC Chairman
Members of the Republican National Committee face a difficult decision in January when Chairman Michael Steele’s term expires. Former Michigan GOP Chairman Saul Anuzis was defeated by Steele last time, but is now the first candidate to challenge his renomination. He is expected to have the support of former House Speaker Newt Gingrich, and his letter to RNC members was posted today: