The McLaughlin Group: The Economy Tanking
Guest blogged by Heather, cross posted at DailyKos
The panel of Mort Zuckerman, Eleanor Clift, Monica Crowley and Pat Buchanan on this Friday's The McLaughlin Group sat down for a discussion on whether our economy is tanking and whether or not it's in part due to Iraq.
Mort Zuckerman paints as gloomy a picture of the economy--as we heard the other day from Jim Cramer--but he refuses to admit that the occupation in Iraq might have anything to do with the economy tanking now. Zuckerman is also completely dismissive of Ron Paul's arguments about the economy during the ABC GOP debate.
Of course, Buchanan and Crowley think it's only a minor drag on the economy and Crowley goes so far as to start spouting off about how great the economic growth is in Iraq. How's that occupation and genocide going for you, Monica? Oh the economy is booming....it's wonderful.
We do have a real mess on our hands with the sub-prime lending industry and the economic forecast is looking very dreary, to put it mildly, but I don't understand how anyone can completely separate our irresponsible borrowing and spending on the bottomless pit called Iraq from the state of the economy in general we're facing now. The conservatives' answer to our problems is to lower taxes and cut government spending (code for gut Medicaid and Social Security) but that war spending, no problem.
Transcript below the fold
Zuckerman: I don't think it's an exaggeration. It's an understatement. You've heard me say here I think we are facing the worst financial crunch and crisis since the Great Depression. You have the entire banking system now that is virtually frozen and there are not just the sub-prime mortgage thing. There are other things called credit default swaps where they're going to lose as much money, 250 billion dollars on. The banks are frozen. They're not making loans because they have such huge debts that they have to take onto their balance sheets and nobody knows how to deal with that because you had a dramatic...you had two bubbles that have burst at the same time. The housing bubble which has collapsed in this country. The first time since the Great Depression that housing values have gone down for a year since the depression and it's going to go down even more next year. The credit crunch, you've just exploded the whole credit system in this country. We were way over leveraged. The banking system was over-leveraged. People didn't even know about it. The bankers didn't know about it. They didn't access the risk. Now that risk is piling in and every body's going to pay the price. Uh it's going to stimulate nothing other, I mean it's going to de-stimulate the economy. Nobody has money to lend. They're saving all their money to pay off their debts. They're borrowing money or looking at uh the rest of the world to enhance their capital and it's still not going to solve their problems.
McLaughlin: Okay this worthy tried to pull it together. Why is the economy tanking?..............Is Ron Paul right? Do you have to deal with the monetary issues before you deal with anything else to account for deficit spending?
Zuckerman: You know, I'm ah, Mitt Romney starts your program and he says he's going to do something about the economy. When he was Governor of Mass. he had 1/2 of one percent increase in employment in the four years he was Governor while the country's employment went up by 5 1/2 percent. He left the state with the highest unemployment rate of any state in the union. So his words are just phony words. This guy doesn't even know what he's talking about. Romney does know what he's talking about he's misleading.....
.....He has pulled nothing together. He's just pulled words together.
McLaughlin: You don't think the Iraq war?.....
Zuckerman: I'm not saying the Iraq war was, was an economic boom. All I'm saying to you it does not deal with the problems that this country is facing.
McLaughlin: Despite the trillion dollar cost of the Iraq war?
Zuckerman: We had five years of this war and the country was booming. The reason why the country is going down is because of the credit system, not because of the war.......
Clift: First of all, Romney went to Michigan and pandered. He promised them 20 billion dollars if he's president to revive the auto industry so I'm not going to heap praise on him. Ron Paul is the closest thing we have to a Ross Perot. He is out there hammering away on this issue. I think he has a point to make and the American people if they really do link a wasteful war in Iraq with problems at home then the politicians will really be up against the wall.
McLaughlin: What do you think about what Eleanor said?
Crowley: Well the UN this week came out with a report projecting that in Iraq, the Iraqi economy this year and next year will grow at the rate of seven to eight percent. The US economy right now is growing at the rate of 1.5 percent. So all of these little stimulus packages and Hillary Clinton just recently said she's going to tack on a forty billion dollar rebate package along the lines of what President Bush is suggesting too.
McLaughlin: What do you want to do?
Crowley: Look none of these problems address the long term issues in this economy about job creation and growth. I want to see a cut, I want to see the Bush tax cuts made permanent. I want to see a roll back of the tax rates across the board and I want the most important thing John is cutting federal spending.
McLaughlin: I want a villain here. I want culpability. Why should it be this way? I haven't heard it yet.
Buchanan: ..John look, the United States is completely tapped out. We borrow from Europe to defend Europe. We borrow from the Arabs to fight a war to bring democracy to Iraq. We borrow from the Chinese and the Japanese to defend their oil lifelines. The United States saves nothing. We are now, we've got five trillion dollars abroad. It is coming back to bit us....Citibank.....
McLaughlin: This goes back to Bush and it goes back to the White House. Is that right?
Buchanan: Well it goes back to 1992, John. There is five trillion dollars abroad. They're moving it into sovereign wealth funds. They are snapping up Citibank, Morgan Stanley, 3Com, all these other....crosstalk......
McLaughlin: It's traceable to overspending by the government...[crosstalk]......and misspending by the government.....
Clift: I agree the government is tapped out but is not the time for the ideological hobby horses. We're not going to solve the problem of sovereign wealth and we're not going to make the Bush tax cuts permanent....[crosstalk]... They're going to do some quick and immediate fixes that are needed for average people.
McLaughlin: Multiple choice on the Iraq war. Is the cost of the Iraq war A: a major drag on the economy, a medium drag, a minor drag, or no drag? Pat Buchanan.
Buchanan: It is a minor drag, John. There's five trillion dollars in American dollars out there that foreign countries have and they're coming back to buy America.
Clift: We wouldn't be reliant on those foreign countries to the extent we are if we weren't funding a trillion or two trillion dollar war. Major drag.
Crowley: Minor drag in the whole context of this dynamic American economy that's having some serious problems.
Zuckerman: You know we've had four booming years while the war in Iraq has been going on. It's no drag at all. The problems we're having now have nothing to do with the war in Iraq.
McLaughlin: A major drag. We'd have that trillion dollars to spend here at home if we didn't have Iraq.
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