Countdown with Keith Olbermann, September 22, 2008

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OLBERMANN: Nothing like an intensely complicated economic problem multiplied by urgency phrased in the most cataclysmic of terms to bring out contradictory answers from the presidential candidates. The switch here is senators, McCain and Obama, do not seem to disagree with each other. The conflict seems to be between Senator McCain and Senator McCain. Our fourth story on the COUNTDOWN: The treasury secretary pressing Congress to approve without changes or significant debate an unprecedented financial bailout funded by taxpayers that could reach a $1 trillion. And, oh, by the way, give him all the power and none of the accountability.


HENRY PAULSON, U.S TREASURY SECRETARY: I think what we need to do is have the authority to move very quickly to purchase these assets, these illiquid assets from banks, and the plan we have, I think, is one that will work and will help us stabilize the market to get through this period. And then, future administrations, there`s flexibility to run this, any way they would like to run it. But what we need to do is have something that will work and work quickly.


OLBERMANN: Secretary Paulson`s plan dubbed "cash for trash" by its critics, taking hits in Congress. But on the campaign trail, the "do it now" mentality were supported by Senator McCain, but opposed by Senator McCain.


MCCAIN: We don`t have time to wait for Senator Obama`s input for our nation to act. I think it`s clear that Congress must act and act quickly.


OLBERMANN: So, for Senator McCain, it`s act now, except for when that means he thinks Paulson`s idea isn`t so good.


MCCAIN: I`m greatly concerned about the plan that gives a single individual the unprecedented power to spend $1 trillion -- $1 trillion without any meaningful accountability.


OLBERMANN: Which is pretty much what Senator Obama said today, too.


OBAMA: We cannot give a blank check to Washington with no oversight and accountability when no oversight and accountability is exactly what got us into this mess in the first place.


OLBERMANN: And check this out tonight from the top Republican of the banking committee, Senator Shelby of Alabama. "I am concerned that treasury`s proposal is neither workable nor comprehensive despite its enormous price tag. In my judgment, it would be foolish to waste massive sums of taxpayer funds testing an idea that has been hastily crafted and may actually cause the government to revert to an inadequate strategy of ad hoc bailouts. Given that markets have recently taken confidence in the prospect of government involvement, I believe Congress must immediately undertake a comprehensive public examination of the problem and alternative solutions rather than swiftly pass the current plan with minimal changes or discussion we owe the American taxpayer no less." Paul Krugman is, of course, professor of economics at Princeton University, an op-ed columnist with the "New York Times," brings piece on the so-called "cash for trash" rescue appeared this morning. Welcome.


OLBERMANN: I want to get your analysis of the latest stage of the bailout. But first, I`m very confused by Senator McCain`s response here. He does not like the unchecked authority that so many are complaining about, so he wants to give Secretary Paulson the unchecked authority, immediately.

KRUGMAN: Well, he wants to do something immediately. And, you know, he is trying to have it both ways.


KRUGMAN: I`m not sure he has quite said -- and there`s a lot of debate -- a lot of people think that McCain is going to try to, in the end, vote against this thing and oppose the opponent of big government. But, it`s, you know -- I mean, let`s put it this way. Obama is a little slow on the uptick.


KRUGMAN: We`d like to hear more from him. But McCain is really trying to play this on both sides.

OLBERMANN: The Bush administration`s "hair on fire" approach to this, you have analogized this to the authorization for use of military force, Section Eight of the bailout, whatever the secretary of the treasury does, it`s not reviewable by the courts. Clearly, that briefing of lawmakers last Thursday must have been like one of Dick Cheney`s warnings about Saddam Hussein. It`s much worse that we`re telling the public -- is this another scam or is this JPMorgan in 1907 locking the bankers in the room, not letting them out until they did something?

KRUGMAN: Well, you know, my hair is kind of on fire.


KRUGMAN: This is a very scary financial crisis. It`s not clear to me that extending the debate a couple more days is going to, you know, be make or break. And you really want to do it right. The amazing thing to me was the arrogance of Paulson. Because he comes along, he says, OK, we`re in this terrible crisis, and without consultation, without any discussion, he comes up with this plan that basically is -- all your decisions, they belong to me, right, and no future review, no courts, no agency can establish accountability -- without explaining. There`s nothing from treasury explaining why this thing should work. And I`ve been in conversation with lots of people, Wall Street people. There`s been this very active discussion among economists who know something about it over the weekend and nobody that I know is convinced that it will work. So, this whole thing of we have to do it now, now, now otherwise trouble - and there`s particular reason to believe -- and by the way, Hank Paulson`s record on this financial crisis, while he`s certainly better than some other Bush administration officials, he has, in fact, been wrong again and again. And there`s no reason to think that he has the magic answer.

OLBERMANN: And is there a reason even given for why there is to be no accountability, why that section was written in such a bare boned, in your face, kind of 32 words, sign here or else?

KRUGMAN: Yes, that`s very odd. I mean, the guess is that there is actually going to be, if they get their ways, there are going to be some real giveaways. They`re going to go to some firms and they`re going to buy this stuff for a lot more than its worth in order to rescue the firms. And then they don`t want somebody to be accountable. But you know, if you`re going to do this, let`s be up front. Let`s have a mechanism where the public gets some ownership, if we do that.

OLBERMANN: The Chris Dodd parts, his alternative of this, which, I guess, you`re hinting at there, protection oversight, something for whatever amount of money we`re giving away. Is that essential to anything because the more I see this as an outsider in this field, the more it reminds of the movie, "Blazing Saddles" and Cleavon Little holding the gun to his own head and saying, "You know, nobody moves or the sheriff gets it"?

KRUGMAN: Yes. What I`ve been hearing is the Bush administration can stay irrational longer than you can stay solvent.


KRUGMAN: Now -- and the world can stay solvent. No, the real problem, I think, if there`s no equity at stake then it`s the deal-breaker and what`s really amazing, by the ways, as treasury produces bare bones, talking with no explanation. U.S. Treasury Department, Senator Chris Dodd, who is after all just a senator, has produced a much more detailed, much more carefully-thought out document. The Dodd plan is much more convincing than the stuff from Paulson.

OLBERMANN: Is it that they don`t know what to do or is it that they want the proverbial blank check?

KRUGMAN: Well, they want both. They want the proverbial blank check, and look, this was just a week ago. Just eight days ago, Paulson thought, well, we`re finally just going to stop, you know, stop the bailouts, we`re going to say no. Lehman, we`re going to let it fall and no problems. And then the world started falling on them. And all of the sudden, they completely reverses and says -- I want total power to dispose of $700 billion of taxpayers money with no constraints. It`s very -- yes.

OLBERMANN: Do you think that this inclusion of Section Eight, this really kind of just naked power grab contain in this, is going to ironically work towards the forces who want oversight, it`s going to essentially necessitate this (INAUDIBLE)?

KRUGMAN: I`m thankful for Section Eight, because there`s an intellectual argument which I and those who we`ve been trying to have, saying, you know, this plan does not make sense, we need to restructure it. But we might have been just overcome by the rush. It could have been the Iraq war resolution all over again, except that people took a look at that and said, what? And that was kind of a signal that these people are not serious, that they are not really trying to reach out. This is, you know, this is a power grab. Let`s stop and talk about this for awhile. So, I think this may have been a great gift, maybe there was a mole in the treasury legal department who realized that this was a bad plan they`ve given out.

OLBERMANN: Put in a poison pill if they`ll have a chance.


OLBERMANN: Paul Krugman of the "New York Times" and Princeton, as always, great thanks for your time, and especially in person.

KRUGMAN: Thanks so much.

OLBERMANN: Thank you. Talk about radio news hot off the wire. What it`s supposed to be video of a station catching fire and not just in the ratings. And nothing like blaming the financial meltdown on loans to minority home buyers. Nice racism, Neil Cavuto. Worst Persons is ahead.

Originally broadcast, 9.22.08