Columns » Ernest Dumas

Speech of the year

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The speech of the year, maybe of the decade, was beyond doubt the one written by Matthew Scully, the avenging wordsmith for George W. Bush, Dick Cheney and Dan Quayle, and recited marvelously at the Republican National Convention by Sarah Palin. It made Palin an overnight celebrity and revived the campaign of the most forlorn presidential candidate in modern times.

Even after all its lies and distortions are unmasked, that speech may yet elect John McCain but, regardless, history will bury it and instead illuminate the least celebrated of all the manufactured bombast at the two conventions. It was the five-minute speech at the Democratic Convention by Barney Smith of Marion, Ind., a 54-year-old displaced mechanic for RCA whose job was exported to China four years ago. Clad in a red plaid shirt and sporting the last crew cut in the Midwest when he got up to address the Democratic throng in Denver, Barney Smith announced that he had been a lifelong and diehard Republican.

Now, in the stiff cadence of a man who had never before had to address even his Sunday School class, he intoned “We need a president who will put Barney Smith ahead of Smith Barney.”

Only three weeks later, on a day that two of the greatest investment banking names in history collapse and the government throws a lifeline to an insurance giant, Barney Smith's words have a prophetic and magical quality. Smith Barney — Salomon Smith Barney it is now, a subsidiary of Citigroup — is not one of the banks that is tanking, at the moment anyway, but Barney Smith in one sentence got to the heart of the financial crisis and of the coincident election that will determine whether the nation has learned anything from it or will continue on course.

Not to stray too far from the point, it needs to be pointed out that Smith Barney was the investment house that, innocently it said, obliged much of Enron's sham transactions at the beginning of the Bush era, and that Smith Barney's parent, Citigroup, helped Enron hide its debts. To bring the little analogy full circle, Smith Barney manages Sarah Palin's portfolio, according to her financial disclosure form.

It ventures only a little further from the point to recall that it was John McCain who, along with four other senators, famously helped his benefactor Charles Keating flummox federal regulators on his way to fleecing depositors and investors in the big thrift crash of the '80s, the philosophical antecedent of the current credit crisis.

From that brush with scandal and political ruin, McCain was supposed to have fashioned a new career as an anti-corporate reformer, but the evidence was still missing 18 years later when he issued a statement Monday claiming that he was the man to clean up the mess on Wall Street and institute some tough regulation of the financial industry. While omitting the president's name and title, he suggested that it was George W. Bush's fault.

By that he seemed to mean Bush's frequently demonstrated incompetence, not his guiding philosophy, for McCain has embraced that philosophy as his own. Bush's economic philosophy is McCain's whole economic platform.

The financial turmoil of the last year — indeed of the last eight years — is a failure of philosophy and not of competence. The Bush team seems in fact to have managed things quite well from McCain's standpoint. McCain has supported all the administration's remedies: the bailout of Bear Stearns and the mortgage giants Fannie Mae and Freddie Mac and the steps it and the Federal Reserve took over the weekend. Whatever they have done he has said was right.

Under the prevailing philosophy, the role of political leadership is to craft the words that make greed and selfishness and the government policies that encourage them acceptable and even cherished by the American people. It was just market freedom.

As it applied to Bear Stearns, Lehman Brothers and Merrill Lynch, it meant lax capital rules, an almost complete absence of regulation of the shadow financial system and all its players and the consolidation of commercial and investment banking.

As for the last, it was, after all, McCain's top economic adviser and close friend, former Sen. Phil Gramm, who crafted it: the Gramm-Leach-Bliley act that the Republican Congress, including McCain, passed and that Bill Clinton lamentably signed into law. It ended once and for all the Glass-Steagall Act and the legal distinctions between commercial and investment banks. McCain's main man had to go into hiding this summer after pronouncing the country “a nation of whiners” for complaining about economic dislocation and the erosion of the middle class's well-being, but he will be back in a McCain administration, probably as treasury secretary.

Finally, it was Sarah Palin's ringing address that roused the convention-goers to cheer McCain's radical $300 billion in tax breaks for corporations and the richest two percent of Americans, which he proposes to pass out with Congress's help next spring. It would mean little to the middle class and poor while delivering $45 billion to the 200 largest corporations and at least $6.3 billion to the largest financial firms in the world, including Citigroup and Smith Barney.

Then she told the biggest lie of all —the opposite of the truth, in fact — that Barack Obama's plan would place huge taxes on working Americans.

The McCain plan, Matthew Scully's artful phrasings and Palin's ebullient delivery of them were all the very essence of the Bush economic philosophy.

If Americans put aside the glamour and rhetoric and think about it at all in the next six weeks, they will go instead with Barney Smith.

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