Where are we now?

+ Reports off the Hill say that a deal is done. $700B total, greater Con­gres­sional over­sight, restric­tions on exec­u­tive pay, no bank­ruptcy law changes, no money for afford­able hous­ing, the (use­less) House GOP insur­ance pro­posal stays in but only as an option, and, most impor­tantly, the gov­ern­ment gets equity war­rants in case the toxic assets really are as bad as every­one fears. Obama and McCain are both on board.

+ Paul Krug­man and Brad DeLong are now openly favor­ing Swedish-​style nation­al­iza­tion instead of the Paul­son plan–which, for the record, Yves Smith has been push­ing since the begin­ning–even though Krug­man, at least, rec­og­nizes that a nation­al­iza­tion plan is polit­i­cal poison until at least after the election.

News out­lets are report­ing on a new Spanish-​language Obama ad that com­pares McCain’s atti­tude toward immi­gra­tion to Rush Limbaugh’s. As a few people have noticed, that’s pretty bla­tantly mis­lead­ing, since McCain has gen­er­ally (though not com­pletely) been in favor of reform­ing immi­gra­tion, while Lim­baugh has come out stri­dently against it. The ad does the truth the fur­ther dis­ser­vice of pulling Limbaugh’s words out of con­text. Here’s ABC’s Jake Tapper on the sum of Obama’s sins:

The greater impli­ca­tion the ad makes, how­ever, is that McCain is no friend to Lati­nos at all, beyond issues of fund­ing the DREAM act or how NCLB money is dis­trib­uted. By link­ing McCain to Limbaugh’s quotes, twist­ing Limbaugh’s quotes, and tying McCain to more extrem­ist anti-​immigration voices, the Obama cam­paign has crossed a line into mis­lead­ing the view­ers of its new TV ad. In Span­ish, the word is erróneo.

It seems odd (read: polit­i­cally dumb) for Obama to release a mis­lead­ing ad at the very moment that he’s reap­ing the sym­pa­thy of a media envi­ron­ment that turned against John McCain for his mis­lead­ing ads.

So what’s going on here?

[UPDATE 9/17: Turns out Biden and Obama are just as con­fused on the AIG bailout as McCain is. I've added in their con­flict­ing state­ments below.]

1/ John McCain, speak­ing yes­ter­day to NBC’s Matt Lauer, as reported by ABC’s Ron Claiborne:

“No, I do not believe that the Amer­i­can tax­payer should be on the hook for AIG and I’m glad that the Sec­re­tary Paul­son has appar­ently taken the same line.”

NBC’s Matt Lauer pressed McCain: “So, if we get to the point, in the middle of the week when AIG might have to file for bank­ruptcy, they’re on their own?”

McCain replied, “Well, they’re on their own. We cannot have the tax­pay­ers bail out AIG or any­body else, this is some­thing that we’re going to have to work through.”

1a/ And Joe Biden, speak­ing yes­ter­day to NBC’s Mered­ith Viera:

No, I don’t think [AIG] should be bailed out by the fed­eral gov­ern­ment. I’ll tell you what we should do. We should try to cor­rect the prob­lems that caused this.

2/ John McCain, speak­ing today to ABC’s Robin Roberts:

I didn’t want to do that. And I don’t think any­body I know wanted to do that. But there are lit­er­ally mil­lions of people whose retire­ment, whose invest­ment, whose insur­ance were at risk here.

2a/ And Barack Obama, in a state­ment today:

The fact that we have reached a point where the Fed­eral Reserve felt it had to take this unprece­dented step with the Amer­i­can Insur­ance Group is the final ver­dict on the failed eco­nomic phi­los­o­phy of the last eight years…. While we do not know all the details of this arrange­ment, the Fed must ensure that the plan pro­tects the fam­i­lies that count on insur­ance. It should bol­ster our economy’s abil­ity to create good-​paying jobs and help work­ing Amer­i­cans pay their bills and save their money. It must not bail out the share­hold­ers or man­age­ment of AIG.

Politico’s Jonathan Martin quotes the fol­low­ing state­ment from the McCain cam­paign this morn­ing that attempts to square the two positions:

The focus of any such action should be to pro­tect the mil­lions of Amer­i­cans who hold insur­ance poli­cies, retire­ment plans and other accounts with AIG. We must not bailout the man­age­ment and spec­u­la­tors who cre­ated this mess. They had months of warn­ings fol­low­ing the Bear Stearns deba­cle, and they failed to act.

Don’t be deceived by this. As any­body who’s been paying atten­tion to the sit­u­a­tion will know, insur­ance poli­cies and retire­ment plans have noth­ing to do with the bailout. AIG’s insur­ance and retire­ment plans are run through AIG sub­sidiaries, which every­one agrees are well cap­i­tal­ized and which, at least in the case of the insur­ance oper­a­tions, are gov­erned by strict reg­u­la­tions that severely limit the risk to people like you and me. Noth­ing I’ve read in the last couple of days sug­gests that these were ever in danger, even if AIG went into bankruptcy.

Rather, the reason for the Fed bailout is, quite simply, the mas­sive coun­ter­party risk that an AIG fail­ure would cause.

Ed. note: What fol­lows is a letter addressed to John McCain on the occa­sion of his 72nd birth­day from William Wineberg, a San Fran­cisco attor­ney and self-​described life­long Repub­li­can who has decided to vote for Barack Obama this elec­tion. This is not a chain letter or an unsourced for­ward; it came to me by way of a close friend of mine, who is also Wineberg’s nephew, and is pub­lished here with Mr. Wineberg’s approval.

Rather, I post the letter here because I’ve long been dubi­ous of the argu­ment that John McCain’s age should be no more rel­e­vant to the choice for pres­i­dent than Barack Obama’s race or Sarah Palin’s gender. I don’t ques­tion that ageism is a real and often nefar­i­ous social ill, but nor do I think that it is accu­rately or use­fully equated with racism and sexism. Advanced age can have seri­ous cog­ni­tive con­se­quences, as race and gender do not, and these only accel­er­ate after age 70. I leave it to Mr. Wineberg to recount the impact these con­se­quences have had on his own life, and to sug­gest how they might affect McCain’s abil­ity to be an effec­tive pres­i­dent. For what it’s worth, I think there are other and better rea­sons to vote for Barack Obama and against John McCain, but I agree with Mr. Wineberg that McCain’s age is some­thing that ought to be seri­ously reckoned.

++++++++

Dear John,

As we cel­e­brate our respec­tive 72nd birth­days it is appar­ent that we have a lot in common. You were born on August 29, 1936; I was born two days later on August 31st. While you went to the Naval Acad­emy, I attended Stan­ford and we both grad­u­ated near the bottom of our respec­tive classes. We were com­mis­sioned as Naval Offi­cers in 1958 and each of us failed in our first mar­riages. Luck­ily, how­ever, we both are now hap­pily mar­ried to suc­cess­ful women who each are over 18 years younger than we—quite a chal­lenge to keep up with them, and a real incen­tive to enjoy life after 72.

While I cannot claim an expe­ri­ence com­pa­ra­ble to five years in cap­tiv­ity in Viet­nam, it is appar­ent that our Navy ser­vice has sub­stan­tially affected our lives. You recov­ered from your cap­tiv­ity to become a lob­by­ist for the Navy and then a Con­gress­man and Sen­a­tor. After the Navy, I “grew up,” applied myself, headed the Uni­ver­sity of Chicago Law Review and became a trial lawyer. We both have been life-​long Repub­li­cans and we both per­son­ally knew and were influ­enced by Barry Gold­wa­ter. We both believe in ser­vice to our coun­try, but have we learned to rec­og­nize our limitations?

Where we differ—John—is that I know that I am too old to be Pres­i­dent of the United States. From every indi­ca­tion, you are too.