Remembering the ’72 race

I think this is one of the first pieces, blog or otherwise, coming from a political commentator (historians may have a different take) that I think accurately reflects on the 1972 election — and not just because he echoes something I’ve written before.

Basically, George McGovern was going to lose to Richard Nixon — nearly any Democrat would have. But McGovern faced, as Matt Yglesias points out, a concerted effort on the part of his own party to undermine his campaign. McGovern was “the only Democratic Party presidential nominee to not secure the AFL-CIO’s endorsement,” a snub that came not “because of any failure to support the labor movement on key labor issues.”

He had a solid pro-labor record, and a very solid record of support for the concerns of working people. But the AFL-CIO leadership, including its disastrous president George Meany, was dominated by cultural conservatives and Cold War hawks who decided to screw McGovern over.

He calls this “an aspect of American political history that’s not well-understood.”

McGovern would have lost the election no matter what. Frankly, nobody was going to beat an incumbent President amidst the strong economy of 1972. And you certainly weren’t going to do it by nominating an unusually left-wing candidate. But a big reason McGovern did so extremely poorly was that huge swathes of the progressive establishment — including organized labor — just flat-out refused to support him, often for very bad reasons. Under those circumstances, it’s just impossible to put up a respectable showing.

This 1972 story from Time outlines the kind of things that were at stake during the Democratic primary that year and the convention and just how angry and scared the party’s old guard was of the new McGovern voter. I think there is some evidence, as well, that McGovern was surprised by how he was adopted by younger voters and that he never expected to find himself on the wrong side of this dispute. But he was, with

a stop-McGovern coalition led by Arkansas’ Wilbur Mills continued its last-minute efforts. A small Washington group of strategists bent on heading off the South Dakotan included Humphrey Aide Stan Bregman, Muskie’s Berl Bernhard, Wallace’s Billy Joe Camp and the AFL-CIO’s Al Barkan.

Acrimony. At his summer house in Maryland, McGovern tended his swimming pool and delegate arithmetic. At one point he paid a second courtesy call on George Wallace, presumably to feel out the Alabaman’s intentions. Occasionally McGovern spoke apocalyptically of the consequences if his nomination were “literally stolen in a naked power play.” He did not discount running as a third-party candidate. Said McGovern: “I don’t think people have fully assessed how the party could destroy itself if the reform process is denied after all that has happened in American politics these past few years.”

Many regulars, humbled by the McGovern young and suddenly astonished by their own impotence, already see ruination for the party. St. Louis Dentist Martin Greenberg, for four years the Democratic chairman of St. Louis County, found himself outnumbered by McGovernites in the spring caucuses and defeated for delegate. Last week he contemplated the prospect of a McGovern nomination and said dolefully: “Unless the party comes to its senses, it will destroy all of us. The acrimony and dissension will be suicidal. The disaster this fall will not only be felt on the national ticket but on statewide Democratic tickets as well.”

The party was badly damaged, though I would argue that it may have been inevitable, growing out of the divisiveness of the preceding decade and the recalcitrance of the old guard. Not that a public reconciliation between McGovern and the anti-McGovern forces would have changed the results of the November election. At best, it may have narrowed Nixon’s victory margin.

Is the bailout changing?

Henry Paulson may be ready to do what he should have done several weeks ago, when it was apparent just how dismal the financial situation is.

According to The Washington Post,

U.S. regulators are preparing to expand their response to the financial crisis beyond the $700 billion financial rescue package that was approved by Congress and signed into law this month, sources familiar with the matter said today.

An additional plan is set to be announced soon, most likely tomorrow morning, the sources said on the condition of anonymity because they were not authorized to speak publicly.

Some of the sources said they expect the plan to go beyond the bailout by taking steps to shore up interbank lending and bank health, as well as possibly expanding deposit insurance beyond the current $250,000.

The news comes at a time when European governments are proving to be far more aggressive in their efforts to save world financial system from collapse, offering a plan to directly buy interests in failing lending institutions as a way to infuse the system with money and prop up the banks.

European governments put hundreds of billions of dollars into their banking systems Monday and the U.S. Federal Reserve announced it would back up their effort by making U.S. currency available in unlimited amounts, as efforts continued to strengthen the foundations of the world financial system.

The report goes on to say,

In London on Monday morning, the British government said it would partially take over several major banks, providing $34 billion to the Royal Bank of Scotland and another $29 billion to Lloyds TSB and HBOS, two banks that are in the process of merging. The move would give the British government about a 60 percent stake in RBS and a 40 percent stake in the bank created by the Lloyds-HBOS merger.

Separately, the cabinet in Germany okayed a plan to guarantee about $500 billion in bank loans and provide about $136 billion in goverment capital to Germany banks. In Paris, French President Nicolas Sarkozy said the French government will make about $54 billion availble to bolster bank capital and offer guarantees to about $436 billion in bank loans.

Details of other government actions are expected later Monday. The moves followed a deal reached Sunday in Paris by European governments who agreed to provide capital for banks and take other steps to restart credit markets so that financial firms will begin lending again to businesses, consumers and one another. Credit markets in recent months have virtually stopped functioning, depriving the world economy of a major source of operating cash.

While the Paulson plan allows the federal government to buy a stake in banks, the treasury secretary has not made it a major component of his rescue mission — essentially asking Congress to create a $700 billion line of credit so that the government could buy up bad debt. Buying a stake in the institutions, however, would allow the government to have more direct oversight and would give taxpayers — who will be on the hook for the bailout — potentially see some benefit.

This is the approach George Soros has been advocating — recapitalizing the banks, “recogniz(ing) the losses and replenish(ing) the equity, which he says cannot be done “by taking their assets off their hands.”

He is critical of Paulson, telling Bill Moyers on Friday that the treasury secretary “represents the very kind of financial engineering that has gotten us into the trouble.” He said that Paulson’s initial plan — “to create a super SIV, special investment vehicle, to take care of the other special investment vehicles” — must look more like the European bailouts.

He told Moyers that he would take the bailout cash and invest it directly “into the capital of the bank so that the capital equity can sustain at least 12 times the amount of lending.”

GEORGE SOROS: You see, what is needed now the bank examiners know how those banks stand. And they can say how much capital they need. And they could then raise that capital from the private market. Or they could turn to this new organization and get the money from there. That would dilute the shareholders. It would hurt the shareholders.

BILL MOYERS:Of the bank?

GEORGE SOROS:Of the banks. Which I think Paulson wanted to avoid. He didn’t want to go there. But it has to be done. But then, the shareholders could be offered the right to provide the new capital. If they provide the new capital then there’s no dilution. And the rights could be traded. So if they don’t have the money, other people could, the private sector could put in the money. And if the private sector is not willing to do it then the government does it.

And money has to be — underline and capitalize this — provided to homeowners to stem the foreclosure tide “to prevent housing crisis from overshooting on the downside the way they overshot on the upside.”

GEORGE SOROS:You can’t arrest the decline, but you can definitely slow it down by minimizing the number of foreclosures and readjusting the mortgages to reflect the ability of people to pay. So you have to renegotiate mortgages rather than foreclose.

And you provide the government guarantee. But the loss has to be taken by those who hold the mortgages, not by the taxpayer.

BILL MOYERS:You mean the homeowner doesn’t take the loss. The lender.

GEORGE SOROS:The homeowner needs to get relief so that he pays less because
he can’t afford to pay. And the value of the mortgage should not exceed the
value of the house. Right now you already have 10 million homes where you have
negative equity. And before you are over, it will be more than 20 million.

That this is not on the table is mindboggling, given the impact that foreclosures have on the values of neighboring properties and the impact they have on the economy at large.

What was so shocking about the bailout plan as devised was that it was prepared to hold the institutions who created this mess — the ones that created financial instruments that lacked any connection to actual money or value and then traded them back, forth and sideways — harmless while leaving taxpayers and poor homeowners to feel the pain.

Runner’s diary, Monday

Maybe I’m getting old, but my morning runs have been growing increasingly difficult. Take this morning, for instance. I got outside and pushed out three miles, but I felt heavy and listless, and knew from the outset that three was all I had in me.

The thing that is most disheartening is that it was just a year ago last week that I ran in the Long Beach Island 18-mile run and was in my best running shape in a long time.

Maybe I need a real goal.

iPod: Bill Moyers.

The national Republican brand

I hope they taste better than they've governed over the last couple of decades.

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