Odd Couple: Krugman and Kristol on Bailout Plan

Take a picture. It is hard to imagine a more opposite pair of political commentators than uber-liberal economist Paul Krugman and neoconservative William Kristol, both of The New York Times. Yet there they were raising similar objections to the proposed financial bailout plan in yesterday's columns.

Krugman:

Everyone agrees that something major must be done. But Mr. Paulson is demanding extraordinary power for himself — and for his successor — to deploy taxpayers’ money on behalf of a plan that, as far as I can see, doesn’t make sense.

...But Mr. Paulson insists that he wants a “clean” plan. “Clean,” in this context, means a taxpayer-financed bailout with no strings attached — no quid pro quo on the part of those being bailed out. Why is that a good thing? Add to this the fact that Mr. Paulson is also demanding dictatorial authority, plus immunity from review “by any court of law or any administrative agency,” and this adds up to an unacceptable proposal.

Kristol:

But is the administration’s proposal the right way to do this? It would enable the Treasury, without Congressionally approved guidelines as to pricing or procedure, to purchase hundreds of billions of dollars of financial assets, and hire private firms to manage and sell them, presumably at their discretion There are no provisions for — or even promises of — disclosure, accountability or transparency. Surely Congress can at least ask some hard questions about such an open-ended commitment.

And I’ve been shocked by the number of (mostly conservative) experts I’ve spoken with who aren’t at all confident that the Bush administration has even the basics right — or who think that the plan, though it looks simple on paper, will prove to be a nightmare in practice.

Strange times, indeed.

Here's hoping that Congress acts on the advice of Krugman, Kristol and a host of other observers and takes time to carefully consider the plan, its consequences and plausible alternatives.

--Ballard Burgher