A little more than three months ago, the debate was raging over the $700 billion Paulson Plan. And while there was never any doubt that House and Senate Democrats would support the notion of handing over astronomical sums of money to anyone with a pulse, far too many conservatives in the media cast aside whatever shreds of principle remained to them after eight years of a disastrous Republican administration and encouraged the Republican Party to support what was a small step for a Treasury secretary and a huge leap for socialism in America.

Now that what was completely obvious has become undeniable, and the failure of the initial round of bailouts has bankers and politicians in both the United States and the United Kingdom scheming to concoct another one, it’s wise to go back and examine what observers in the media wrote the last time. For it is certain that those who were completely and utterly wrong about the Paulson Plan being a viable solution to the financial crisis cannot be considered to have any credibility on economic matters in the future, as “we had to do something” is not a defense that can be reasonably invoked by any thinking conservative.

    A Paulson-Cantor plan is a win-win. Actually, for taxpayers, the bank rescue plan is a win-win-win-win.

    – Larry Kudlow, National Review, Sept. 27, 2008

    I say “aye” to the proposed national debt bailout – and a big shout out to Rep. Barney Frank, one of its early authors, who has been a prescient early voice on the need for a big solution to a big problem.

    – David Frum, National Review Online, Sept. 19, 2008

    This week has provided a vivid example of where rabid partisanship leads with the failure of Congress to pass a bailout bill vitally needed to keep our economy from unraveling.

    – Kathleen Parker, National Review, Oct. 1, 2008

    The real point is to avoid a major contraction of credit that could cause major downturns in output and employment, ruining millions of people, far beyond the financial institutions involved. If it was just a question of the financial institutions themselves, they could be left to sink or swim. But it is not. We do not need a replay of the Great Depression of the 1930s. …

    – Thomas Sowell, National Review, Sept. 24, 2008

    [I]n a true crisis, the financial system needs a government backstop. Panics must be stopped because it is their very nature to damage the economy out of all proportion to reason. So something must be done, and it appears that the Paulson plan is going to have to be the template for that something.

    – The editors, National Review, Sept. 26, 2008

When two of the conservative media’s best-known economists are so visibly on the wrong side of the socialism/freedom divide, it is time to rethink the conservative media. Fortunately, there were no shortage of right-wing voices vehemently opposed to the series of bailouts that is still ongoing, whose inherent skepticism about government intentions proved more precise than the expertises of the various Nobel Prize winners, economists, and professional commentators who endorsed the Paulson Plan.

    Count me out of the bailout. … Even if I completely trusted the wisdom of Paulson and his bureaucrats – which I don’t – there’s no way that I trust the Dodds, Franks or the next Treasury secretary. Every day the markets don’t go off the cliff suggests to me that we can do this in stages and that Paulson’s do-it-my-way-or-it’s-the-Dark-Ages-for-us-all argument doesn’t hold water.

    – Jonah Goldberg, National Review Online, Sept. 23, 2008

    On Sept. 19, Treasury Secretary Hank Paulson put a gun to America’s head: Pass his $700-billion bailout of the banking industry and give him unfettered new powers to buy up an ocean of privately held toxic assets, or all hell would break loose. … This is a man, in other words, whose crap sandwich should be taken with a huge grain of salt.

    – Michelle Malkin, National Review, Oct. 3, 2008

    Friday’s financial OK Corral took place when federal politicians had a standoff over the mother of all bailout bills. Bullets called ballots were fired from both congressional houses and the White House. And when the smoke cleared, the bad guys were apparent – Bush, Paulson, Barney Frank, Pelosi, Dodd, most of the members of the House and the Senate, including Obama and even McCain, among many others.

    – Chuck Norris, WorldNetDaily, Oct. 6, 2008

    Some of the salesmen of this plan have reached to new heights in marketing it. They’ve even dared to call it an “investment” by taxpayers. They have suggested the taxpayers could somehow benefit down the road because their bailout is protected with real assets. I don’t know about you, but until I receive my stock certificates for this forced investment and am able to sell my shares in the marketplace, I prefer to see this deal for what it clearly is – grand larceny at the point of a gun.

    – Joseph Farah, WorldNetDaily, Oct. 8, 2008

    The Paulson plan cannot and will not work. It is hopeless and was from the very moment of its conception. It’s a Keynesian solution to an Austrian problem; all the Treasury is doing is ensuring that the crisis is exacerbated and extended in exactly the same way that Hoover and FDR did. … You cannot correct fundamental investment misallocations caused by cheap money by providing more liquidity. It’s spraying gasoline on the fire.

    – Vox Day to Rich Lowry, National Review Online, Oct. 10, 2008

As I have repeatedly written, the Keynesian and Monetarist economic models upon which the bailout was conceptually based are useless because they have been shown to be broken by economic history. They are little better than the failed Marxian model, even if they lack dependence upon anything so undeniably absurd as the Labor Theory of Value. Their flaws stem from the demonstrable fact that their base assumptions are incorrect, their statistics are unreliable, and predictions based upon them are consistently wrong.

But one need not be a historian or an economist to know that government interventions almost never provide results in accordance with their proclaimed intentions. Conservatives are not supposed to require relearning this lesson, given that it has been taught many, many times over the centuries. And conservatives would do well to keep the words of one chastened National Review editor in mind for the next time the politicians declare the existence of an emergency that absolutely, positively requires the American people to hand over yet more money, power and authority to them.

    In retrospect Paulson’s conduct verges on bad faith.

    – Rich Lowry, National Review, Dec. 16, 2008


Note: Read our discussion guidelines before commenting.