The Paulson bailout plan

Nothing really new here, but I just saw the actual text of the Paulson plan, and this struck me:

"Sec. 6. Maximum Amount of Authorized Purchases.
The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time."

That's a lot of zeros, and a lot of authority for one person.

The other thing that struck me is just how simple the plan is -- the draft is only a couple of pages long. And yet, even though the plan came out last week, McCain admitted that he hadn't actually had time to read it until Tuesday. (It was available to anyone on the web -- Oh yeah, that might help explain it.) This must have been the same day that McCain started planning to suspend his campaign, drop out of the debate, fly to DC, and use his Magical Bipartisan Pixie Dust to save the negotiations over the bailout bill. Negotiations that were already moving along pretty well without him, particularly since he doesn't sit on the Senate Banking Committee.

With McCain's suspension announcement, and the most recent Palin-Couric interview, it's starting to get a bit ridiculous.

(Hat tip: TPM)

Is Paulson's bailout plan socialist?

I'm not an economist, so I don't pretend to understand the details or implications of the $700 billion bailout plan. But from the little I do understand, it's totally inaccurate to call Paulson's plan "socialist," as so many pundits and politicians have done.

There are different definitions of socialism, but all of them involve government taking a more active role in the economy in order to redistribute resources from the wealthy to the poor. Although defenders of the plan are arguing that the bailout will help the economy as a whole (which seems reasonable enough), they are pointedly not arguing that the bailout will redistribute resources to the poor. If anything, a major criticism of the bailout is that it will do precisely the opposite.

So let's call the bailout plan mercantilist, or nationalist, or even Keynesian, but not socialist. The government is looking to support (or even own) specific industries and stabilize the financial system in order to improve the national (and perhaps global) economy. It has virtually nothing to do with socialism.