This has been cross-posted from my personal blog, the right-wing liberal. I speak only for myself.
There have been whispers (and much louder) about Ed Gillespie running for United States Senate next year. Given his national connections and the potential vulnerability of Senator Mark Warner, one can understand why there is excitement around Gillespie’s potential candidacy.
That said, Gillespie has one very critical flaw: as White House Counsel in 2008, he was a loud defender of TARP (CNN):
(CNN’s John) KING: You mentioned the economy. One of the last acts was this bailout. And $350 billion of it has been spent on George W. Bush’s watch. The second installment will come on Barack Obama’s. But many Americans, when you travel, they think, where did this money go? Did big banks get it on Wall Street? It is being flushed literally down the toilet? They don’t see the impact on Main Street.
But can you cite specific evidence that the first $350 billion has done anything to begin the turnaround?
GILLESPIE: You can, John. And in fact, if you look at the rates that have narrowed in terms of credit markets, the TED spreads and LIBOR, things, frankly, I didn’t know that much about until about six months ago, they were very — the spreads were high. And that’s not good for the credit markets.
The injection that the Treasury has put into the capital markets has helped ease those. Again, this is a difficult time. But the president said the other night, I believe rightly, that had we not acted boldly and had we not put this money into the financial markets, we would have seen a lot worse of a financial strain on the American people today than what we’re already witnessing.
Now, readers of my blog will know that I’ve been critical of TARP practically since its conception, and I have maintained that it was a terrible mistake. However, there is more to it than that. When Republicans nominate TARP supporters, they are essentially agreeing with the Democrats’ claim that the situation in 2008 was so terrible that President Obama should essentially be given a pass for any economic problems under his watch. It was one of the reasons Mitt Romney’s criticism of the president on the economy was so ineffective. It also damaged his efforts to criticize enlarging government in general.
As for Gillespie’s specific comments, we now know LIBOR was a badly corrupted indicator, one that even at the time should have been eclipsed by SONIA and EONIA (which were based on actual transactions, had already discounted the pre-September concerns about the economy, and thus did not jump in panic when Lehman Brothers sank beneath the waves).
Thus, for policy and political reasons, I cannot support Gillespie for the nomination. Support for TARP is a stain that cannot be removed.