July 17, 2008
Both Campaigns Linked To Fannie, Freddie
Washington Post: Figures Connected To McCain, Obama Also Have Deep Ties To Mortgage Giants
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Play CBS Video
Video
Freddie, Fannie And Friends
With trouble brewing inside mortgage giants Freddie Mac and Fannie Mae, Armen Keteyian reports that the nation is learning more and more about the companies and their friends in high places.
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Video
Fed To Help Mortgage Giants
The U.S. government is stepping in to help ailing mortgage giants Freddie Mac and Fannie Mae. The Fed plans to expand their lines of credit and buy equity, if needed. Randall Pinkston reports.
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Video
If Mortgage Giants Fall
Bankrate.com's Greg McBride tells Katie Couric whether homeowners should be worried about the problems plaguing mortgage giants Fannie Mae and Freddie Mac, and gives some other finance advice.
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Photo
Some of the most prominent supporters to both John McCain and Barack Obama also have deep ties to embattled mortgage giants Fannie Mae and Freddie Mac. (AP Photo)
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Timeline
Credit Crunch
Feeling the squeeze? Here's a look at actions and statements from key players in Washington.
From Our Partner:
When Fannie Mae and Freddie Mac's stock prices plunged and rumors of their insolvency swirled, the presidential campaigns of Sens. John McCain and Barack Obama released terse statements about the mortgage giants, then went nearly silent.
Their responses made sense in political and economic terms. The risks of intervening in the firms' rescue are high, the rewards are scant, and the tentacles of the government-sponsored enterprises reach into both campaigns.
"You see a consensus developing that the current system is unsustainable," said David C. John, a senior research fellow at the conservative Heritage Foundation. "But actually saying what has to happen next is a little bit scary if you're in a campaign, especially if some of your most prominent supporters have such deep ties to these entities."
Rick Davis, McCain's campaign manager, was president of the Homeownership Alliance, which advocates the expansion of homeownership through low-interest mortgages funded by Fannie and Freddie. Arthur B. Culvahouse Jr., who is heading McCain's vice presidential vetting panel, was a lobbyist for Fannie Mae. Mark Buse, a longtime McCain aide, lobbied for Freddie Mac before returning to McCain's Senate staff.
And the list of Republican Fannie and Freddie lobbyists includes some of its most notable rogues -- including Tony Rudy, Edwin Buckham, Kevin Ring and David H. Safavian, all of whom were linked to the Jack Abramoff lobbying scandal -- as well as some of its leading power brokers, from Reagan White House chief of staff Kenneth M. Duberstein to uberlobbyists Vin Weber and Tom Korologos. Alberto R. Cardenas, one of McCain's top fundraisers, has lobbied for Fannie Mae, as have former Montana governor Marc Racicot and tax-cut advocate Grover Norquist.
Obama also has ties to the firms. James A. Johnson, the former head of his vice presidential vetting panel, was a chief executive of Fannie Mae, as was Franklin D. Raines, who said this week that he has been consulting with the campaign on housing issues. Maria Echaveste, a top Clinton White House official whose husband, Christopher Edley Jr., is a close Obama friend and adviser, has lobbied for Freddie Mac, and former commerce secretary William M. Daley, a top Obama backer, was an in-house lobbyist.
Other Democratic luminaries who have advocated for the mortgage giants include strategist Steven Elmendorf, Rep. Doris Matsui (Calif.), former Al Gore aide Ronald A. Klain, former Clinton aide Steve Ricchetti and former congressman Harold E. Ford Jr. (Tenn.), now the head of the Democratic Leadership Council. Jamie Gorelick, a deputy attorney general in the Clinton administration, was also vice chairman of Fannie Mae.
That payroll has cost Fannie and Freddie nearly $200 million in lobbying and campaign contributions over the past decade, according to lobbying reports and Federal Election Commission disclosures. It has also won them plenty of protection from calls for greater regulation, less federal protection, and even nationalization.
With the current housing meltdown, that protection may be ending, Washington economists say, but any real changes will almost certainly happen after the election.
"I am hopeful that the extent of carnage will shake up the status quo," said Douglas W. Elmendorf, an economist at the Brookings Institution who has worked at the Federal Reserve Board and Treasury Department and is not related to Steven Elmendorf. "And if the taxpayers end up putting in a significant amount of money, which I think they will, members of Congress will realize whatever their past views were, the future cannot be a replay of the past."
Fannie Mae and Freddie Mac grew huge and powerful by buying up home mortgages and consolidating them into fixed return bonds and other financial instruments with the implicit backing of the Treasury. But with so many of those mortgages going into default, investors fear that both companies lack the capital to cover the losses, and the lobbyists have helped Fannie and Freddie fend off calls to bolster their reserves.
On Sunday, Treasury Secretary Henry M. Paulson Jr. made that implicit federal backing more explicit, allowing the companies to borrow directly from the Federal Reserve and pledging that the government stands ready to pump money into the giants in exchange for equity if necessary.
Douglas Elmendorf argued that federal loans will minimize the personal risks to Fannie and Freddie managers and shareholders, while leaving taxpayers with all the risk. Instead, the government should be taking stakes in the companies in exchange for that cash. That way, a recovery would have some benefit to the government.
The McCain campaign has been reticent about backing anything that smacks of partial nationalization. Last week, the senator from Arizona issued what amounted to full-throated support of the Bush administration's efforts to keep the companies afloat.
"Those institutions, Fannie and Freddie, have been responsible for millions of Americans to be able to own their own homes, and they will not fail, we will not allow them to fail," he said. "They are vital to Americans' ability to own their own homes. And we will do what's necessary to make sure that they continue that function."
Obama has been slightly more skeptical, at least in tone. His initial statement put the issue of homeownership first. The senator from Illinois "has long believed we should take all necessary steps to ensure affordable homeownership for millions of American families, and that includes an essential role for Fannie Mae and Freddie Mac," spokesman Bill Burton said last week.
Then on Tuesday, Obama sounded a note of skepticism: "I think it is important, with respect to Freddie Mac and Fannie Mae, that we ensure there's continued liquidity in the housing market, but that we're not devoting huge sums of money to bailing out shareholders or CEOs. I mean, I think that there's got to be some recognition that you can't have those institutions with all upside but no downside," he said on PBS's "NewsHour With Jim Lehrer."
That is still a far cry from prescriptions coming from the campaigns' left and right flanks, from firing the firms' managers before offering any loans, to nationalizing them to breaking them up. But analysts in Washington say those next steps will have to wait.
"It's going to take a lot of effort, and it's going to require some real sustained activities," John said. "It won't be easy, but it can be done."
By Jonathan Weisman
© 2008 The Washington Post Company
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See all 161 CommentsIts time the tax payer stop footing the bill these self serving egomaniacs have caused....
Posted by Credibility2
I am especially anxious to hear McCains side---I suppose once McCain confers with Lieberman about what his ties have been with these entities, he seems to "forget" stuff lately.
Actually, he may be anxious to hear what he did yesterday for that matter.
Bank of China 3988.HK 601988.SS , meanwhile, may hold roughly $20 billion worth of bonds issued by Fannie and Freddie, according to a research note by analysts at CLSA.
A Bank of China spokesman could not immediately be reached for comment. Because the U.S. government has taken steps to support Fannie and Freddie, CLSA said in its note that it regards the credit risk for the two as near to that of a sovereign credit rating for the government itself.
Look what''s happening in Obama''s old district, the south-side of Chicago.
HOPE and CHANGE is something that Obama isn''t going to bring to the White House because he can''t even bring it to his old district.
LIES and NO CHANGE is what we can expect. ................................sorry here''s the FACTS:
""Violent crime in the city of Chicago is out of control," Blagojevich said at the bill signing ceremony. "I''m offering resources of the state to the city to work in a constructive way with Mayor Daley to do everything we can possibly do to help stop this violence," said the governor.
The summer of 2008 will be remembered as especially violent. Blagojevich said there''s been a child shot nearly every day since June 26, with 29 Chicago Public School students shot since last fall.
"Twenty-eight of those kids are African-American and Latino. Hard to imagine that that would be acceptable if that were, in fact, the case inother parts of the city or in a middle-class suburb somewhere," he said. "Something is wrong, and this violence has to stop."
Bringing in state troopers -- even National Guard helicopters to high-crime areas -- is still very much in the planning stages."
Are WE THE PEOPLE going to "promote" a politician that has no record of accomplishments but a CLEAR record of "failure"???
America''s "deep blue one-party" cities are a disgrace to this great country and the world.
Look what''s happening in Obama''s old district, the south-side of Chicago.
HOPE and CHANGE is something that Obama isn''t going to bring to the White House because he can''t even bring it to his old district.
LIES and NO CHANGE is what we can expect. ................................sorry here''s the FACTS:
""Violent crime in the city of Chicago is out of control," Blagojevich said at the bill signing ceremony. "I''m offering resources of the state to the city to work in a constructive way with Mayor Daley to do everything we can possibly do to help stop this violence," said the governor.
The summer of 2008 will be remembered as especially violent. Blagojevich said there''s been a child shot nearly every day since June 26, with 29 Chicago Public School students shot since last fall.
"Twenty-eight of those kids are African-American and Latino. Hard to imagine that that would be acceptable if that were, in fact, the case inother parts of the city or in a middle-class suburb somewhere," he said. "Something is wrong, and this violence has to stop."
Bringing in state troopers -- even National Guard helicopters to high-crime areas -- is still very much in the planning stages."
Are WE THE PEOPLE going to "promote" a politician that has no record of accomplishments but a CLEAR record of "failure"???
America''s "deep blue one-party" cities are a disgrace to this great country and the world.
Obama has never "blustered his way around being associated with lobbyists". What he has done is to commit to not fund his campaign with money from lobbyists and he hasn''t.
That means he owes them nothing once elected.
All lobbyists are not created equal. Fannie and Freddie serve a useful public interest.
Perhaps before McCain supporters cop a high and mighty attitude they should take a closer look at the nature of McCain''s lobbyists connections.
His top aide Charley Black used to lobby for Ferdinand Marcos. Other McCain associates have lobbyied for the Burmese junta which Mrs. McCain has publically and loudly decried. Others have lobbyed for the Jihadist War Crininal regime of Sudan.
Funny isn''t it...this article left out Pritzker Obama''s whoop la campaign fund raiser, who along with Stearns invtented the damned sub-prime industry!
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Posted by occams_taser at 12:06 PM : Jul 17, 2008
Perzactly!
Back in your RowdyTexan days when Hillary was your God she was being funded by members of the Pritszker family.
No one invented the sub-prime market and plenty of institutions and investors participated in it. Not all of them failed to disclose the risks to people and it was the Republican White House and Congress that had the oversight responsibility to see that those who would didn''t.
Back in your RowdyTexan days when Hillary was your God she was being funded by members of the Pritszker family.
No one invented the sub-prime market and plenty of institutions and investors participated in it. Not all of them failed to disclose the risks to people and it was the Republican White House and Congress that had the oversight responsibility to see that those who would didn''''t.
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Posted by realpatriot1 at 12:25 PM : Jul 17, 2008
No still in the same days where your Obama is a total lying hypocrite! Sorry to burst your little bubble!
If Obama''s swooning, humorless supporters continue to force critics to whisper, to shut up or to explain their artistic renderings, our precious gift and right of free expression will diminish if Obama is elected in November.
These people need to know that some of us cherish free expression. They also need to know that if Obama needs to be protected from the satirist''s rapier, he doesn''t deserve to be the president of the United States of America.
I also cherish the right to free speech and I thought you cons were over the top sensitive to the point of borderline insanity over Wesley Clark''s remarks about McCain. After all, being shot down in a plane does not make someone better qualified to lead and that''s a fact.
"Violent crime in the city of Chicago is out of control," Blagojevich said at the bill signing ceremony. "I''''m offering resources of the state to the city to work in a constructive way with Mayor Daley to do everything we can possibly do to help stop this violence," said the governor.
The summer of 2008 will be remembered as especially violent. Blagojevich said there''''s been a child shot nearly every day since June 26, with 29 Chicago Public School students shot since last fall.
Twenty-eight of those kids are African-American and Latino. Hard to imagine that that would be acceptable if that were, in fact, the case inother parts of the city or in a middle-class suburb somewhere," he said. "Something is wrong, and this violence has to stop."
Bringing in state troopers -- even National Guard helicopters to high-crime areas -- is still very much in the planning stages."
Are WE THE PEOPLE going to "promote" a politician that has no record of accomplishments but a CLEAR record of "failure"???
America''''s "deep blue one-party" cities are a disgrace to this great country and the world.
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Posted by perceptions5
I most assuredly will not support Obama. EXCELLENT POST. Obama is just like GW Bush - he is experienced and has a long list of bad decision making.
What Obama has said all along is that he won''t allow his campaign to be controlled by lobbyists.
His campaign has been funded with over 95% of small donations throughout. No one in the history of politics has won their party nomination without owing lobbists or special interests. He has no favors to repay to any group. That alone makes him unique in American political history and provides him the best opportunity to actually deliver for the public.
He might not deliver, but it won''t be because he didn''t do a better job than anyone else at putting himself into position to do so.
Why are you still here talking as if you have any authority whatsoever? You still say that Obama is an Arab and a Muslim and is a terrorist who is funded by Islamic Terrorists.
Shame on you for even existing.
I bet you believe that Michelle Obama is part of the black panthers or that Obama is a close personal friend of Farakkan.
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Posted by Ariel133 at 12:52 PM : Jul 17, 2008
+ report abuse
Hold up a sec Ariel. You love America the way it is? Really? You love that the entire WORLD hates us? BTW, when the entire WORLD hates us, it makes the value of our dollar SINK. Our dollar is worth HALF what it was 7 years ago. HALF!! THis means the DOW at 11,000 today is equal to about 5500 7 years ago. Uh... if you LIKE that... i guess you''re delusional.
The fact of the matter is, the US is not what it once was... a moral authority to the world. Now, we are looked down upon by virtually every country in the world and our citizens are looked down upon by the same folks. WHY? Because we voted to go ahead with the plundering in Iraq and the senseless deaths of HUNDREDS OF THOUSANDS of people in Iraq (innocents) and displacement of 4M people and the destruction of their entire infrastructure.
But hey, you love this country the way it is right now.
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Posted by Credibility2 at 12:39 PM : Jul 17, 2008
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Credibility (bad name for someone who has NONE)... Obama is not being FUNDED by lobbyists. That''s the point. He may be getting advice from people who were connected to companies that know various industries since he relies on their knowledge and advice, but he is NOT FUNDED BY THEM. Nowhere in this article does it state anything about a lobbyist funding Obama... NOWHERE. ALL of his campaign donors and the amounts funded can be found on the internet. You''ll find that people donate on AVERAGE of 90 bux or so to his campaign. THis is NOT the work of lobbyists.
The dollar is bad becuase of the deficit and the deficit is so bad because the wealthy fel they''re owed something that the rest of us aren''t...a tax break!
Financial markets and U.S. legislators alike have derided U.S. Treasury Secretary Henry Paulson''''s plan to bail out the mortgage lenders. One of the two key elements is illogical, while the second is plain outrageous.
Just last week, Fannie Mae said it ``has access to ample sources of liquidity, including access to the debt markets.'''''''' Freddie Mac said it was ``adequately capitalized, highly liquid and an essential part of the nation''''s housing system.'''''''' Either they are being economical with the truth, or the decision to let them borrow from the Federal Reserve''''s discount facility is window-dressing that serves no real purpose.
Defending the Indefensible
Worse is the scheme to allow Paulson to dip into the nation''''s tax revenue to purchase shares in Fannie and Freddie -- shares that investors have already deemed to be almost worthless. If the mortgage lenders can''''t survive in their current form, the government shouldn''''t be defending the indefensible.
In April, Standard & Poor''''s said the risk that the U.S. would have to prop up its so-called Government Sponsored Enterprises posed a bigger threat to the country''''s AAA rating than its willingness to underwrite securities firms.
Posted by Ariel133 at 01:02 PM : Jul 17, 2008
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oh nooooo you di''int...
#1. I''m a democrat and feel no one owes me a d*mn thing. I make 100K per year and pay a BOATLOAD in taxes and didn''t get a stimulus check. You know, the check that your GOD George Bush said everyone needed. THAT''s an entitlement program that YOUR GOD threw out there.
#2. It takes a village... ever heard that one? For those who cannot take care of themselves, WE, as a SOCIETY have a DUTY to take care of them. If we do not, then you will see massive homelessness, poverty and disease. It is your DUTY to provide care to those who cannot care for themselves. Yes, there are many who game the system, but a vast majority do NOT.
#3. Romney and Mccain? Pillars of honor? are you kidding me? Wow, you''re seriously warped. McCain is an arrogant pri*ck (although he does have SOME good idea). McCain is a complete FAKE. Voted against Veteran funding!! Wow
Posted by Ariel133 at 01:02 PM : Jul 17, 2008"
Mention no names eh Georgie Bush and who was it that proudly said he agrees with Bush 100% of all the important issues ? oh yeah that would be ole senility McCain - needless to say his entire economic policy reeks of Bush''s policy - ie spend $ trillions that he doesn''t have
Bottom line is theat Freddie Mac anf Fannie Mae should be left to collapse
The fools who bought shares in them will lose and the equally moronic idiots who bought their subprime loans will go belly up
Gramm is an executive of UBS bank.
UBS bank? "UBS is already under investigation by the IRS, the FBI, and the Securities and Exchange Commission, Levin said."
As usual, the Republicans are tied to the crooks stealing our money.
What kind of RESPECT can you give to someone who advocates war repeatedly? McCain JOKES about "Bomb bomb bomb Iran" and other incindiary words against Iran. Do you have ANY idea what war with Iran will do??? ANY?? you RESPECT McCain? I guess you want oil to be 1000/barrell and you want instability in the middle east 100x worse than it is now for eternity. Shame on you.
BTW, how do you feel about your GOD, George Bush, running up our deficit soooooooooooooooooo high that it devalued our dollar in half!? It''s not because citizens spend more than they make... although that goes into PART of why our nation is broke, but the president is spending HUNDREDS OF BILLIONS of dollars every quarter more than we take in... and he wants MORE tax cuts!! We''re TRILLIONS in the hole when we were at a surplus right before he took office. TRILLIONS!! Do you understand what that means to your children and your children''s children? SOMEONE has to pay the tab.
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Posted by CANYOUTELLME
You''re right, when terrorists hit both skyscrapers, and downing the towers and caused Billions of dollars of losses to our economy and killed our stock market, somebody has to pay for that, and we have been paying.....your''re right about that, lib
Fannie and Freddie should be left to collapse - why should taxpayer funds be used to fund Paulson''s pension fund and the pension funds of his fat cat banker friends
What the country needs is a load of bankers and stockbrokers jumping out of skyscraper windows - they''re nothing but leeches and parasites....their demise will allow the country to set itself right
This is the second day, where you have been boasting about how much money you earned, and didn''t get a stimulus check because you were too rich....too freaking bad Richey Rich, the Bush stimulus checks were for the middle class, not rich folks...sorry
Posted by Minuteman-1 at 01:14 PM : Jul 17, 2008"
your stockmarket must be pretty weak if knowcking over 2 buildings is enough to kill it
Seems like you''re nothing but a country of poncy chicken littles
I love this country the way it is too, but I also love it enough to want to make it better. To not want to solve the problems that the country faces isn''t love, it''s irresponsibilty.
Obama hasn''t been absent more than McCain. Like most conservatives, you don''t realize that a legislator has to be present to vote present. McCain has been missing votes that Obama has been present for all year. 2 years in the Senate is 2 more years in national office than Bush or Eisenhower or Reagan had and you all had no problem with that.
Obama''s New Hampshire Primary campaign co-chair, Jim Demers, was a lobbyist for the drug companies; when asked about this in an early debate, Obama was too spineless to address this. Michelle Obama was a vice-president at the Univ. of Chicago''s Medical Center "stepped down" in May 2007 but who''s to say that there wasn''t a tie between Michelle, Barack and Demers? Michele was the dutiful wife to disassociate herself from suspicious professional situations that might taint husband Barack''s political future. Here''s the point again and public finance issues aside, Obama can''t talk out of both sides of his mouth. Obama either has to be clean across the board and have nothing to do with lobbyists, even at an arm''s length, including having a personal association, or not, or he''s just as guilty and filthy as those he criticizes.
Posted by Ariel133 at 01:02 PM
I agree....I think McCain and Romney would make a good ticket.....who do you think Barrack Ocarter is going to select as his Vice Appeaser ?
Posted by Ariel133 at 01:16 PM : Jul 17, 2008"
Ole Georgie Chimpanzee swore an oath to defend the US - he FAILED to do that and as a result those "terrorists" struck the US - so yes it is far to blame Georgie chimpanzee
And as for Johnny of the 100 years war.....well lil mermaid if you''re so sure that he isn''t advocating a 100 year war, how ''bouts YOU enlist in the military.....after all you claim to love your beloved ''murrkkka and claim you want to secure it from those "terrorists"
Hey, robroy, nelson, vortex, you''re back.....if you had a bit of intelligence....say .00000000001% I.Q. you would have know that not only 2 buildings fell on 9/11, 6 or more were destroyed......how''s socialist Scotland, still a cra-ppy island ? or nice and green?
Obama''s New Hampshire Primary campaign co-chair, Jim Demers, was a lobbyist for the drug companies; when asked about this in an early debate, Obama was too spineless to address this. Michelle Obama was a vice-president at the Univ. of Chicago''s Medical Center "stepped down" in May 2007 but who''s to say that there wasn''t a tie between Michelle, Barack and Demers? Michele was the dutiful wife to disassociate herself from suspicious professional situations that might taint husband Barack''s political future. Here''s the point again and public finance issues aside, Obama can''t talk out of both sides of his mouth. Obama either has to be clean across the board and have nothing to do with lobbyists, even at an arm''s length, including having a personal association, or not, or he''s just as guilty and filthy as those he criticizes.
Hey I had a little vacation in tiny state of Rhode Island, which is bigger than you''re whole country !!!
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Posted by RobRoydonxlv
This statement about enlisting really burns me because the Military supports American Ideals and not just a politician or political party. Lame correlation.
It is like saying - if you want to elect a Democrat as president, then you can pay the extra taxes. Pure BS
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Posted by Minuteman-1 at 01:25 PM : Jul 17, 2008"
Can''t be that little if it was big enough to accomodate you and your fat yellow belly
Dems & Repubs calling each other hypocrites is just hilarious considering the amount of contradictions coming from both camps.
If there were never another Democrat or Republican elected to any office, the US would be a far better place. Niether party has any real concern for the nation, they only care about pushing the party agenda. Independents need to get better organized.
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Posted by RobRoydonxlv at 01:27 PM
whats wrong, no food on the farm today ? I know there is some deep seeded hatred for people that actually get nutrition in America
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Posted by Minuteman-1 at 01:15 PM : Jul 17, 2008
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I didn''t boast about anything.. just pointing out that i''m a LIBERAL DEMOCRAT who doesn''t expect anything from anyone because i made something out of myself...
BTW, i live in the SF Bay Area (you know, the area where your GODs O''Reilly and a few other CONs said should be blown up by a Nuclear bomb... destroying the lives of tens of millions of people), and 100K does not go very far here. So, no, i''m not richy rich. BUT, i didn''t agree with the gov''t handout of those stimulus checks yet you republiCONs who say DEMs are out of whack for handing out $$, you CONS sure do seem to be hypocrites.
BTW, i''d rather be a TAX AND SPEND liberal than a TAX AND BORROW AND SPEND "Conservative".
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