It was a bit disturbing to hear John McCain blaming the greed of Wall Street and the lack of federal oversight for the our financial meltdown. But McCain’s performance yesterday on the Today show was truly a travesty. He attempts to voice the free-marketeer line that AIG shouldn’t be bailed out but winds up sounding like Miss Teen USA South Carolina talking about Iraq.

Our friend Rachel Sklar at the Huffington Post provides the transcript.

LAUER: So if we get to the point middle of the week as we heard in that report where AIG might have to file for bankruptcy, they’re on their own?

McCAIN: Well…quote, “on their own”…we have to - we cannot have the taxpayers bail out AIG or anybody else…this is something we’re gonna have to work through — there’s too much corruption, there’s too much access, we can fix it, I believe in America - we can have a 9/11 commission such as we had after 9/11, ‘cause this is a huge crisis and we can come up with fixes and we can make sure that every American has a safer future and that is to make them know that their bank deposits are safe and insured.

It’s hard to escape the feeling that free market ideas don’t stand a chance with this guy as the Republican leader.

Does McCain Understand The AIG Crisis? [Huffington Post]

The Wall Street Journal’s news pages are notoriously liberal not in sync with the right-wing stance of its editorial pages. But ever since Rupert Murdoch bought the Journal’s parent company, Dow Jones, many have wondered if that might change. The place of Barack Obama’s picture just above the best story ever salacious tale of sex and drugs at the Department of the Interior will give them little reassurance that conservative politics aren’t playing a role in the news department. Surrounded by police, walking on the sidewalk, Barack glancing over his shoulder—well, it looks more than a little like a perp walk picture. As it turns out, the picture has nothing to do with the headline. Barack was just going to an appearance on David Letterman.

On a related note: who would have ever suspected that working for the Department of the Interior could be so much fun?

We’ve been scolded by some of our readers for our coverage of Sarah Palin. This morning we turned to a “Washington insider” to find out about her economic outlook, largely because she didn’t seem to say much about economic policy in her speech and her short tenure as governor of Alaska didn’t give her much of a chance to articulate a policy. Some readers point out that we might have overlooked the gushing black elephant in the room: oil policy.

Former supply-side economics, tax-cutter guru Larry Kudlow gives voice to this idea in the new York Sun today.

“The no. 1 economic issue this election is gasoline prices at the pump,” he writes. “And Governor Palin has the energy answer: Our abundant country can produce more energy at lower cost if government gets out of the way.”

There is a body of thought—increasingly popular among Republicans apparently—that holds that energy policy is the key to economic growth and financial health. Everything from home prices (pricey gas makes suburban life more expensive) to drug prices (the cost of chemicals) to food has an energy pricing angle. “Energy prices are the extreme marginal tax rates for the twenty-first century,” a ‘drill, baby, drill’ Republican told us.

Palin Is Our Energy Answer [New York Sun]

When asked who we are planning on supporting in the presidential election, our standard response is to avoid this query. It’s a trick question premised on a mass delusion according to which people believe that one politician is better than another. We’re pretty sure that the next president will be the worst in history, regardless of who wins.

Perhaps less importantly, we know our votes count for almost nothing. Less than nothing, really. The costs incurred in voting—risking jury duty by registering to vote, having to trek to an out of the way public building we’d otherwise never know existed, standing in lines around people who we do not especially enjoy being around, witnessing the self-congratulatory grins of people who believe that they’ve performed some great democratic duty by voting for one scoundrel or another—are great. The rewards are few. They don’t even serve lunch or whiskey at polling places anymore, we’re told.

So it turns out that John McCain picked Tina Fey Alaska governor Sarah Palin as his running mate.

“Sarah Palin” is probably the most searched for name on the internet right now. In the minutes after news of her selection spread, popular websites like the Drudge Report went down. The reason for this is relatively simple: most of us don’t know anything about this woman who John McCain wants to be his running mate.

The one thing we do know is that she’s been a strong proponent of drilling in the Alaska National Wildlife Reserve and wants to see more off-shore drilling. In fact, she’s said that McCain, who opposed drilling in ANWR, is “wrong on that issue.” It certainly seems that Republicans are lining themselves up as the party of greater oil supplies.

After the jump, we present a CNBC segment with Palin advocating drilling in ANWR.

Over the next few months, the media will be talking about presidential polls taken nationwide. Most of the polls you hear about are done nationwide and assume we Americans for our president the way the French vote for theirs (and may the Lord bless and keep Nicholas Sarkozy): that is, by popular vote.

Some of the smarter ones amongst you are toying around InTrade.com to predict the upcoming election. Well, that’s nice and all, but how ‘bout those of us for whom statistics matter? We’re looking at FiveThirtyEight.com which breaks out poll numbers state-by-state and evaluates the pollsters themselves based on their prediction accuracy.

We’ve long since given up the assumption that some politicians are better than others. But every now and then a politician’s statements make us reconsider: perhaps this fellow is actually a little worse than the others.

Yesterday John McCain went to Colorado in order to say awkward things in an awkward manner. After begrudgingly saying maybe he’d cut taxes if he could somehow figure out how to do that, McCain turns to praise a local example of American ingenuity and drive.

And what is this fantastic example of American industry? Crocs, a company that has lost over 90% of its market value since its highs last fall. All we can say is that McCain must really enjoy his reputation for not understanding economics. Why else would he go so far out of his way to remind us of it?

After the jump, video of McCain’s praise of the ugly footwear company.

Phil Gramm gave his first political interview in years to Stephen Moore in the Wall Street Journal’s weekend edition. The interview is clearly meant to reassure conservative voters about Republican presidential candidate John McCain. What separates McCain from Obama, Moore writes, is that although neither of them know much about economics, “McCain has the good sense to know where to turn to for first-rate advice.”

Gramm was something of a hero to a lot of conservative activists. He cut his teeth as a Reagan Democrat in the House of Representatives, championing Ronald Reagan’s tax cuts in the early eighties. Later he switched allegiances to the Republican party and got elected to the Senate. With the GOP victories in 1994, Gramm became the chairman of the powerful banking committee. Moore writes that he played a “decisive role in nearly every fiscal conservative victory in the 1980s and 1990s.”

But that was then and this is now. Gramm is now 65 years old, and he vanished from the political stage six years ago when he took a high-rolling investment banking job at UBS. So what does Gramm offer voters now?

SEC chair Christopher Cox missed the 5am conference call when Ben Bernanke and Hank Paulson decided that the Fed would lend funds to rescue Bear Stearns from bankruptcy, the Wall Street Journal reports on today’s front page. The call’s time changed and no one bothered to tell Cox, who didn’t know until he came into the office a few hours later.

The scandal of Countrywide’s sweetheart loans has already forced the resignation of a top Barack Obama campaign adviser, and is proving embarrassing to two powerful US Senators. But now some are wondering where the information about the tainted loans is coming from. Who is leaking the story?

Jim Johnson is out of there. The former chairman of Fannie Mae who received several preferential loans from Countrywide, has announced he’s leaving Barack Obama’s vice presidential search committee.

This is in keeping with the Obama campaigns new tactic of knee-capping supporters whose scandals distract from the campaign’s messages of hope and change. The operating principle (if not an actual campaign slogan) seems to be: No more Reverend Wrights!

Johnson Quits Obama’s Vice Presidential Search Team [Bloomberg]

Is John McCain trying to make headway with the activist investor community? Activists have been among have been among the vocal critics of lavish executive pay packages at public companies, and most of the biggest names among the activists favor Democrats in this election. (Carl Icahn, who said Barack Obama would be a terrible president, is an exception.)

Today John McCain is speaking to a small business conference on economic issues. He is expected to hit the usual Republican notes, calling for lower corporate taxes and opposing hiking capital gains taxes. But he’s also going to take a shot at “excessive” corporate pay and severance packages.

“Americans are right to be offended when the extravagant salaries and severance deals of CEOs … bear no relation to the success of the company or the wishes of shareholders,” his prepared remarks released in advance of the speech say.

It’s not just talk. He’s going so far as to endorse the hardest versions of the “say on pay” proposals that would require shareholder approval of a CEO’s pay.

“If I am elected president, I intend to see that wrongdoing of this kind is called to account by federal prosecutors. And under my reforms, all aspects of a CEO’s pay, including any severance arrangements, must be approved by shareholders,” he will say.

McCain wants low corporate taxes, regulated CEO pay [Reuters]

As it turns out, Bill Clinton likes to hang around with a bunch of questionable characters.

His wealthy friends like to fill their private jets with young women, the big Vanity Fair story that everyone is talking about reveals. He pals around with the guy who knocked-up Elizabeth Hurley and sued Kirk Kerkorian for invasion of privacy. One of the supposed bad boys is grocery store magnate Ron Burkle, who shows up at a wedding in Paris with a woman who others say was “not much older than 19.” But one of the most troubling associates is a guy familiar to longtime DealBreaker readers, a guy who has been known to hang around with girls who are much younger than 19.

Last night at the “All Things D” conference sponsored by the Wall Street Journal, Rupert Murdoch told attendees that Democrat Barack Obama will win the presidential election by capturing the key swing state Ohio and that activist shareholder Carl Icahn will lose his proxy fight to take over Yahoo. He also said the US economy face tough times for the next 18 months.

Details after the jump.

Wall Street’s chiefs are divided on the presidential election, according to DealScape.

The Federal Election Commission’s records show that Hillary Clinton received campaign donations from JP Morgan Chase chief Jamie Dimon, Morgan Stanley chief John Mack and Goldman Sachs chief Lloyd Blankfein. John McCain received support from Merrill Lynch’s John Thain. Dick Fuld of Lehman Brother’s is hedging his bets, supporting McCain and Clinton, as well as Barack Obama.

Citigroup’s Vikram Pandit didn’t contribute to any of the campaigns.

What does this tell us about the political acumen of Wall Street’s top men? Find out after the jump.

Self-styled shareholder superman Carl Icahn says Barack Obama would be a “terrible” president, Bloomberg reports. His election, backed by a filibuster proof majority in the Senate, would lead to runaway legislation, higher interest rates and accelerating inflation, Icahn told a conference of investors last night.

“I don’t normally get involved in politics, but this time I am,” Icahn said. “I don’t think Obama really understands economics.”

Does this mean Larry Kudlow was right?

Carl Icahn Says Obama Would Be a ‘Terrible’ President for U.S. [Bloomberg]

With a slowing economy, escalating food prices and energy prices climbing ever higher, you might think that Republican presidential candidate John McCain would be hesitant to endorse a European Union-style carbon emission trading scheme that seems likely to result in less economic growth, higher energy prices and higher food prices from increased biofuel demand. But that’s because you don’t know him as well as his daughter, Meghan McCain, who says he’s totally freaking out over global warming.

“My dad was tortured in prison; he doesn’t overreact to things. So if he starts freaking out, you know it’s time to freak out,” the blonde, blogging McCain told the editors of GQ in a profile last month. “And I think he’s freaking out about the environment. He’s like, ‘I’m genuinely worried about climate change; it’s happening right now.’ ”

Today in Oregon, McCain—the former POW—announced his support for a “cap-and-trade” program for carbon emissions. Under “cap-and-trade” programs the government rations the right to emit certain pollutants and allows companies to sell unused portions of their ration or buy up excess rights from others.

The endorsement is meant to win over centrist voters who have been convinced that global warming results from man-made pollution. It is likely to be criticized by the right—which views going to Oregon to endorse environmentalist measures like Jane Fonda going to Hanoi to decry the Vietnam War (Oregon John, anyone?)—and the extreme greens, where carbon trading is seen as conceding a right to pollute. Energy traders, who largely see the credits as another commodity to trade, will likely welcome the plan.

McCain also promised to bring pressure on China and India to convince them to reduce their emissions.

China responded this morning by holding an earthquake. (“Pow! Take that, Earth!”) India said it would gladly allow US companies to outsource their own carbon reductions in exchange for improving India’s environment. Vietnam responded by offering to sell rice to the Philippines at shockingly high prices.

McCain Woos Democrats on Environment [Wall Street Journal]

Hillary Clinton has been upping the ante with her populist rhetoric, bashing “greed” and swatting away economic critiques of her tax plans by saying “I’m not going to throw my lot in with economists.” As is often the case, that kind of anti-intellectual politics is accompanied by Wall Street bashing. Julie Satow, who covers Wall Street for the New York Sun, reports on Clinton’s latest swipes.

Yesterday, Mrs. Clinton’s normally responsive camp took a full 24 hours to correct widely reported accounts that she had said in a speech during the Indiana Democratic Party’s Jefferson-Jackson Day dinner: “Why don’t we hold these Wall Street money-grubbers responsible for their role in this recession?” In fact, she said: “Wall Street money brokers.”

Either way, the sentiment is the same, according to many on Wall Street.

Clinton Attacks Wall Street [New York Sun]

It’s official: Wall Street loves Barack Obama. In 2007, even before he became widely-recognized as the front-runner for the Democratic nomination, Obama pulled in a total of $1.7 million from employees at 12 major Wall Street firms, according to a survey by the McClatchy news agency. Those numbers included $288,835 from Goldman Sachs, $242,395 from UBS and $226,805 from Lehman Brothers. He’s reportedly doing even better now that he has pulled ahead of Hilary Clinton in most polls. Money from hedge funds and private equity funds is pouring into his campaign coffers.

Well it’s a good thing that Wall Street loves giving money to Obama because if he gets elected, employees at Wall Street firms will be sending much larger checks his way thanks to tax increases. Obama has promises to end the Bush tax cuts. “That is a 3% bump across the board to the bad old days when associates faced a marginal federal tax rate of 36%,” Ted Frank wrote on our sibling blog AboveTheLaw when he analyzed the tax effects of Obamanomics on law firm associates.

We decided to take Frank’s analysis and apply it to Wall Street. Specifically, we decided to look at the effect of Obamanomics on an associate at an investment bank in his first year out of business school. Let’s say that a first-year post-MBA associate is paid about market rates for a Wall Street firm, taking home $105,000 in salary and $175,000 in bonus. Like Frank, we’ll assume he’s generous, and gives $10,000 a year to charity.

The biggest tax effect comes from Obama’s plans to end the social-security tax cap. Current law caps social security taxes at $102,000. Obama plans to abolish this, meaning the full salary and bonus will be subject to social security taxes. That adds several thousands of dollars to the associate’s tax bill.

As Frank notes, that’s not the only place associates will feel the higher tax bill. They’ll likely feel it in smaller bonuses as well. Social-security taxes are not only on employees. The government also charges 6.2% to employers that employees never see on their W-2s. But, of course, their employers noticed this hit and it shows up in compensation costs on balance sheets that shareholders will see too. Even if we assume that employers are willing to swallow half of the extra cost of uncapped social security taxes, the bonus for the associate will decline by around $5000.

The overall effect of Obama’s tax hikes is breathtaking. The first year associate’s marginal tax rate goes up from an already ridiculous 42.5% to 51.4%—not including the new 6.2% marginal tax on the employer. Add in the effects on the bonus, and the associate is losing nearly $20,000/year in take-home pay.

Frank has helpfully added a third column to his chart: how big a pay cut would you have to take to receive the same take-home income? The answer is that Obama’s tax increases have a bigger effect on your income than a Wall Street firm cutting New York salaries by $34,000.

See the effect charted after the jump.

College isn’t worth it and you should stay out of corporate America, Michelle Obama, the Princeton graduate who went to Harvard Law School before joining the white shoe Chicago law firm Sidley & Austin, told an audience of working mothers at a daycare center in Zanesville, Ohio.

After speaking of the burdens of student loans from her upper-crust education, the wife of Democratic presidential hopeful Barak Obama told the women at the day-care center that she’d prefer they not follow in her upwardly mobile footsteps. Better if they stay in their place, back in “the community.”

“We left corporate America, which is a lot of what we’re asking young people to do,” Byron York reports Michelle told the women. “Don’t go into corporate America. You know, become teachers. Work for the community. Be social workers. Be a nurse. Those are the careers that we need, and we’re encouraging our young people to do that. But if you make that choice, as we did, to move out of the money-making industry into the helping industry, then your salaries respond.” Faced with that reality, she adds, “many of our bright stars are going into corporate law or hedge-fund management.”

York points out that spending too much on college and getting too involved with bank-account enriching and presumably soul-sucking corporate America is not too much of a problem for the people of Zanesville. “According to the U.S. Census, Muskingum County, where Zanesville is located, had a median household income of $37,192 in 2004, below both the Ohio and national averages. Just 12.2 percent of adults in the county have a bachelor’s degree or higher, also well below the state and national averages. About 20 percent don’t have a high school degree,” York writes.

Well, at least she wasn’t telling grade school kids in the Bronx that they were studying too hard.

Michelle Obama: “Don’t Go Into Corporate America” [The Corner]