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Paul Krugman was on ABC’s This Week this morning, where he pulled no punches when discussing the GOP’s argument against Wall St. reform. He called Mitch McConnell’s argument against financial reform as, “the most dishonest argument ever made in the history of politics, which is the claim that having regulation of the banks is actually bailing out the banks.”

Here is the video courtesy of Media Matters:

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Krugman said, “Let me say a couple of things here. Anyone who says we need to be bipartisan should bear in mind that for the last several weeks, Mitch McConnell, the Senate minority leader, has been trying to stop reform with possibly the most dishonest argument ever made in the history of politics, which is the claim that having regulation of the banks is actually bailing out the banks. And basically, the argument boils down to saying that what we really need to do to deal with fires is abolish the fire department. Because then people will know that they can’t let their buildings burn in the first place, right? It’s incredible.”

He continued, “So anyone who says bipartisan, should say, you know, bipartisan doesn’t include the Senate minority leader. But, you know, I agree with George, actually, believe it or not. Too big to fail per se is not the problem. The Great Depression was made possible by the failure of the Bank of the United States, which despite its name, was a Bronx-based institution that was the 28th largest financial institution in the United States at the time, and yet brought the whole system down.” Krugman hit the nail on the head, because this really isn’t about financial reform.

Polling data reveals that Americans are strongly in favor of more regulations for the financial sector, but what the American people may want doesn’t matter to the Republican Party. The GOP is still on their mission to say no to everything in order to grind the Obama presidency to halt, so that they can regain power first in 2010, but also they are dreaming of 2012. The Republicans are oblivious to the notion that their Party of No stance on everything is killing their image with voters.

It would be a mistake though to portray only the GOP as beholden to corporate masters. One of the legacies of President Clinton is that he re-shaped the Democratic Party, so that it is now a friend of Wall Street too. This is the main reason why the proposed financial reform bill is so weak, and has holes that are big enough to drive a truck through. Still the Democratic reform proposal is better than the Republican alternative, which is to do nothing at all.