Eliot Spitzer on Government's Role in the Market - and Weiner

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Welcome to Politics Bites, where every afternoon at It's A Free Country, we bring you the unmissable quotes from the morning's political conversations on WNYC. Today on the Brian Lehrer Show, former Governor and Attorney General of New York and c-ohost of "In the Arena" on CNN, Eliot Spitzer, discusses his new book, Government's Place in the Market.

Spitzer On Weiner

Gov. Spitzer, who resigned from office as a result of his own sex scandal, said in so many words that Weiner should step down.

It's a personal tragedy. I think he should heed the wisdom of the senior Democratic leadership and permit politics now at this point to move on to other, more critical issues. I think that's a judgment I hope he comes to sometime in the near term.

The case for government

Spitzer says that government has a role in dealing with negative externalities that arise as a result of our economic system, like pollution. He says his argument is capitalist--it's a market-driven argument--for why government needs to do certain things, because if not, cataclysms will result--like they did in 2008.

Look, if government doesn't do this, the market participants themselves will not. Not because they're evil people, it's just because all the incentives are designed to produce different behaviors and outcomes.

At the Republican debate on Monday night in New Hampshire, all the candidates said Dodd-Frank should be repealed. Spitzer said it's an imperfect bill--it did not confront sufficiently the issue of banks being "too big to fail," he said, but repealing Dodd-Frank would be "crazy." He said the law restores the regulatory rules that for 50 to 60 years had lent stability to the banking system--which had been stripped away in the Bush and Clinton era.

Dodd-Frank was a first step at restoring stability and sanity, for them to want to repeal that I really think is such superficial almost 'no-nothingism' in terms of just a cheap pandering to public that is unhappy and understandably unhappy.

Obama isn't tough enough

Spitzer believes that Obama was too light-handed with the banks during the bailout and should have required more reforms on Wall Street.

He almost seemed to be protective of Wall Street--bailing them out and not asking for anything in return. I think he had a meeting with the CEOs of the major banks at the White House and he said to them effectively, 'I, the President, is the only thing standing between you and the pitchforks.' President Roosevelt would have said, 'I'm holding the pitchfork and here's what I need you to do.'

As for what's happening in Albany now, Spitzer says gay marriage is close, but not guaranteed. He's not a fan of Cuomo's proposed property tax cap. He says just look at California to see the long-term negative effects.

What it is popular at first what it does in the long-term is lead to substantial fiscal imbalance and to often, scarcity of funds in area that are critical.

Lastly, will Spitzer run for mayor of New York City? He's happy being a talk show host for now.