Sept. 19 (Bloomberg) -- Vanguard Group Inc. founder John Bogle says the U.S. government is ``punch drunk.'' Federal Reserve historian Allan Meltzer calls it ``social democracy at its worst.''

Yet former Fed vice chairman Alan Blinder says it's a ``giant step toward a cure'' for the financial crisis. Harvard University economist Kenneth Rogoff says Treasury Secretary Henry Paulson and other leading officials are doing a ``terrific job.''

Opinions of the plan from Paulson and Fed Chairman Ben S. Bernanke to arrest the yearlong credit crisis ranged from high praise to anger among scholars, investors and bankers with decades of experience following financial markets and the economy.

``I certainly don't think this is the taxpayers' problem,'' said Meltzer, 80, a professor of political economy at Carnegie Mellon University in Pittsburgh. ``This is not a place exactly with a great big surplus that can afford to do these things. This is social democracy at its worst.''

Paulson's plan, which he said would cost ``hundreds of billions of dollars,'' is aimed at cleansing banks of troubled assets and preventing a credit freeze that might cause a meltdown in the U.S. economy. Stocks around the world surged, and congressional leaders said they would aim to pass legislation soon after meeting with Paulson and Treasury late yesterday.

AIG Loan

Last night's news came two days after the Fed agreed to bail out American International Group Inc. with an $85 billion loan in exchange for an 80 percent government stake. Last week, the government took over mortgage-finance companies Fannie Mae and Freddie Mac.

Bogle, who created the $106 billion Vanguard 500 Index Fund in 1976, says he hasn't changed his personal asset-allocation target -- 35 percent in stocks and 65 percent in bonds -- since 2000.

``We're playing a game of casino capitalism, interfering with the way the market is working,'' Bogle, 79, said in a telephone interview today from Valley Forge, Pennsylvania. ``The government seems punch drunk. It doesn't seem systematic.''

Blinder, on the other hand, says the plan is ``a giant step toward a cure and a giant step toward creating some clarity in the market.''

Careful Drafting Needed

``This needs to be drafted very carefully,'' said Blinder, 62, a Princeton University economist who also served as an adviser to former President Bill Clinton. ``What's needed is something large and systemic rather than this case-by-case ad-hoc-ary.''

William Poole, who retired in March as president of the St. Louis Fed, said he's ``skeptical on all counts.''

``I'm afraid that we've got a grand idea that when we start to actually write it down on paper, how it's going to work, we're going to find one stumbling block after another,'' Poole, 71, a Bloomberg contributor, said in an interview with Bloomberg Television.

Rogoff said that even though he's the ``last person on earth to favor giant bailouts,'' the Treasury and Fed chiefs along with New York Fed President Timothy Geithner are doing the right thing.

``Bernanke and Paulson and Tim Geithner have really done a terrific job the past couple weeks not caving in and doing a bailout prematurely,'' said Rogoff, 55, former chief economist at the International Monetary Fund. ``It's been clear that once things got out of hand, they would eventually have to move in, and that time clearly has arrived.''

To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net

Last Updated: September 19, 2008 15:19 EDT