The Democrats whined about McCain getting involved, calling it a stunt. Then they demanded he take a position on the bailout (he came out against it). Now they're back to whining that he get out of the process entirely. A simple example of the partisan politics involved here: the Democrats insist that one of the biggest negatives about McCain is that he votes with Bush so often. Well, who's on Bush's side now, in the most important financial crisis we've faced in decades? The Democrats, not McCain. Pot, meet kettle. Also, why is it that they have to keep appealing to President Bush to call McCain home and send him away? Can't they do anything themselves? No wonder Obama is their leader, with his passive 'call me if you need my help' stance.
If the Democrats in Congress believe the Paulson plan as it was originally proposed is the best way to go, why don't they force a vote on it? They should have the votes to pass it, thus giving them the victory, and President Bush has said he would sign it. So what's the problem? They know it won't bring any lasting reform or long-term solution, and it will ultimately end up being worse for taxpayers, who will exert significant vengeance on the politicians who did it to them. So, the Democrats don't want to be the ones taking credit (which will eventually become blame) for it. At the same time, they're blaming House Republicans (thank God for them!) for stalling the whole thing. It's a classic strategy.
McCain has said that there is some 'significant progress' being made on a bipartisan solution, and is confident that all sides will be able to come to an agreement on the deal in a timely manner. As such, he is resuming his campaign and will take part in the debate this evening. After the debate, he'll return to Washington to continue negotiations.
No word from the Obama camp yet, but I'm sure he'll be happy to help out if anyone bothers to call him.
The main sticking point for the House Republicans is the defense of the American taxpayer. Here's a statement from Boehner's office:
Sounds pretty good to me! Like I said, it's a good thing we have these House Republicans at the table, or we'd have a massive boondoggle that could very likely tank the entire American economy on our hands. Hopefully, they'll be able to wrangle some saner provisions out of this deal to minimize the pain we as taxpayers will encounter.HOUSE REPUBLICAN WORKING GROUP – ECONOMIC RESCUE PRINCIPLES
I. Wall Street – Not Taxpayers – Should Fund the Recovery
The most troubling part of Sec. Paulson's plan is that it relies wholly on taxpayer funds. House Republicans believe that rather than providing taxpayer funded purchases of frozen mortgage assets to solve this problem, any rescue package should adopt a plan to insure mortgage backed securities (MBS) through payment of insurance premiums.
Currently, the federal government insures approximately half of all MBS and can insure the rest of those still outstanding. However, rather than taxpayers funding the insurance, the holders of these assets should pay for it. The working group's proposal would direct the Treasury Department to design a system to charge premiums to the holders of MBS to fully finance this insurance.
II. Private Capital – Not Tax Dollars – Should Be Injected Into Financial Markets
Instead of injecting taxpayer funds into the market to produce liquidity, private capital can be drawn into the market by removing burdensome regulatory and tax barriers that are currently blocking private capital formation. In short, too much private capital is sitting on the sidelines during this crisis, and it is well past time to unleash it.
Temporary tax relief provisions can help companies free up capital to maintain operations, create jobs, and lend to one another. In addition, the working group recommends a temporary suspension of dividend payments by financial institutions and other regulatory measures to address the problems surrounding private capital liquidity.
III. Immediate Transparency, Oversight, and Market Reform
Both Republicans and Democrats have made clear that they believe there is not a strong enough oversight component in Sec. Paulson's plan. The House Republican working group's proposal addresses this flaw. To begin, the plan would require participating firms to disclose to the Treasury Department the value of their mortgage assets on their books, the value of any private bids within the last year for such assets, and their last audit report. Additional safeguards include:
- To limit federal exposure for high risk loans, the working group's recommendations mandate that Government Sponsored Entities no longer securitize any unsound mortgages.
- The plan would call on the Securities Exchange Commission (SEC) to audit reports of failed companies to ensure that the financial standing of these troubled companies was accurately portrayed.
- The blueprint would guarantee that Wall Street executives do not benefit from taxpayer funding.
- The proposal would call on the SEC to review the performance of the credit rating agencies and their ability to accurately reflect the risks of these failed investment securities.
- The working group recommends that Congress create a blue ribbon panel with representatives of Treasury, SEC, and the Federal Reserve Board to make recommendations to Congress for reforms of the financial sector by January 1, 2009.
Interestingly enough, there are some who think the U.S. goverment could actually make money off of a bailout, as much as $2.2 trillion. While that may be true, it is certainly no guarantee. What's the downside if things don't work out the way they're hoping? How big of a disaster would we see then? Even if it did happen, it would be years down the road. And, let's be real...if the federal government saw a net gain of $2.2 trillion, what are they going to do with it? Do we really expect them to cut a check to every American taxpayer? What a joke. Let's say there are 100 million taxpayers (I think that number is high, but it's just a starting point). That would mean each person who pays taxes would get a check for $22,000. While I'd certainly be in favor of that, I'm not holding my breath. In reality, you'll see another expansion of government based on this new money, and it'll probably happen before we ever even see that money. You know Congress - they spend money they don't have already, so what makes anyone think they wouldn't do it again with a sudden 50% increase in the budget? It's a joke.
Anyway, here's the nutshell. Right now, the biggest problem appears to be the credit situation. None of the big lenders are loaning money on credit right now, which has essentially frozen the market. Everyone is hanging onto whatever cash they have until the Washington deal comes out. So, those yahoos need to get something done fast, but not at the expense of doing things the right way. This truly is something that will have a drastic effect on the American economy, and, if done wrong, could really reduce the prominent role America plays in the global economy. There is talk of a global currency and a global financial network of oversight, which would eliminate America's leadership across the board. And, with the size of American financial power, an American crash would likely take the rest of the world with it, at least to some extent. This is a big, big deal, and our leaders absolutely MUST get it right.
History shows us what works: less government, more freedom. That's capitalism. That's what made America the greatest superpower on the planet. An expansion of government like what is being discussed now would be exactly the opposite - more government. That will be devastating.
Call your Senators and Reps, and tell them to let capitalism win the day. It is not a stretch to say that our future, and that of our children and grandchildren, will be greatly affected by what happens in the next few days.
There's my two cents.
Sources:
http://corner.nationalreview.com/post/?q=MGViMTg0ZGI4YWEyNjJjYmMwOWYwNjg4YWE0YzhjZTU=
http://online.wsj.com/article/SB122230704116773989.html?mod=special_page_campaign2008_mostpop
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