It is officially called H.R. 1424, the Emergency Economic Stabilization Act of 2008. It is also called the Wall Street Bailout Bill, the Rescue Bill, the largest Federal power grab in US history, the socialization of the US Financial sector, and, of course, the crap sandwich. As of a few moments ago, the legislation passed the House on a 263-171 vote. Wall Street rallied at the news while down on Main Street, folks are getting ready for a piece of that sandwich.
The Core Proposals Have Not Changed, Just the Wrapping
The heart of the bill, that lovely great $700 billion Wall Street Bailout, is still there. This, of course, means that one of the primary objections to the original bill is still very much in place. True, the Senate version makes the bailout more palatable—raising the FDIC insurance cap to $250,000 for example—but not in any way that really takes care of core objections. What the Senate did was to tie a number of other popular bills to the failed bailout proposal, add in a hefty helping of pork and then drop it steaming and stinking onto the plate of the House, figuring that there would be enough excess spending and tax-play to make everyone happy. Oddly enough, they were right. Here are just some of the things that the Senate included in this bill:
Rum producers in Puerto Rico and the US Virgin Islands.
Corporations operating in American Samoa.
Bicycle commuter benefits.
Children's wooden practice arrows.
Film and television productions.
Commercial fishermen affected by the Exxon Valdez oil spill.
Mental health parity in health insurance.
These are not all of the excess provisions, which add up to an additional $110 billion over and above the $700 billion already requested, but they are a vivid and, dare I say, damning example of the culture that pervades Washington. Rather than come clean, admit that the American people do not wish to give this boon to Wall Street, and come up with something better—and there were better ideas out there—our lawmakers stoically pressed on with what originally failed, hoping to buy votes by including the pet projects of stubborn lawmakers and much needed tax relief—such as the annual AMT fix—in with the original bill that couldn't stand on its own merits. It was a smooth piece of politicking, but it stinks.
Would You Buy a Used Car From These People?
No wonder no one trusts the government anymore. When faced with a crisis of its own making, our government resorts first to panic, and then to sanctimonious panic, then to unctuous posturing guaranteed to make sure no one knows who's name really ought to be associated with the crisis. Panic in this case was the first, 3-page proposal from Secretary Paulson. Honestly, the only way that could have been worse was if he had written it on the back of a cocktail napkin. Sanctimonious panic followed in the subsequent congressional negotiations and in the failed vote last Monday in the House of Representatives. The Senate, meanwhile, moved on to unctuous, pork-adding posturing, and managed to slide their fat version of the bailout through and over to the House. Now we have the spectacle of everyone engaged in ritualistic, post-bailout unctuous posturing as those responsible do their best to keep that their little secret while gravely intoning that something had to be done.
The Bottom Line: Something Will Be Done
Well, something was done. For good or ill, right or wrong, The House today did somethingsomething that the Senate did a couple of days ago and that the House tried to do at the beginning of the week, only this time it was attached to a great many other somethings that needed to be done. There is no telling what will happen. Stocks rose on the news of the passage, but we need to see how this will play out over time. Consider the words of Congressman Jeb Hensarling (R-Texas), Chairman of the House Republican Study Committee, during House consideration of the Financial Stabilization Package (emphasis mine): to deal with the current economic crisis. It was, in great measure, the same
Let me now speak to my hopes and fears. No one truly knows if this plan will work. We all hope it does. No one knows the true amount of taxpayer exposure. Treasury could spend $700 billion in no time flat and come right back to Congress for $700 billion more. Some believe the taxpayer will actually make money in the deal and I hope that proves true. But history as my guide, I have strong fears it will not. And at what point do we finally bailout the American taxpayer from the unconscionable burden he or she faces from out of control Washington spending?
This bailout mess and the headlong rush to do something to solve it tells us one thing: Perhaps the biggest change we need in Washington is the elimination of unrelated amendments and earmarks to legislation. Bills should be clean, of single purpose, and given straight up or down roll call votes, no more voting “present” to weasel out of taking a position. No buying votes for weak, uncertain or even dangerous legislation such as this bailout bill or the laws that Congress has passed over the years that have brought us to this apparent point-of-no-return. I know that isn't what the politicians would want, it would force them to actually work for a living and be honest about their positions, standing by their votes. I can't imagine many on either side of the aisle wanting to do that, but what a change for the better it would be!
Both sides in the presidential campaign are offering change. This is a great test issue. Clean bills mean transparency and accountability. They mean that bills would have to stand on their own merits or perish, and that lawmakers would not be able to obfuscate the issues as they do today. If that is a suggestion for change that you would like to offer the campaigns, visit www.johnmccain.com and www.barackobama.com and we'll see just how willing either side is to make a real change to Washington culture.
In the meantime, pass the mustard.