Just Say No To The Bailout From Hellby Doug Mataconis
While the rest of the politcal class debates the wisdom of John McCain’s non-supension suspension of his campaign, Libertarian Party Presidential Candidate Bob Barr seems to be one of only a handful of people out there saying we need to look at the bailout itself:
In the name of restoring economic confidence, the Bush administration is demanding unlimited authority to implement a massive financial bailout. The Secretary of the Treasury would become an economic dictator, empowered to re-engineer the economy as he sees fit. These powers fit Kim Jong-il’s North Korea, not the American republic.
The economy is in trouble, but the wrong policy could make things much worse. With the public deeply divided over the proposed bailout, and the future structure of our economy at stake, Congress must stop and take a deep breath before rushing such a far-reaching plan into law.
The federal government cannot eliminate financial losses and should not attempt to do so. It can only shift the burden — in this case from irresponsible borrowers, lenders and investors — to taxpayers. Keeping the walking dead on economic life support will only slow down necessary adjustments. The federal government’s principal responsibility at a time of financial stress should be to maintain liquidity for use by otherwise sound institutions.
Congress certainly should reject an unrestricted, economy-wide purchase of mortgages and mortgage-backed securities, as well as “other financial instruments” at the Treasury’s discretion. Interest groups already are lining up with their hands outstretched, including mortgage lenders and insurance companies, municipalities and foreign banks. The congressional Democrats even want to include home heating assistance and another wasteful “stimulus” package.
If the administration believes there are financial institutions so critical that their failure would put the entire economy at risk, then the president should identify those institutions and make the case for aiding them to Congress and, more important, to the American people.
“My first instinct was to let the market work, until I realized, while being briefed by the experts, how significant this problem became,” lamented President George W. Bush. So, he would turn capitalism into a government-protected enterprise and Uncle Sam into an ATM machine for economic failures. Congress must say, “No.” Why should we, the taxpayer, believe the people who got us into this mess when they say bailing them out is the only solution?
Despite his flaws as a candidate, Barr is, of course, quite correct about all of this.
Here he is talking about the bailout on CNN earlier today:
We all know what will happen here. Compromise will be reached in Congress and another $ 700 billion of taxpayer wealth will be wasted in an effort to keep a system that can barely sustain itself at this point in operation.
It might even work, temporarily.
At some point, though, we’re going to run out of tricks like this and then where will we be ?