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Now for the hard part

Monday, October 06, 2008

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In the end, the system worked, in its own halting, imperfect way. Now, we can only hope that the $700 billion package passed by the House of Representatives and signed into law by the president Friday performs the hoped-for trick of unlocking the credit markets and averting economic disaster.

The measure, as finally approved, was a dramatic improvement over the three-page, just-sign-here proposal that Treasury Secretary Henry Paulson initially submitted. It still gives the administration huge leeway and will need skillful Treasury administration, but it includes increased oversight and greater protections for taxpayers. After Monday’s stunning rejection by the House and the resulting plunge in the stock market, both presidential candidates pitched in to salvage the deal; the Senate acted to revive the measure; and enough “more than enough” House lawmakers in both parties rethought their original positions, in part as callers from home districts who were fearful of economic disaster began to outpace the callers who were indignant at the idea of a bailout. House leaders, including Democrat Steny Hoyer of Maryland and Republican Roy Blunt of Missouri, worked together. Juvenile partisanship gave way, at least for the moment, to productive cooperation.

But not without a price. One of the changes the Senate made to the package made sense: a temporary increase in federal insurance of bank accounts from $100,000 to $250,000 to deter potential bank runs. It is sad, however, that the Senate seized the opportunity to add unnecessarily to the deficit. A moment of economic peril became powerful leverage for fiscal irresponsibility in the form of another $100 billion-plus in deficit-financed tax cuts.

We refer to the Senate’s move to tack onto the package an unrelated measure: the extension of expiring tax provisions that business eagerly sought and a temporary patch in the alternative minimum tax.

Friday’s action by no means ensures that the problem has been solved. The rough economic news continues to mount, with a drop in orders for manufactured goods and a seven-year high in claims for unemployment benefits. The credit markets have become so dysfunctional that California Gov. Arnold Schwarzenegger sent Paulson a letter warning that the state might need a $7 billion loan because it has not been able to borrow the money elsewhere. Meantime, the global nature of the metastasizing crisis adds to the nervousness. Maybe the only sure thing is that without the congressional action, prospects would be far bleaker.

(This editorial originally appeared in the Washington Post.)

5 comment(s)

kevin wrote on Oct 6, 2008 5:00 AM:

" The congressmen that voted against this bill on Monday and then turned around and voted for the exact same bill on Friday (except for the added $110 Billion in pork) should be ashamed. Their actions would make a streetwalker blush with shame.

And that includes our own Mike Thompson... "

Normbc9 wrote on Oct 6, 2008 8:58 AM:

" To begin with the so called "Rescue" is more than 800 billion. As of this writing there is little sign it is correcting everything the authors hoped for. Those who are the authors succumbed to the same rhetoric we all did. The fact that the US economy was failing right in front of us. In my opinion that was all carefully orchestrated scare talk played up by the media. This is not the end of the financial problems and I'll bet 2009 is just as bad if not worse. Most of the legislators caved in to fears of not being re-elected at first and then when the pork was added did their usual and claimed patriotism as their motivator. Who can question that? "

Ruff Limblog wrote on Oct 6, 2008 12:42 PM:

" Actually, I find it quite easy to question the Sell America Out First gang of so-called "Republicans" like John McCain, Mitch McConnell, John Boehner.

There's no lack of so-called "Democrats" like Barack Obama, Joe Biden, Nancy Pelosi, Harry Reid, Diane Feinstein, Barbara Boxer, and Mike Thompson that deserve a shout-out either.

There are lots of other 'Sellout America First' critters in BOTH PARTIES.

There were rescue plans passed around in the Senate and House that followed models that 'worked' in similar circumstances, but the 'Sellout America First' crowd did not want them in the public eye.

When politicians can be shown to 'know better' and vote down the best plan in favor of the sell us out plan then it is much easier to focus voter backlash.

So a plan that would have worked was carefully kept out of the media, but those who want the truth can go to Democrat Marcy Kaptur's webvid of her remarks in the Congressional Record.

As it is... I am going to be taking a closer look at the 'Paulite' Republican 'Zane Starkewolf' and 'Carol Wolman' , the Green Party candidate.

Either would be better than voting for Mike Thompson who 'regretfully' sold us out to the Wall Street Weasels.

I think a perusal of "OpenSecrets.Org" listing of where Mike Thompson gets his money is in order. It should be interesting reading.

When it comes to economics a true-blue 'Ron Paulite' or a Green would be a better vote than for a sellout Democrat.

~Ruff "

GoMommyGo wrote on Oct 6, 2008 2:19 PM:

" The people were overwhelmingly against it, but their representatives rejected their wishes and voted "yes", anyway. The stock market is still falling, credit is still stagnant. They sold out democracy to save the economy, and it didn't even work. We've been fooled again. "

Raven wrote on Oct 6, 2008 4:58 PM:

" hmm....that darn plan...passed on friday and hasnt fixed everything by Monday morning......it must be a failure.... "

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