Fallout from yesterday’s bailout vote in the House continues. As Paul wrote yesterday, the issue is one on which reasonable conservatives can differ. Conservative cases can be made both for and against the package, as improved by House Republican negotiators, that came to the floor yesterday. This is well illustrated by the divergent views of two Minnesota Representatives, John Kline and Michele Bachmann.
Kline and Bachmann are both friends of mine; they are both great people, smart legislators and solid conservatives. John voted for the bill, Michele voted against it. Both released statements explaining their votes; they sum up as well as anything I’ve seen the conservative cases pro and con.
John Kline writes:
Today, members of Congress were asked to make a difficult decision. As it became increasingly clear that the financial crisis facing America was extending beyond Wall Street and threatening the jobs, homes, and retirement security of the men and women reporting for work on Main Streets throughout Minnesota and across America, we were asked to cast our vote for an imperfect, but important, solution. Unfortunately, this bill did not pass, and the crisis continues.
In recent weeks, I have heard from thousands of men and women in Minnesotaâ€™s 2nd district. To a person, they voiced concern about the liabilities they would face under the bailout plan proposed by President Bush and Treasury Secretary Henry Paulson. Many also expressed worries about how the current financial instability would threaten them personally â€“ their bank accounts, retirement savings, and jobs. Throughout negotiations, I represented the voices of these men and women and worked with my colleagues to address both concerns, insisting that any effective solution must protect taxpayers and ensure accountability while returning stability to our financial markets.
The result was imperfect, but it was a bipartisan solution that I believed was in the best interest of Americans. Supported by such diverse groups as AARP, Citizens Against Government Waste and the U.S. Chamber of Commerce, it provided increased protection for the American taxpayer by instituting greater oversight and transparency. My Republican colleagues and I stood firm against the original, seriously flawed plan, as well as irresponsible provisions supported by my Democratic colleagues â€“ including slush funds for left-leaning political organizations. We demanded that Wall Street finance its recovery through a federal insurance program. We also fought to ensure no golden parachutes would be available to corporate executives who made reckless decisions. But the bill failed, and we must, once again, return to negotiations.
As we can see from the precipitous decline in the markets, this crisis has not dissipated. I urge my colleagues not to allow discussions to devolve into partisan bickering. We must not act in a way that exacerbates the problem. As we now resume negotiations, I am hopeful that we can put aside our differences and work together to shield Americans from further harm caused by Wall Street and Washington.
Michele Bachmann writes:
Today marks an historic moment for America as a solid bipartisan majority of Congress rejected the fatally flawed Paulson Plan. Standing shoulder to shoulder with taxpayers, we declared that we can do better.
As Iâ€™ve stated previously, this plan was rushed, unworkable, and short-sighted. A majority of House Republicans have parted ways with President Bush on this plan and we demand that alternative proposals be put on the table. There is universal agreement that this plan was bad, but its supporters claimed it was the only option. There were alternatives available, but Speaker Pelosi and the Administration chose to ignore them and used every parliamentary trick in the book to stifle debate. Now, they will have to listen to the voices of American taxpayers who refuse to open their checkbooks to Wall Street to write a $700 billion check with no strings attached.
I support a plan that would have Wall Street bail itself out, not hardworking taxpayers, by requiring institutions to insure troublesome assets that are causing todayâ€™s credit crunch. It would suspend mark-to-market accounting, which forces companies to take losses on artificially devalued assets on an artificial timetable, to give investors more confidence.
The plan I support would break up Fannie Mae and Freddie Mac — government sponsored enterprises that are at the heart of this crisis — so that the encumbered taxpayer no longer backs them — implicitly or explicitly — and so that they do not artificially grow larger than the market will allow. We cannot pass legislation that sets America up for a Groundhog Day reprise of this mess and that means changing the problem at its core – the GSEs.
Furthermore, the plan I support suspends capital-punishing tax rates to bring more capital into the U.S. markets rather than our foreign competitors. And, the plan ensures the Federal Reserveâ€™s attention is focused on long-term price stability rather than short term economic growth. Finally, it requires the US Treasury to write rules keeping executives who made the risky decisions from personally profiting from them with excessive compensation or golden parachutes all at the expense of taxpayers. We can’t have a market that only condones risky behavior. The balance between risk and reward is an important part of the free market.
My colleagues and I stand ready and willing to negotiate with any parties on a plan that will help stabilize our financial markets and relieve the liquidity crisis without exposing taxpayers to a $700 billion bailout debacle.
To a considerable extent, the choice turns on risk assessment. If a little time goes by and the financial sky doesn’t fall–at the moment, the Dow is up 247 points today–and a significantly better, more market-oriented deal is negotiated, the “No” votes will look very good. On the other hand, if further negotiations are unproductive and in the meantime the damage spreads beyond the financial sector, “Yes” votes will look prudent with hindsight.
It may well be that John Kline and Michele Bachmann differ in their assessments of these risks. There is, too, another obvious difference: Kline is a three-term Congressman with no serious opposition this year. Bachmann is a first-term Congresswoman who is very much in the Democrats’ sights. For now, at least, her vote insulates her against the political trap that Nancy Pelosi and the Democrats tried to lay yesterday.
Quite a few conservatives are exultant this morning about yesterday’s vote. That reaction strikes me as premature. It’s hard to believe that the Democrats will agree to legislation that takes the markedly more free enterprise-oriented approach argued for by Republicans. If that is the case, we likely will see either the passage of a bill that differs only modestly from the one that failed yesterday, or a widening economic collapse that panics the House into reversing yesterday’s vote. So, while the “Nos” are triumphant today, it’s far from clear that this will continue in the long run.
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