The failure to pass the Emergency Economic Stabilization Act of 2008 is a plague on both Houses of Congress and the White House. We are in the midst of the greatest financial crisis since the Great Depression. The market demands and needs government intervention, but instead of bipartisan cooperation and action, timidity and self-preservation pervaded Capitol Hill and the $700 billion dollar bailout was defeated 228-205.
The market responded accordingly. The Dow plummeted 778 points by the end of business, suffering its worst single day loss in history. $1.2 trillion dollars of market value was lost. The market rebounded slightly yesterday. The Dow rose 485 points, but did not recoup the totality of Monday’s loss.
Negotiations on the Hill were delayed by the Jewish holiday of Rosh Hashanah, but a revised bailout proposal was ready to be voted on Wednesday evening by the Senate, followed by the House on Friday. The Senate added provisions that included raising the FDIC insurance cap to $250,000, placed a moratorium on the Alternative Minimum Tax, and extend other tax incentives for individuals and businesses meant to placate House Republicans, primarily responsible for killing the House’s bailout bill.
Congressional support for the credit rescue is unstable. One third of the Senate and the entire House is running for re-election. The financial market bailout will be the deciding vote for these incumbents. Public opposition has fueled the anxiety within two reluctant parties, both unwilling to be saddled with the blame for the market collapse.
According to a Rasmussen poll released this week, 50% of the American public opposes the bailout plan, 60% of voters feel that the federal government will do too much to bailout Wall Street. Politicians are politicians, and they will hide under the banner of public opinion even if their mandate is illogical. Congress should serve the public good, and ignore the reactionary public opinion polls. The complexity of the global financial market and the ramifications of a credit collapse in the U.S. make it impossible for 50% of the public to reach an informed decision. This is the precise moment when our elected representatives need to act in our best interest by willfully ignoring their own.
Our government has failed us. They created this financial crisis through massive deregulation, and have failed to avert a complete economic collapse by intervening. Congress, President Bush, Secretary Paulson, and Senator McCain and Senator Obama have been unable to convince the American people that the bailout is necessary. This is their greatest failure.
All of them have failed to articulate the connection between Main Street and Wall Street. The rescue of the financial markets is a rescue of the middle-class. We live in an interdependent age. The credit crisis on Wall Street cannot be isolated from middle-America. If the government does not intervene, banks will fail, credit will collapse, car loans and student loans will be unobtainable, businesses will fold, mortgages and pensions will be imperiled, and unemployment will rise.
We need to tell the truth about this bailout. It is an unavoidable and necessary evil. Yes, the bailout will benefit some barons of Wall Street, but the financial system is at stake, and must be salvaged even at the expense of golden parachutes. Yes, the taxpayers’ investment needs to be protected by government oversight, but ill-advised public outrage should not jeopardize a saving intervention.
This is a time for American leadership. Congress has failed the midterm but perhaps their frantic cramming in recent days will salvage a C on the final exam of the legislative session.
|
