Gingrich: Kill the Paulson bailout plan; Update: Reid to GOP: Vote with us or we won’t pass it; Update: 57% support bailout, says Pew

posted at 3:30 pm on September 23, 2008 by Allahpundit

Like Ross Douthat, I’m wholly unqualified to comment intelligently on this subject so I humbly offer a few links to those of you who are. Here’s the report of Newt’s presser this morning stressing that the sky is not, in fact, falling and that Paulson’s plan will be seen as such a loser in six weeks that McCain should come out hard against it now and pin it to Obama. There’s some logic in that — the public is notably cool to it — but needless to say, if the plan doesn’t pass and the market crashes, that’ll put Maverick (among others) in a bit of a spot. Any reason to believe that a crash is really possible? Yes indeed if you believe Paulson and Bernanke, who spent last week putting the fear of God into congressional Democrats and this morning doing the same to House Republicans. Newt offered his own plan over the weekend at the Corner, but I’d recommend reading these two posts by Megan McArdle before jumping boots first into the ideologically pure “let ‘em fail” position. In a strange way, this reminds me of the Iraq debate in reverse: We’re faced with what may or may not be a looming threat of mass destruction, except this time conservatives are willing to chance it rather than take costly, aggressive preemptive action. Maybe they’re right; as I say, my ignorance on this leaves me unable to judge. But here’s your exit quotation from McArdle, emphasizing that we’re looking at a nuclear scenario if they’re wrong: “There is no benefit from a ‘tough love’ strategy for anyone that even begins to approach the catastrophic consequences, for everyone, of a massive and rapid contraction.”

Update: Democrats worry that McCain will take Newt’s advice:

Senior Democrats on the Hill are worried that Sen. McCain will “demagogue” the bill, continue to voice opposition to it, use it to run against both Wall Street and Congress as well as to distance himself from the Bush White House. Democrats worry McCain will not only vote against the bill, he will provide cover for other Republicans to do so, leaving Democrats holding the bag for the Bush administration’s deeply unpopular proposal.

A Democratic congressional leadership source says that Treasury Secretary Henry Paulson went so far as to assure Democratic leaders that McCain “won’t be a problem” — in other words that McCain will vote for the proposal.

Update: Further to the last update, Reid’s not going to let the left take the rap the Bush administration’s foray into socialism:

“This is a Republican proposal, and we need some Republican votes,” to help it pass. “At this stage we [Democrats] are working with ourselves.”

Reid is essentially calling the Republican bluff on a political gambit. There’s a growing chorus of Republicans in both chambers _ especially House conservatives _ who would love to yell about the bailout and vote against it knowing it will pass. In this strategy, Republicans will be able to hit the campaign trail and boast about how they’ve voted against the Bush administration and Democratic Congress while protecting Main Street.

But Democrats aren’t going to let that strategy fly.

House Minority Whip James Clyburn says his leaders are not going to push through a bill that only passes with Democratic votes either…

“We now need Republicans to stand up,” Reid said. “We need the Republican nominee for president to say what he’s for.”

Update: The Democrats are refining their position further to protect Obama from being outflanked: McCain has to vote with them or else the bill’s dead.

Update: Good luck squaring this with the Rasmussen poll I linked above, but Pew has no less than 57 percent of the public onboard with the Paulson plan. And guess which party’s membership is most gung ho.

If McCain and House Republicans needed an extra little prod to sign on with Paulson and Reid, there it is. Although from what Richard Shelby and Jim Bunning — and Sherrod Brown — told Paulson and Bernanke today, I wouldn’t expect passage by an overwhelming majority.

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“Dodd is pressing for a loosening of the loan regulations restricting Fannie Mae and Freddie Mac, government-sponsored lenders that bundle mortgages into tradable securities. The administration is resisting the proposal.”

http://www.earthtimes.org/articles/show/96422.html

Aug. 21, 2007

drjohn on September 23, 2008 at 3:32 PM

Saw him on Greta last night. He said the Paulson plan was the one of the most “unrepublican” things this administration produced.

pt on September 23, 2008 at 3:35 PM

I beleive Newt is calling for oversight of the bailout, based purely on Paulson’s wrong calls in the past being no sure predictor of the future.
Which seems damn smart. Plus it puts Mav. in the interesting position of running against Obaaaaama and Bush at the same time.

hippie_chucker on September 23, 2008 at 3:35 PM

Palin/Gingrich ’12

bloghooligan on September 23, 2008 at 3:36 PM

I don’t understand much of this, but if a bailout is necessary, it must not be loaded up. It also must have oversight. One man should not have that much control over $700b of our money. The legislation should include language that specfically bars Dodd and Frank from being able to come within 1000 miles of the legislation and not be allowed any public comments regarding it.

bopbottle on September 23, 2008 at 3:39 PM

A market crash will occur if nothing is done. This will ensure a massive Democratic victory in November.

phronesis on September 23, 2008 at 3:39 PM

Here’s the solution:

1. LIFT THE BANS ON DRILLING IMMEDIATELY. This will have an immediate affect on speculators, gas prices will drop in days and consumer confidence will skyrocket. It will become apparent that the 700 billion we’ve been spending overseas will soon be staying at home and we will have all kinds of good jobs coming on line. But that is just step 1.

2. STOP ALL FREE MONEY TO FOREIGN COUNTRIES THAT HATE US. Who knows how many billions that will save?

That’s just a start…give me 5 more minutes and I’m sure I can come up with something even better and I’m not even an elected official.

JustTruth101 on September 23, 2008 at 3:39 PM

There’s no guarantee the Paulson Plan will avert a recession, or merely delay one.

lodge on September 23, 2008 at 3:39 PM

There is already a strong vocal populist opposition, Gingrich adds to it, and the democrats are instinctively inclined to not do anything Bush wants done. The democrats have been effective in deflecting any responsibility for their own actions, and the democrats have so effectively destroyed the Bush Administration’s credibility that the democrats could just adjourn congress without being blamed for the results.

Paulson and Bernanke, as members of the discredited Bush administration have not been effective at selling the policy.

If you look at this hearing as a trial balloon, and look at the reaction on Wall Street (little reaction, if any) it would appear that this deal won’t get done.

It certainly won’t be the deal that Paulson and Bernanke recommend.

rockhauler on September 23, 2008 at 3:41 PM

Nothing should be done until they remove the “cancers” of this problem.
Cox, Dodd, Franks, should all resign from their posts and their seats in congress…they are a disgrace.
How can anything be “fixed” if what caused the problems are still in their positions?
That would be my first request of McCain, that the people responsible for being the stewards of our money are held accountable and removed from the system…immediately.
*
BTW Christopher Cox was also editor of the Harvard Review, so that shows you how “intelligent” these guys are.

right2bright on September 23, 2008 at 3:41 PM

NRO has an interesting, if inconclusive, take on the bailout.

Slublog on September 23, 2008 at 3:42 PM

There’s no guarantee the Paulson Plan will avert a recession, or merely delay one.

lodge on September 23, 2008 at 3:39 PM

That’s true. But if credit dries up as a result of inaction, a recession will be inevitable.

phronesis on September 23, 2008 at 3:43 PM

I hope McCain takes Newt’s advice.

Spirit of 1776 on September 23, 2008 at 3:43 PM

My humble opinion … If this bailout were that, that that imminently critical as proposed by Paulson, Bush would be on TV at 9 p.m. Eastern tonight making the case for it.

How the administration expects the public just to take this on faith shows an appalling lack of respect for the public’s intellect and, well, rights.

BigD on September 23, 2008 at 3:43 PM

Even Markos at the Daily Kos opposes this crazy bailout AND he even praises Newt Gingrich, Newt is right.

It looks like we have an issue that an overwhelming majority of Americans can agree on.

olympian2008 on September 23, 2008 at 3:43 PM

If this boondoggle does somehow pass and become law, I see there is a general consensus for an oversight committee to administer this give away program. I nominate Newt to Chair it.

meci on September 23, 2008 at 3:43 PM

Even If Mccain votes against it…it will still likely get passed.

Good plan though..

We’ll get more votes because of Mccain’s opposition to it, marking a stark contrast with ubama’s compliance on an unpopular issue.

And we still get to have banks with clean balance sheets and the ability to lend.

SaintOlaf on September 23, 2008 at 3:45 PM

There’s no guarantee the Paulson Plan will avert a recession, or merely delay one.

lodge on September 23, 2008 at 3:39 PM

A recession is not a problem. What is about to happen will be much worse.

dedalus on September 23, 2008 at 3:45 PM

IMO, we need a clearer understanding of what the bailout would do and the second and third order consequences of any plan adopted. It seems as if the “plan” is nothing but a knee jerk reaction by a bunch of politicians that recognize that this is an election year.

highhopes on September 23, 2008 at 3:45 PM

Glenn Beck’s “REAL STORY” from last night.

Well, welcome to the “REAL STORY.”

I told you at the top of the program today that our country is in real trouble, it`s like a plane flying around with half of its engines on fire and you can`t put them out. No matter which way you slice it, we are in for a hard landing. Our pilot`s job now is just keep that plane from falling out of the sky and killing everybody on board.

To put it in another way, we are in the middle of an all-out financial emergency, and emergencies have a way of really testing people. In normal times, under normal circumstances, if you tune in to me, you know me as somebody who would tell the federal government exactly where to take their bailout plan and shove it right up their you know what.

But these are anything but normal times. I thought about it an awful lot this weekend, and while it takes everything in me to say this, I think the bailout is the right thing do.

The “REAL STORY” is the $700 billion that you`re hearing about now is not only, I believe, necessary, it is also not nearly enough, and all of the weasels in Washington know it.

You think about this crisis again like an airplane, ok. We could have stopped this whole thing when the plane was sitting at the gate and we were saying don`t load this thing up with easy money and make mansions for anybody who wants them. You can`t take off in this plane. It`s unsafe.

Nobody listened.

You could have turned it around when the plane was taxiing down the runway and we were still screaming, don`t take off. We could have even turned it around just after takeoff. Now the plane, however, is over open ocean, has engine trouble. Who would have seen this one coming?

Well, now we`re stuck in a position where we let that plane fall out of the sky or we do our best to try to have some sort of a controlled crash landing that saves lives and let us salvage what we can. I mean, there are 350 million people on this plane.

The truth is that while $700 billion is an awful lot of money, it is not nearly enough to purchase all the bad assets out there, because they`re already after it.
The Treasury Secretary Hank Paulson knows this. So does Fed Chairman Ben Bernanke. So does the president. So does Chris Dodd, Barney Frank, Obama, McCain — all of them. They all know.
When you start to realize that the term “bad assets” is soon going to apply from everything for credit card balances to your home equity loan to your car loan, you name it, it`s going to add up. The real bailout number is probably going to be about three times higher, probably going to be at least $2 trillion or more.

I have said this to you over and over again. You`ve got to prepare. I am not a financial adviser. I`m a dope. I`m a rodeo clown. I`m a recovering alcoholic who spends way too much, saves way too little. I`m just trying to get by, just like you are, on the little bit of knowledge that I have.

I am not trying to offer financial advice to anybody. I am trying to offer a dose of sanity and reality in a world that seems to have lost both.

We are not in the ninth inning of this game. You know it and I know it. You feel it here in your gut. We are in the second inning.

The price for our years of greed and burying our heads in the sand while these companies and our government just loaded this plane up cannot be paid for by writing another check or passing a few new federal regulations. It`s going to be much more painful than that. It has to be. That plane is going to come out of the sky one way or another.
The taxpayers may have to pay the bill for this, but believe you me, the people who have done this to us, they better damn well be held accountable, and they will pay, as well. Otherwise, these things will increase in value. I have been warning you and asking you, please, spread the word about all of this since last year.

But I`ve turned the page. While I am sorry that gloomy Glenn is back, I need to tell you what all of the people with agendas or, you know, brokerage house or constituencies, they can`t or won`t tell you — a hard landing is now the best scenario we can hope for. Just don`t kill everybody on the way down. The worst-case scenario is just that.

In the words of our immortal Treasury Secretary just last Wednesday night, quote, “Heaven help us all.”

Nouriel Roubini is a professor of economics at School of Business and New York University and chairman of rgemonitor.com. Peter Schiff is the president of Euro Pacific Capital and author of “Crash Proof: How to Profit off the Coming Economic Collapse.” And Brett Arends he is personal finance columnist for “The Wall Street Journal.”

To try to help make sense of all of this Peter, let me start with you.

The bailout — I see this as just stopping the plane from falling out of the sky. Is this naive of me?

Dr.Cwac.Cwac on September 23, 2008 at 3:46 PM

We’re faced with what may or may not be a looming threat of mass destruction, except this time conservatives are willing to chance it rather than take costly, aggressive preemptive action.

Newts plan is to cut capital gains taxes to open up the spigot on new capital entering the market while addressing the underlying problems, like repealing Sarbanes/Oxley. It’s not a matter of leaving it up to chance, it’s a market solution instead of a socialist band-aid.

FloatingRock on September 23, 2008 at 3:47 PM

I am with Newt. This bailout is not going to work.

I also think Bernanke needs to slam the brakes on interest rates (ala Paul Volcker, ca. 1980), and let the chips fall where they may.

The pain will be exquisite, but the economy will recover.

GulfCoastBamaFan on September 23, 2008 at 3:49 PM

The left has been trying to use this crisis in their favor, I say we should take it as an opportunity too.

A Plan to Replace the Welfare State
The government should give every American $10,000–and nothing more.

http://www.opinionjournal.com/editorial/feature.html?id=110008142

Throughout history until a few decades ago, the meaning of life for almost everyone was linked to the challenge of simple survival. Staying alive required being a contributing part of a community. Staying alive required forming a family and having children to care for you in your old age. The knowledge that sudden death could happen at any moment required attention to spiritual issues. Doing all those things provided deep satisfactions that went beyond survival.

Life in an age of plenty and security requires none of those things. For the great majority of people living in advanced societies, it is easily possible to go through life accompanied by social companions and serial sex partners, having a good time, and dying in old age with no reason to think that one has done anything significant.

If you believe that’s all there is–that the purpose of life is to while away the time as pleasantly as possible–then it is reasonable to think that the purpose of government should be to enable people to do so with as little effort as possible. But if you agree with me that to live a human life can have transcendental meaning, then we need to think about how human existence acquires weight and consequence.

For many readers of The Wall Street Journal, the focus of that search for meaning is bound up with vocation–for some, the quest to be rich and famous; for others, the quest to excel in a vocation one loves. But it is an option open to only to a lucky minority. For most people–including many older people who in their youths focused on vocation–life acquires meaning through the stuff of life: the elemental events associated with birth, death, growing up, raising children, paying the rent, dealing with adversity, comforting the bereaved, celebrating success, applauding the good and condemning the bad; coping with life as it exists around us in all its richness. The chief defect of the welfare state from this perspective is not that it is ineffectual in making good on its promises (though it is), nor even that it often exacerbates the very problems it is supposed to solve (though it does). The welfare state is pernicious ultimately because it drains too much of the life from life.

“Too much capitalism does not mean too many capitalists, but too few capitalists.”

http://en.wikipedia.org/wiki/Distributism#Subsidiarity

“Distributism puts great emphasis on the principle of subsidiarity. This principle holds that no larger unit (whether social, economic, or political) should perform a function which can be performed by a smaller unit.”

Conservatives have got to focus more on individual empowerment and getting people to solve problems without government… as Palin said: “Do a few big thing right”… we’ve got to fight against Byzantinism… this may require taxing, rebating, and killing off every government problem which can be done better by citizens organizing on their own

ninjapirate on September 23, 2008 at 3:49 PM

A recession is not a problem. What is about to happen will be much worse.

dedalus on September 23, 2008 at 3:45 PM

It can’t be allowed to happen in this form. Too little oversight and no guarantees. Looking down the road 5 years, we’ll be better off if we let the market work it out. Already, they are adding credit cards and student loans. What’s next?

genso on September 23, 2008 at 3:50 PM

3) He recently chatted with economic historian Alan Meltzer who advocated doing nothing rather than implanting the Paulson Plan.

My, my, isn’t that just a cunning plan. Do nothing. Watch as our economy collapses. Bravo. Bravo!!!

wise_man on September 23, 2008 at 3:50 PM

Vote it down, folks. Make Pelosi live up to her threats.

MadisonConservative on September 23, 2008 at 3:51 PM

FloatingRock on September 23, 2008 at 3:47 PM

‘Zactly. Cut capital gains and those “evil rich people” will flood the market with capital thereby enabling the expansion of jobs and increasing tax revenues via new workers income taxes.

Dr.Cwac.Cwac on September 23, 2008 at 3:51 PM

if the plan doesn’t pass and the market crashes,

Okay, that’s not the real risk. The real risk is what we saw happen the other day when the financial system ground to a halt. What’s the mean? It means banks weren’t even willing to lend other banks money for 1 day. They all hoarded their cash becuase confidence in the system as a whole collapsed. That means nobody can borrow money no matter who they are – basically. That means the entire economy grinds to an almost instant halt. The value of commercial paper (short term commercial debt) collapsed (becuase nobody trusted it) and that meant ultra-safe money markets weren’t even safe. That caused a run on money markets which had the same affect any run on any banks has – it causes a collapse (remember “It’s a Wondeful Life?”)

Now, let’s think about how this causes a death spiral. Companies don’t have money to run their businesses which lead to mass lay-offs. Mass lay-off leads to more debt defaults (mortgage, business and all debt) which leads to even more bad debt in the system which leads to more bank failures which leads to even less lending which leads to more businesses closing…. all which leads to a depression….

TheBigOldDog on September 23, 2008 at 3:52 PM

McCain should show up and be the 100th to cast his vote

jp on September 23, 2008 at 3:52 PM

Conservatives have got to focus more on individual empowerment and getting people to solve problems without government… as Palin said: “Do a few big thing right”… we’ve got to fight against Byzantinism… this may require taxing, rebating, and killing off every government problem which can be done better by citizens organizing on their own

ninjapirate on September 23, 2008 at 3:49 PM

I agree. But, when has a government program ever been killed off? The best way to stop government spending is to not let it happen

genso on September 23, 2008 at 3:53 PM

Newts plan is to cut capital gains taxes to open up the spigot on new capital entering the market while addressing the underlying problems, like repealing Sarbanes/Oxley. It’s not a matter of leaving it up to chance, it’s a market solution instead of a socialist band-aid.

FloatingRock on September 23, 2008 at 3:47 PM

Newt is talking about how to renovate a house that is on fire. His solutions are sound but will work over the course of years. Paulson and Bernanke are trying to address something that can begin to happen acutely next week.

dedalus on September 23, 2008 at 3:53 PM

My, my, isn’t that just a cunning plan. Do nothing. Watch as our economy collapses. Bravo. Bravo!!!

wise_man on September 23, 2008 at 3:50 PM

Our economy will not collapse. The housing market will collapse. The loan market will suffer. That’s right, suffer. Remember what percentage of Americans had subprime loans. This won’t gut the industry. The stock market will take a nice hit and investment firms will learn the lesson they should have learned with the S&Ls.

All of that is entirely worth avoiding a centrally controlled economy and the locking in of socialism as the dominant ideology in the government.

MadisonConservative on September 23, 2008 at 3:53 PM

For a man (Paulson) that has been telling us that everything is OK for months and years, I find it hard to believe that everything is so dire now.

Was he so shortsidely blind and incompetent as to not see this as a looming threat? Why then we would we trust a single man with so much of our money?

Dr.Cwac.Cwac on September 23, 2008 at 3:54 PM

MadisonConservative on September 23, 2008 at 3:53 PM

It’s interconnected. It brings with it more pain and suffering.

wise_man on September 23, 2008 at 3:55 PM

McCain must vote against this AWFUL bill. This country must avoid this sharp turn into socialism. What is the REPUBLICAN president thinking?! This is a great opportunity for McCain to vote against Bush and make the libs and Obama side with the president. This is GOLD for McCain.

jencab on September 23, 2008 at 3:55 PM

‘Zactly. Cut capital gains and those “evil rich people” will flood the market with capital thereby enabling the expansion of jobs and increasing tax revenues via new workers income taxes.

Dr.Cwac.Cwac on September 23, 2008 at 3:51 PM

…Thus making it easier for sub-prime mortgagees to pay their bills each month.

FloatingRock on September 23, 2008 at 3:55 PM

Whoa!

House Minority Whip James Clyburn says his leaders are not going to push through a bill that only passes with Democratic votes either…

Which means the Democrats HAVE the votes and CAN pass legislation, alone, to solve this crisis… Legislation they’re calling the Obama plan in ads.. but won’t risk it on political grounds because the house Republicans are opposing it on ideological ones…

Skywise on September 23, 2008 at 3:56 PM

MadisonConservative on September 23, 2008 at 3:53 PM

The loan market will suffer. But not for those who have good credit and equity. Good sound business practices. What a novel idea.

genso on September 23, 2008 at 3:56 PM

Folks, McCain may have cost us the election this last week. He seems to be addicted to criticizing conservatives.

Let’s summarize the events of the campaign so far:

1. McCain criticizes conservatives – Down in the polls to Obama all the way to August.

2. McCain goes to Saddleback and sounds very conservative – Big bump in the polls.

3. McCain picks conservative running mate – Big bump in the polls.

4. Palin gives conservative speech – Big bump in the polls.

5. Now, McCain blames the economy on Republicans, says conservative SEC Chair should be fired, says he would appoint dem to SEC – Big drop in the polls.

Everytime McCain sounds like a conservative he gets a bump. Everytime he sounds like a democrat he falls.

He has one lifeline left. He needs to come out against this bailout and lead the conservative cause against big government. If he does that he will win. If not, he will lose.

poljunkie on September 23, 2008 at 3:56 PM

Allahpundit,

I have to ask a question. How can McCain vote for the bill? As of late last night when I went to sleep neither campaign had indicated that they have any indication of the Senators being in Washington DC.

Hmmmm???

Dr. Dog on September 23, 2008 at 3:57 PM

Pardon me for not willingly supporting a handover over $700 billion to Paulson — a Democratic donor who has connections to the Communist Chinese and didn’t see the crisis coming.

amerpundit on September 23, 2008 at 3:57 PM

Looks like McCain holds the key to the whole thing: the economy, the Congress, the presidency. It’s go time!

Jim-Rose on September 23, 2008 at 3:57 PM

I think Newt’s right. The bailout is window dressing that will cause the market to have a big, false rebound before coming in for an even harder landing.

Bad debt is bad debt, no matter who you write it off to. Sooner or later, it needs to be accounted for. The simpler solution would be to do a one-time tax write off for the whole problem with corresponding spending cuts. The business world gets a parachute, the Fed tighten it’s belt for the reduced tax income. The courts can sort out the grey areas on a case by case basis between the people that got screwed by the banks and the ones that are simply deadbeats to even things out.

I never saw the point in giving businesses the money to deal with bad debit. The Fed ends up with the bill anyhow.

Damiano on September 23, 2008 at 3:58 PM

So, the Dems want McCain to vote with Bush again so that they can use it against him later??

tdavisjr on September 23, 2008 at 3:58 PM

It can’t be allowed to happen in this form. Too little oversight and no guarantees. Looking down the road 5 years, we’ll be better off if we let the market work it out. Already, they are adding credit cards and student loans. What’s next?

genso on September 23, 2008 at 3:50 PM

Paulson told Dodd that he expects the Senate to write the oversight section of the law since that is the role of Congress not the Treasury.

I agree that current plan needs a great deal more detail and oversight, but they do need to get something in place within a week or the markets will start to malfunction.

dedalus on September 23, 2008 at 3:58 PM

MadisonConservative on September 23, 2008 at 3:53 PM

Tru dat, playa.

Isn’t something like 95% of all mortgages are being paid on time? So we’re going to have a government run economy for 5% of mortgages that lenders were too stupid to make?

But also, this trouble lies with CEOs that cooked their books to make it appear that everything is fine. This is worse than Enron. Those CEOs eventually were prosecuted. Raines, Johnson, Gorelick, et. al. need to be investigated for their roles in the crisis.

Dr.Cwac.Cwac on September 23, 2008 at 3:58 PM

McCain blames the economy on Republicans,..
poljunkie on September 23, 2008 at 3:56 PM

I stopped reading right there.

wise_man on September 23, 2008 at 3:58 PM

McCain has to vote with them or else the bill’s dead.

There you go – this is the moment – this is THE moment that McCain can win the election, handed to him by Harry Reid. McCain – call Mitt and Newt and whoever else your best advisors are, and you and Plain ride into DC like the white knights on your white horses and fix that legislation so that it either fixes this or gets as close as possible and holds those accountable if they fail to follow the plan.

This could be THE show of leadership the electorate needs to decide. Obama is hiding like a mouse in the corner. Reid is calling for McCain.

McCain – Palin – Romney – Newt: go to work. Now. And make sure the cameras are rolling.

JustTruth101 on September 23, 2008 at 3:58 PM

It’s interconnected. It brings with it more pain and suffering.

wise_man on September 23, 2008 at 3:55 PM

Pain and suffering is, as cold as this sounds, a natural component of an advanced economic system. However, we are at a junction where we can choose one of two things:

1. Postpone temporarily an economic decline at the cost of accepting socialism as the new dogma of future economic decisions in government, and furthering this nation towards tyranny.

2. Postpone temporarily the looming spectre of socialism (and by extension tyranny) at the cost of tightening our belts and not being as wasteful and reckless as we have been for about twenty years now.

It’s called personal responsibility for the sake of preserving the country.

MadisonConservative on September 23, 2008 at 3:58 PM

What a bunch of spineless worms without even the smallest hint of honor. Our congress at work!

HoosierCon on September 23, 2008 at 3:58 PM

Update: The Democrats are refining their position further to protect Obama from being outflanked: McCain has to vote with them or else the bill’s dead.

Ah, playing games with the lives of millions of Americans.

God Bless America.

BadgerHawk on September 23, 2008 at 3:59 PM

There’s not a Democrat in Congress who belongs here and they caused the problem, so I put the blame squarely on the idiots who vote and who voted for Democrats in the past, Democrat donors, Democrat campaign workers and the media that both lies to support Democrats and who refuses to report on the incompetence/corruption of the Democrat Party.

NoDonkey on September 23, 2008 at 3:59 PM

poljunkie on September 23, 2008 at 3:56 PM

Problem with your premise is that this bailout is NOT a conservative thing to do. Yes, the Repubs in the Bush admin are pushing it, but that does not make it conservative by any stretch of the imagination.

Interesting, and a very possible line of attack, is if they can get quotes about the Dems playing politics with this. I won’t vote for it if McCain does not is not a Principaled Statemanlike position to take.

Romeo13 on September 23, 2008 at 4:00 PM

So we’re going to have a government run economy for 5% of mortgages that lenders were too stupid to make?
Dr.Cwac.Cwac on September 23, 2008 at 3:58 PM

And that’s hardly a “sharp turn into socialism.” as some would call it. Five percent. Five.

wise_man on September 23, 2008 at 4:00 PM

Update: The Democrats are refining their position further to protect Obama from being outflanked: McCain has to vote with them or else the bill’s dead.

OK, Reform Team……you know what the vote should be.

Dr.Cwac.Cwac on September 23, 2008 at 4:00 PM

Why doesn’t McCain say he is going to let the Democrats piggy bank die? And then say he is all for “all of the above” — Right now.

Zero out capital gains taxes and stand back. Drill baby drill … Build nukes now. With no capital gains taxes and cheap energy, capitalism will do the rest.

Sarbanes-Oxley is just a huge drag on IPOs, notice how there have hardly been any new IPOs since it was enacted.

tarpon on September 23, 2008 at 4:00 PM

MadisonConservative on September 23, 2008 at 3:58 PM

It’s not socialism.

wise_man on September 23, 2008 at 4:00 PM

And that’s hardly a “sharp turn into socialism.” as some would call it. Five percent. Five.

wise_man on September 23, 2008 at 4:00 PM

What else do you call a government buyout of the auto industry and major investment firms?

MadisonConservative on September 23, 2008 at 4:01 PM

A few things about forcing McCain to cast the deciding vote:

A) It sets him up as another “He voted with Bush and to bail out Wall Street instead of Main Street”.

B) If the plan fails after the legislation passes, he was the one who “cast the deciding vote for flawed legislation”.

C) If he does vote against it, he be blamed for anything and everything bad that happens after that.

amerpundit on September 23, 2008 at 4:01 PM

Meh………. politics.

Why pay attention? Why try to hold people accountable? Why vote for that matter? It doesn’t effect my life………… Hey, wait a minute……!

/sarc off.

Seven Percent Solution on September 23, 2008 at 4:01 PM

Oh Man. This is just craziness and I have a very uneasy feeling (was that the Eagles?). High stakes poker with everyones deed to the farm ante’d up! Yikes.

Pray for our country and for wisdom for our leaders.

Ordinary1 on September 23, 2008 at 4:02 PM

Calling Mitt Romney. Mr. Romney, your expertise is needed for hard-hitting policy from Team McCain.

Alternate solution via Romney/Newt will bring home the election for the Maverick Team.

Dr.Cwac.Cwac on September 23, 2008 at 4:02 PM

It’s not socialism.

wise_man on September 23, 2008 at 4:00 PM

I really want to hear how this figures. Government control of industries is socialism. Explain how this is not government control over, say, these investment firms, since the odds are they’re going to fail again and not be able to pay back these “loans” to the government.

MadisonConservative on September 23, 2008 at 4:02 PM

The loan market will suffer. But not for those who have good credit and equity. Good sound business practices. What a novel idea.

genso on September 23, 2008 at 3:56 PM

That’s just not true. As someone pointed out yesterday on hot air, even commericial paper was breaking down last week. Commericial paper is considered among the safest investments that exist. It is found in money market funds and consider as Cash and equivalents on corporate balance sheets. If that is breaking down, it means credit is basically stopping. If credit stops, an economy that normally tends towards equilibrium instead enters a downward spiral.

phronesis on September 23, 2008 at 4:02 PM

Here’s an alaogy I have been thinking about today. Tear it apart.

Think of the financial system as the circulatory system of the body. The circulatory system is badly clogged with plaque (bad debt). All the arteries are clogged to some degree. The worst ones were totally clogged 9Bear, AIG, etc) and bypasses were performed but it’s not enough. If the plaque isn’t almost completely cleaned out of the system the heart won’t be able to pump blood to the other organs (other business)and they will quickly die even though they have nothing to do with all the plague in the system (except the brain and the stomach which both played a role). This plan was designed to suck the plague out of the system where it could be dealt with over time. The alternative is to keep doing emergency bypass surgery or sit back and watch if our diagnosis os right and the patient dies…

TheBigOldDog on September 23, 2008 at 4:02 PM

And does the government run General Motors now, after they bailed out the auto industry, MadisonConservative? Does the government issue demands and five year plans on this auto industry, MadisonConservative?

wise_man on September 23, 2008 at 4:02 PM

I must ask ALLAH to please post the video of last night’s Greta’s interview with Newt. It is very telling of the disaster this bill will be to our nation.

jencab on September 23, 2008 at 4:02 PM

dedalus on September 23, 2008 at 3:58 PM

The problem is that Congress can’t be trusted to design an oversight for this program that can’t be gamed…by Congress. This is a lose/lose deal.

genso on September 23, 2008 at 4:02 PM

The problem right now is liquidity. It must be addressed. Drilling for oil is not going to solve the financial liquidity problem this week.

Paulson plan = mild recession or maybe no recession

Gingrich plan = great depression

Dodd plan = worse than Gingrich plan

indythinker on September 23, 2008 at 4:02 PM

Like AP and Ross Douthat, I have no business saying whether this plan is necessary or a good idea or what. If they do pass it, maybe they can at least put a clause in to say that the powers have to be renewed after the election.

One thing the democrats, or at least Reid, are doing is giving McCain a huge opportunity here. Reid has basically just said, “McCain, I am putting the fate of the country in your hands.” It will be interesting to see how the Mav plays this.

RINO in Name Only on September 23, 2008 at 4:03 PM

MOAB for the masses.

I haven’t heard anyone say that Wall Street will no longer be able to do this again. Has anyone?

Also, I don’t like being left out of this “free for all.” Since I have to pay for it, can I let the house I’m living in now foreclose and then buy a larger home from the government at a much reduced price?

moonsbreath on September 23, 2008 at 4:03 PM

Out of curiousity, why is the governemnt planning to pay the full hold to maturity price on the bad debts, when the bad debts aren’t likely to ever reach maturity? Why pay the full value when these don’t even look like they are close to full value?

Canadian Imperialist Running Dog on September 23, 2008 at 4:03 PM

I really want to hear how this figures. Government control of industries is socialism.
MadisonConservative on September 23, 2008 at 4:02 PM

The government isn’t taking over the entire industries of the United States, MadisonConservative.

wise_man on September 23, 2008 at 4:03 PM

We need a different plan:

1. Suspend FASB 157 on the mark-to-market of all level 2 and 3 loan portfolios, which currently force investment banks and insurers write down all loans when a couple of percent of the loans default.

2. Cut or suspend capital gains taxes to get more cash off the sidelines and into the market.

3. Since Fannie and Freddie hold about 90% of the subprime mortgage paper, appoint a board (including Romney, Gingrich, Buffet, etc) to reconnect the CDS, CDO and other paper to the real property, then resell as level 1 loans, hopefully at breakeven or minimum loss.

4. Once number 3 is complete, close the doors at Fannie and Freddie. They caused the problem. Government has no business being in the mortgage market.

5. Rewrite of Sarbanes-Oxley to a more realistic level.

6. Open drilling to any state which wants to engage.

I am sure there are a few things left off the list, but this would be a good start.

Vashta.Nerada on September 23, 2008 at 4:03 PM

wise_man on September 23, 2008 at 4:00 PM

It’s creeping incrementalism. The government is growing larger and getting more involved in the citizens’ lives.

Whatever happened to limited government?

Dr.Cwac.Cwac on September 23, 2008 at 4:03 PM

What exactly is Newt’s strategy? I saw the NRO post but what I saw was why this bailout’s a bad idea.

What is he proposing specifically and is it something that McCain can adopt?

powerpro on September 23, 2008 at 4:03 PM

Re: Updates:

This could get really interesting. Reid and the Dems in a tizzy trying to force Republican votes. If the American public was blind to the corruption and partisanship in Washington before, they had better wake up and witness this.

Dare I hope that McCain puts his money where his mouth is and lays the bitch slap on Congress and the White House in one fell swoop by doing the right thing?

This will either kill McCain’s campaign or make him into the greatest leader in generations.

…Wow. Just wow. Talk about high stakes poker.

Damiano on September 23, 2008 at 4:03 PM

wise_man on September 23, 2008 at 4:02 PM

Speaking of which, there’s talk of us bailing out the auto industry next.

amerpundit on September 23, 2008 at 4:03 PM

poljunkie on September 23, 2008 at 3:56 PM
Problem with your premise is that this bailout is NOT a conservative thing to do. Yes, the Repubs in the Bush admin are pushing it, but that does not make it conservative by any stretch of the imagination.

Interesting, and a very possible line of attack, is if they can get quotes about the Dems playing politics with this. I won’t vote for it if McCain does not is not a Principaled Statemanlike position to take.

I am not sure what you are talking about. That was exactly my point. The bailout is not conservative. That is the problem. McCain needs to get back to acting like a conservative and come out against this bailout!

poljunkie on September 23, 2008 at 4:03 PM

Isn’t something like 95% of all mortgages are being paid on time? So we’re going to have a government run economy for 5% of mortgages that lenders were too stupid to make?

Dr.Cwac.Cwac on September 23, 2008 at 3:58 PM

The mortgages are, but the 95% have been bundled into securities that have been marked down to reflect the fact that there are no buyers for the securities.

dedalus on September 23, 2008 at 4:04 PM

Reid to GOP: Vote with us or we won’t pass it

I hate Harry Reid.

CP on September 23, 2008 at 4:04 PM

I hope this bail out FAILS!

The American people will then be over taxed, over burdened.. losing house and then … they will see that Newt, and others were right.

Just watch…. I bet this crap is going to FLY!

upinak on September 23, 2008 at 4:04 PM

Doesn’t Pickens say 700 billion dollars is what we send foreign countries (that hate us, but not our money) for oil? Drill here, Drill now- bail the companies out and it’s a wash. And get Dodd et. al. out of congress.

kareyk on September 23, 2008 at 4:04 PM

Commericial paper is considered among the safest investments that exist. It is found in money market funds and consider as Cash and equivalents on corporate balance sheets. If that is breaking down, it means credit is basically stopping. If credit stops, an economy that normally tends towards equilibrium instead enters a downward spiral.

phronesis on September 23, 2008 at 4:02 PM

Don’t you think people running to pull out of their money market accounts late last week might have had a bit of an effect on that?

MadisonConservative on September 23, 2008 at 4:04 PM

Isn’t something like 95% of all mortgages are being paid on time? So we’re going to have a government run economy for 5% of mortgages that lenders were too stupid to make?

But also, this trouble lies with CEOs that cooked their books to make it appear that everything is fine. This is worse than Enron. Those CEOs eventually were prosecuted. Raines, Johnson, Gorelick, et. al. need to be investigated for their roles in the crisis.

Dr.Cwac.Cwac on September 23, 2008 at 3:58 PM

well, its more complicated than the 5% of bad mortgages. It turns into a Multi-Trillion dollar problem because of these derivatives and “Credit Default Swaps” from what they say. a handful of speculators apparently knew how to game the system perfectly and nobody saw it coming. Investment Banks, Paulson, Fed, everybody.

jp on September 23, 2008 at 4:04 PM

phronesis on September 23, 2008 at 4:02 PM

No one suggests that there won’t be a lot of pain. The question is whether the pain taken to go back to a sound economy is worth it?

genso on September 23, 2008 at 4:04 PM

The problem right now is liquidity. It must be addressed. Drilling for oil is not going to solve the financial liquidity problem this week.
Paulson plan = mild recession or maybe no recession
Gingrich plan = great depression
Dodd plan = worse than Gingrich plan
indythinker on September 23, 2008 at 4:02 PM

I would like for someone to explain that this observation is incorrect. Convince me that what Gingrich wants to do isn’t going to harm this country disastrously.

I am listening.

wise_man on September 23, 2008 at 4:05 PM

Kill Bill

700 billion? Is Bush mainlining crack in his final months? F that bar tab into a cocked hat.

McCain needs to slam this proposal now…..hard into the dirt…..stomp all over it and demonstrate his maverosity.

He can win two big zingers here….differentiation from the ‘Bush Club’, and hammer Obama et al for being the gulping socialist muppets they are.

LimeyGeek on September 23, 2008 at 4:05 PM

In a strange way, this reminds me of the Iraq debate in reverse:

I don’t think it’s strange at all. I made the same point last week. This all comes down to the cost of doing nothing in the face of massive perceived risk….

TheBigOldDog on September 23, 2008 at 4:05 PM

McCain is a RINO-he is not really conservative- he just has tendencies.

kareyk on September 23, 2008 at 4:05 PM

Does the government issue demands and five year plans on this auto industry, MadisonConservative?

wise_man on September 23, 2008 at 4:02 PM

Not to take the other side in this argument, but indeed the government does issue demands to the auto industry, like CAFE standards, in return for preferential tax treatment, etc.

Vashta.Nerada on September 23, 2008 at 4:06 PM

The government isn’t taking over the entire industries of the United States, MadisonConservative.

wise_man on September 23, 2008 at 4:03 PM

I never said they were taking over the entire industries, so don’t put words in my mouth. Government control over any industry that was formerly a private enterprise is socialism. Maybe this could be argued with smaller markets, but the investment and automotive industries are integral to our economy.

MadisonConservative on September 23, 2008 at 4:06 PM

Speaking of which, there’s talk of us bailing out the auto industry next.
amerpundit on September 23, 2008 at 4:03 PM

Talk by democrats? Could you link that for me please? I’d like to read that.

wise_man on September 23, 2008 at 4:06 PM

The problem is that Congress can’t be trusted to design an oversight for this program that can’t be gamed…by Congress. This is a lose/lose deal.

genso on September 23, 2008 at 4:02 PM

It’s their Constitutional role. We have the right to vote the members out if we don’t trust them.

dedalus on September 23, 2008 at 4:06 PM

Dirty Harry getting paranoid much?

Enoxo on September 23, 2008 at 4:07 PM

I never said they were taking over the entire industries, so don’t put words in my mouth.
MadisonConservative on September 23, 2008 at 4:06 PM

Good lord, you are drifting back into your old habits again.

wise_man on September 23, 2008 at 4:07 PM

Wait until Christmas season. Doesn’t matter if the market is up or down or gone by then because Americans will be telling retailers to stuff it.

All I know is my electric bill is a significant percentage of househould income and car insurance is flat out highway robbery. Americans are fed up regardless of what the Kristols and business class set think. Not everyone has the ability to be raised to CEO level. Who the frak is going to make the widgets? I’m all for letting this economy settle out the Darwinian way and the hell with the white shirts and the collective bots both. If that means I have to eat Fido then Fido better run quick.

Limerick on September 23, 2008 at 4:07 PM

Does the government issue demands and five year plans on this auto industry, MadisonConservative?

wise_man on September 23, 2008 at 4:02 PM

Um, yes. Not familiar with government standards, I see.

MadisonConservative on September 23, 2008 at 4:08 PM

Whatever happened to limited government?

Dr.Cwac.Cwac on September 23, 2008 at 4:03 PM

Is that the punchline to some joke I’m not privy to?

LimeyGeek on September 23, 2008 at 4:08 PM

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