Monday, September 29, 2008

An Open Letter to House Republicans

Dear Republican Members of the House of Representatives,

Today, is the first day in my political life where I can honestly say that I am embarrassed to be a Republican. Your actions today have the potential to: deal our economy a blow that will take decades from which to recover, hand the election to Barack Obama, destroy any hope of eventually privatizing any portion of social security, lock legalized abortion in as the law of the land, and relegate the Republican Party to a minority status for the rest of my expected lifespan. Nice going.

Now I know a third of you did the right thing and voted for the is bill. I am not now writing to you, but I would urge you to exert as much pressure on your colleagues as possible to work toward a bill that gets sufficient votes to pass.

No one likes what this bill represents. It is in fact, antithetical to much of what the Republican Party stands for, and if it were put forward under anything but emergency circumstances, your cries of creeping socialism and "the courage to fail" might be worth listening to. But now, they may simply be the words on the tombstone of a once-great party. We are in a genuine emergency, an emergency caused at its heart by human nature. Human nature drove people to seek more house than they could afford. Human nature drove the Democratic Party to resist regulating Fannie and Freddie. Human nature caused financial interests to mitigate risk by collateralizing these debts. Human nature drove investment banks to move heavily into these debts because of the once evident upside. Human every step of the way...compounded this problem.

In Federalist 51, James Madison told us that if men were angels, government would not be necessary. But we all know, that there have been no angels in this financial crisis. It falls upon government to be that institution charged with mediating among men (and women), that institution charged with ensuring that the runaway impact of human nature does not destroy the country.

This bill is not perfect, but it is necessary. So now it is time to do the right thing. Yes, if you vote against this bill, you will go home to your safe districts, where the folks there don't really understand how globally connected the world finance system is, and you can tell them you stood up to Wall Street. Tell them this as inflation rises, as unemployment rises, as the economy contracts, and their buying power decreases. Tell them this as their 401K's continue to lose value. Remind them that you stood up to Wall Street! As more and more banks fail and our GDP begins to look more like China's, tell them you stood up to the special interests! When Barack Obama appoints Hillary Clinton the the Supreme Court, and Roe v. Wade moves into the category of untouchable decisions, tell your district you acted against creeping socialism! Twenty years from now, when you've spent twenty years in the legislative desert, keep telling your constituents that you stood athwart history and yelled "Stop"...but history kept coming. And when your constituents come to you two decades from now, wondering if social security will be there for them when they need it, you can change the subject, because you stood up to the big, greedy investment banks.

When the ship is sinking, a good Captain does not worry about whether the ship's bell is shiny, as important as that might be. He takes action to save the ship. Take action, House Republicans, while you still have voices that will matter.


Anonymous said...

Hold on a minute. 95 Democrats voted against this bill. The bill fell short of passage by only 13 votes. Why are you dogging the GOP? Don't you think much of their reasoning was sound? I've already sent a thank you note to my Congressman for voting nay.

The Conservative Wahoo said...

Because I expect more from Republicans.

Anonymous said...

This is a perfect example of behaving like Republicans. The Republicans from 2000-2006 behaved like Democrats, which is part of the problem.
If you can explain to me how the passage of this bill means we won't have the same problem 3 years down the road, you'll change my mind. Otherwise, this action makes me tremendously proud to be a Republican.

The Conservative Wahoo said...

Sally, all you need to do is look at the Japanese banking crisis of the 90's to see what inaction will bring. We are in trouble. You may be proud to be a Republican today, but your elected officials will increasingly be more lonely.

Anonymous said...

CW, you be as angry if the Rep members of Congress voted down the same Bill, if it had been proposed by a Rep. President? I am very happy that the minority members lived up to their principles. I don't know what the right COA is; however, I don't think rushing to failure is a wise move. I agree with one of the previous authors who said that we need to hold off on the 700b lifeline - the situation could be worse in 3 years. Admittedly, I could be way off on the correct way ahead.... Joe

The Conservative Wahoo said...

But it WAS proposed by a Rep president.

Mudge said...

Let's say that CW's indignation with the GoP "nay" sayers is spot on and that the economy tanks. And let's take it to the unthinkable--a no-holds-barred depression. No arguing over definitions, no quick fix bail outs, no nothing but the realization that the US economy is for all intents and purposes, dead. From what I heard from my grandmother when I was a small boy, the depression was "pretty darned tough", and this was to a woman (who grew up on a farm in Appalchia in the early 1900s) whose definition of tough was such that "pretty darned tough" was nothing I ever wanted to experience. She also said that people of all walks of life (which in Appalachia back then, probably meant German Americans, Scottish Americans and maybe some Dutch Americans, all white and all pretty poor) worked to find any labor jobs they could find. But she never mentioned riots, looting, anarchy. I wonder, given that so many people had a different concept of tough and virtually no concept of entitlement back in the last depression, how would we do in today's society if CW's predictions were too optimistic and we repeated the Great Depression (a great oxymoron) today?

Unknown said...

I am also very a bit surprised at CW's position on this one. When I read the headline I was expecting the post to be a letter of kudos.

CW - I think you may have missed the target on this one.

I have yet to hear what exactly this $700BB buys us? Where exactly is the money going and who/what will profit from this cash injection? When in a position of responsibility, I like to know how certain an outcome is, PRIOR to taking action. I don't think that the majority of Congress (and certainly not the average US citizen) knows how certain this course of action is to solve/resolve the current situation. Taking swift action does not absolve the Congress of the responsibility to take prudent action.

The bottom line for me is that Congress WILL take action & they will certainly do so before the week is out. Symbolically, I LOVED the fact that the Republicans gave Pelosi a SMACK DOWN after her self-righteous, pompous, grand-standing immediately preceding the vote.

This IS NOT a Bush problem. This is not a result of unbridled Republican spending. This is not the Republicans wanting a "blank check".

The petty thieves on the Left need to stop politicizing this issue, quit the finger pointing and reach across the aisle in humble solidarity with their opposition. Right now is not the time for finger pointing and blame games - the stakes are too high. Let's put together the right package... one that stabilizes the banking, mortgage and securities industries. One that ensures that the mavericks on Wall Street don't find some mechanism for exploiting this bail-out to further their personal wealth. One that contains no pork.

Thairish said...

I have heard a few times in my life the suggestion, "don't let perfect be the enemy of the good." I will allow that there may be some cases in which the problem is so large that this bromide breaks down...maybe it a problems larger than $699B. On the other hand, the market lost $1.2 TRILLION today. I don't even want to think about the ripple effect.
This stand by the House Republicans makes me think of another saying, "cutting off one's nose despite one's face." Really, we have hemmorhaging from the femoral artery here and are in danger of losing the patient, and they are wasting precious time arguing about how the tourniquet might cause the loss of the leg.

I thought I heard this morning that voting by those members not up for reelection was split, but for those on the chopping block, it was something like 3 or 4 to one against. Sounds like political expediency to me. Rather than governance, we are getting government by mob rule.

"A good plan, violently executed now, is better than a perfect plan next week." George Patton

Unknown said...

I would agree with Thairish if the $1.2 Trillion today were real losses and represented money that was lost forever. However, any losses yesterday or today can be made up with equal gains in the market tomorrow or the next day.

If you have staked your future on a short position in the market, then yesterday's news represented a life-changing event. I think that a long-term position in the market offers the promise of more stability any losses incurred yesterday can certainly be overcome in the future - the question to be sure, is how long will it take to fully recover from this mess.

I appreciate the effect of a violently executed maneuver on the battlefield... I don't know if rushing in to take on an additional $700BB debt is a prudent course of action - do we really know the ramifications of this deal?

Lastly, if you and I agree to enter a non-partisan deal after some heated debate over the details, the last thing that I expect is that you will grandstand and lob insults at me right before you expect me to support you in a vote of this magnitude. This act was more akin to cutting off Pelosi's nose precisely because she is an ass.

Goldwater's Ghost said...

CW – You’re assuming that the same institution (and many of the same players) whose keen bit of social engineering got us into this mess is the same one that now holds the key to its resolution. The American people, I believe, have every right to question where this money is going and how it will be used. This is not chump change. And unfortunately, I don’t see any clear cut solution to the issue. In fact, for every opinion I’ve seen over the past two weeks from credentialed economic policy wonks demanding immediate intervention, I’ve seen equally persuasive arguments against such action.

The folks flooding their local congressman’s phone lines demanding accountability do not comprise the culpable demographics of this crisis – they are neither the entitlement-minded idiots who leveraged themselves out of a home nor the greedy Wall Street types who were only happy to oblige.

Rather, these are people who have paid their mortgages dutifully for years without fail. People who have seen the value of their portfolios shredded in a matter of weeks. These people have played by the rules. And now Congress has come to them and demanded that they hand over $700B, no questions asked (it’s better that way, since we’re obviously ignorant to the intricacies of global finance).

I’m embarrassed for Congress more than anything else. The partisan bickering has taken on the cartoonish drama of a professional wrestling match.

I’m all for swift action to right the ship, so long as the clowns at the helm are not steering us toward the abyss.

Goldwater's Ghost said...

Mark Steyn weighs in on a similar thread over at NRO...

"I always enjoy hearing Burke's admonition that a member of parliament owes his constituents his judgment rather than a spasmodic jerk to the latest opinion poll. But isn't it the case that we're in this mess because US politicians previously subordinated "the general reason of the whole" to "local interests" and "local prejudices"? That's to say, with their usual casual destructiveness dressed up in the baby talk of "diversity", they chose to turn the mortgage industry into just another branch of the affirmative-action racket. The United States government in effect decreed credit a human right rather than a privilege judiciously granted by one independent contractor to another.

Do those legislators understand the damage they did to "the general interest"? One of my problems with the "bailout" is the way it's presented not as an emergency measure to correct the stupidity of previous political interference but as evidence of the flawed nature of the market, and thus a justification for more must-pass "emergency" measures ahead. Exhibit A - President Sarkozy rejoicing in the end of "Anglo-American capitalism":

The idea of an all-powerful market without any rules and any political intervention is mad. Self-regulation is finished. Laissez faire is finished. The all-powerful market that is always right is finished.

As a general proposition, when told by unanimous elites that a particular course of action is urgent and necessary to avoid disaster, there's a lot to be said for going fishing*. If the entire global economy is so vulnerable that only the stalwart action of Barney Frank stands between it and ten years of soup kitchens, can it, in fact, be saved? Or look at it the other way round: Given any reasonable estimate of the number of headless chickens running around, was the five per cent fall in Asian markets and seven per cent "plummet" on the Dow in reaction to the House vote really the catastrophe some of my pals round here seem to think it was? If fear of seven per cent falls is enough to justify massive unprecedented government intrusion into the private sector, we might as well cut to the chase and go for the big Soviet command economy.

At times like these, it helps to remember the sage words of Boy George: Calmer, calmer, calmer, calmer, calmer, chameleon. You come and go. The market is forever.

[*See, e.g., global warming:

The four major agencies tracking Earth’s temperature, including NASA’s Goddard Institute, report that the Earth cooled 0.7 degree Celsius in 2007, the fastest decline in the age of instrumentation, putting us back to where the Earth was in 1930.

Any "crisis" here seems to be the opposite of the one we were told we needed to act against. Odd that."

Well put Mr. Steyn...

Mudge said...

To drill baby drill, sally, hamptonpk fan, goldwaters ghost, anon, thairish and, of course, cw, I just want to say that I am enjoying the hell out of reading your posts to this topic. sure do wish the news outlets would allot more time to discussions like this rather than short sound bites of political grandstanding. great quality of debate here. thanks

The Conservative Wahoo said...

I'm wondering why the $1.3 Trillion lost yesterday is any less real than the $770B that everyone seems so wrapped around. Yes, if the feds bought the bad debt out there and then did NOTHING with those assets, there would indeed be a $770B bill. But why would they do that?

Golwater's and I have a very different view of the folks calling their representatives and telling them not to vote on this. I think those people simply have NO CLUE how dependent the entire economy is on the health of the credit markets. Zero. Zilch. Nada. They think this is a Wall Street bailout, or a bailout of the idiots who overleveraged isn' is a way to keep our economy from dragging the entire world economy into an abyss (your word).

As for Eric Cantor's charge that Pelosi's speech may have caused some to vote against the bill, c'mon now. Really? I'm no Barney Frank fan, but his reaction to the hurt feelings of Republicans was priceless.

Bottom line for me? I trust Paulson and Bernanke, not the "people who put us in this situation" (like Frank--and George Bush for that matter--see "ownership society" rubbish).

Goldwater's Ghost said...

CW – While I agree that it’s getting harder to find someone you can trust in Washington these days, I find your blanket endorsement of Bernanke and Paulson troubling. This is the same Secretary Paulson who, reacting to the failure of Indymac Bank in July said “it's a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation.” He’s said similar comments about Fannie and Freddie earlier this summer as well. That was eight weeks ago. This is also the guy whose bailout “plan” consisted primarily of giving him a blank check without any oversight or even a thorough understanding of how he was going to determine the value of the toxic debt he was buying.

I’m all for stabilizing the financial system through governmental intervention. Philosophically, I’m not crazy about it, but I accept the gravity of the situation and agree that something has to be done. Soon. I respectfully differ from you on the notion that the Paulson bailout is the only viable option (at least, that’s what I think your position is). The plan as I came to understand it did nothing to reform or eliminate the horrible policy that got us into this mess in the first place – Fannie/Freddie, CRA – take your pick, nor did it consider proven and sound fiscal tools already available to Congress and the Fed to help spur the economy. How about slashing capital gains taxes and/or the corporate tax rate for a two year period to provide long-term economic incentive in addition to the short-term fix? There are alternatives to the all-or-nothing Paulson proposition as you pointed out in an earlier dispatch.

Yes, if the feds buy the toxic debt, sell it at a future premium and use the proceeds to retire the debt the plan will have been worth the price. But this is not how the game works. Five years from now when the markets recover and the economy is humming along, the government will be flush with cash from the sale of these assets – can an Obama administration and a democrat-controlled Congress be trusted to do the right thing? I’m not betting on it.

Unknown said...

Here's an idea... how about personal responsibility carried out the same way that it is in the Navy or the Army... swift, decisive and starting at the top.

Here is my plan:

1. All corporate officers of the institutions involved (ie. banks that have folded and banks that will take this govt. money) are subject to property seizure and financial forfeiture of all assets and material wealth accumulated during the term of this ponzy scheme (I believe that includes the years 1994 through the present - ALL corporate officers). This means everything... make these guys start from scratch. Prison is not out of the question for this group... but, taking their wealth will be a tremendous punishment.

2. All Congressmen/Senators proven to have backed the "sound-ness" of Fannie/Freddie (there are plenty of videos available to prove this beyond a shadow of a doubt) be found guilty of anti-trust violations and subject to prison and forfeiture. No escape clause and no country club federal pen - this is hard time with hard men if you know what I mean. Having a Congressman sit on a banking committe and proclaim to the country that Fannie and Freddie were sound is akin to a CEO making similar claims in his annual report to the shareholders. Let's stop electing blow-hards and actually hold them responsible to perform their duties ethically.

3. I am certain that someone on Wall Street is already calculating some plan to capitalize on the infusion of capital back into the market. These people in the know will make more millions - this should be made a crime subject to prison and forfeiture. This bailout should not line the pockets of the same scammers who were profiting for the last decade off of Fannie and Freddie.

4. No bailout without STRICT oversight provisions - not overseen by Congress (we simply cannot trust these morons to make good decisions and they truly don't have the intellectual horsepower to understand this business in the first place).

Once the groundrules for future business are laid out - we can then discuss the size and the terms of the bailout required to address this situation.

Greed is a powerful motivator for good people to make bad decisions. We need to eliminate that motivation or at least make the risk of getting caught very, very unattractive.

Finally, we need to set a very strong precedent to discourage partisanship from EVER trying to inject social engineering back into our fiscal policy.

For me, that would be a good foundation for this bailout discussions. I know it will never happen, at least not until I become King.

Anonymous said...

I'm not sure that Barney Frank would mind doing some hard time with hard men.

Thank you though Mr. Goldwater for reminding us that Adam Smith was right. Had banks been allowed to turn down customers with risky credit without the fear of race hustlers and other democrats coming after them, we wouldn't be in this mess.

The Conservative Wahoo said...

GG--what makes you think that these alternatives you speak of weren't discussed in their negotiating sessions and dispensed with as unworkable or unsupportable from one party or another? The suggestion that there were "no alternatives" doesn't wash for me. There were no alternatives put on the floor for a vote, but there were PLENTY of alternatives discussed in trying to put together a bill that both sets of leadership could support.

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