I have mixed thoughts on the bailout bill. Mike isn’t wrong about the importance of individual responsibility. It is problematic to me, too, that the American savings rate hovers around zero. It is upsetting that individuals entered into mortgages that they could afford – and even more upsetting that predatory lending enabled some to have a distorted sense of what they could handle. I have strong feels about the fact that the same Wall St. folks that lobbied against regulation later asked the government to step in, all the while approving millions for their executives. I don’t think the bill is doing enough to keep people in their homes; I was disappointed that it didn’t include something along the lines of a Home Owners’ Loan Corporation (HOLC). Lastly, with an almost $400 billion budget deficit already, the pricetag of $700 billion seems too high.
So while I’m sitting in the comfort of the Ivory Tower right now, I understand that Mike is voicing frustration that many Americans are feeling. When I was out canvassing for Rep. Joe Courtney in New London, CT this weekend I was surprised by the high numbers expressing pleasure that he had voted against the bailout bill both times. Many have struggled since the layoffs at Electric Boat in Groton after their contract was reduced to one sub a year. For them, it was perfectly reasonable to ask why folks in New London would have their houses foreclosed upon while Wall St. folks were getting bailed out. It just didn’t seem fair.
But reservations aside, we live in the real world. We can’t responsibly just let people lose their homes – they are the backbone of the savings of ordinary Americans and, in many cases, families’ only real assets. We can’t responsibly just let AIG go under – the consequences would have been catastrophic for the thousands of companies around the world for which AIG provides insurance. The failure of WaMu was the worst bank failure in American history. This is not small potatoes and it is not appropriate to prescribe the theoretical solution of letting the market run its course and permitting its consequences, however awful they may be.
When the market fails, government’s duty is to intervene. Why? Because the crisis occurring right now is not just a financial crisis, it is an economic crisis. In our globally interconnected market, America’s serious cold can look at lot like MDR TB for everyone else. That, in turn, is bad for us. While I understand that the bailout bill was a bitter pill to have to swallow, I applaud the bipartisan efforts of our legislators and executive to deliver a solution.
And on a more partisan note and from a more visceral level, I think it was really cowardly that the 79% of Republicans in Cook Political Report “leans Republican” House races voted against the bailout. That’s not, as Senator McCain likes to say, putting country first.
I will be back for Pt. II of my disagreements after I get some schoolwork done.
Red, Brown, and Blue 