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Wednesday, September 24. 2008
Blank Check
The big bailout is coming. We, the people, will pay for it. And both candidates are talking tax cuts. Sounds incredibly unrealistic. There’s the war that costs a billion dollars every week, our various social programs like Social Security which is continually raided to pay the national debt, the ongoing expense of disasters, the most recent being Hurricane Ike. The list can go on.It just doesn’t seem possible. In fact, the opposite seems inevitable. We will socialize the financial system of the U.S. — but not the health care system — and this is going to cost us a trillion dollars. That’s $1,000,000,000,000.00.
Secretary of the Treasury Henry Paulson wants $700,000,000,000.00 free and clear, without any oversight or control by Congress or anyone else. At the front of the bill Paulson submitted are these words: “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency;” and, “The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this act, without regard to any other provision of law regarding public contracts.” And the coup de grace, “Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.”
In the words of many, it is the greatest power grab in the history of the nation. Secretary Henry Paulson is vying to become the de facto ruler of America as the one in charge of how that $700,000,000,000.00 is used.
It’s a classic Bush Administration tactic, centralize power into one seat and the kicker is, come January 20, 2009, Henry Paulson will likely be out of that job. If it goes through, Paulson will be the man who saved America’s economy. Of course, this bailout will happen quickly so Paulson will have a large hand in how the money is used and his example will place a heavy stamp on how the next Secretary of the Treasury performs that task.
Thankfully, the Democrats and some Republicans in the Senate decided the Paulson Plan has a few flaws, like no oversight and too much power in the hands of a few. The Democrats go even further and want to limit compensation for the corporate officers of these financial institutions who might have been planning to walk away from this with 20, 30 million or more in their pockets. They also want some of those trillion dollars to be used to bailout homeowners about to lose their homes; the Democrats want to make it possible for judges to rewrite mortgages.
The feeling on the street though is that a plan will be in place that closely resembles the Paulson Plan, with little or no oversight, the same philosophy that created this crisis when the Gramm-Leach-Bliley bill was signed — by President Bill Clinton in 1999. If there is a major black mark on Clinton’s legacy, signing that bill is it.The heads of the financial institutions that are at the center of this mess are lining up to line their pockets with the government’s — our — largess, confident they can continue with their irresponsible ways. They are in fact lobbying to control some of that trillion dollars, dispense it at their whim and, here’s the most contemptible part: collect fees from the government for doing so.
They also expect to change the rules once the plan is in place, so that they won’t lose any money, just the American taxpayers. What drives their arrogance? The fact that everyone agrees, even those who are stridently and philosophically against any bailouts, something needs to be done because the alternative will make the Great Depression seem like a minor financial bump in the road.
Our two presidential candidates support the bailout and Senator McCain has even become a regulator! Six months ago he was the “de-regulator.” On the other hand, he has been dithering on the fence: he’s for it, he’s against, basically trying to find a way to line up support for the bailout with his long history of being the “deregulator.” Ever the populist, at least for the past few days, he wants to make sure the CEO’s don’t get golden parachutes. Well gee, that will save taxpayers maybe 200 to 300 million out of the trillion. He’s basically waiting to see which way the wind blows politically with the voters, two-thirds of whom believe we shouldn’t bail out Wall Street.
Obama knows the bailout needs to take place and hasn’t minced words about it, but, like his Democrat colleagues (and some Republicans) Obama wants to change the rules to pre Gramm-Leach-Bliley days when the government regulated the banking and financial services industries and kept them from the kind of practices that occurred in the past nine years.
The bailout will take place, the only question is, how deep and how long will the American taxpayers get fucked in the process.
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