TRANSCRIPT & COMMON GROUND archives back to July 2007
The financial rescue package.
The financial rescue package.
Cal: Henry David Thoreau once wrote, "In the long run, men hit only what they aim at. Therefore, though they should fail immediately, they had better aim at something higher." The 19th century author might as well have been talking about this week in Congress. Seems the partisans were aiming for failure, and what do you know: They struck it! Now, though, is indeed time for "something higher."
(Sam Ward / USA TODAY)
Bob: If I hadn't seen it myself, I wouldn't have believed it. The House of Representatives, with an approval rating just a tad better than child predators, reached the bottom this week and started digging. The Senate came to the rescue, and perhaps by week's end, the sausage grinder will have produced sausage. Even so, what we've seen is a staggering indictment of partisanship in Washington today.
Cal: The market meltdown after the House vote on Monday seemed to work like a whip on the rear end of a stubborn horse: The Senate saw an opening and sprung to action, while the House reluctantly seemed to recognize its own failure. We'll see whether the $700 billion offering will ultimately reach the president's desk. And if it does, the public reaction will be telling. America began a revolution over the British Stamp Act, which would have cost very little. If taxpayers are hammered by today's bailout, perhaps another revolution is in order.
Bob: There has been a revolution. The question is, how will the economy and taxpayers be affected? In just three weeks — the duration of the Tour de France — the federal government has taken over Fannie Mae and Freddie Mac, which combined control nearly 70% of the housing mortgage business; the big Wall Street investment houses have either gone broke (Lehman Bros.), been bought by large commercial banks (Merrill Lynch by Bank of America) or reorganized themselves as federally regulated banks (Morgan Stanley and Goldman Sachs); and the U.S.government has taken over insurance giant American International Group. All that was before this bailout. Talk about pedaling uphill!
Cal: Here's what really gets me: For years this calamity has been building.
Bob: True, but no one had the political will to tackle it. How long have we known that the housing bubble had burst? More than a year now. Yet congressional cowards and feet-draggers — and yes, the Bush administration — waited until it imploded before sounding the alarm. Oh, and it just happens to be five weeks before a presidential election, which is an impossible time to seek common ground in Washington.
Cal: No one in Congress can claim immunity. From the Democrats who carried Fannie Mae and Freddie Mac's water to the Republicans who thought Wall Street could flourish on an island of deregulation, the politicians — pockets loaded with lobbyists' cash — failed the American people. Don't you find it disturbing that Senate banking committee Chairman Chris Dodd last week held hearings on how to fix the problem? Here is a guy who took money from Fannie and Freddie (theNo. 1 recipient in the Senate, with Barack Obama coming in at No. 3). Allowing Dodd to draft the Senate's bailout bill is like letting Madonna run the federal abstinence program.
Bob: The people who helped cause the problem have little credibility when it comes to fixing it, which explains the uproar across the country. Yet most legislators, Democrats and Republicans alike, have gotten money from either Fannie or Freddie, big Wall Street investment banks, or commercial banks or insurance companies. Like it or not — and I don't like it — that's the way the game is played. What's doubly unfortunate is that it takes a massive crisis like this to focus Congress and bring about anything that resembles bipartisanship.
Cal: Lately, we've heard a lot of talk about bipartisanship — both John McCain and Obama made some very common-ground-type statements about the financial crisis, including talks this week with President Bush. Yet when it mattered most, venom spewed. House Speaker Nancy Pelosi'spartisan tirade on the House floor — before Monday's vote, mind you — poisoned the well.
Bob: That well had fetid water to begin with, and the House Republicans were as responsible as the Democratic leadership for failing to get this compromise through. It's telling that of 26 House members who are heading into retirement, 22 voted yes. Too many people on both sides of the aisle put politics before country. What's mind-numbing to me is that lawmakers, despite historically low poll numbers and a mandate for change from voters, still don't get it. On big issues such as health care reform, Social Security, fiscal responsibility and even tax policy, only consensus-building will get things done. Yet it takes someone putting a gun to their head — as is the case with the Wall Street meltdown — to get Democrats and Republicans to come together.
Cal: One quick aside, Bob. This was one of the worst product marketing jobs since "New Coke." What American would be behind a "Bailout for Wall Street"? But that's exactly how this was sold — or not sold — to the American people. This fed off the class warfare divisiveness straight from the Democratic playbook all these years. Like it or not, it's a rescue package — unpalatable to many of us, sure. But ultimately, there is a bipartisan consensus that something must be done. This isn't Wall Street vs. Main Street. In this crisis, we're all living on the same block.
Bob: Let's remember, too, that neither vengeance nor schadenfreude are ingredients for good public policy. We need to get beyond that and find what ultimately might be the least-worst option.
Cal: So where do we go from here? At a minimum, government needs to send a message that it will no longer pay for failing institutions. The oft-cited "moral hazard" must be restored. Neither should government see itself as the permanent owner of last resort. Failure can be good. I've learned more from failure than from success.
Bob: Too bad the same can't be said of our president. If failure were a currency, he'd be loaded!
Cal: The fear of failure will promote more responsibility among public and private entities. As a conservative, I find it difficult to stomach what amounts to socialism. I still believe in the free market.
Bob: Surely you would agree that the free market still needs some government checks.
Cal: There needs to be a healthy balance between regulation and freedom. James Madison noted in Federalist paper No. 51, "If men were angels, no government would be necessary." But laws should restrict those with bad motives, not suffocate the entrepreneurial system that is the economic engine of our country. The public has a major role to play. We cannot continue to demand everything from government before we demand more from ourselves. Government should be a last resort, not a first resource.
Bob: The New Deal crafted by the left's hero, Franklin Delano Roosevelt, had too much regulation. And under Ronald Reagan, the right's sage, there was a supply-side philosophy that led to too little regulation. Maybe this disaster will bring us to a healthy balance between both. It's funny how history always has a way of teaching us the way forward. Now we have to wait and see whether members of Congress will embrace this moment in history, or shamefully watch it pass them by.
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