Poughkeepsie Journal - Taxpayers Need not be Burdened

Op-Ed

Poughkeepsie Journal - Taxpayers Need not be Burdened

By Kieran Michael Lalor

I oppose President Bush's financial bailout plan, and I would have voted against it because the president and the rest of the elites in Washington threw together and barely debated a staggering corporate bailout to be paid for by American taxpayers.

Last month, when Fannie Mae and Freddie Mac collapsed, it became clear that major intervention by the federal government to stabilize the economy was needed. However, the government, becoming the biggest player in the mortgage and banking industries, without any provisions designed to prevent a repeat crisis, is neither necessary nor acceptable.

Asked why $700 billion was the magic number for the bailout, a Treasury Department spokesman said, "It's not based on any particular data point. We just wanted to choose a really large number." A government rescue, coupled with assurances the bill had a high probability of success and taxpayer protections, might fit into the "necessary evil" category. However, a taxpayer bailout of Wall Street based on "a really large number" should have been unanimously defeated by both Houses of Congress.

Bush and all those who voted for the measure, including U.S. Rep. John Hall, D-Dover, were looking out for the top 10 percent and the bottom 10 percent while asking the 80 percent of us in the middle to bear the burden.

There was absolutely nothing in this bill to forestall another crisis. The bill did nothing to address the root causes such as social engineering that rewarded banks for lending to unqualified applicants.

Similarly, the failure of oversight by both the administration and congressional watchdogs was not dealt with.

End conflicts of interest

For starters, members of Congress who sit on committees with oversight roles should be barred from taking campaign contributions from the industries they oversee. U.S. Rep. Barney Frank, D-Mass., who leads the House Financial Services Committee and U.S. Sen. Chris Dodd, D-Conn., who heads the Senate Committee on Banking, Housing and Urban Affairs, received campaign cash from Fannie and Freddie totaling $40,100 and $133,900, respectively. Dodd and Frank should have been forced to step down from their leadership positions. Instead, they were allowed to have a say in how to clean up the mess they helped make.

Adding insult to injury, greedy Wall Street bankers (who knew that if the perfect storm hit that the middle-class taxpayers would foot the bill) have not been punished for risky and potentially illegal behavior. This is an injustice of stunning proportions.

There are better ways to inject capital into the market and encourage economic growth, without taking a dime out of the taxpayers' pockets. The capital gains tax could be suspended for a period of months or years. This would ensure added liquidity to the market and allow existing businesses to expand while permitting new businesses to open their doors. Private enterprise, beginning at the small business level, drives economic expansion, not government spending.

Moreover, Congress could have passed a bill that loaned troubled financial institutions money to continue operating rather than have the American taxpayer assume the debt.

Amazingly, the bailout bill that passed the House last week was worse than the bill it rejected before this. So-called "sweeteners" were added to the bill to entice those who voted "no" to switch their votes. Of course, "sweeteners" is Washington-speak for things like tax breaks for rum importers, Hollywood production companies and racetrack owners. The "clean bill," free of pork barrel spending, that we were promised by Congress became one of the worst examples of taxpayer abuse since the infamous bridge to nowhere.

Wealthy elites got us into these dire straits and are asking the middle class to get us out. Now more than ever the middle class needs a seat at the table of power in Washington.

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