With the credit market seizing up and the stock market swinging wildly, members of the House of Representatives wisely reversed course Friday on the $700 billion plan to rescue the financial industry.
Sixty percent of the members, Democrats and Republicans, voted for it. Not one of those votes came from Hampton Roads or northeastern North Carolina.
Reps. Thelma Drake, Randy Forbes, Robert Wittman and Walter Jones, all Republicans, and Bobby Scott and George Butterfield, both Democrats, voted against the package.
Admittedly, this was a tough vote, coming just weeks before an election, amid a climate of financial crisis and on a subject of enormous economic complexity.
Still, for all of that, theirs was a vote that willingly risked more joblessness, more foreclosures and more 401k losses as a prescription for economic healing. That's a gamble that should not have been made with the economic security of their constituents.
Even as the House was voting Friday, California announced that with the credit market frozen, it was unable to get financing and needed $7 billion to continue operating. And the Labor Department reported that the country had lost another 159,000 jobs last month, more than twice the jobs lost in July and August and 50 percent higher than expected.
There's no reason to be cheering for the plan. It's chock full of unrelated tax credits, a $150 billion package that benefits people working in the Hurricane Katrina disaster area, those investing in poor neighborhoods of Washington, D.C., and those who donate to schools, among others. Those were added to ensure the proposal got enough votes to pass.
The $700 billion plan to limit damage, insure bank deposits and stabilize the markets was no easy thing to swallow. It's a complicated answer to a complicated problem, and it comes with its own set of problems that include a spike in our national debt and not enough help for those on the brink of foreclosure.
It requires Americans to trust the government at a time when the government's given them scant reason to do so. But our economy cannot function when people can't get credit, the blood supply of our financial system.
As unpleasant as it is, the legislation has a credible chance of preventing an even worse economic meltdown. Which is more than can be said for doing nothing.
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Bailout
You made the following statement: "Still, for all of that, theirs was a vote that willingly risked more joblessness, more foreclosures and more 401k losses as a prescription for economic healing. That's a gamble that should not have been made with the economic security of their constituents." Did you bother to check with them and see how many of their constituents ASKED them to vote against the bill? I, for one, would rather take the risk of economic uncertainty for a while than have the Treasury Secretary (or his cronies from Goldman Sachs) have virtually unlimited power to spread MY money where he/they want to. As a person living in Randy Forbes district, I applaud his actions - I would guess that they were the result of what his CONSTITUENTS wanted him to do. More people in congress should listen to their constituents.
I'm a Dentist, not a barber
But if I treated a patient with a toothache the way Congress has treated the financial sector, I would pretend the toothache was not the problem, give the patient a 6 month prescription for Oxycontin and cut his hair.
The patient would leave with his toothache still hurting, on the road to a debilitating addiction, and with a bad haircut.
The big difference is that unlike the toothache, the financial sector would have gotten well on its own had Congress just left it to its own devices. Government interference in the marketplace caused the housing bubble which was the root cause of all the rest. The bubble has burst and the marketplace would have corrected the overvaluations, punished those who sought to speculate in housing prices, and restored balance to the market. Instead, Congress has protected the guilty, prolonged the period of adjustment, and started Wall Street on a debilitating addiction to government rescue. We should sue for malpractice.