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Monday, 29 September 2008
All SC members voted for bailout, except Barrett
The "how they voted" on the collapsed bailout plan is pretty simple: Every S.C. member of the U.S. House voted FOR the bailout, except Gresham Barrett.
Here's his explanation (short version: It's about him and his ideology.):
Washington, DC - Congressman Gresham Barrett (SC, 3) delivered the following remarks regarding his concerns with the level of government intervention and lack of free market principles included in H.R. 3997, the Financial Stabilization Package:
"First off, I want to commend my colleagues, especially Minority Leader John Boehner, Roy Blunt, Eric Cantor, and Ranking Member Spencer Bachus, for their work in improving this bill. However, after careful - and agonizing - consideration, I cannot support H.R. 3997 and will be voting no.
"I understand the need to act and I understand the urge to act quickly. We must restore the flow of credit. I firmly subscribe to the belief that “Main Street” and Wall Street are inextricably linked. Instability in the financial markets leads to instability in taxpayers’ personal accounts and their personal funds. Meanwhile, that capital that flows through our financial markets is vital to the continued success of our businesses, large and small. We should all agree that a failure of our credit markets would be an enormous catastrophe, and the government does have a role in ensuring that the financial markets function soundly.
"At the same time, we cannot allow the American taxpayers to become the insurance policy for financial decisions that did not turn out as planned. Whether you’re talking about someone from South Carolina who took a mortgage they couldn’t afford or a Wall Street banker who financed that loan, we see just how important personal responsibility must be to American society, and I fear that this legislation erodes that accountability – and the freedom that comes with it.
"Unfortunately, our government is in debt. And we are in a lot of debt, both as a government and as a nation. In fact, this whole crisis is built around debt, where too much bad debt has caused an inability to get new credit – otherwise known as debt. My daddy always told me that you can’t borrow your way out of debt, and he was right.
"There are other reasonable options that we should explore to help the markets heal themselves and that would not burden our country under even greater mounds of debt. I was pushing for a plan that would use more free market principles such as a suspension of the capital gains tax and incentives for repatriation of earnings, o help spur economic growth by helping all Americans whose retirement accounts are invested in the stock market, or who own a house, or a business and jump start the flow of funds back into the system.
"There is no doubt that we find ourselves in a precarious situation and people are angry, rightly so. I am angry. But we must not allow this anger to cloud our judgment, and make choices that will divide our country. This is not a matter of Wall Street versus Main Street.
"But when it becomes time to vote on this bill, I will be voting no. I understand my colleagues for their reasoning, and I am confident that we all want to do what's best for the country. But, because I believe so strongly in the principles of the free market and the belief in freedom, I will be opposing this bill. My fear is that today the government will be forever changing the face of the American free market."###
What I have not seen yet is any indication whether Mr. Barrett had any notion whether the bailout would actually fail on account of him and the others voting "no," or did he just intend to make a gesture? When I hear more on that, I'll pass it on...
Posted by Brad Warthen at 04:23 PM in Business, Economics, Leadership, Marketplace of ideas, Republicans
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Comments
Meanwhile, here's what Joe Wilson (the only other S.C. House member I've gotten a statement from so far) had to say about his vote FOR the plan:
Wilson Statement on Economic Rescue Package
WASHINGTON – Congressman Joe Wilson (SC-02) issued the following statement today after H.R. 3997, the Emergency Economic Stabilization Act of 2008 failed to pass the House of Representatives.“The cost of doing nothing during this economic crisis threatens the retirements and jobs of the people of the Second Congressional District of South Carolina. This is not about Wall Street. It is about Main Street. It’s the community banks that provide loans to the small businesses of this nation or student loans to families struggling to afford a quality education for their children. It’s those small businesses that create jobs – the very foundation of commerce that drives our economy. A systemic failure of this size in our complex economy would harm not just the market but the individuals who I have the privilege of representing. It has made the option of doing nothing unacceptable.
“I adamantly opposed the proposal originally sought by Secretary Paulson. It lacked transparency, accountability, and protections for taxpayers. That is why I stood in strong support for free market alternatives proposed by House conservatives including a far better alternative that failed to pass this morning. The legislation we considered on the floor this afternoon had tougher oversight and an alternative insurance plan to make Wall Street fix its own problems. It would have made sure that the first in line to recoup losses would be the American taxpayers who by no fault of their own were exposed to this crisis by the mishandling of others. This was not the best option available, and there are no perfect options. This was a compromise at a time when we need solutions.
“I voted to remain in session until a solution is achieved, and I urge that Congress be reconvened as soon as possible to face these issues now.”
###
Posted by: Brad Warthen | Sep 29, 2008 4:33:27 PM
Over in the Senate, we have a split once again, with Lindsey Graham vehemently condemned the House failure to pass the bill:
Graham Statement on the Financial Rescue Plan
WASHINGTON – U.S. Senator Lindsey Graham (R-South Carolina) today made this statement after the vote in the U.S. House of Representatives against the financial rescue plan. He said:“I have never been more disappointed in the Congress than I am today. I hope every member of the House of Representatives -- Republican and Democrat -- who voted against this legislation will work in the next twenty-four hours to improve the bill. Now is the time to put the national interest above the self interest.
“Speaker Pelosi’s partisan comments before the vote obviously did not help matters. Now is not the time for extreme partisanship but time for our nation to pull together for the common good.
“If we do not address this issue, our nation may be headed toward a major financial collapse. For the common good, we must find a solution to this problem. Without the ability to borrow money to build a business, buy a home, or go to school, our country will be brought to its financial knees.
“Today’s actions will ripple throughout our economy. More people will lose their homes. Businesses may be forced to shut their doors. Life savings and retirement accounts will take a severe hit. I fear those who voted against this legislation have put our nation’s economy at risk.
“Democratic and Republican leaders must find a way to bring more votes on board to this bipartisan bill. I will continue to do my part in this effort as I realize the cost of congressional inaction will be steep.”
#####
Meanwhile, as you might have expected, DeMint was in the Barrett camp:
DeMint Statement on Failed Bailout
Americans demand Congress “do the right thing to grow our economy and reform our government”
Washington
,
– Today, U.S. Senator Jim DeMint (R-South Carolina) made the following statement after the House defeated the Wall Street bailout:D.C.
“President Bush and the Democrat Congress gave Americans two bad choices: do nothing or pass this bailout. Americans have said ‘no’ to both and demanded that we take a third way and do the right thing to grow our economy and reform our government.
“Our economy is going through difficult times, but the American people are resilient. Americans have told Congress they are willing to work through this problem instead of expanding the failed government that created it.
“It’s now time to reform the misguided government policies that caused this mess. It’s now time to enact real solutions that grow our economy and increase opportunity for all Americans. It’s now time to stop the knee-jerk political reactions that have earned this Congress the worst approval ratings in history, and focus on real solutions to secure our nation’s future.”
Senator DeMint has outlined a Plan for Economic Growth:
REFORM A TAX CODE THAT DISCOURAGES CAPITAL FORMATION
• Suspend Capital Gains Tax for 2 Years, Index it for Inflation: Immediately suspend the capital gains rate from 15% for individuals and 35% for corporations on assets, including stocks, homes, and commercial real estate investments. This provision would unleash funds and materials to create jobs and grow the economy. After the two-year suspension, capital gains rates would return to present levels but assets would be indexed permanently for any inflationary gains.
• Reduce the Corporate Income Tax Rate: Reduce the corporate income tax rate, which discourages job creation and investment in the
U.S.
, from 35% to 25%. For over a decade, theU.S.
corporate tax rate has been 50% higher than the average among our counterparts in the industrialized world and nine key trading partners cut their rates during 2007. According to the Tax Foundation, the corporate tax quietly taps family pocketbooks for nearly $370 billion per year, over $3,000 per household, in the form of higher prices, lower wages and poorer return on investment.
REFORM FAILED GOVERNMENT REGULATION
• Suspend “Mark to Market” Accounting: Suspend the mark-to-market regulatory rules for long-term assets. These rules require financial firms to mark assets at current market levels, even where no market exists and any immediate transactions would result in fire-sale prices. Instead of allowing firms to mark these assets to their true economic value, these rules contribute to a downward spiral as firms have to evaluate their assets not on the basis of their long-term investment but rather on a short-term panic.
• Reform Section 404 of Sarbanes-Oxley: Make voluntary the duplicative reporting requirements under Section 404 of the Sarbanes-Oxley Act, allowing companies to comply with standards that better fit their size while still insuring that they protect their investors. The average compliance cost for a business under Section 404 is $3.8 million, with smaller businesses paying over twice as much in percentage of revenue as large businesses. Relieving this burden will reverse a policy that is chasing capital offshore and encourage more companies to go public in the
United States
.
• Repeal federal mandates for risky loans: Repeal the Carter-era Community Reinvestment Act, which requires banks to make loans available to borrowers who would otherwise be deemed as too high a credit risk, and who often cannot afford to repay the loans. Under this law that contributed to our current crisis, if banks don’t make enough risky loans, community organizers can take financial institutions hostage during regulatory proceedings when banks try to merge, acquire or otherwise alter their status.
EXPAND ENERGY EXPLORATION
• Permanently Repeal Bans on Energy Exploration and Expedite Production: Expedite offshore and oil shale exploration, ensure states share in energy revenues, and prevent endless litigation from frivolous environmental lawsuits. American reserves offshore are estimated to hold over 20 billion barrels of oil and 97 trillion cubic feet of natural gas. In the West, oil shale is estimated to be between 800 billion and 2 trillion barrels of oil -- that is more than three times the proven oil reserves in
Saudi Arabia
alone. Permanently ending these bans on American energy will help fuel our economy and stop sending billions of dollars overseas for foreign oil.
REFORM FAILED GOVERNMENT INSTITUTIONS
• Schedule the GSEs for Privatization: Transition Fannie Mae and Freddie Mac over a reasonable time period to truly private companies without special government privileges and expose them to real market competition. This reform would 1) establish commonsense limits for their capital requirements and portfolio holdings relative to their size, 2) focus their mission on affordable housing only, not profit making, 3) require them to pay an appropriate risk-based amount for the government guarantee they enjoy, 4) subject them to state and local taxes and accurate SEC filings like every other private for-profit corporation, and 5) ultimately provide for the phase out of their GSE charters once their conservatorship has ended.
• Stabilize the Dollar: Repeal the Humphrey-Hawkins Full Employment Act, which diverts the Federal Reserve’s attention from long-term price stability to short-term economic growth. In an effort to fuel the economy, this additional mandate has encouraged the Fed to keep rates artificially low, leading to economic booms and busts, a rise in inflation and the decline of the dollar. This reform would require the Fed to establish a numerical definition for price stability and maintain a policy that promotes it over the long-term.
###
Posted by: Brad Warthen | Sep 29, 2008 4:49:08 PM
And why does Rep. Barrett think we can afford to suspend the capital gains tax (and yeah, that's one I pay)? We are very lacking in money, and foreign nations own a lot of our debt. We must not go any further into debt than we can help. Suspending the capital gains tax gives us just that much less to work with. We need to try to get ourselves out of this mess as fast as possible. That means more tax, not less, and it means people being willing to actually do without some luxuries for awhile until we stabilize again. And will somebody give Lee a good dose of Klonopin now, and avoid the rush?
Posted by: Karen McLeod | Sep 29, 2008 4:49:21 PM
Visiting friends who watch Fox news, and it's interesting how their "news analysts" are bemoaning the fact that this bill wasn't passed. Doug's comments on the subject remind one a lot of Herbert Hoover's non-solutions, but then maybe another depression, if it comes to that, will have a silver lining to it.
Posted by: Herb Brasher | Sep 29, 2008 4:51:08 PM
There are several reasons it was voted down, according to Congressmen who voted against it.
1. Secrecy. Pelosi only gave up a copy of the bill minutes before the vote.
2. Railroading. Only 3 Republican members were allowed into the room to negotiate, and they couldn't take anything out but some hand notes. That would not sell the deal.
3. Coverup. Democrats wanted a quick fix before the election, with no hearings, because the root cause of this debacle was the creation of nothing-down NINJA loans for minorities who were not creditworthy.
During the Clinton administration, these "subprime loans" expanded from 2% of all mortgages to 20%. Barney Frank, John Spratt and Pelosi defeated 18 attempts to tighten controls and bring outside oversight.
4. Kickbacks. Hundreds of political pie jobs were created for cronies like Jamie Gorelick, who went from making $116,000 at DOJ to making $577,000 at FM, with a $700,000 annual bonus. Then these people would "donate" the maximum back to Barney Frank, Nancy Pelosi, Spratt, Chris Dodd, etc.
5. Other bailouts. The mortgage mess only required about $35 BILLION in insurance guarantees, not cash, to stabilize things. The other $600 BILLION came from Democrats trying to slip in bailouts into the future for union pensions and state and local government worker pensions.
Posted by: Lee Muller | Sep 29, 2008 5:05:26 PM
Go Gresham Barrett
It is amazing that when we speak of the retired or the poor the government can not find the money.
Who needs to approve the budget? Congress would go on break without thinking twice. Now that Wall Street (mostly over paid folks) has problems they are willing to do whatever it takes.
Bail Out? What signal is the Government sending? With great lobbyist it does not matter if you are Dishonest, have bad management, or just mismanage you resources (You’re fired, take this 20 million dollar benefit package and get out) the feds will take care of you.
I am starting to believe white collar crime does pay and pay well I might add.
Who is next in line? Auto, insurance, GE?
Most of the restrictions that were placed (FDR’s New Deal) on these institutions to prevent this from happening were lifted in the last thirty years.
You reap what you sew
If you took that 700 billion dollars and built infrastructure you could put a lot of people to work. Nuclear, Solar, and wind power station to reduce greenhouse gases. New refineries in areas other than the gulf (don’t put all your eggs in one basket).
Fair Tax would help (www.fairtax.org)
Posted by: Opa | Sep 29, 2008 6:41:25 PM
Fair Tax wouldn't do a damn thing about this. And it sure as hell wouldn't provide the funding to do $700 bil in infrastructure.
Lee, what bailout are you talking about that the Dem's slipped $600 bil into? (I'm assuming you aren't referring to the current proposal since the original 4700 bil one was pushed by a republican president and his appointees).
Posted by: just saying | Sep 29, 2008 7:56:03 PM
When reading Lee's comments, it would be wise to keep a Churchill quip in mind: "Most men may stumble over the truth, but they will pick themselves up and carry on as though nothing had happened."
Posted by: Steve Gordy | Sep 30, 2008 6:04:27 AM
Why do Steve Gordy and "just saying" bother to post silly insults, thinking it makes up for their lack of knowledge of the mortgage crisis?
I read the entire bill yesterday, which is more than most Congressmen or Senators did. In all fairness, Pelosi did not let them read it.
Posted by: Lee Muller | Sep 30, 2008 7:06:10 AM
Republicans and Democrats said their mail, e-mail and phone calls were over 90% against the bail out deal crafted in secret by Pelosi, Reid and Paulson.
Obama lied when he said "my reforms are in the bill."
* The bill was a coverup, crafted by those who created the subprime mortgages: Barney Frank, Chris Dodd, John Spratt, and Nancy Pelosi.
* The mortgage markets only needed an insurance pool of $35 BILLION to stabilize, not a cash buyout of bad loans.
* Current executives at Fannie Mae, Freddie Mac, Lehman Brothers and AIG had their pay and bonuses protected. They caused the problem, were paid $400,000,000, and were big donors to Barney Frank, Chris Dodd, Joe Biden and Obama.
* Home owners in foreclosure got nothing.
Banks were guaranteed government making up any losses they took on foreclosures.
* Radical communitiy organizer groups like ACORN was supposed to get up to 20% of the "profits" from the bail out.
* The bill was larded up with money for student loans, and other spending.
* Democrats fought to keep loans in there for illegal aliens.
* The bill gave open-ended power for the federal government to buy up state retirement bonds, which was a way for states to assume the obligations of bankrupt union pension plans and pass them on to taxpayers. That amount is much larger than the money needed for the mortgage bailout.
Posted by: Lee Muller | Sep 30, 2008 7:51:22 AM
I may be a financial dunce, but I fail to see how suspending the capital gains tax would help. By definition, wouldn't a bankrupt company not have any capital gains?
Part of me is tempted to let these ideologues have their way. Then fast-forward 12 months and watch them try to explain that unemployment isn't skyrocketing, bankruptcies and foreclosures aren't up. Except that I know they'd still get re-elected anyway.
Posted by: Susanna | Sep 30, 2008 10:38:57 AM
Major tax reform of capital gains and dividends are needed to make us competive with industrialized Europe. It is not a quick cure for this mortgage crisis. We just have a tax code which skews a lot of investment decisions off the normal track.
With our IRS code having grown from 10,000 pages to 30,000 pages under Clinton, and still growing and changing, no one can keep up.
The US double taxes business profits. Corporations are taxed, then dividends are paid with after-tax net profits, to indidviduals and mutual funds, which then have to pay income taxes again on what they receive.
Interest on business loans is deductible, but dividends on capital is not. That makes not sense, except that banks have more lobbying power.
Most of Europe has no taxes on capital gains, no taxes on dividends and interest from savings, and if they do, the dividends, like the interest, are deductible from corporate profits. Stocks there traditionally pay high dividend returns, while in America, investors have to try to make money off stock price appreciation outpacing inflation.
Posted by: Lee Muller | Sep 30, 2008 10:58:24 AM
A big THANK YOU to Congressman Barrett for having the guts to stand up and vote no. The congressman for my district, who I have supported in his past runs, will most likely not have my support in his next run. I want a representative who actually represents.
Posted by: SC Citizen | Sep 30, 2008 3:14:57 PM
Lee, I had no intent to insult you personally. I don't wish to stoop to your usual level of argument, rather to comment on your use of "facts". BTW, I've seen this coming since housing prices started down two years ago. In our household, we dumped all our financial stocks last year.
Posted by: Steve Gordy | Sep 30, 2008 4:50:05 PM
Steve,
If you doubt any of my facts, I can provide sources for all of them, and sometimes footnote them here, but the hardcore Obamatown Kool-aid drinkers don't care about that - nothing is credible if it challenges their belief system.
Any particular fact in my posts bothering you, or is it just factual overload?
Posted by: Lee Muller | Sep 30, 2008 4:56:15 PM
I am disappointed in Joe, to say the least. Fortunately, Jim DeMint represents those of us who actually believe that a free market actually works. In fact, about the only thing missing from the good senator's proposal is a suspension of foreign aid and foreign security provided by the U.S. Military. Any American wishing to help, should feel free to do so, just as any American thug who feels s/he can make money providing for other's security, but we can no longer afford it as a nation and I can't afford it as an individual. What we need in congress is for Ron Paul to clone himself 434 times.
Posted by: Robert | Sep 30, 2008 8:30:30 PM
Gresham Barret did the right thing - he represented the wishes of his district, who overwhelmingly oppose this bail out and coverup of the largest bank robbery in history, which made millionaires out of hundreds of Democrats who set up the subprime scam.
Then they packed the bail out of themselves with more money than the current deficit, for money to prop up bankrupt union pensions and state employee pensions.
Each piece of legislation should deal with its subject matter. Union pensions and government pensions should just go broke if they promised too much.
What should be included in this bill is some obvious tax reform:
* Abolish the capital gains tax which Obama wants to raise to 28%.
* Abolish income taxes on interest and dividends.
* Abolish estate taxes.
* Abolish the Alternative Minimum Tax.
* Abolish the Earned Income Tax Credit and make lower-income workers pay some taxes so they feel the impact of socialism.
Posted by: Lee Muller | Oct 1, 2008 7:34:23 AM
C'mon Lee, you're asking Congress to adopt good sense ideas; it'll never happen! Congress not taking from the producers? That is as likely as Warren, Bolton and Ross-Scoppe starting a Video Poker and Payday Lending business!
Posted by: Robert | Oct 1, 2008 10:54:13 PM
You don't see Warren Bolton writing about the mainline banks which finance the payday lenders, or even own them.
You don't see Cindy Ross-Scoppe attacking Education Gambling.
Money stolen by the "right people" for a "noble cause" is magically cleansed.
They're halfway there, Robert.
Posted by: Lee Muller | Oct 2, 2008 6:58:05 AM
