The Goldman-Sachs solution put forth by Henry Paulson is just what not to do. President Bush is getting bad advice from his staff and needs to re-think the approach to the current Wall Street financial problems.
The Henry Paulson plan is an absolute disaster for hopes that a sane economic policy will emerge from current Wall Street financial problems caused by the collapse of Fannie Mae, Freddie Mac, and AIG. Former House Leader Newt Gingrich said in an interview with NPR's Melissa Block that, "... I think that [U.S. Treasury] Secretary [Henry] Paulson has shown almost no understanding of how a democracy operates. His initial draft would have given him $700 billion of your tax money with no oversight, no judicial review, no accountability. I mean, we're not a dictatorship."
Gingrich understands that the interests of the American people come before those of Wall Street. Gingrich went on to note, "... for example [Connecticut Sen.] Chris Dodd — was the largest single recipient of money from Fannie Mae and Freddie Mac, and he is the chairman of the Banking Committee. So the guy who got the most money is now going to write a bill to give taxpayers' money to the people who gave him money. Somehow, I am not reassured."
Apparently, Washington politicians view their constituents as too unsophisticated to comprehend simple free market economics. When a business goes bad, it should fail. In the case of government-created entities who have operated outside of sufficient regulatory control, the people must share some responsibility for continually returning politicians to office who have created the mess they must now confront. Promises without substance have become the stock in trade of politicians who have no solutions, but who feast on bad economic times to slip into office. Once elected, these politicians create cozy relationships with organizations (Fannie Mae, Freddie Mac, Acorn) who then get support either from direct government grants of hundreds of millions of your dollars (Acorn), or congressional stonewalling of proper regulatory control (Fannie Mae, Freddie Mac). In return for this support, these institutions fund the election campaigns of their friends in Washington. Barack Hussein Obama received six-figure institutional contributions from Fannie Mae and is now receiving active campaign support from Acorn (which only cost taxpayers $500 million).
Commenting on the Paulson proposal being from a Republican administration, Gingrich replied, "I think you have a Goldman Sachs chief of staff to the president and the Goldman Sachs secretary of the Treasury. And they convinced the president that the American people ought to send $700 billion to Wall Street, which I think is a very, very bad idea, and I would argue is a very un-Republican idea. I don't understand what they think they're doing." Gingrich is absolutely correct. Now is not the time to toss more taxpayer money into the ever-increasing morass that passes for federal action.
Gingrich proposes a less panicked approach, "we need to slow down, take a deep breath, hold public hearings, have experts testify, understand exactly what the agreement would be, where the money would go, how we would account for it. I don't think the taxpayers should be socked for $700 billion for welfare for Wall Street. I think it's fundamentally wrong, and I think that it is very likely to create a bureaucratic control of our financial system in a way that will cripple us for 20 years." This is not the time for panic to reign over reason.
Yet panic seems to be the most appropriate word to describe the Paulon proposal. As Gingrich so aptly observed, "Secretary Paulson has been consistently wrong for a year-and-a-half. He told us for a year-and-a-half this wasn't a dire crisis; this wasn't going to happen. So the very people who told us for a long time not to worry about it are — I know they're panicked. Whether that means that we should be panicked, I'm not sure. And I think the purpose of the Congress, the purpose of the House and Senate, is to be a check and balance on the executive branch, not to automatically write blank checks." Let's hope that Congress takes this advice seriously. It's time for Congress to assemble and invite the President to participate in a measured effort to deal with the current financial situation, not from panic, but from a position where everyone is sufficiently informed to help develop a plan to resolve these problems intelligently.
As I write this, Senator McCain has announced he will suspend his campaign to go back to Washington to devote his time and effort toward a sane solution to this financial mess.
Evidently, earlier today Obama called McCain and offered to issue a joint statement that both candidates will work to develop a plan to support the Paulson proposal. McCain's response was his decision to suspend his campaign and return to Washington.Beyond the usual attempt to blame others without providing any suggestion of a solution, there is no word from the Obama campaign on what he proposes to do at this point. However, an "Obama source" stated that the initial Obama position is that he sees "no reason" to suspend his campaign and he plans to go forward with the debate. Hmmmm. Is that the kind of "leadership" we're looking to elect? Politics as usual?
Frankly, McCain should take it one step further, invite both Gingrich and former Gov. Mitt Romney to help develop a sound plan to move forward and deal with this issue.
Those who believe $700 billion is a large number are absolutely correct. This country cannot go on bailing out every bad business, no matter how large and widespread the problem. The money simply isn't there and printing more would simply drive the value of the dollar down, create skyrocketing inflation, and bring much higher fuel and electric costs as the anticipated severe winter of 2008-2009 approaches.
Fortunately, because of Republican efforts to demand that the ban on drilling not be renewed when it comes up for a vote in October, congressional Democrats have had to agree rather than face the wrath of their constituents. Democrats are hoping for an Obama victory so that they can then reinstitute the ban on drilling. If that should happen, we can expect to see a continuation of the annual expenditure of $800 billion to foreign dictators and terrorist supporting nations so we can import sufficient crude oil to sustain our economy.
Apparently, it took little time for Obama's initial reaction to McCain's suggestion to hit the proverbial fan. Rumors currently circulating indicate Obama's campaign reversed its original reaction to McCain's action and says it will now "work to" reschedule the debate. No word on whether Obama will suspend his campaign and return to Washington. We've seen this before with the responses of the two candidates to the Russian invasion of Georgia. Obama was silent. McCain gave a thoughtful, clear, appropriate response. Then Obama essentially says "me too" to the McCain statement. Which candidate shows leadership and decisiveness? It's clear. We can't have a President Obama calling Sen. McCain for advice every time a tough situation develops. Better to elect the better candidate in the first place.
Why isn't Obama making these statements himself? Why are campaign "sources" speaking to media people about Obama's reaction? To test various reactions until they get one that has the right response?
Think long and hard before even thinking of voting Democrat this November.
Bob Webster, a descendant of Daniel Webster's father, Revolutionary War patriot Ebenezer Webster, has always had a strong interest in early American history, our Constitution, U.S. politics, and law. Politically he is a constitutional republican with objectivist and libertarian roots. He has faith in the ultimate triumph of truth and reason over deception and emotion. He is a strong believer in our Constitution as written and views the abandonment of constitutional restraint by the regressive Progressive movement as a great danger to our Republic. His favorite novel is Atlas Shrugged by Ayn Rand and believes it should be required reading for all high school students so they can appreciate the cost of tolerating the growth of unconstitutional crushingly powerful central government. He strongly believes, as our Constitution enshrines, that the interests of the individual should be held superior to the interests of the state.
A lifelong interest in meteorology and climatology spurred his strong interest in science. Bob earned his degree in Mathematics at Virginia Tech, graduating in 1964.