Wednesday, September 24, 2008

Congress and the Bailout

I'm not an economist, so I'm not going to tell you how Congress should vote on the proposed $700 billion plan to buy problematic mortgage backed securities. That question is "above my pay grade." Personally, I'm conflicted on the issue, as are, I suspect, most Americans. From the perspective of a congressional scholar, however, there are two things that concern me about the proposed legislation.
  1. I don't trust Congress to make wise choices this close to an election. The financial crisis is a complicated issue. Even with their incumbency advantage, members of Congress are often concerned about losing their next election, especially when it is two months away. Will they be able to devote thought and energy to this problem, keeping in mind what is best for the country, rather than how it will look to swing voters in their district?
  2. "Bipartisan" often just means "incumbent protection." I know most Americans like bipartisanship, but when I see the parties working together, I worry. The one thing that Republican and Democratic members of Congress can agree on is they want to keep their seats. (Think about the tax rebates, for instance.) So, how much of this vote will simply be members of Congress showing their constituents that they are doing something about the problem? We won't know if they made the right decision until well after the election.

5 comments:

karenwalker said...

So right!

karenwalker said...

I just realized in a political blog “right” has more than one meaning- I meant- true, accurate, correct.I agree.

Dr. N said...

LOL! I assumed that were the case, but thanks for the clarification.

Shannon Bow said...

what frustrates me is that its not really a bail out... what it is more closely related to is a bridge loan with a hope for a profit on repayment but they haven't framed it that way. They are assuming the public are too stupid to understand financing.

I'm personally really unhappy with the fact that the bill as written essentially places treasury beyond legislative oversight and judicial review. You know I'm all about presidency, but I love my checks and balances.

The other thing that really irks me is that the brand of Republicans we have in office have consistently reminded us how they want to scale back the New Deal and Great Society. They don't want big government. However, this bailout is about as big as big government can get. The ideological inconsistency drives me nuts.

Dr. N said...

Shannon,

I agree with all three of your points. It won't "cost the taxpayers $700 bil," b/c the treasury would be purchasing assets that they would later resale. We may lose money in the end, but we won't lose all $700 bil.

I think an oversight committee will be part of the final bill, which today looks like will pass.

I think the fact that it's essentially a liberal approach from a Republican administration is what has gotten the MCs confused about how to vote.