In making their individual decisions as to whether or not to support the $700 billion bailout bill, members of Congress ought to be asking tough questions of themselves and of the bill's advocates.
These questions should include the following:
What will be the inflationary impact of the bill? To what degree will this bailout lead to more speculation bidding up assets? To what degree will this bailout encourage more risky investments in the future?
The amount credit card debt in the United States is more than $750 billion. This bill places no caps on credit card interest rates for debt that has been incurred now or will be incurred in the future. Why not? Would caps on interest rates not reduce inflation and speculation? Would not capping credit card interest rates free up more money for home mortgages and lower home mortgage rates?
The price of homes in many areas of the country has been bid up by reckless lending policies beyond recognition. The current market correction is moving in the direction of making more homes affordable to first time buyers. What impact will this legislation have on homebuyers and home sellers? Which is more important, maximum profits on sales of existing homes, or accessibility to home buying for new entrants to the housing market.
The number of abandoned houses in our country is now increasing. What are the statistics in this area? Will the bailout bill lead to the number of abandoned houses being reduced? How do the provisions of the bailout bill deal with this?
To what degree have U.S. tax policies fueled irresponsible debt accumulation? Why does so little of the bailout bill seem to deal with tax policies? What is the overall relevance of limiting deductions of executive salaries over $500,000 to companies receiving bailout aid? Do they pay enough taxes so that this is a meaningful sanction? Does this appear likely to reduce executive salaries or not? If yes, how much will the savings be, and where will the money be likely to go?
The bailout plan raises the possibility of an increased tax burden on the financial industry if the bailout loses money. Why does it not start levying increases NOW? Why does it not mandate increased taxes in the future? Why should anyone believe that tax increases for the financial sector would not be strongly resisted by that sector, making them highly unlikely to be realized?
The American economy is more and more looking like a deck of cards. Does this bill really strengthen the economy, or is just picking the cards up off the table and placing them up again in fragile positions?
Were I a member of Congress, I would be strongly inclined to vote against this legislation. I would want real, documentable facts to justify it. I would want increased contributions to the federal treasury by the financial industry, effective immediately. I would want to know how this bailout effects my constituency, and why it does not benefit them more directly.
It appears that there will be little or no opportunity for concerned members of Congress to amend this legislation. That does not appear to be a good sign for the long range interests of American citizens, even it does lead to quicker passage of the legislation.
One of my former colleagues in the Pennsylvania House of Representatives described the logical progression of a lot of advocacy in the House as being like this:
We have to do something. This bill is something. Therefore we have to do this.
In fact, all three premises have to be carefully examined. Do "we" the American people, have to do something, or can the markets take care of this problem themselves? Is this bill something that meaningfully addresses the problems without bad side effects? Do we really need to pass this legislation? If we do need to pass this legislation, why do we need to do it by October 1?