by Frank James
Reporters who have gotten drafts of the Bush Administration's bailout plan for the financial markets say the administration is asking for $700 billion.
Here's an excerpt from an Associated Press story:
WASHINGTON (AP) _ The Bush administration is asking Congress to let the government buy $700 billion in toxic mortgages in the largest financial bailout since the Great Depression, according to a draft of the plan obtained Saturday by The Associated Press.
The plan would give the government broad power to buy the bad debt of any U.S. financial institution for the next two years. It would raise the statutory limit on the national debt from $10.6 trillion to $11.3 trillion to make room for the massive rescue. The proposal does not specify what the government would get in return from financial companies for the federal assistance.
"We're going to work with Congress to get a bill done quickly," President Bush said at the White House. Without discussing details of the plan, he said, "This is a big package because it was a big problem."
The White House and congressional leaders hoped the developing legislation could pass as early as next week.
Meanwhile blogging over at the
American Prospect's site, Dean Baker, an economist who's co-director of the Center for Economic Policy and Research, says not to get your undies tied up in knots over the bailout's better-part-of-a-trillion-dollars price tag.
The bailout will clearly carry a big bill, likely in the $500 billion to $1 trillion range. As the Post reports today, opponents of Social Security and other government social programs are already using this expense as a rationale for curtailing such spending.
When assessing their argument it is important that the financing of the bailout be correctly understood. From an economic standpoint, the cost of the bailout was incurred when the bad loans were made. That was when people built a home, borrowed for a vacation, and spent in some other way that demanded real economic resources in the form of newly produced goods and services.
When the government supports a bailout, it is not directly creating demand for new goods and services. It is simply ensuring that money that we thought was already there (e.g. funds in a money market account) does not disappear through a financial collapse. No one is going to spend more because their savings account did not disappear. (They obviously would have spent less if their savings account actually did disappear.)
Interesting view. The government may not be creating any new demand for goods and services. But it certainly feels like there will be a whole lot less money to address many of the things that need attending to like dealing with health care, infrastructure renewal or any of the other pressing needs facing the U.S.
Of course, if those same toxic assets were allowed to bring the economy to a halt for many months or years, then there wouldn't be much money for much of what's on the national agenda anyway.
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Comments
and lets add those well deserved tax breaks proposed by McBush. How dare Obama think taxing these people that haved raped America deserve to pay more.
Posted by: bill r. | September 20, 2008 11:11 AM
Add this to the Trillion dollar Iraq War and we are all in debt forever.
Heckuva job, W.
Posted by: athena | September 20, 2008 11:16 AM
Thanks Jimma Carter, Jamie Gorelick and Barney Frank for sticking it up our a$$.
Paulo
Posted by: Paulo | September 20, 2008 11:38 AM
Orn's Law:
Take any govt official's "estimate" of what something is going to cost, and then:
multiply it by, at the least, a factor of 4.
Posted by: ornery | September 20, 2008 11:53 AM
With all the losses on Wall Street this week, not gonna be much taxes to collect. Even so, you have gotta keep your sense of humor.
http://www.boppoll.com
Not a good week for McCain.
Posted by: mgultch | September 20, 2008 11:54 AM
Well, Paulo, that's exactly where anything you have to say belongs. "Richly Deserved for you," I say.
Posted by: Op109 | September 20, 2008 12:08 PM
I've got an intersting idea for this solution: How about we take on the bad loans but in order for a bank to unload the loans, they much agree to an ARM interest-only loan so that there is a penalty given to these greedy lenders and that this part of the national debt will not race away with compounding interest debt. Seems like what goes around comes around, huh? Go Obama
Posted by: xcellentform | September 20, 2008 12:49 PM
I have only two things to say about the price tag:
*
1. It's way too much; and,
*
2. It's unconstitutional because it's nothing but a handout to private "persons," Congress hasn't voted to spend it, and its not for the general welfare.
Posted by: John W. | September 20, 2008 1:08 PM
bill r:
*
I have no doubt that people in the financial industry must bear responsibility for this debacle, and that they should be made to pay as much as they can for it. However, dragging tax cuts into the discussion is a red-herring. Most of those who benefitted from changes in the marginal tax rates are not responsible for this debacle. We are not facing the misdeeds of all "the rich" in general. We are facing the misdeeds of those in the financial sector, and that's a very limited subset of those who benefitted from the tax cuts. So, if you don't like the current tax policy, that's fine. But your argument against them on the basis of last week's events is a poor one.
Posted by: John W. | September 20, 2008 1:18 PM
So this one, particular bail-out had to exceed 3/4 Trillion before anyone in the Bush administration noticed something was wrong. I don't want tax payer bail outs. I want the incompetent lenders and the incompetent borrowers to fall on their bums. Where is my reward for living below my means? Do I get rewarded by taxpayer funds for being responsible? The banking institutions that have required bail outs should not have coffee machines, refrigs., or plants in their offices. They should all work in sparse cubicles and give the nice, corner offices to community organizers or to the homeless--since they will be operating on tax payers' money--and have already been rewarded for doing pathetic and criminally negligent jobs. Congress has to provide that any and all golden parachutes for the negligent bankers shall be voided if the banks or corps are bailed out with tax funds. The Wall Street "problems" could all be a hoax as Bush and his brother, Neil, would want to use this much money for the Banking buddies, and make sure the money never made it to fund health care for all Americans. Swamp, is this one "too over the top" for you, too?
Posted by: Vivian | September 20, 2008 1:38 PM
Paolo has no clue.
Does anyone remember voting for Hank Paulson for office? seems he is running the country; but to tell you the truth we're better off with him than Bush, who doesn't seem to even be participating in working this out.
Posted by: Flo | September 20, 2008 3:24 PM
THAT IS 700Billion because Democrats decided to pressure Bush saying that Minorities aren't able to buy houses and they need special MINORITY BANK LOANS to get them. Bush gave them what they harped for and when the interest rates went up (as the loans stated they could do) the market was flooded with homes and banks went under.
YOU CAN ALL THANK THE DEMOCRATS FOR THIS ONE. YES, they are out there in high force along with their LIBERAL MEDIA FRIENDS telling you it's Republicans fault, but they are LYING TO THE AMERICAN PEOPLE and they will continue to lye in hopes that you don't take a few seconds to look this information up and find out the truth for yourselves.
Posted by: LIBERAL MEDIA AND DEMOCRATS HOPE YOU ARE STUPID | September 20, 2008 4:01 PM
3 words
STOP THE BAILOUT
Posted by: willie, urbana, il | September 20, 2008 8:07 PM
THAT IS 700Billion because Democrats decided to pressure Bush saying that Minorities aren't able to buy houses and they need special MINORITY BANK LOANS to get them.
_________________________
Really? Bush gives in to Democratic pressure? I am sure your messiah shrub would have a thing or two to say about your fantasy.
Posted by: tried and true American | September 20, 2008 9:41 PM
Make all the banks and insurance cos. show congress their books--the real ones--not the cooked ones. Then, I'll show congress my books, and congress can tell us who the crooks and greedy gamblers are. A rational society does not bail out private crooks and private greedy gamblers with public money.
Posted by: Vivian | September 20, 2008 11:39 PM
5 more words:
GET THE LYING REPUBLICANS OUT !!
SUPPORT OUR TROOPS, BRING THEM HOME, ALIVE AND WHOLE. NOW.
Posted by: Don Fitzgerald, Chicago | September 21, 2008 1:25 AM
Posted by: tried and true American 9:41 PM
You need to do some reading. Acorn is a group that Obama worked as lawyer for to pressure banks into giving subprime loans to minority and poor who did not qualify for loans. THEY CRIED RACISM (there's one we haven't heard from Obama before) if banks were not going along, and they could stop mergers and growth and banks could recieve fines.
ACORN is not a good group to associate with. THEY ARE RADICALS. http://www.consumersrightsleague.org/UploadedFiles/ACORN_AHC_Report.pdf
Pres Clinton started these loans for people who couldn't afford them to boost up a housing bubble that burst while he was in office. There was efforts to do something about it in 2002 and then McCain and other republicans tried to pass a reform act in 2005 that was voted down by 100% of Democrats.
Now, we are all mad as heck and wondering why WE SHOULD PAY FOR THIS BS ALL THE WHILE ALL WE ARE HEARING IS HOW MCCAIN IS IN HOT WATER OVER THIS ha ha ha. I DON'T THINK SO ! ! ! !
Posted by: ACORN/Obama and DEMOCRATS GOT US HERE | September 21, 2008 2:13 PM
With the new bail out,WE HEAR MOST SENATORS TALK OF MORE transparency WITH THESE BANKING COMPANY BAIL OUTS? when Might we sey some members of congress step down from there chairs they hold? or even removal from office?
Since real accountability requires transparency,Expenditure data is only available for members of the House. The Senate has exempted itself from reporting expenditures electronically. THIS NEEDS TO CHANGE ASAP!
why are we not hearing cuts in congress's pay? 100 DAY SESSIONS AND THEY MAKE MORE WHEN THERE NOT IN WASHINGTON? THEY MAKE $50,000 DURING THERE SUMMER VACATION,MORE THAN MOST AMERICANS THAT WORK ALL YEAR?
OUR FRAMERS THOUGHT OF WORKING PEOPLE COULD COME TO WASHING TO SERVE (PART TIME) (NO HEALTH BENIFITS FOR PART TIME WORKERS)IN CONGRESS AND THEN GO BACK TO THERE REGULAR JOBS WHERE THEY HAVE HEALTH BENIFITS.
As Americans worry about their own finances, their elected representatives in Washington—with a collective net worth of ......$3.6 billion..........are mostly in good shape to withstand a recession. TOTALLY AGAINST WHAT OUR FRAMERS PLANNED
U.S. senators had a median net worth of approximately $1.7 million in 2006, the most recent year for which their financial data is available, and 58 percent of the Senate's members could be considered millionaires. In the House of Representatives, the median net worth was about $675,000, with 44 percent of members having net worths estimated to be at least $1 million.
By contrast, only about 1 percent of all American adults had a net worth greater than $1 million around the same time.
WHY SHOULD IT COST 1/2 BILLION FOR THE SENATE AND 1.5 BILLION FOR THE HOUSE? WHY DO WE PAY $1 MILLION PER SENATE TERM WHEN 95% OF US MAKE THAT IN A LIFE TIME?
Data for 2007 will be integrated after those reports are made available to the public at www.opensecrets.org but as of today we do not have 2007 data avail. and we are almost over with 2008? I think this data needs to be provided before any action needs to be taken on a bail out? Its like asking the many that passed work on legis. over the years with the banking policies(that go us in this mess) to come up with another plan?
THIS WOULD BE GREAT TRANSPARENCY THAT MAY OPEN A PANDORAS BOX OF WHY WE DO NOT WANT PEOPLE MAKING POLICY
The investment portfolios of members of Congress have millions of dollars invested in politically influential industries that they also regulate IE:commercial banking ($94.5 million),securities and investment ($24 million).
I FIND IT HARD TO BELIEVE THAT THE DAY THEY COME BACK FROM RECESS THE DOW PLUNGES? A SELL OFF OF $118.5 MILLION HELD BY MEMBERS SOLD ON MONDAY AND RE INVESTED THURSDAY WOULD REFLECT WHAT HAPPENED FOR THE WEEK ON WALLSTREET?
WELL THERE ARE JUST A FEW QUESTIONS AND IT HAS NOT EVEN TOUCHED HEALTHCARE?
I STILL FIND IT HARD TO BELIEVE WHEN A PROVIDER IN IOWA CAN PAY ITS CEO $17 MILLION AND HAVE PROFITS OF $160 MILLION IN ONE YEAR GET 77% OF ITS INCOME FROM THE GOVERNMENT?
THANKS
TOM SMALLEY Iowa
tome@netins.net
Posted by: tommy in iowa | September 21, 2008 2:31 PM
The thing that gripes me is that we had a special COMMISSION to see why 9/11 happened so it wouldn't happen again, but when McCain talks about a special commission that will look into all the details about what happened to cause the BANKING CRISIS> the LIB MEDIA AND DEMOCRATS come down on him fast. They don't want anyone giving detailed information on what happened there. They don't want the public knowing that Congress wrote laws that screwed with the banks making it impossible for them to opperate the way they should where loans only go to those who CAN PAY FOR THEM (qualify). They don't want details getting out about ACORN along with Obama's help working to put the screws to BANKS for these SPECIAL MINORITY LOANS with their CRIES OF RACISM and using the power they were given by congress to control banks growth, while screwing the hell out of these MINORITIES in the meanwhile.
THIS IS SUCH A SCANDAL. IT'S BEYOND ACCEPTABLE.....and the MEDIA, they're watching McCain/Palin take the numbers by storm and people are looking at this and seeing that MEDIA/DEMOCRATS/OBAMA are all one in the same>TIME TO VOTE THEM OUT ! ! ! !
Posted by: TIME TO VOTE LIB MEDIA/DEMOCRATS/OBAMA OUT | September 21, 2008 6:32 PM
I thought, long ago, the Supremes decided that corporations have the same rights and responsibilities as individuals.
Posted by: C. Morris | September 21, 2008 9:13 PM
Paulo,
We thought you said once that Bush fixed the economy through tax cuts and deregulation.
Looks like the Republicans were asleep at the switch again, just like on 9/11.
Posted by: TheLeninSisters | September 21, 2008 9:16 PM
The speed-of-light measurement was off by a factor of nearly 100.
The technology of the era was not up the task. With new technology came new calculations for the speed of light path traveled in a vacuum one meter length is 1/299 792 458 of a second.
One day a Zen master was walking in the jungle and came across a large man eating tiger charging behind him, in a split second the made the decision to run down the path to escape the man eating tiger, suddenly he was at the end of the path which was a edge of a shear drop cliff dropping a long way to jagged rocks, so below which would be a sure death. So, the Zen master was faced with being eaten by a large man eating tiger or jumping off the cliff to sure death! The Zen master looked at the edge and notice a small vine at the edge of the cliff growing over the edge, with a split second decision he decided to use the frail vine to get over the edge of the cliff. The frail vine began to give way and the Zen master was falling to sure death to the jagged rocks below, when he notice a fresh beautiful bright red strawberry growing on the cliff right in front of him, the last thought from the Zen master was this is got to be the best tasting strawberry he has ever had. The economy would be the Man-eating tiger and the frail vine is the rescue or bailout plan. The strawberry is the pork barrel attached to the rescue or bailout plan.
Local Entrepreneur is selling Caps & T-shirt with the logo “Got $700 billion?” http://www.cafepress.com/092308
Posted by: Laisseraller | October 3, 2008 1:50 AM