A Plan To Turn the Bailout Into A Boon For Taxpayers
Posted by Jeff Pruitt - 9/25/08 @ 1:52 am - Filed Under 2008 National Elections, Featured, National Politics
I’ve tried to read everything I could on our current financial crisis and the proposed $700 billion bailout. I think this legislation is DOA in its current form but I think it’s inevitable that something will pass. So the question becomes how can taxpayers use this bailout to their advantage?
Debt is crushing this country - governmental and personal. We all know how to fix the problem - tighten the belt and work your way out. Unfortunately, government has been incapable of making the tough decisions. We’ve borrowed $500 billion/year during relatively strong economic times. Does anyone think that will continue during an economic crisis? Who in their right mind will be buying up our debt after this? We’re going to have to pay higher and higher interest rates and so I humbly suggest that now is the time to change course on our perpetual financial irresponsibility.
If the government wants to spend $700 Billion of our future earnings then I want something for it - collateral if you will. And no, the mortgage debt the government will be buying is not collateral - it’s worthless. If it weren’t then we wouldn’t have to buy it all up. No I want real quid pro quo. Here are my demands:
- A Balanced Budget Amendment - it’s high time we have a constitutional amendment requiring our federal government to only spend what they bring in
- Presidential Line Item Veto Amendment - Every President in recent memory has requested this power to control wasteful pork-barrel projects. Bill Clinton was given this authority but it was ultimately removed by the Supreme Court when then mayor Rudy Giuliani sued the government
- Institute Import Certificates - We must balance our trade deficit and this is the most efficient way to do it. The idea was originally proposed by Warren Buffet and creates import certificates equal to the country’s exports. Importers then have to buy/trade the certificates in an open market in order to import their goods.
- Re-institute the Glass-Steagall Act that was created in 1933 and repealed in 1999. The same idiots that lobbied for this deregulation are the ones that now want to be bailed out.
In the end I believe that the previous items are ultimately worth vastly more to taxpayers than the $700 billion. Taxpayers need to leverage their new found power and demand, in an election year, these fundamental changes to government spending. We should stop looking at this as a potential disaster and focus on the opportunity.
(Hint, hint Mike Montagano…)
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37 Responses to “A Plan To Turn the Bailout Into A Boon For Taxpayers”
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Very practical wish list, but keep in mind that our government does not seem to be very practical minded.
I’d suggest this link that I sloe from Dan Turkette’s site.
http://www.buymyshitpile.com/
The logic of this scheme is more in line with traditional Congressional actions, so it might actually have a chance of passing.
Jeff,
I would encourage people to oppose the entire 700 billion dollar bailout. It is socialist and it should not be passed by Congress.
That being said if there is a bailout there are a lot of things that need to be done to improve the bailout!
1. A real balanced budget amendment would be awesome!
2. I also favor a Presidential line-item Veto.
3. I am not so sure about this one. I agree our trade exports are much higher then our imports and we must address this issue immediately; I am not sure if this is the best way to do it.
4. Yes we should re-institute this act.
Mike Sylvester
Mike,
You should google “import certificates” for more information. I think it’s a good plan…
Jeff,
I sadly agree something will pass and must be passed because of lack of common sense by the CONGRESSES and PRESIDENTS of the past. It proves because you GOT THE MOST VOTES does not mean you can lead or write good laws.
It is like I told an attorney yesterday it seems like we are digging a hole by hand. We grab a handful of dirt and toss it up into the air and it comes right back down on us. We are digging a hole alright, but we are filling the hole right back in ourselves.
1- I agree with the concept of balanced budget. We must be able to go into debt provided congress approves by some margin to go into debt for one given reason. Keep in mind with a balanced budget if a war breaks out and if we don’t have the money in house what do we do? If the “big one” comes to the west coast what do we do?
2- If someone looked at what Gov. Palin has done in Alaska is she used the “line item veto.” She killed certain line items and cut the amount back on other items by reducing the amount. There is provision for her veto and/or reductions to be over ridden.
3- Balancing our trade deficit is much more complex when looking at the entire world. I have not studied Warren Buffet’s program but believe it would make sense as I think he is one of the few people who has some of the best insight into the world of trading.
4- Remember Glass-Steagall Act was the act of protecting the people. While congress got credit for the act it was written by others who where from the private sector. Keep in mind many serving in congress back then represented the people who elected them. They where not be holding to outside groups, who provided money for them to run their next campaign.
The 1999 act was on concept was a great idea. However, by the time the special interests got things changed it provided the holes for entire trains to drive through.
Keep in mind these companies hired hundreds of people to figure out how to get advantages over other companies. They pushed the letter of the law to serve their needs to turn mega profits.
While making mega profits no one bitched outside of what the CEOs where making. People with 401-K accounts where thrilled when their savings gained 12% a year. Everyone was thrilled about how housing was being built all over the United States and our home values increased at record rates. No one was asking any questions! So maybe our own greed helped us get here.
What we need to do is modernize our systems of watching over these mega companies. Currently departments like SEC are limited in their reviews and watching over these companies until a crisis comes about.
What we also must do is make examples of those who are found to have broken the law. That these people stand alone before the courts, with attorneys paid for by themself, to defend their deeds. That they serve long terms in jail and that they are left penniless.
There is no better message for a top manager to know that he will be held accountable by himself for his actions. He will not have a battery of attorneys paid for by the company he worked for. That he will not serve a short time in jail. That even after serving time he will leave jail with no access to the tens of millions of dollars he had in bank accounts.
Jeff & Mike in 2012!!!
(that is, if the Mayans are WRONG and we all don’t ALL go bye-bye that year)
;)
B.G.
(glad THEY know all this political stuff and can make it easy for me to underdstand)
The more informed we are the better off every American will be. Read and engage in our democratic process. Read, digest then call, email
your elected folks on Capital Hill.
Let’s look at what our elected Congress, Senate, and Representatives are doing on the Budget, Finance, Appropriations, Judicial,
Rules & Adminstration, and the Joint Economic Committee. It’s interesting, how their deadline is Sept. 30th…date to get their job done till the election.
Look at their ideas yourself.
And we are all educated on the
Constitution of the United States
Preamble Article I Article II Article III Article IV Article V Article VI
Article VII & AMENDMENTS for 2008-2016.
http://www.senate.gov/general/committee_assignments/assignments.htm
I hestitate but folks listen we have people that want to hurt us. It is a real. Maybe eveyone should bookmark http://www.thereligionofpeace.com/
You won’t get a line item veto. The Supreme Court was correct in interpreting the presentment clause in its Clinton v. New York decision. Allowing a president to decide which items he would get rid of would be chaos.
Every president could simply decide which items were not acceptable to him within the limitations of the act. What kind of lobbying would go on? Who would win and who would lose?
The Constitution requires presentment and either acceptance or rejection of bills in whole. The line item veto is simply a back door way of allowing a president pretty much unfettered power.
Judicial Review needed!!!! Our Constitution is at
stake. I’ve already lost my investments on paper.
Bring it on Congress!
Let the people know now.
Kill the bailout: Capitol Hill to pull an all-nighter; negotiations break down
By Michelle Malkin • September 25, 2008 07:31 PM
Charlotte,
We could get a line item veto via constitutional amendment.
JQ,
Previous proposals have addressed this issue. I believe the last version required a “super majority” of 60% to override.
I want “preferred stock” in these investment companies—NOT their bad assets.
And its good to see the democrats got some money in this bill for Acorn to bail them out of there trouble. It’s politics as usual for both sides!!
Trade certificates constitute a import quota, a form of trade barrier. If the US does this, other countries will do it in retaliation. Trade barriers are what caused the Great Depression.
http://eh.net/encyclopedia/article/obrien.hawley-smoot.tariff
What happens if the “Big One” hits the West Coast?
Assuming the massive fleet carrying the enemy troops somehow goes undetected, assuming California doesn’t welcome the invaders as “liberators”, and assuming that the conflict doesn’t end in a massive nuclear exchange, Congress would have time to convene and vote for an emergency increase in defense spending.
We need a balanced budget amendment because deficit spending and bad economic planning pose a greater threat to this country than any external threat.
Robert,
The “big one” is known as the eartquake that will rock that part of the United States that is known to be coming, just when.
Here is the organizational chart of our
United States Leaders from top down with clickable links:
Please read what our leaders are proposing and bookmark it for future reference:
http://www.senate.gov/pagelayout/reference/e_one_section_no_teasers/org_chart.htm
Jeff:
The Supreme Court will not allow a lnie item veto. We have a constitution that sets up a checks and balanced system. Each branch of government makes decisions that protects their own turf.
But here is the ultimate break down:
Legislative- makes the laws
Ececuvitve - enforces the laws
Judiciary - interprets the laws
The Judiciary has the final say and has the most power.
Okay all of you cowards here is what Thomas Jefferson said,
“How can a people who have struggled long years under oppression throw off their oppressors and establish a free society? The problems are immense, but their solution lies in the education and enlightenment of the people and the emergence of a spirit that will serve as a foundation for independence and self-government.
When are we going to see a revolution? Or are all of you too scared?
It is time for a revolution. Independents, Republicans, Democrats or what ever.
We the people created this government, and we can reorganize it
Jeff:
My list of “things to do” are divergent from yours and while many of your ideas might be nice, some seem to be pipedreams in today’s contentious political environment. (1)We will not see a balanced budget that would be enforced. (2)As you pointed out, the line item veto is unconstitutional. (3)Turning our back on free trade in today’s world economy would result in a raft of unintentional consequences, primarily reduced foreign investment in the United States.
From what I read, Glass-Steagall still exists in part, since Goldman Sachs had to reorganize as a bank holding company in order to get $5 billion from Warren Buffet to be used to buy deposits from distressed banks. Limiting private participation in this credit crises seems to me to be a silly idea.
Now that the House Republicans are working to fix the Paulson bailout plan by going away from outright purchase of bad mortgages at who-knows-what-price, the needed government involvement begins to make sense.
Whatever we do, we have to realize that this is an immediate crisis that requires immediate legislation and implementation. Bank failures fueled the Great Depression and we do not want to go there. My complete wish list, which was influenced by some economists, is here:
http://herdgadfly.blogspot.com/2008/09/bailout-what-to-do.html
This morning I spent some time contacting Bayh, Lugar and Souder urging them to vote no on this bailout package. I urge others to do the same if they feel as I do.
Jeff/Mike,
Jeff Jacoby of the Boston Globe has a great article and keen insight on the whole mess.
http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2008/09/28/franks_fingerprints_are_all_over_the_financial_fiasco/
Worth reading.
Help me understand… Obama wants to tax the hell out of the “rich” and “dirty rich american companies,” then who is going to buy the gov. bonds for this “bailout!”
All the Democrats hoping for the big tax cut are watching Obama kiss it good bye unless you hope your kids and grandchildren want to pay for it.
I am not sure who is worse on this Bush or the Democrats in trying to scare the crap out of the taxpayers of this country.
One of Obama’s talking head just on Fox News at 1:28 PM said Obama may not vote on the bailout. That unless his vote is needed he may not return to Washington and vote>>>>> This is standard Obama from the days in Illinois… when the going gets tough the tough head to hills…. This is the damn leadership we need…. I best stop before I say something that gets me banned.
To Gadfly and Charlotte:
If you AMEND the constitution then the Supreme Court cannot call it unconstitutional - that’s the whole point of what I wrote regarding line item veto - you should go back and read it. You can argue that we shouldn’t amend the constitution if you wish but you cannot argue that it would be unconstitutional.
Robert,
Don’t tell me import certificates are anathema to free trade. What we have NOW is nothing, not even remotely, like “free trade”.
Charlotte,
Revolution? Be careful what you wish for. If that day came myself and millions like me have guns and you don’t.
Fred,
I appreciate the link to the article. I must say that I found it incredibly ridiculous but I suppose it’s good to read all sides.
For those that didn’t read it, in short Jacoby argues that our current crisis was caused by government requiring lenders to give loans to black people. If it weren’t for those damn blacks then we’d all be better off.
My response - horseshit…
Jeff,
We could amend the constitution for all sorts of things …to shut down baby killers is the first to come to mind; however, constitutional amendments take years not days to accomplish. Once an amendment is in place it could take decades to firm up the legal rulings supported by the amendment. Right now, I am unsure that line item vetos are a good thing, because state governors often change the meaning of appropriations by deleting words inside the bill.
As for the root cause of the crisis, government intervention (primarily Democrats)into capital markets IS the cause. Say HORSESHIT all you want. Subprime mortgages come about from lending money to people who did not, repeat, did not qualify for them. This was under the auspices of the the Community Refinance Act, supported by rules set forth by HUD under Clinton to make certain that banks made the loans. There is evidence, if you care to look for it, that banks were first strong-armed into making the loans and later the greatly enlarged GSE’s, Fannie and Freddie, had an offer for the financial institutions that they could not afford to pass on…you loan the money, we will guarantee repayment.
There are some crooks at the GSEs who cooked the books that need to go to jail (just as there were crooks at ENRON) and there are some politicians such as “Countrywide” Dodd, Barney Frank and Barack Obama who personally benefited from the GSE dole.
I can’t believe in this day and age we have the type of racism that I see in the co-ed (not article) in the Boston Globe and here on this board. In this “enlightened age, where everyone is trying to tear down the walls for equality, stupid, stupid statements blaming minorities and the poor for this problem, are just BS!
If there is ever a doubt, maybe someone should look at the number of 6 figure homes that are for sale in Fort Wayne and many are in duress, short sales and yes, bank repossessions. Those darn poor trying to live like the rich. Yes… those have to be the ones that got us into this.
Ugh….I think I just threw up in mouth out of complete disgust….
April,
I for one agree with you this is not a black issue or even of the poor. First of all these people are not so dumb as think they where going to get a home for free. Many, and maybe even most paid rent payments for years.
They got conned by hook, crook or whatever. If you go to the newspapers from San Fran, Los Angles, or Boston and go back a couple years ago you will find stories of how these poor people tried to hang on. They took second and third jobs trying to hang on to their American Dream.
But if you look at some of the loans they had no chance of making it unless they won the lottery. Yes, they saw the problems after they got hit and someone showed them the “fine print.”
You look at the ballon mortgage payment loans that highly eductated people signed up for. Five year interest only loans. With from nothing to five percent down put them in 500,000 dollar plus homes. Then the bubble popped and the home was only worth 400,000. They had to get a new loan as the five years ballon mortgage had come due. Gosh, they did not have the 100,000 to cover the value change. So they packed up and moved out. Leaving the mortgage company holding the bag.
There is about every type of jumk mortgage package you can think of out there.
I could toss my cookies everytime I see Barny, Nancy, Dodd, Obama and the rest of the crooks who had no problem taking money from the rat companies that took part in these deals. Now, they act like they are some shinning night on a horse saving us from these bad guys. But the entire time, if the camera ever showed their hands would be out to take more money from these people.
I wish John McCain would come out and say this deal does not protect the taxpayers enough and he was going to vote “NO!” Let the market tighten up for a week and see what it does… They have been telling us for a week it was going to cave in the next day and it has not. So, like Obama, they just reword the story and say the market is waiting on congress. Let them wait some more…. Could it be that it will fix itself?
To President Bush, don’t let the door hit you in the ass on the way out. Yes, I voted for you two times and supported you through a great deal of crap. But this sucks and your getting out of office will not come soon enough.
I am telling you that import certificates are anathema to free trade. Sure, we don’t have free trade now. But any further restrictions on imports will be reciprocated by other countries, putting a huge damper on the global economy.
Jeff,
Disappointed to see your response. I guess on man’s horsesh*t is another man’s fertilizer.
The root of this problem goes back 30+ years, and was exacerbated further under the last Democratic President. Republicans are guilty if they went along, or stood by and did nothing. But all these unqualifed mortgages were basically buying votes more than trying to make affordable the American dream (a home).
You of all people I’d think would be interested in getting to the bottom of the whole mess. My fear now is that we’ve treated a sucking chest wound with a bandaid, and haven’t addressed the systemic problem. Doing something is not always the same as doing the right thing. But I must admit, none of the choices as this moment in time are very attractive.
Jeff,
I suggest you read the article again.
The article Fred posted a link to accurately describes ONE of the major problems that created the current mess we are in.
As I have said over and over this problem was created by both Democrats and Republicans and they have to share responisbility for the current problems we have along with the mortgage lending industry, consumers, and regulaters.
The article Fred posted a link to is accurate and discusses something that did occur due to failed Democratic policies that required banks to lower their lending practices.
That story is not racist, it is factual based on statistical evidence.
Mike Sylvester
April,
I am in no way racist nor is the article. It accurately points out that the Federal Government FORCED lending agencies to lower their lending requirements. When the lending requirements were lowered this allowed many Americans (Many of which were minorities) to take out loans they could not afford.
This is not racist, it is statistically accurate and you would realize that if you analyze the statistics.
Mike Sylvester
Mike,
I don’t need to read the article again.
It’s not presented as ONE of the problems by the author whatsoever. Also even if one were to agree that this were ONE of the problems I doubt many would say it’s the TOP problem.
So despite the fact that Republicans have controlled Congress for 12 out of the last 14 years and controlled the Presidency AND the Congress for 6 of the last 8 years they were somehow unable stop these “Democratic policies”?
There wasn’t one piece of “statistical evidence” given in that article so I have no idea where you came up with that argument. This was the same old race-baiting BS that some Republicans have been doing for 40+ years.
It’s not serious discourse…
Fred,
I do want to try and understand the causes to the current crisis but I don’t think that article furthers that goal one iota.
Maybe somebody can fill me in on the regulation that required these banks to leverage themselves 40-1 in mortgage backed securities. I certainly haven’t found it yet…
Jeff,
Give me a break. In an earlier post you claim to have read “everything” you can on this issue.
If that is so, and if you have read the plethora of posts that I have put up in the last few days, you would realize that I blame both Democrats and Republicans almost equally for this crisis.
Almost every economist that I have read and almost every politician I have listened to specifically have stated that the core of this crisis is the sub-prime and alt-A loans that have failed.
These loans were only allowed due to legislation that allowed more and more unqualified Americans to buy homes.
Many of those Americans are minorities.
It is a simple fact and it is not racist. I have no idea how you can feel it is racist. It is factual, statistically accurate, and it is not racist at all.
Mike Sylvester
Jeff,
I can fill you in on that, I have covered it in two posts on this blog.
The SEC (With a Republican appointee, Republican President at the time, and a Republican Congress at the time) in 2004 changed the rules and effectively allowed the investment banks to double their leverage with the stroke of a pen.
This is part of the current financial crisis that was caused by Republicans.
I do not see how ANYONE could spend a few hours researching the facts and fail to conclude that Republicans and Democrats are almost equally at fault for our current problems.
The ONLY people that can come to that conclusion are political hacks…
Mike Sylvester