In case you missed it, the Senate just slipped another $149 billion into its Taxpayer Assisted Reelection Plan (TARP, which actually stands for Troubled Asset Relief Plan). That $150 billion is in the form of tax cuts -- just what we need due to our record budget deficit for 2009, which should approach $600 billion by the time this is all over. But wait, there's more -- the Senate bill also suspends accounting rules so companies no longer need to report the true value of their financial toxic waste.
Now, this is rich! Washington wants to cure a financial crisis caused by debt and deception by -- wait for it -- even more debt and deception. The proposed bill would boost the national debt to $11.3 trillion -- 125% more than it was in 2000. And by suspending fair value accounting rules, will allow financial institutions that hold mortgage-backed securities and other toxic waste to stop valuing them at the market price. This is like blaming a thermometer for telling you that you have a fever of 104! Next thing you know, Congress will be mandating that all banks report $100 billion in revenues and 90% profit margins.
Meanwhile, Edmund Phelps, who won 2006's Nobel Prize in economics, agrees that a better plan would be to recapitalize the banks -- not try to buy their toxic waste. If they're so determined to load up our children and grandchildren with debt, why can't they at least pass a plan that will solve the problem instead of giving away our hard-earned tax dollars to help them get reelected? Let's see how the House likes them apples.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.
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Reader Comments (Page 1 of 1)
10-02-2008 @ 9:53AM
william lindblad said...
The Senate bill is nothing short of a mirage and the House will never buy the illusion.
The devil is in the details and this is pig with lipstick, mascara and a red ribbon. In order to gain the votes to pass the bill became a port barrel project. Some of the examples: a few billion for Amtrack, a few billion for mental health, etc. None of this money is ear marked to address financial problems.
I also liked the political rhetoric preceding the vote that implied that the public was now in support. I think the the dear Senators should confer with the House members that voted for the House version. I understand that those with the yea vote and are up for election are not getting a warm reception in their districts.
When all involved finally figure out that this is really a battle of fear and greed a solution may be found. The bill proposals to date will not eliminate fear in the banking section.
10-02-2008 @ 10:45AM
Mike O said...
Lou Dobbs is right... American tax payers should not bail out these companies. We simply can't trust the idiots in Washington to do right by the American people.
Let's hope the House does the right thing and defeats this bill a second time.
Screw Harry Reid's "sweetners" (aka pork).
10-02-2008 @ 10:48AM
citizen said...
Passing this pork laden bailout of greedy financal wizards shows just how out of touch our government of the people, is with the average working citizen,show your dissatisfaction on voting day and get rid of the supporters of this mess......
10-02-2008 @ 2:50PM
Ben said...
thou shall not pass!
As much as I comparatively "like" Obama (vs McCain) he is dead wrong for supporting this bill. At this point I think I'll simply not vote in November.
10-02-2008 @ 8:57PM
Henry Pictor said...
The House should come up with a new plan. If credit is frozen the government should provide credit at the going rate. Let the banks borrow money from the government so the banks can provide credit to those worthy of credit. Do not bail out anybody. Do not give away my hard earned tax dollars.
10-03-2008 @ 8:39AM
azjack said...
The revised bill being reconsidered by the
House today must be passed if we are to
avoid a calamatous shutdown of our entire
economy. A machine cannot run without
lubricaion; an economy cannot function
without liquidity. The biggest beneficiaries of this legislation will be the
laborers and homeowners of the country--they are the ones being bailed out--NOT
Wallstreet!
10-03-2008 @ 8:49AM
Harley said...
We really don't get it in this country. The very issue that makes
people despise the government-pork spending-shows up in what has been
called by Congress the most critical bill to be considered in a
century. For all the talk of refraining from pork, wooden arrows are
in the proposed bill. OMG.
When you get all the "smartest guys in the room" blowing smoke up
each other's butt, this is what happens. It is an American tragedy.
Sarah might have the common sense to get something done.
Nobody else has demonstrated common sense.
10-03-2008 @ 9:58AM
Publius said...
We've created a permanent list of all the supporters of the bill, so we'll never forget who we felt betrayed by.
http://bailoutbrigade.com
The lists will be updated after every roll call.
10-03-2008 @ 1:28PM
oggie said...
NO, NO, NO, NO!!!!!!!!!! WE SHOULD NOT HAVE TO BAIL OUT THE BIG SHOTS ON WALL STREET! LET THEM SUCK IT UP, EVEN IF WE HAVE TO SUFFER TOO. AND THE PIG CRAP ALONG WITH THE BILL IS JUST THAT, PIG CRAP!
10-03-2008 @ 1:31PM
Ron Gambrell said...
Subprime Mortgages=Defaulted mortgages= Community Reinvestment Act= Jimmy Carter(1977)=Socialist Democratic Congress