Congress Should Pass the Palson Plan

It is with reluctance that I conclude Congress must past the amended version of the Palson Plan. I would prefer the House Republican Plan, if I thought it would work. Unfortunately, from what I have read, I don't think the House Plan would be sufficient, and the stakes are too high to gamble. I hate the thought of the federal government taking on a $700 billion dollar obligation and buying all of the bad mortgage loans that should never have been made in the first place; however, I think it is necessary.

I know some free market purists are advocating letting the companies that made these bad loans and the investors that purchased this bad debt fail and let the chips fall where they may. I understand the argument. I understand the dogma. Now is the time, however, for pragmatic solutions that will get us out of this crisis. It is great to have guiding principles, but you shouldn’t let them guide you over a cliff.

I also understand those who don’t like the idea of bailing out rich, fat cats while letting homeowners get foreclosed and neglecting other unmet needs. Yesterday I was in a chat group and someone wrote, “Isn't it funny how they can find $700 billion for this, yet they can't come up with enough money to get us health insurance? Man, I wish I was rich enough to get bailed out by the government when I couldn't pay my bills.” I understand the sentiment, but resentment is no substitute for sound policy.

This bailout is not just for Wall Street. If an economic meltdown is not avoided, everyone will surfer. Senator Bob Corker made this point in an article appearing in today’s’ Tennnessean:

There is a record shortage of credit in our nation's economy and the situation is growing worse by the day. If the credit markets continue to deteriorate, and credit provided by our country's banks and lenders is no longer available, businesses will no longer be able to secure short-term loans, forcing them to lay off workers because they can't meet payroll. It will become impossible for individuals to secure car loans or mortgages — leading to more foreclosures, pressure on housing prices, and a worsening of the credit crunch. In a worst-case scenario, credit cards may no longer function and the ability to even cash a paycheck may no longer exist. This is how a financial crisis becomes an economic calamity that will have an effect on every American and Tennessean.
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I understand that those on the left are going to blame this crisis on Republicans and deregulation and a failure of free enterprise. They are going to use it for political advantage and blame it on the “failed policy of the last eight years of Bush and McCain.” They will try to use this as an excuse for greater government interventions, and to achieve social goals of income redistribution. By agreeing to the bailout, we are not acquiescing in the analysis of what caused the problem. As Tennessee’s senior senator, Lamar Alexander, has said, “fix the problem and next week we can fix the blame.”

I am appalled that Democrats have tried to use this crisis as a means of permanently funding the liberal activist organization ACORN. I assume there are enough pragmatic Democrats who will put country above party and that provision will be stripped from the bill. I would not support the bailout if the ACORN provision is in it, and unless the taxpayer protections, as stated in Lamar Alexander’s article below, are included. If those changes are in the final version, then I think the plan should be adopted. If I were in Congress, based on what I know now, I would have to hold my nose and vote for the bailout.

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