Paul Krugman yesterday, having looked at the leaked bailout proposal, declared "No deal." One of the reasons he cited:
...there's no quid pro quo here -- nothing that gives taxpayers a stake in the upside, nothing that ensures that the money is used to stabilize the system rather than reward the undeserving.
In a speech today, Barack Obama expressed similar reservations and insisted that congress not give Paulson a "blank check."
"[T]hus far, the Administration has only offered a concept with a staggering price tag, not a plan," Obama said in a statement. "This crisis started with homeowners and they bear the brunt of the nearly unprecedented collapse in housing prices. We cannot have a plan for Wall Street banks that does not help homeowners stay in their homes and help distressed communities." [...]"If we grant the Treasury broad authority to address the immediate crisis, we must insist on independent accountability and oversight," Obama said. "Given the breach of trust we have seen and the magnitude of the taxpayer money involved, there can be no blank check."
In a statement, Speaker Nancy Pelosi concurred:
"We will not simply hand over a $700 billion blank check to Wall Street and hope for a better outcome. Democrats will act responsibly to insulate Main Street from Wall Street.
As did Hillary Clinton:
When the American people, facing a foreclosure crisis and struggling economy, turned to this administration for help, the answer was no. Now, the administration is turning to the American people for help, to rescue the credit markets and take on hundreds of billions in debt and financial obligations as a consequence of that same foreclosure crisis. The truth is, Main Street came to Washington and got little. Now Washington is coming to Main Street and asking for a lot. The American people deserve to know that this isn't a blank check. While the need to address the current crisis is clear, I will only support steps that will prevent a widening crisis, tackle the worst kinds of abuse tolerated for too long by the Bush administration, and address the root problems at work.
That's all well and good for our Democratic leaders to talk tough, but, as dday notes...
...the question is whether [Obama]'s willing to fight for it. Or rather, signal to his party to fight.
From what he's seen so far, Krugman is not terribly optimistic.
The Obama people -- and the Congressional Democrats -- do know that the Republicans will run a populist campaign against them on the basis that they voted for a horrible big-government program, don't they?
But there are some signs that congressional Democrats are appropriately skeptical. As The Politico reports:
Sen. Patrick Leahy (D-Vt.) says he's seen this movie before: The Bush administration, citing an unprecedented national threat, puts the hammer on Congress to ram through gargantuan legislation with a minimum of review -- and the murkiest of repercussions.
And Matt Stoller has collected some outright angry e-mails (HERE and HERE) from anonymous Democratic members of congress that do seem to signal a strong "Hell No!" caucus among the members.
But will Congressional Democrats do the right thing this time where they've caved so many times before? The likelihood is that pressure to do the right thing will not come from the top, it's going to have to come from us, so call your member of congress tomorrow and insist: no blank check for Paulson.
Update [2008-9-21 22:20:16 by Todd Beeton]:Some clues tonight as to emerging Democratic amendments to the administration's proposed bailout plan:
Democrats said the plan would need to provide more specific relief for troubled homeowners. They said the program, which the administration proposed to be run by Treasury, would have to be more accountable to Congress. And they said that the plan must restrict the compensation of corporate executives from companies that make use of the program to sell the burdensome securities on their balance sheets to the United States. [...]Representative Barney Frank, the chairman of the House Financial Services Committee, put forward the Democrats’ proposed changes to the administration’s plan. They would give the Treasury secretary the authority to set “appropriate standards” for compensation of senior executives whose companies sell troubled assets to the government.
Under a so-called claw-back provision, the secretary would have the power to force companies to recoup previous payments to executives of companies involved in the program. And Mr. Frank’s plan would give broad authority for the Government Accountability Office, an investigative arm of Congress, to audit and oversee the program.
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