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  • Morning Bell: Vital and Acceptable

    The $700 billion financial rescue that the House will vote on today is a significant improvement over the drafts released last Friday, and the Friday before that. According to the Congressional Budget Office, the plan will eventually cost “substantially less” than the oft-quoted amount of $700 billion, and it even has the chance of making taxpayers money. Taxpayers will receive warrants from the firms that sell distressed assets to the government and, if after five years the plan has lost money, a fee will be assessed upon financial institutions to repay the taxpayers. Taken together, from a purely economic standpoint, the bill properly addresses the dangerous situation currently facing credit markets.

    In many ways, the plan also improved by subtraction. Gone is the diversion of taxpayer money into a corrupt housing slush fund. The left has also abandoned its efforts to give judges new powers to rewrite mortgage contracts in bankruptcy proceedings. Another dropped provision would have made it easier for interest groups to use shareholder meetings to advance their own agendas.

    However, there are still two major constitutional problems that need to be addressed. First, the latest text does not sufficiently narrow the scope of authority delegated to the Treasury secretary; i.e., the law provides no “intelligible principle” to guide and direct the secretary’s actions. Our Constitution allows no czar, with standardless discretion to prop up or manage various industry sectors. Language does exist that can both provide Treasury with the tools it needs while protecting liberty. Hopefully, conservatives in Congress will fight for such measures.

    The second constitutional problem arose only after Congress tried to fix the first. Instead of finding language that properly directed executive action, Congress punted by creating a new “power-sharing” arrangement: the Financial Stability Oversight Board. Composed of the chairman of the Federal Reserve, the Treasury secretary, the director of the Federal Home Finance Agency, the Securities and Exchange Commission chairman, and the Department of Housing and Urban Development (HUD) secretary, this quasi-executive entity would have unprecedented structure and power. A majority of these board members are not removable by the president except for cause.

    Congress has never attempted to give the discretion and responsibility to one cabinet official who is directly answerable to the president, and then subject his actions to the direction, modification and veto of another board — especially one not wholly subject to the president’s direction and control. This oversight “fix” makes it harder for the American people to hold their elected leaders accountable. It remains dubious whether such an entity would pass muster in the courts, as it clearly offends Article II and the lines of democratic accountability that it established.

    According to the Los Angeles Times, “Treasury Secretary Henry M. Paulson is about to become the most powerful mortgage financier of the modern era — most likely of any era.” The Washington Post reports: “[Paulson] would stand largely unfettered by traditional rules, largely unrestricted in his ability to spend $700 billion of federal money.” The New York Times notes, “one overarching aspect of the initial plan that remains is the vast discretion it gives to the Treasury secretary.” Lawmakers need to have a spirited debate to make sure they get this massive transfer of power right.

    Quick Hits:

    • President Hugo Chavez said Sunday he accepted an offer from Russian Prime Minister Vladimir Putin for assistance in building a nuclear reactor.
    • The Taliban shot and killed Afghanistan’s most high-profile female police officer Sunday.
    • According to Rasmussen Reports, just 24% of U.S. voters now favor the plan first proposed by Treasury Secretary Henry Paulson.
    • According to Rasmussen Reports, 51% of Americans think politicians are more interested in gaining additional power than in fixing the economy with the proposed $700-billion taxpayer-backed financial rescue plan.
    • Somali pirates who have hijacked an Iranian merchant ship with a mysterious cargo have suffered skin burns, lost hair and fell gravely ill since boarding the vessel.
    Posted in Ongoing Priorities [slideshow_deploy]

    18 Responses to Morning Bell: Vital and Acceptable

    1. Edwin Buck, Albuquer says:

      You must be joking? The senate and congress not wanting power? How can that be? These theives in congress are only after two things. 1) More power 2)Another way to steal from the tax payers. I'm afraid that our law makers have made the USA another banana republic. In a banana republic, just for anyone not familiar with them, lawmakers will promise everyone everything and anything in order to get elected. Once in power, their only job is to enrich themselves, their families and their cronies. And they are using the taxpayer monies to do this. Tell me that this is not happening?

    2. Alisha Gomez San Ant says:

      Iam so angry& afraid at the same time.Angry that we stood by and let the Democrats create this mess,and now they have the nerve to point fingers at every one else,and say they can fix this!There ones that did this,I dont trust them as far as I can spit.And if this gets passed we have become socialist.And thats what Iam afraid of.My country is no longer my country.God help us for we dont know what we are doing.

    3. Pingback: Morning Bell: Our Constitution Allows No Czar » The Foundry

    4. M.J. Schimmel, Winfi says:

      I'm not sure if I am a conservative or not. I consider myself

      to be an "old-fashioned" American. The government has watered-down, changed, tweaked, and destroyed this country and

      the beliefs on which it was built. I would rather this country

      went through another depression than resort to socialism. All

      Americans need to go back to or learn to take care of themselves

      and accept the consequences of their actions and decisions. We

      can no longer sit back and let government make decisions that

      affect our lives, and have nothing to do with what they are supposed to be doing. Enough with the agendas of a few at the expense of the rest of us!!!!!

    5. Michael J O'Bri says:

      This weekend congress completed work on the Emergency Economic Stabilization Act of 2008. President Bush will sign this into legislation which puts at risk some $700 bn of taxpayer’s money. It also provides for homeowners who cannot afford their homes to refinance with reduced principles, giving both businesses and homeowners who made bad business decisions a windfall. The average American who pays their bills and struggles to balance their check books each month should be outraged. Not only did congress construct this bill, but last week it very quietly pass a bill authorizing $25 bn in loans to the big three automobile manufacturers. The big 3 car makers have for decades mis – managed the business, made poor business decisions and now wants the taxpayer to pay for their mistakes. Even if all loans are repaid, the interest on these loans will cost the taxpayers some $7.8bn.

      Credit is risk taking and banks are reluctant to take risk, not until the housing inventory comes into equilibrium with supply and demand will credit begin to flow. This will require an additional 10 – 15% price reset in the housing market, and then prices will recover as new buyers enter the market. Forget about the sub prime folks, they will be out of the mortgage market until congress finds another way to give then free money.

      The issue with this bill [EESA] is that should it not resolve the credit crisis, as I think not, there is nowhere to go. The equity markets will certainly fall, and all confidence in our markets and government will be lost. The root cause is housing; (1), sub prime mortgages need to be replaced with good mortgage money, and (2), the over supply of housing needs to be reduced. Speaker Pelosi said yesterday to Wall Street that the party is over, who is telling congress that the party in D.C should be over for them.

    6. Pingback: Fausta’s Blog » Blog Archive » Today at 10AM: The bailout and the Constitution

    7. earl gorel, houston says:

      I USUALLY SHARE YOUR OPINIONS BUT NOT THIS TIME. THESE PEOPLE SHOULD BE MADE TO BAIL THEMSELVES OUT OF THEIR MESS. FURTHERMORE, THEY SHOULD BE PROSECUTED CRIMINALLY FOR THEIR ACTIONS AND FINED MULTI MILLIONS. THIS WAS CONTRIVED THIEF BY GREEDY PERSONS AND SHOULD NOT BE REWARDED.

    8. RickFromMichigan says:

      Credit-it does not have a foundation, eventually it was destined to fall like dominoes.It may be painful but the time has come to pay the piper.We cannot artificially prop up poor policies, incompetent and sometimes dishonest executives.Lets try going back to cash,remember cash,we can still use credit in some situations but we got off the track.Yes it will be tough,we in Michigan,according to a recent study have been in a DEPRESSION for the last eight years.We here in Mich.have had to deal with losing our homes,having no credit,very few jobs,a huge deficit in the treasury.These fat cats on wallstreet did not help us and congress had to be hit over the head to get their atten tion. Now that the situation has spread to all of the nation suddenly it is an emergency.The lousy economy has been horrible for a long time and our leaders now realize it.We are a capitolistic country not socialistic,survival of the fittest,tough but required.

    9. Mary Meyer, Virginia says:

      I've been saving my cash in anticipation of the market contracting. I have no debt other than a small fixed rate mortgage on a modest home I put 50% down. I'm content with an 8 year old car, a good income from investments in multifamily housing that I made it my mission to pay in full over the first 15 years I owned them, because they had adjustable rate loans and I remembered 17% and 9 point mortgages from the early 80's.

      On the other hand, many former tenants bought homes with no money down, spent huge $$$ furnishing them, have huge credit card debt and expensive car leases necessary to complete the lifestyle they bought into.

      Further, I didn't receive a single call in 5 years from any lender for a rental reference. And inspite of the fact that they broke their leases, I couldn't talk these tenants out of taking ARM loan.

      To my knowledge, every tenant who was a recent immigrant has since walked away from their home and mortgage, several have sought to re-rent from me. They were clearly unprepared and unknowledgeable about the possibilities of the real estate "market". In addition, they did not honor any contract, lease or mortgage. They also seemed unaware that real estate is an investment with market risks.

      For those like me who chose the higher rates of a fixed rate mortgage, don't drive the latest vehicle, pay off our credit cards monthly, and save for rainy days– we say, 'What's the reward if if we bail out those who made poor choices?' It's hard for fiscally conservative folks like me to buy into all this "sky is falling" and "crisis" and "bailout" howls. We've paid more in interest on our mortgages, made less risky investments that gave us smaller returns (cd's and savings accounts- does anyone still have them?) and steer away from derivatives and other alien things. We are taxpayers, we've paid enough, not chasing every tax shelter out there because the simplicity and a less stressful life was our choice. Just don't ask us to live with the consequences of yours.

    10. Pingback: Hot Air » Blog Archive » Video: Rep. Paul Ryan on why he’s voting — reluctantly — for the bailout

    11. Tom says:

      http://www.obamacrimes.com

      American Citizens Outraged that Presidential Candidate Barack Obama won’t Address Recent Allegations that Documents Verifying His American Citizenship were Falsified

      Seattle, WA September 30, 2008 – Much concern is brewing regarding a recent lawsuit filed by attorney Philip J. Berg claiming that presidential candidate Barack Obama is not truly an American citizen.

      Much concern is brewing regarding a recent lawsuit filed by attorney Philip J. Berg claiming that presidential candidate Barack Obama is not truly a naturalized born American citizen.

      Instead of addressing the concerns of the American people regarding the Berg vs. Obama lawsuit, Senator Obama and the Democratic National Committee filed a motion to dismiss the lawsuit. They filed the motion on the basis that the Court does not have jurisdiction because Mr. Berg "lacks standing to challenge the qualifications of a candidate for President of the United States."

      Voters want to know the truth beyond a shadow of a doubt that the person they vote for is a law abiding American national citizen. They believe it is their constitutional right to know all the facts before they vote.

      Filing a motion to dismiss their concerns has only elevated their doubt. Upon hearing about the motion filed, one Washington state voter said, “Mr. Obama may have a fancy Ivy League education, but there is a big difference between Intelligence and being mindful of our concerns“,

      Senator Obama seems to have the whole package. He‘s young, he’s hip, and he seems to have a lot of excitement and enthusiasm. However, after elected, and voters find out the package isn’t what they were sold, do they get their money back? Is he offering a money back guarantee?

      They want answers and believe it’s their right to know all the facts before they vote. They hope he won’t sweep their concerns under the rug, or claim that they’re unqualified, or lack standing to ask these questions.

      Mr. Obama, you claim to be ‘present’, but are you even that? Where are you? Once and for all, please address these concerns.

    12. Pat Eddy, Birmingham says:

      The sky is not falling and the world will not come to an end or I hope it won't. The American hard working public will continue to work hard with less.

      We've not challenged our youth to step up to the plate, earn what they get and stop crying about not having the latest toys.

      It starts with a good education and follows with a strong work ethic.

      We don't have leaders, we have self-serving, me first politicians, who only want to look good on camera. Nancy, Harry and the mob need to go bye-bye!

      The one thing Americans do have is the right to vote out the wolves feasting on the people they are suppose to SERVE!!

      Maybe that's why so many politicians and the media is fighting so hard to make Sarah Palin llok bad.

      I say, "You go girl", make them represent the interest of America.

    13. Pat Eddy, Birmingham says:

      The sky is not falling and the world will not come to an end or I hope it won't. The American hard working public will continue to work hard with less.

      We've not challenged our youth to step up to the plate, earn what they get and stop crying about not having the latest toys.

      It starts with a good education and follows with a strong work ethic.

      We don't have leaders, we have self-serving, me first politicians, who only want to look good on camera. Nancy, Harry, Barney and the mob need to go bye-bye!

      The one thing Americans do have is the right to vote out the wolves feasting on the people they are suppose to SERVE!!

      Maybe that's why so many politicians and the media is fighting so hard to make Sarah Palin look bad.

      I say, "You go girl", make them represent the interest of America.

    14. William Wynne, Atlan says:

      I am disappointed in Heritage's support of the economic rescue program, even with conservative amendments. I believe it is a short-term solution with dangerous long-term consequence in precedent. There are alternative approaches that involve less risk and greater potential for success.

    15. mark kohn, buckley w says:

      all i have got to say about this crisis is, what ever happened to personal accountability,are we not responsible for our mistakes. I dont need the government to kiss my boo boos and wipe my tears…

    16. IrishEyes2c, Alabama says:

      In a banana republic, just for anyone not familiar with them, lawmakers will promise everyone everything and anything in order to get elected. Once in power, their only job is to enrich themselves, their families and their cronies. And they are using the taxpayer monies to do this. Tell me that this is not happening?>>>

      Wow, you just came to that conclusion? It is happening and continues to happen. Listening to politicians who have for decades have lied, made promises to the American public with no conscience or understanding of what truth and honesty is. I will never shake a politician’s hand, I’d be afraid I wouldn’t get it back he could steal my ring or watch. They tell you what you want to hear, to turn around and do something else. It's standard operating procedure. Yet, later they'll make statements and say, I looked at all the oppositions and my conscious got the best of me and I decided to change my vote. In political speak, means I got something from another politician, made a deal with him/her if I voted for his Bill, he’ll vote and support mine.

    17. Ken , Melbourne , Fl says:

      Whatever political party pledges to only spend 95 % of revenue for the next 50 years will be my new party affiliation . 10.2 trillion dollar credit cards must be cut up and paid off or U.S. dollars might just be good for wallpaper .

    18. John, Vero Beach, Fl says:

      Too many Congressmen launch hearings on too many insignificant matters. The financial crises is far from that and hearings must be conducted. It is clear some of our legislators have benefited from Fannie/Freddie and shold be investigated. These people believe they are above the law and must "now come home to roost" (to paraphrase a well known individual).

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