What's The Difference?

Many people have asked me what the fuss is all about over this Wall Street bail out bill. It seems to the average citizen that it’s all the same thing and people wonder what the argument is all about. There are stark fundamental differences in what the democrats and, unfortunately, President Bush were trying to ram through and what conservatives want and it really exemplifies the differences between conservatives and liberals in the solution.

Before I get into the specifics, let me comment on the reactions of the two major Presidential candidates. John McCain set aside politics and went to Washington to do his job. He is still a US Senator and felt that shirking his responsibility in order to simply run for office was irresponsible although it may hurt his campaign. Barack Obama did what Obama always does. He said, “if they need me they can call me”. In essence, in this crisis, as in many other instances he is simply voting present. You may ask, what did McCain accomplish by going to Washington? Good question and that is what the rest of this blog intends to explain. What he accomplished was to oppose the measure that was on the table and get the conservative voice and I believe the voice of the people heard. Before McCain showed up, the democratic leadership was saying, “we have an agreement in principle”. But they had not even listened to the opposing side. McCain made sure that the house conservatives were heard and now it seems like the conservative bill is the one that will pass. The sticking point now is getting all of the ear marks out of the bill. Believe it or not, the democrats are still playing politics with your money. This is a bill that needs no ear marks. We have a crisis here. No ear marks. Now, here is the difference.

Let me try to make this simple. Both groups are looking at somewhere around $700 Billion that needs to be injected into the system in order for it to rebound. Some may say, “well $700 Billion is $700 Billion not matter how you look at it”. But is it really? It seems that both sides are speaking the same rhetoric, but do they want the same solution and which one is better for us, the tax payer? The democrats (including Barack Obama) and President Bush would like to give Wall Street a blank check for $700 billion and buy up (therefore the government would own) bad mortgages and the property they go with. In this plan, we the people would have to go to the federal government in order to get a mortgage. This is unadulterated socialism and a fundamentally wrong course. This plan grows the deficit $700 billion and puts us at the mercy of the federal government to borrow money.

What the conservatives (including John McCain) want is not a blank check given to companies who managed their affairs badly, but to in essence loan these corporations the money which will be paid back with interest. This has happened in the past with Chrysler and a bail out package to the country of Mexico where we as a nation actually made money and strengthened our nation’s bottom line. This plan still leaves banks in the private sector where they belong. It does not add to the national deficit, but will eventually cut it significantly, although this will take time. There is oversight built into the plan to make sure these bad loans are not ever made again so we will not get into this trouble in the future.

These differences go to the fundamental differences between the parties when core principles are strictly adhered to. The democrats think that it’s the government’s job to come in and pay for everything that troubles the US economy. This rewards people whether they run their companies properly or whether they are mismanaged. So, why do things the right way if the federal government is going to bail everyone out without consequences? The conservatives want government to assist when necessary, but still leave the burden on the companies who caused the problem. In other words, if companies have mismanaged their money, they should pay for it, not the American tax payer. In the conservative plan, Wall Street pays for this problem. In the democratic plan we the people pay for the mess made by these corporate executives. I’d rather Wall Street pay.

How did we end up in this mess? Every economist and historian agrees that this problem began with Bill Clinton and finance chairman Barney Frank over a decade ago. The Clinton administration in a well meaning effort to help low income families buy homes relaxed the regulations on home mortgages. Later in order to follow through with this strategy mortgage companies depended on federally backed Freddie Mack and Fannie Mae to offer loans to many people who could not afford to pay for these loans. Many, many of these people defaulted on their loans and left these institutions holding the bag. In short, it was the democratic philosophy of the government coming to the rescue that caused these fraudulent loans to be written to begin with. It was also a lack of oversight by the treasury department and the finance committee chaired by democrat Barney Frank. Now the democrats want to point the finger at the Republican Party which has not been in power for the past two years. The democrats hold power in both houses of congress which has direct power over the purse strings of the nation. They did nothing to avert this. In contrast John McCain wrote a bill with some others in the Senate a couple of years ago to try to stop this sort of lending warning that Fannie and Freddie were going to fail. All the Democrats on the committee voted no on the bill and all of the Republicans voted yes so the bill did not carry the support it needed and never even got to a vote on the floor of the Senate or the House. This is not just a partisan observation although I am a conservative, these are simply the facts as history will verify.

What do we do now? We can let our congressional reps know what we think. I personally think that I don’t want “we the people” to bail out Wall Street. Let’s approve the conservative plan that makes Wall Street pay back the loan. Just my opinion…

Until later,

Don