To no one's surprise, after voting down the first bill and seeing the Senate put pressure on them by passing a bailout proposal, the House went along last Friday and passed a similar bill itself. Arizona's delegation, which had unanimously voted against the original bill split 4-4 the second time around (Giffords, Mitchell, Pastor, Shedagg were the yes votes).
I am not opposed to some form of throwing taxpayer money into the system. The situation is clearly dire, and by all accounts Federal reserve Chairman Ben Bernanke, one of the chief originators of the bailout proposal, is an expert on the Great Depression ... so I accept the thesis something needed to be done, as galling as that is on many levels.
What I don't accept is that this was the only approach to be tried. While there has certainly been a great number of modifications added, the original framework - give $700 billion to the Treasury department to spend as it deems best - remains. As far as I can tell from what I have read, no other approach was ever considered at all, much less considered seriously.
Why not? Numerous other bright, well-respected economists have, since the original proposal came out, giving variations of the line "Well, it's better than nothing, but X would be a better approach". I am no economist, so take anything I say below with a large heaping spoonful of salt, but two other proposals which seemed reasonable to me included:
* Give money directly to the commercial banks. The idea was to encourage the commercial banks to lend money to each other again, thus unlocking the "credit crunch" which is supposedly breaking down the commercial gears.
* Use the money to purchase actual foreclosed homes. The idea was that by purchasing these assets outright it turns the bad investments into good ones. The money eventually would make it's way back to the companies holding the mortgage notes. Hey, if trickle-down economics is supposed to be so great, what's wrong with a trickle-up approach? As an added bonus, families would get out from under mortgages they can't sustain.
Either of these approaches (and others I have seen as well) would be more palatable to me than throwing money directly at the Wall Street companies that got themselves in trouble in the first place.
I'd be more understanding if the entire affair had been proposed and voted on in a 48-hour period. As things went, however, there was time (maybe not plenty of time, but time) to consider alternatives ... but apparently this never occurred.
What does it say about the Bush administration that it's first response to a crisis is a proposal that basically says "Give the Secretary of the Treasury $700 billion no strings attached" and the response of the Democratic Congress is to attach a few strings and then go along? Nothing good about either.