The bailout plan failed to pass the House. I didn't have a chance to comb through the text of the straight-out-of-Atlas Shrugged-named Emergency Economic Stabilization Act of 2008 but I read the highlights and it seemed to match quite well with Reich's plan. I think my arguments against that plan also work against the House's version.
House Republicans successfully repulsed this corporate welfare program—man it sounds weird saying that—but this isn't the last we've heard of this plan. Democrats see an opportunity for increased regulation over a sector that they particularly despise and the Bush Administration sees a chance to transfer wealth over to its cronies on Wall Street. The Republican objections generally were not on principled grounds so they may not have the wherewithal to stop the next iteration. I encourage you to write your representatives in both houses to let them know of your opposition.
Here's what I just wrote to Representative John Shadegg:
I am glad to read of your opposition to the bailout plan. You are my Representative and I have voted for you in the past at every opportunity. If you maintain your opposition, I will vote for you in November.
My only wish is that you base your argument against the bill on better grounds. Your statement reads like your disagreement is based on technicalities, not any firm defense of constitutional principles or freedom. I think your soft dissent, while producing the same end result, leaves open the possibility of a subsequent bill's passage.
I admire your father's work for Barry Goldwater. I expect you to maintain the family name as a bastion of freedom and individual rights. While the government has largely created this mess, it is not its place to absolve those who took advantage of their responsibilities. It is time to truly deregulate the financial sector, which has been one of the most regulated parts of our economy since the New Deal.
Please oppose future bills on the premise of limited government.
And here's what I wrote to Senator Jon Kyl:
In your press release dated 9/15 entitled "Bail Out" you speak of "allowing the free market system to work" and opined that you weren't going to support "writing a blank check with American taxpayer dollars." Yet in your weekly column of 9/22 entitled "Stabilizing the Economy" you contradict those very same statements.
I have voted for you ever since you started in the Senate. I think you are generally an advocate of the free market and you represent your state well in that regard. I think you are tremendously wrong in supporting this bailout, though.
This crisis was not the result of the housing bubble as you suggest in "Kyl on the Economy, Housing, Financial Markets." The housing bubble masked the consequences of the "moral hazard" of guaranteeing and encouraging fiscally irresponsible actions on the part of mortgage lenders. When housing valuations were on the rise, there were no problems because equity ratios were sufficient to make these mortgages look good. Once housing valuations returned to reasonable levels, the truth was laid bare and the risks inherent in the shaky loans were inescapable.
Bailing out these irresponsible lenders sends a horrible message and further insures that the "moral hazard" you rail against becomes enshrined as precedent.
But that's not the worst of it. In bailing out anyone, you are supporting the writing of a blank check on the taxpayer. I am more than my wallet: I am an American with individual rights that I elected you to protect. I am not the Peter you may shake down to help Paul out when he makes bad choices.
This is a government intervention not seen since the days of the New Deal. If you are truly in favor of a free market, you must oppose this bill (and inevitable subsequent bills) with every fiber and sinew of your convictions. If you do not, I may find myself having to vote you out. And I'd rather not do that.
And finally, here's my letter to Senator John McCain:
I have grudgingly voted for you ever since I've been eligible to vote. I am a Republican of the Barry Goldwater variety: we stand for limited government and individual rights. Your support of the bailout plan as put forward by Secretary Paulson and Congress is repugnant to Goldwater Republicans, as it should be to any individual who professes to support the free market.
The financial crisis was caused not by the greedy Wall Street financiers, though they took advantage of the situation, but by the very government regulations that were supposed to forestall such a calamity. In encouraging questionable mortgage lending and providing lenders a guarantee of immunity from the consequences of such irresponsibility, the federal government caused the situation in which we find ourselves.
The answer to this problem is not more government power or regulation. It is deregulation: the financial markets need to be left to succeed or fail on their own accord. The government prop has proven itself useless on countless occasions and it needs to be removed.
I know that it's politically expedient to play the demagogue and pander to what you think the American people want to hear about Wall Street fat cats. You are wrong: the American people don't want to be a wallet for the government to loot. They respect those who get rich of their own accord, who work hard and earn every penny they own. The thing they don't like are people who get rich through government-provided incentives and then cry when those dislocations come back to bite them.
I am going to vote against Barack Obama come November. Please don't make me reconsider that decision by supporting future bailout proposals.
I don't know if it will do any good, but it certainly can't hurt.