BEHIND THE HEADLINES
Bailout plan puts politicos in hot seat
Lawmakers are clearly caught in the middle between fiscal chaos and angry electorate.
WASHINGTON — While their leaders try to hammer out a $700 billion bailout of a financial system gone haywire, lawmakers find themselves caught between the fear of doing nothing and the fear of passing a bill that will further outrage their angry constituents back home.
On one side comes pressure from President Bush and financial titans like billionaire investor Warren Buffett, who told Fox Business News this week: “We are looking over a precipice in terms of the economic condition of the country for the next few years. If Congress doesn’t help us on this, heaven help us.”
And on the other side comes pressure from countless voters, including one who wrote to Rep. Randy Kuhl, RHammondsport, saying: “No to the bailout!!!! The bailout is a disgrace to the hardworking people of America. It is time to make the Greedy Executives and politicians responsible for their actions.”
Lawmakers from both parties widely expect to come together on some sort of bailout, but for now, members of Congress — particularly the Republicans — are treading carefully.
Talks, meanwhile, concluded Friday without an agreement but with some optimism one could be reached by the end of the weekend.
“I’m convinced that by Sunday we will have an agreement that people can understand on this bill,” predicted Rep. Barney Frank of Massachusetts, a key Democrat in eight days of up-and-down talks.
Republicans, however, were less upbeat.
A spokesman for Rep. Thomas M. Reynolds, R-Clarence, said he would not comment on the bailout while negotiations are ongoing. And Kuhl issued a statement saying: “I will OPPOSE the Bush Administration’s proposal if it does not include provisions to protect the taxpayer.”
In contrast, both Rep. Brian Higgins, D-Buffalo, and Rep. Louise M. Slaughter, DFairport, and New York’s two senators have emphasized that Congress has to act in some way.
“The crisis that has seized our markets and millions of families throughout our nation demands our swift action,” Sen. Hillary Rodham Clinton, D-N. Y., said in a statement on Friday. “Any further delay motivated solely by partisan politics and posturing risks deeper financial crisis and catastrophe.”
That’s the establishment message lawmakers are hearing from the likes of Buffett, chairman of Berkshire Hathaway Inc., which owns The Buffalo News, and from President Bush.
“We are going to get a package passed,” Bush said on Friday. “The reason it’s big and substantial is we’ve got a big problem. We also need to move quickly.”
Financial analysts agree, saying the Dow Jones Industrial Average will take a big hit and credit will dry up if Congress doesn’t act.
“If it doesn’t go through I think the markets probably get slapped — probably 1,000 points — but then we’ll work our way out of it,” Mark Coffelt, portfolio manager at Empiric Funds in Austin, Texas, told the Associated Press.
But those are weasel words compared with what the voters are saying.
“The package is a cold slap in the face to all of the taxpayers that did the right thing over the last eight years,” a voter from Ontario County said in an e-mail to Kuhl. “We purchased homes we could afford, and we lived within our means. We did not fall to temptation and took the time and effort to educate ourselves as to good investments and bad.”
Similarly, a man from Grand Island wrote to Slaughter, saying: “Please do not allow George Bush and [Treasury Secretary] Henry Paulson to rush us into a bailout of Wall Street with only promises of reforms to follow.
“Too many times in the last years a rush to judgment has led to disaster for the American people,” that writer continued. “Please make this madness stop.”
Kuhl and Slaughter took sharply different paths in responding to those letters.
“This cannot and should not be a taxpayer bailout,” said Kuhl, who faces a serious re-election challenge from Democrat Eric Massa. “Any congressional action must be centered on protecting those who have done the right thing, those who took responsible home loans and have worked so hard to keep up with their obligations as the faltering economy has made it harder to do so.”
In saying private companies will have to carry the financial burden of any bailout, Kuhl sided with the renegade Republicans who refused to agree with the tentative compromise leaders of both parties agreed to Thursday. Kuhl also called for a plan that prohibits executives who bear responsibility for the crisis from walking away from their companies with generous “golden parachutes.”
In contrast, Slaughter stressed the importance of the Wall Street rescue package is, and how much Democrats have already improved it.
“I am concerned about what could result if we do not take action to address this industry’s failure,” she wrote. “Bank failures help no one and put the savings of every family at risk. Our retirement savings, our college savings accounts for our children’s future and our investments in our own future are at risk due to the failure of this industry. Without help, Main Street will feel as much pain as Wall Street.”
Slaughter noted that Democrats had already dramatically altered Paulson’s proposal by insisting that golden parachutes be banned and by including far greater oversight of the bailout by Congress and the Government Accountability Office.
If Kuhl and Slaughter appear divided over the proposed Wall Street rescue, they’re a reflection of the American public at large.
In an Associated Press-Knowledge Networks poll, only 30 percent of those surveyed expressed support for Bush’s bailout package. An additional 45 percent were opposed, with 25 percent undecided
Many voters, in their e-mails to Kuhl, Slaughter and Higgins, acknowledge that something must be done — even if they are not happy about it.
“I realize a bailout of Wall Street is vitally important to avoid a total collapse of our economy,” one voter wrote to Higgins. “However, I will not support any future candidate who offers a blank check to those who have put us in this situation.”
And another voter told the Buffalo congressman: “The bailout should definitely institute new regulatory practices (which never should have been lifted in the first place!). And some provisions must be made to help out the ‘common’ citizens who are struggling with bankruptcy and foreclosure. It is ridiculous to reward the rich for their abuses while continuing to let the working and middle classes suffer.”
And a voter from Buffalo wrote to Slaughter to say: “This ‘bailout’ should have careful oversight and some necessary restrictions. No gargantuan salaries for the bozos who have run these banks.”
Higgins said he understands why voters are angry, but stressed that after talking to local bankers, he’s concluded that credit will start to tighten, damaging the economy in general, unless Congress acts.
“You’ve going to have to do something,” he said.
Yet Republicans in the House continue to be reluctant to agree to a bailout, no matter what the Republican president says.
“We need to get the president to get the Republican House in order,” Sen. Charles E. Schumer, D-N. Y., said on the Senate floor. “Without Republican cooperation, we cannot pass this bill.”
News wire services contributed to this report. jzremski@buffnews.com
