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October 2, 2008

Hopes and Fears About the Bailout

Today’s Dispatch is about the continuing bailout saga. What else could it be about? We’re Downsize DC and this is the single-largest, fell-swoop increase in the federal government ever seriously considered. It’s a dramatic — scary! — expansion and concentration of power. We’ll get back to how scary in a moment.

But first, let’s address a pervasive mood out there. We might lose. Might. But it became evident to me throughout the day last Thursday (9/23) that public sentiment was running so strong against this that we could actually defeat this bill.

So when the news arrived on Monday (9/27) that the House voted down the bill by just a 12 vote swing, and the rest of the world was “shocked,” “stunned,” and “surprised,” frankly, I wasn’t any of those things. Pleased, yes. Mildly surprised? Sure. But the Downsize DC concept is about massive, overwhelming pressure. And it worked!

Well, today the institutional media on Wall Street and Capitol Hill is pretending that the House vote is going to go their way. They’re practically running an infomercial for the bailout bill.

Further, as I pointed out yesterday, the Congress is violating the “One Subject at a Time” principle.

The aspect that we’re seeing today is that, in Congress, nothing moves until it “oinks.” Various unrelated pet causes are getting inserted in the bill to make it more palatable. And unseen, backroom deals (votes swaps and pork) are being made to get those final 12 votes.

It’s easy to get discouraged when you see members of Congress getting bribed with your tax dollars.

But I still won’t be surprised if we win, so long as we keep up the pressure. The odds may be against us, but just like last Monday, I really believe we can win. One reason why I think so is that a great many opinion leaders have come out against this bill.


We want to give you reason for hope; all is not lost. So, with a HatTip to Chuck Muth, who brought these quotes to my attention, here is a sampling of statements by influential figures that you can quote — cut & paste — in your message to your Representative asking them to vote against the bailout.

 “(W)hat if the bailout, as originally proposed and in its latest incarnation, would spend $700 billion of taxpayers’ money and actually make the economy worse? Believe it or not, there is good evidence this may happen. The inflationary prospects of the bailout price tag may lead to spikes in oil and crop prices that could hit ordinary Americans in their cars and on their kitchen tables. And government purchases of financial assets could ironically further constrain credit through causing write-downs on even the balance sheets of financial firms not participating in the bailout by worsening the effects of mark-to-market accounting rules.”
– John Berlau of the Competitive Enterprise Institute

 “This unconscionable ($700 billion bailout) scheme forces the vast majority of taxpayers who were honest and prudent to bail out firms that made bad business decisions. Furthermore, it does nothing to address the root causes of today’s market difficulties. The long-term effects of this fiasco, including inflation, a weaker dollar, and an even more precarious federal balance sheet, are almost certain to outweigh the shallow short-term stabilization of moneyed interests who have been twisting arms on both ends of Pennsylvania Avenue.

 “…Congress helped to create this debacle with the Community Reinvestment Act, poor tax policies, hastily designed mark-to-market regulations, and spectacular negligence with regard to the systemic risks posed by Fannie Mae and Freddie Mac. Instead of addressing those core problems, this disgraceful plan snatches $700 billion from the pockets of hard-working Americans who largely had no part in this horrific play.”
– National Taxpayers Union

 “The Bush Administration has now provided three case studies in arrogance, isolation, and destructiveness: Michael Brown during Hurricane Katrina, Ambassador Jerry Bremer in Baghdad, and Secretary Paulson at Treasury.  It is a tragic and very expensive legacy. No conservative and no Republican should doubt how much it has hurt our cause and our party.”
– Former House Speaker Newt Gingrich

 “Even House leaders admit the bill is far too interventionist for their tastes. Minority Leader John Boehner called the $700 billion plan a ‘crap sandwich’ during a closed-door caucus of his members last night as he exhorted them to vote for the bailout bill if their ‘conscience’ would allow it. Paul Ryan, ranking member on the House Budget Committee, told his colleagues it ‘sucks’ even as he said he would reluctantly vote for it.

 “But some members simply couldn’t stomach the prospect of voting for such a bill. ‘I didn’t get elected to turn this country into France,’ one member told me. He added that the predictions of financial doom by Congressional and administration leaders have been overplayed: ‘They shouldn’t have said the sky will fall tomorrow every day. It didn’t,’ he said.”
– John Fund, Political Diary, 9/29/08

 “We’ve turned down King Henry Paulson because the American people know there are alternatives. The market may be down but the Constitution is up.”
– Rep. Virginia Foxx (R-NC)

 “Every Republican who voted against the Emergency Economic Stabilization Act on Monday believes that Congress must address this crisis. They take it seriously and stand ready to vote for reasonable legislation. They were unwilling to give Treasury Secretary Henry Paulson a blank check.  The sky is not falling. The market will return. Secretary Paulson is getting a lesson in civics.”
– Rep. John Shadegg (R-AZ)

 “Nothing could more painfully demonstrate what is wrong with Congress than the current financial crisis. Among the Congressional ‘leaders’ invited to the White House to devise a bailout ‘solution’ are the very people who have for years created the risks that have now come home to roost.  Five years ago, Barney Frank vouched for the ‘soundness’ of Fannie Mae and Freddie Mac, and said ‘I do not see’ any ‘possibility of serious financial losses to the treasury.'”
– Columnist Thomas Sowell

 “The bailout package that is about to be rammed down Congress’ throat is not just economically foolish. It is downright sinister. It makes a mockery of our Constitution, which our leaders should never again bother pretending is still in effect.

 “You can’t stop a problem of too much spending and too much deficits and too much monetary inflation with more of it. So I’m positively opposed to the bailout and believe it will just delay the correction that is required. We need to correct the imbalances and if you interfere, you just delay it and make it more difficult and make the problems worse for ourselves…

 “It isn’t a lack of regulation that was the problem; it was the lack of the market being allowed to work.”
– Rep. Ron Paul (R-Texas)

Please send a message to Congress. Just quote one of these comments if you can’t figure out what to write.

And then, stake your claim. Create an electronic record for your friends that you were right. When you’re done sending your message using our Educate the Powerful System, use our Tell-a-Friend system to pass this campaign on — or just forward this message, or blog about it.


Now, I promised I’d get to how scary this bill is. The HatTip for the following information goes to blogger Jason Kuznicki at Kuznicki writes, “Guess which government this paragraph is about:

 “Following a pattern it had set in earlier bailouts of smaller banks, the government set up a holding company, which it financed together with the central bank. This company acquired all the corporate shares held in the portfolios of the banks at the higher historical, not current prices. thus, the government not only provided liquidity to the banking system, but it also absorbed part of its losses. It also became the largest shareholder in a number of firms. Many of the industrial firms thus acquired were themselves on the verge of failing and benefited not just from the rescue of their banks but also from the direct infusion of public money…. The cost of the entire bailout was a staggering 10 percent of GDP — the comparable amount in the United States today would be about $1 trillion.”

And then Kuznicki answers his own question . . .

 “The quote is from Saving Capitalism from the Capitalists by Raghuram G. Rajan and Luigi Zingales, p 213. The bold bailout was by Benito Mussolini. The results were as corrupt and as anti-competitive as you could probably imagine.”  

Now that’s scary to me. And I hope it scares you enough to act.


First, send a message using our free Educate the Powerful System. If you can’t think what to say, use the material in this message for your statement.

Then, spread this message far and wide. Forward it to friends. Blog it.

Digg it. The icon to do that is on the blog version of this Dispatch.

1) We’ve received several inquiries about why we don’t have a campaign specifically about the bailout. We have a few broad-purpose campaigns we’ve recently installed for the purpose of rapid response. And we’re using one of them right now. The amount of time required for thorough understanding, refutation, and writing with clarity about all that is wrong with this bailout just wasn’t there — especially when the whole shooting match could’ve been over sometime last week. However, we’ve now begun work on a permanent campaign, and Lord-willing and the creek don’t rise, we’ll stall the bailout still further so that we’ll need to use it.

2) It’s now all over the Internet that some members of the House of Representatives are using a throttle to constrict the flood of incoming messages. If your message is either delay or blocked, THIS HAS NOTHING TO DO WITH THE OPERATION OF THE DOWNSIZE DC SYSTEM. Do you know what that means?

Yes, it means he or she wants you to phone their office and let them know you couldn’t send your message, so you’re calling instead! When you’re logged into the Educate the Powerful System, you have full contact information for your Representative’s office, including phone number. Go ahead. Give them a call. They’ll love it!

3) We made budget last month, thanks to a generous donor group who gave us a head-start. We have no such head-start this month. But we need to raise approximately $245 per day, on top of current monthly pledgers, in order to cover our lean budget. We’re growing. We’re spreading the word. We’re having an impact. But continuing to do our work requires your financial support. Please, partner with us now.

Monthly pledges of $3, $5, $8, $10, $15, $25, and $35 per month, even more, are especially appreciated.

Thank you for being part of the growing Downsize DC Army,

Jim Babka
President, Inc.

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