Last week, I voted against a massive $700 billion Wall Street bailout bill. While Sen. Thad Cochran and I voted against the measure, the bailout bill still passed the Senate by a vote of 74-25. As this column is written, the House of Representatives is preparing to vote on the legislation, deciding whether or not it will become law.
I realize the financial troubles facing our nation are serious, and I am committed to ensuring middle class Mississippians are not hurt by the poor decisions of those on Wall Street. I do not believe, however, that rushing to pass this bill is the best solution, particularly when it takes no steps to prevent this type of problem from happening again. By saddling taxpayers with an additional $700 billion in debt, this bailout’s staggering price tag would cost the average American household $10,000.
THE BAILOUT BILL
The credit crunch now facing our country can be traced back to sub-prime mortgage problems. The collapse of the sub-prime mortgage market – due to falling home values and increasing foreclosures – left a number of large financial institutions holding a significant amount of bad mortgage debt. This debt dried up their ability to loan money or stay in business.
In response, Treasury Secretary Paulson and Federal Reserve Chairman Ben Bernanke devised a program for taxpayers to buy $700 billion worth of bad mortgage debt in hopes that banks, with the debt no longer on their books, would start lending again. Even though a number of positive changes were made to the bill in the days after it was introduced, I could not support it. At its core, it was still the same taxpayer-funded bailout plan.
I am philosophically opposed to this type of bailout and believe there were a number of free-market alternatives that should have received more attention and consideration as this legislation was considered.
For example, I believe we should have looked much harder at a proposal to require the Treasury Department to establish an insurance program, funded by premiums paid by financial institutions seeking assistance, to insure their troubled mortgage securities. This could help the problem by creating a market for these mortgage securities at the expense of the financial institutions seeking help, not American taxpayers. I also believe we can take steps to strengthen our economy and free up capital by empowering investors through a temporary or permanent suspension of the capital gains tax.
Finally, we need to get serious about changing our nation’s energy policy. Our country sends $700 billion per year overseas to purchase oil while leaving vast amounts of oil and natural gas off limits here in America. Utilizing this home-grown energy would create tens of thousands of jobs, stop the export of billions of American dollars to overseas countries, and help lower energy prices for families and small businesses struggling with the high cost of gas.
There is no question that our economy is facing hardships because of problems that started on Wall Street. I did not believe a massive taxpayer bailout is the responsible way to protect the middle class from these problems, but I do understand steps need to be taken to address the issue while also moving to stop it from happening again. As your U.S. Senator, I will continue working with Congressional leaders from both parties to ensure this problem receives the oversight and action it deserves.