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| Goode opposes use of public funds in package |
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Sunday, September 28, 2008
By BULLETIN AND AP REPORTS -
WASHINGTON — Nervously eyeing the markets’ next trading session, Treasury Secretary Henry Paulson and key lawmakers in both parties worked late into the night Saturday trying to close an agreement on a multibillion-dollar government bailout of distressed financial companies.
Lawmakers hoped that a final agreement on the package could be reached by 6 p.m. today, in time for this week’s opening of the Asian financial markets.
Fifth District U.S. Rep. Virgil Goode on Saturday voiced vehement opposition to any bailout plan for financial institutions that involves taxpayers’ money.
“Taxpayers shouldn’t be on the hook for financial institutions,” Goode, R-Rocky Mount, said by phone from his Washington office.
He said, however, that most Democrats as well as Paulson are in favor of “having taxpayers’ money on the line” to bail out the financial sector.
“The Democrats won’t vote to cut anything,” just spend money, he said.
“I think we’ll have something to vote on by Sunday evening,” Goode said of lawmakers, but he does not know if a vote will be taken then.
He said he favors lawmakers developing a plan that somehow lets financial institutions needing aid “work within themselves.”
The most important thing the federal government needs to do to stop the financial crisis, he said, is to “stop encouraging loans to persons who cannot afford to pay them back” — including illegal immigrants.
Goode indicated that if the government wants to use taxpayers’ money to rescue financial institutions, it should make cuts in other areas of spending, such as the many billions of dollars in aid it gives to foreign nations.
In talks with lawmakers actively involved in preparing a bailout package, he said, “I’ve been disappointed” that few seemed willing to cut spending.
A key sticking point in Saturday’s discussions was how to include a new government-sponsored program demanded by House Republicans as an alternative to devoting the entire $700 billion proposed by Bush on buying up devalued mortgage-backed securities and other toxic debt from banks and investors.
“We’re making a lot of headway; I think it’s possible to get this thing done tonight,” said Senate Finance Committee Chairman Max Baucus, D-Mont. “I can’t guarantee it,” Baucus quickly added.
The House was scheduled to convene at 1 p.m. EDT today and members there were hoping they could vote on it by that evening and go home to campaign for re-election. The Senate isn’t scheduled to go back into session until Monday morning.
Presidential politics again played a role in the bargaining. Republican John McCain and Democrat Barack Obama called key negotiators and portrayed themselves as helping without getting directly involved in the talks.
Bush expressed confidence earlier Saturday that lawmakers soon would approve a rescue plan while acknowledging that many Americans are frustrated and angry at the amount of money taxpayers are being asked to put up for covering Wall Street firms’ mistakes.
The president spoke with Paulson, McCain and other Republican lawmakers during the day, said White House spokesman Tony Fratto.
“We should not be bailing out Wall Street on the backs of American taxpayers,” House Minority Leader John Boehner, R-Ohio, told reporters at midafternoon, when Paulson and key House and Senate members took over the negotiations from their aides.
Senate Majority leader Harry Reid, D-Nev., said earlier that the goal was to come up with a final agreement before the Asian markets open Sunday night. “Everybody is waiting for this thing to tip a little bit too far,” he said, so “we may not have another day.”
The bailout is intended to rescue bankers from bad loans that threaten to derail the economy and plunge the country into a long depression. Some lawmakers likened the situation to a major car wreck that has backed up traffic — credit, in this case — for miles. The rescue is meant to remove the wreckage so credit can start moving to borrowers again, they said.
Many House Republicans object to several parts of the administration’s approach. Negotiators sought to accommodate enough of their demands to entice a reasonable number them to back the eventual plan, which is nearly certain to be unpopular with many voters.
Democrats and administration officials said they were willing to include House Republicans’ idea of having the government insure distressed mortgage-backed securities — but only as an option, not a replacement for the broader idea of buying those toxic securities.
“There may be a way in which that could be accommodated as part of the toolbox” available to the Treasury Department, said Sen. John Thune, R-S.D. “As a practical matter, that can’t be the engine that drives this bill,” he said.
Negotiators also discussed phasing in the program’s costs. For example, after the first $350 billion is made available, Congress could try to block later amounts, which could total an additional $350 billion, if it believed the program was not working. The president presumably could veto such a move, however, requiring extra large margins in the House and Senate to override.
The negotiations have agreed to limit compensation to executives of corporations that would be covered by the rescue plan but there was disagreement on how to do it and by how much.
Whatever emerges “is not the proposal that we got from Secretary Paulson,” Reid said. But lawmakers said it would be much closer to Paulson’s original plan than to the alternative offered by House Republicans several days ago.
McCain, who flew to Washington after Friday night’s presidential debate in Mississippi, spent part of Saturday working the phones and “helping out as he can,” aide Mark Salter said. But McCain did not enter the Capitol, where his colleagues were voting on a $634 billion spending bill that ended a ban on drilling off the Atlantic and Pacific coasts, and sent billions of dollars to the military.
McCain supports such measures. But the vote would have been difficult for him because the bill also included more than 2,000 pet spending projects worth more than $6 billion. That is the kind of pork-barrel spending that McCain has pledged to end.
Obama campaigned in North Carolina and Virginia. Aides said he placed calls to Paulson, Reid and a key House member to keep tabs on the finance negotiations.
Both presidential candidates are trying to position themselves to take at least partial credit if an accord is reached. Obama spokesman Tommy Vietor offered new details from Thursday’s contentious White House meeting that underscored the divisions among lawmakers trying to reach an agreement.
He said Obama encouraged Paulson to work with House Republicans. Since then, Vietor said, Obama has urged negotiators to find a compromise with enough options so the treasury secretary has the flexibility “to act in an effective manner to stem this crisis.” |
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