Originally published By Mike DeVine, as Legal Editor for The Minority and HinzSight Reports
I was up all night reading. The last two times I did this, I had delightfully consumed Larry McMurtry's "Lonesome Dove" and Fyodor Dostoevsky's "The Brother's Karamazov."
Gamecock announced the Dawn of 2 October 2008 with the distinct taste of Castor Oil on his beak and the themes of Karl Marx's "Communist Manifesto" and George Orwell's "1984" vaguely on my mind.
I read the 451-page Senate Bailout Bill.
I opposed the House bailout Bill that went down to defeat earlier this week amid warnings the world would end if it wasn't passed. With the announcement of dawns since then, this rooster grows tired of chicken littles pointing a gun at my comb.
I praised the House Republicans that improved the original Paulson Panic Prevention Act that we were told was "immediately needed" to avert a crisis 13 days ago. The fact being that we have been in a credit crisis on Main Street for over 13 months, but since CEO's at Banks on Wall Street and Charlotte's Tryon Street had a bad telephone call one night and told Henry the "only" solution was for the Forgotten American Taxpayers to come off the hip for King's fortune enough to fund the US military for over a year, we must make enlarge already Big Government to horror movie size?
President Bush and Speaker Pelosi told us last week that immediate action was required and then they schedule meetings and votes, days into the future.
The world turns and the House Republicans that didn't work to improve the bill and who remained properly opposed to the bill even in its improved (cherry flavored Castor Oil) convinced scores of Democrats to join them, while the Speaker appeared to intentionally manufacture a defeat with scores of her un-whipped by Clyburn, liberal members voting no, holding out like squirrels for Obama ACORNs.
After some gyrations, the DOW stands near the pre-vote level and the World still turns.
Now, the Senate Republicans have "sweetened the bill" (super cinnamon flavor?) with a truly great provision: elimination of the Alternative Minimum Tax (AMT) that the Democrats had refused to consider eliminating for the past two years. This tax is a very great burden to many middle class taxpayers and small businesses. The Senate also finally accepted a GOP proposal to more than double the amount of bank deposits insured by the FDIC and the SEC finally agreed to soften the "mark to market" rules that are a key to the liquidity crisis. (But this could have been done administratively much earlier and still has not been sufficiently changed as I write)
If the above were the only add-ons and if the Cantor GOP insurance and loan provisions were strengthened to greatly reduce or eliminate the exposure of the taxpayers and massive increase in the National Debt of the Paulson-Pelosi main portion of the bill, the Castor oil might have been transformed into Coca-Cola.
But, no, the Democrats in the Senate have out-bargained the Republicans again, making the bill a clear and present danger to the future general welfare of America and the world.
Liberals, please forgive me while I refer to The Constitution of the United States:
"We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America."
Notice that the government may "promote" the general welfare and that the Framers were aware of the term "i(e)sure" since they used it with respect to domestic tranquility (Lincoln exercised that insurance most radically.)
Now let us look at the little goodie the Harry Reid senate democrats inserted within the half the length of "War and Peace" opus, in the "peace" section:
"To ensure that such authority and such facilities are used in a manner that, A, protects home values, college funds, retirement accounts, and life savings."
The "authority" is the Treasury Department. Our government is ordered to "ensure" that home values are protected.
We have examples of this type of "e(i)nsure-nce": USSR, China before they read Adam Smith and Reagan, North Korea and Cuba.
What gets ensured is an equality of shared misery where wealth is not created and the only welfare is, in general, loathsome.
There has been a false liberal cry in the land that republican "deregulation" caused this crisis. Of course, we know, and with President Bill Clinton as a witness against the 2004-6 Democrats in congress, that President Bush and Senator McCain tried to rein in Fannie Mae, but that senate filibuster threats stopped action that could have prevented the present crisis.
Clinton did two things in the late 1990's that have been cited. Liberals de-cry the Gramm-Leach-Bliley repeal of the 1933 Glass-Steagal Act. That Depression Era law prevent banks and investment firms from merging. While it is true that the mergers that followed may have accelerated the buying of sub prime mortgages, it was not responsible for the expansion of Fannie and Freddie Mac's authority and reach into the mortgage market.
The change in interpretation of the regulations of a law designed to promote home ownership in lower income neighborhoods by Clinton's Treasury Department is responsible for that. Bill Clinton admits this now in an ad for John McCain and states that had he been President when it became apparent in 2004-5 that a dangerous situation obtained, he would have asked Congress to arrest the situation.
The change in the regulations essentially deemed banks and investment firms to be guilty of the crime of "redlining" (racial discrimination in housing) with the only way to absolve oneself to be to make bad loans to people that couldn't afford homes. This sub prime boom accelerated when Clinton's appointed head of Fannie Mae, Franklin Raines went on a bad loan buying spree in the early to mid-2000's that insulated private lenders (or so it seemed) by loans insured, guaranteed or bought by Fannie Mae. Raines resigned in "disgrace" (he still got millions for a golden parachute and landed in Barack Obama's campaign as an advisor including vice-presidential nominee vetter) in an accounting scandal exponentially larger than that of Enron and Worldcom combined (scandals that landed their CEOs in jail at the hand of the Bush Justice Department).
Raines walks free, protected by Barney Frank and Chris Dodd. The world turns. But Godzilla threatens said world.
But who is Godzilla, the looming crisis or the monster the Bailout Bill would make of the Treasury Department?
In answering this question I am reminded of a provision of GLB titled: "USE OF SUBORDINATED DEBT TO PROTECT FINANCIAL SYSTEM AND DEPOSIT FUNDS FROM ‘‘TOO BIG TO FAIL’’ INSTITUTIONS."
While that term was not operatively defined in the Act and so, would have been deemed unenforceable "dicta" by a court of law, we see that Congress and the Administration treated Fannie as such, which distorted the markets and which we forgotten taxpayers are not suffering a weakened dollar from as a result.
But Congress did not have to bail out Fannie under that law, since it was mere dicta.
Unfortunately, the language directing the government to "ensure" housing values is not dicta. Will the government have to fix the roofs of deleterious homeowners? If they do not, will courts order them to? They must "ensure" home values after all!
In that regard, when deciding whether to support the AMT tax cut, I am also reminded of the old Saturday Night Live skit of "Bill Swerski's Super (Chicago Bears, beer and bar-be-que leading to heart attacks) fans" and the ultimate question:
Who would win in a fight, Coach Ditka or Godzilla?
The Senate Bill creates something more dangerous than Godzilla. It creates an all-powerful Ditka aka dictator, that can defeat Liberty at its whim.
I don't agree with the aversion of House Blue dawg democrats to supply-side economics, however much I admire many of their socially conservative and hawkish war position. And while I do agree with their desire to cut spending, I see no reason for tying same to tax cuts given the history of increased revenues from tax rate cuts.
That said, their opposition to the repeal of the AMT with no spending cuts, combined with most of them having opposed the Bill earlier this week, makes them natural allies with House Republicans that opposed the first bill.
Bark Blue Dawgs bark, and let us save the nation from Godzilla sized and Ditka-empowered socialist government on steroids.
Mike DeVine’s Charlotte Observer columns Legal Editor for The Minority and HinzSight Reports "The way to stop discrimination on the basis of race is to stop discriminating on the basis of race." - The Chief Justice Race 4 2008 "One man with courage makes a majority." - Andrew Jackson