It is clear we’re in trouble when even the Republicans are acting like socialists. I’m a big believer in the effectiveness of the free market economy, and my instinctive reaction to the 700 billion dollar bailout plan was that government intervention could not possibly be a good solution. McCain voiced support for the bill, but I wasn’t too surprised. After all, McCain is pretty liberal for a Republican. But then even Newt Gingrich, who said the bailout plan was a horrible idea, came out in support of it, saying that something had to be done. The consensus on the Hill seems to be that, although this bill isn’t a great solution, it is significantly better than doing nothing (which, ironically, is Congress’s favorite thing to do).
The bailout is very unpopular among voters, yet both presidential candidates are supporting it. The government has to do something about the Wall Street failures. They have to do something to help the credit supply. The fear is that the economy will dry up. The market is supposed to be cyclical, and is supposed to self-correct. The reason that real conservatives like Newt Gingrich are coming around and supporting the bailout (with as much enthusiasm as they can muster) is that they know this time, the economy will not be able to self-correct as it should. The reason is that our economy has not exactly been a free market. The government has to intervene now, but not because the market itself is flawed. The government has to intervene to try and patch the problems that were in fact created in the first place by government intervention. What we have is not a bailout, but a posting of bail for the crimes of previous administrations.
There is enough blame in this situation for everyone, but the pattern of government over-regulation can be traced back to the presidencies of Bill Clinton and even to Jimmy Carter. The crisis may have hit the fan during the Bush presidency, but the policies that caused the crisis were started long before Bush took office. In fact, Bush tried to warn Congress several times about the dangers of Fannie Mae and Freddie Mac. It’s really almost amusing that entities with such non-threatening names have turned into such disasters. In 1977, President Carter, who currently holds the title of the Worst President We Ever Had (at least until Obama is elected) signed the Community Reinvestment Act into law. This law was essentially affirmative action for the economy. It forced Fannie and Freddie to grant risky loans to less qualified applicants. Then President Clinton came along and picked up Carter’s agenda with rigor, signing the National Homeownership Strategy in 1994. Clinton often bragged about how minority home ownership had increased dramatically under his administration. He neglected to mention that it did so at the expense of the overall health of the economy.
Bush and his economic advisors warned Congress that the government backed subsidies on Fannie Mae and Freddie Mac would not be sustainable forever. In 2005, John McCain (the man who apparently knows nothing about the economy) backed a bill that would reform Fannie and Freddie, warning that they were headed for disaster. (In 2005, Obama was still learning his way around the Capitol). McCain’s reform bill was blocked by Democrats like Chris Dodd, who were receiving millions of dollars in kick-backs from Fannie and Freddie.
I still think that this bailout is unnecessary, and a dangerous step towards socialism. Something should be done to fix the credit crunch, but real fiscal conservatives like Rep. Michele Bachmann have proposed initiatives that will help the credit situation without nationalizing the economy and bankrupting the government. Maybe the House Republicans will prevail. This bill may be a necessary evil, but that doesn’t mean it’s not an evil.
But if we are in fact, headed for a massive bailout, and a bipartisan solution to a mostly partisan problem, then John McCain is exactly what the country needs. In the past week, as the severity of the economic problem has become clear, Barack Obama’s poll numbers have increased. He hasn’t done anything to help the economic problem. Telling Congress that they can call him if they need him is hardly offering an innovative solution. Prominent Democrats like Nancy Pelosi are hurting the effort by playing politics with the financial situation. John McCain tried something risky. He suspended his campaign and flew to Washington to try and solve the problem in a hands-on way. He has a record of reaching across the aisle to address the needs of the country. McCain is often criticized for not being conservative enough for the Republican base, and he has certainly shown this week that he is not a true fiscal conservative, but if what we need right now is someone who has proven that he can reach across the aisle, shake things up, and get things done, then John McCain is exactly the man for the job.