Wall Street bailout
It’s not easy being a Democrat elected to statewide office in a red state, especially when you’re known for helping an unpopular agenda. Just ask Sen. Mark Pryor (D-AR). According to a new poll released this morning by the Club for Growth and the Senate Conservatives Fund, Pryor’s favorability rating has plummeted and he trails his potential conservative opponent, Rep. Tom Cotton (R-AR) by 8 points.
Club for Growth Action, the free market group’s political action committee, began running an ad in Arkansas hitting Pryor for his support of President Barack Obama’s agenda, specifically mentioning ObamaCare, the stimulus, and Wall Street bailout. The ad says tells Arkansans that “when you vote for Pryor, you vote for Obama.”
In the fall of the 2008, the Bush Administration and Congress ironed out the details of what would come to be known as TARP in secret negotiations, hoping that rent-seekers on Wall Street would react positively. Fast-forward to 2013 — Washington has done it again.
Matt Kibbe, President and CEO of FreedomWorks explains that Congress has again stuck it to hard-working Americans with the passage of the “fiscal cliff” deal that not only raises their taxes, but includes special interest tax breaks and corporate welfare:
On New Year’s Day, Republicans and Democrats joined together to bilk taxpayers with their phony “fiscal cliff” deal. They voted to raise taxes on 77% of Americans, yet larded the bill with pork, corporate welfare, and special-interest giveaways. They voted to increase spending by $330 billion, while throwing around buzzwords like “compromise” and “deficit reduction.” And they once again postponed the promised sequester spending cuts negotiated in 2011.
It was a team effort. Senator Mitch McConnell and Joe Biden drafted an outrageous bill behind closed doors; Harry Reid gave Senators all of 6 minutes to read and vote on the bill around 1:30am on New Year’s Eve when nobody was watching; Speaker Boehner scheduled a rushed, up-or-down vote in the House the following day without allowing for sufficient time to read or amend the bill.
This type of collusion against the average American is no surprise. Republicans have been negotiating with themselves ever since the Boehner-led House Republicans passed the consensus “Cut Cap Balance Act” in July 2011 and then began walking away from it. Democrats have been winning since that day, and the goal of fiscal responsibility has been losing.
Since Wednesday, House Speaker John Boehner has been urging President Barack Obama to take the lead on the “fiscal cliff,” a combination of tax hikes and spending cuts set to take effect next year, and has hinted that he’s open to tax reform that would raise revenues while promoting growth. Obama, however, has been pushing a tax hike on higher-income earners, which is a non-starter in the House.
Boehner has also spoken to members of his caucus, telling them that they can’t affford to deal with another fiscal showdown with President Obama:
On a conference call with House Republicans a day after the party’s electoral battering last week, Speakerdished out some bitter medicine, and for the first time in the 112th Congress, most members took their dose.
Their party lost, badly, Mr. Boehner said, and while Republicans would still control the House and would continue to staunchly oppose tax rate increases as Congress grapples with the impending fiscal battle, they had to avoid the nasty showdowns that marked so much of the last two years.
Members on the call, subdued and dark, murmured words of support — even a few who had been a thorn in the speaker’s side for much of this Congress.
It was a striking contrast to a similar call last year, when Mr. Boehner tried to persuade members to compromise with Democrats on a deal to extend a temporary cut in payroll taxes, only to have them loudly revolt.
Despite not being their ideal candidate, Republicans became excited once Mitt Romney named Paul Ryan as his running mate. Ryan’s two budgets — the “Roadmap for America’s Future” and the “Path to Prosperity” — became rallying points for conservative activists and many in the Tea Party movement. It should be noted that FreedomWorks and the Club for Growth supported other alternatives because they didn’t feel that Ryan’s proposals didn’t balance the budget quickly enough.
While he has been able to cast himself as a budget cutter and small government advocate, Ryan’s voting record tells a different story. Back in May, I noted some of Ryan’s big government leanings, including his votes for Medicare Part D, TARP, and the auto bailout.
Earlier this month, Ben Swann, a Cininnati-based report, sat down with Ryan and went over some of the votes over his career in Congress, putting the GOP vice presidential nominee on the defensive for supporting big government.
On Medicare Part D, Ryan explains that the program came under cost projections, but Swann notes that the program has added over $9 trillion in unfunded liabilities to an already broken program.
Swann also shows video of the debate on TARP, where Ryan explains, “[T]his bill offends my principles, but I’m gonna vote for this bill in order to preserve my principles.” That’s no different than what George W. Bush said after TARP was passed, that he “abandoned free market principles to save the free market system.”
Months after they’ve largely faded out of the spotlight, Occupy Wall Street is hoping for a comeback today as they plan chaos in cities across the United States and abroad, using strikes and civil disobedience as their main weapon:
Occupy Wall Street demonstrators, whose anti-greed message spread worldwide during an eight-week encampment in Lower Manhattan last year, plan marches across the globe today calling attention to what they say are abuses of power and wealth.
Organizers say they hope the coordinated events will mark a spring resurgence of the movement after a quiet winter. Calls for a general strike with no work, no school, no banking and no shopping have sprung up on websites in Toronto, Barcelona, London, Kuala Lumpur and Sydney, among hundreds of cities in North America, Europe and Asia.
In New York, Occupy Wall Street will join scores of labor organizations observing May 1, traditionally recognized as International Workers’ Day. They plan marches from Union Square to Lower Manhattan and a “pop-up occupation” of Bryant Park on Sixth Avenue, across the street from Bank of America’s Corp.’s 55-story tower.
“We call upon people to refrain from shopping, walk out of class, take the day off of work and other creative forms of resistance disrupting the status quo,” organizers said in an April 26 e-mail.
Many of us that opposed TARP, the 2009 bailout of financial institutions, for a couple of different reasons. The main reason being that bailing out business for is counter to the belief in free markets. In other words, we don’t believe in the concept of “too big to fail.”
The other reason being is that it was bad policy. Once you’ve put the concept of “too big to fail” into public policy, you’ve set that as a precedent for the future. It doesn’t discourage bad lending behavior, so when the next crisis comes along — and it will, taxpayer-funded bailouts will again be the answer for politicians. And this is what a new study from the Federal Reserve Board shows via James Pethokoukis:
The Troubled Asset Relief Program involved a major infusion of government funds into the U.S. banking system in an attempt to stabilize financial markets. The program was developed by congressional mandate; however, the purpose of the program was not entirely clear from the beginning. The program was originally portrayed as an effort to reduce the risk profile of banks by increasing bank capitalization.
However, the public response to the program also generated a significant push for banks to convert the funds into loan originations. Based on this purpose, banks were being encouraged to make more loans in an economic downturn which may have induced looser lending standards (Guner, 2008).
The results from the event study illustrate that the average risk rating at large TARP recipients increased more than at large non-TARP recipients following the capital infusions. Conversely, the risk of loan originations by small TARP recipients appears to have decreased relative to non-TARP recipients.
Back when the Congress was taking up the Emergency Economic Stabilization Act, which created the Trouble Assets Relief Program (TARP), as financial markets were taking a tumble, many free marketers warned that taxpayers would lose billions. Many members of Congress tried to play down the losses or said that taxpayers would even profit.
If only that were the case. However, the watchdog that oversees the TARP program says that taxpayers are still owed nearly $133 billion:
A government watchdog says U.S. taxpayers are still owed $132.9 billion that companies haven’t repaid from the financial bailout, and some of that will never be recovered.
The bailout launched at the height of the financial crisis in September 2008 will continue to exist for years, says a report issued Thursday by Christy Romero, the acting special inspector general for the $700 billion bailout. Some bailout programs, such as the effort to help homeowners avoid foreclosure by reducing mortgage payments, will last as late as 2017, costing the government an additional $51 billion or so.
The gyrating stock market has slowed the Treasury Department’s efforts to sell off its stakes in 458 bailed-out companies, the report says. They include insurer American International Group Inc. (AIG), General Motors Co. (GM) and Ally Financial Inc.
It will also be challenging for the government to get out of the 458 companies as the market remains volatile and banks struggle keep afloat in the tough economy, it says.
Congress authorized $700 billion for the bailout of financial companies and automakers, and $413.4 billion was paid out. So far the government has recovered about $318 billion. The bailout is called the Troubled Asset Relief Program, or TARP.