As the House began debating the fate of a bail-out for the nation’s credit markets, Congressman Nick Lampson said the bill now being considered is worse than the one he voted against on Monday.
Lampson, D-Stafford, joined House members who defied party leaders and rejected a $700 billion bailout bill they found untenable.
On Wednesday, the Senate approved a new bailout proposal, tacking on more than $150 billion in tax breaks, including breaks for alternative energy. But only enough offsets were included in the proposal to cover $43 billion of those tax breaks.
“This thing has been very poorly done,” Lampson said Friday morning.
He called the original bailout proposal, outlined by Treasury Secretary Henry Paulson, “irresponsible.”
Referring to the Senate action in adding the tax breaks, Lampson said that “a critical need was taken advantage of.”
In his original proposal, Paulson asked for $700 billion to buy troubled mortgage-backed securities from firms who were having trouble selling or even valuing them. By providing cash for those securities, the Bush administration said, confidence could be restored in the markets and a developing credit crunch would be eased.
Economists and members of Congress were critical of the plan in part because it included little or no oversight, leaving the Treasury Department in complete control of how the $700 billion would be spent.
Congress attempted to improve the Paulson plan, but by Monday Lampson and a majority of House members still found the proposal inadequate.
Lampson said on Friday he still feels taxpayers are too much on the hook for the cost of the bailout. And he objects to loopholes that still would allow top executives from financial firms receiving bailout assistance to profit from “golden parachute” compensation provisions if they leave those firms.
Also, Lampson said he wants to see provisions that would revive regulations and controls on the markets, in order to prevent a similar situation from developing in the future.
“Knowing we could do better is what bothers me the most,” Lampson said. “We need to change the way we’re doing business. We need to set our partisanship aside and do what’s best for the country.”
Lampson said he originally ran for Congress in part out of concern for the fact that the nation’s debt ceiling had been raised to nearly $9 trillion. Now, he said, it’s set at $9.6 trillion. And passage of the bailout plan as currently structured by the Senate would put our national debt above $11 trillion.
At the current $9.6 trillion level, Lampson said, the amount of money in the national budget set aside to pay for debt service exceeds the combined budget totals for the Veterans Administration, Homeland Security and the Education Department.
Increasing debt service, he said, has taken away the ability to seriously address almost all of the major problems the country faces. And because of his commitment to reducing the national debt, he indicated, voting in favor of a package that would greatly increase that debt would be very difficult.
Lampson also said regardless of whether a bailout plan is approved Friday, banks still will fail in coming months and the stock market still will fluctuate greatly, because fundamental problems facing the economy can’t all be cured on the basis of the credit market bailout package.
When Paulson presented his original proposal to Congress, he indicated that dire consequences could be expected if it weren’t approved in a week. When the House voted down the bailout bill on Monday, the Dow Jones Industrial Average dropped by more than 775 points. Pressure to approve a plan quickly was evident Friday morning.
However, Lampson said no one knows for sure whether a market meltdown is imminent, and some economists have indicated there’s still time to craft a better plan.
“I wish we could go about this in a more thoughtful way” and “be statesmen, and see if we can do our best on behalf of the people of the country,” Lampson said.
As he spoke, House leadership was polling members to see whether enough votes existed for passage.
He said he doesn’t know if House leadership will allow for any changes from the plan as proposed by the Senate, which he called “less attractive than it was two days ago.”
“Something’s going to come from this,” Lampson said. “It must. I hope I have the opportunity to support it, and support it now.”
