Responsibility and the Bailout: Will They Resign If It Fails?

The nation's political leadership has carried out a full court press for this bailout. They have frequently ignored the facts and commonsense (since when do we make policy based on stock market swings?) and repeatedly tossed out the specter of the Great Depression to push their case.

It's clear that the overwhelming majority of the public thinks that this Wall Street bailout stinks, but Wall Street has immense political power and it is likely that it will get its way.

If it is not possible to stop the bailout, how about a fallback position? Perhaps we can force our political leaders to take responsibility for their actions. Remember, we are only in this economic mess because the people who designed this bailout (Treasury Secretary Henry Paulson, Fed Chairman Ben Bernanke, and President Bush) failed to stem the growth of the housing bubble. Rather than take responsibility for this disaster, they are demanding $700 billion bailout to patch up their mistakes.

How about a commitment to take responsibility this time?

In other societies, and at other times in our society, the leaders that brought on such a disaster would feel the need to resign their positions. That apparently is not about to happen just now.

However, since we have heard so much sanctimony about the importance of this bill to the nation's economic future, perhaps we can force our political leaders to put their power where their mouth is.

As a very large number of economists have argued, this bailout is fundamentally flawed in its design. It should be focused on directly injecting capital into the banking system, not overpaying for bad assets. This design flaw makes the bailout far less effective. Furthermore, this bill does almost nothing to offset the contractionary effect from the collapse of an $8 trillion housing bubble. For these reasons, it is not just morally repugnant to give taxpayer dollars to incompetent Wall Street bankers; it is also bad economic policy.

So here's the deal. One simple measure of the success of the bailout is whether it fixes the mess. Will it be sufficient to restore the banking system or will we need still more money six months or a year down the road? Suppose it does?

Will our political leaders, who promised us that this bailout is the essential medicine for the economy, just get up and tell us that they need still more money? If our political leaders believe what they are telling the public, then they should be prepared to take responsibility for the success or failure of their policy. Are there any commitments to resign leadership positions in the event this great policy fails?

Comments

[Norge]

They will perhaps do as they have done in the past. Throw more fiat monies at the problem to continue
the illusion. They lack courage. And such cannot be bought with dollars(paper) or other forms of material objects.

[Jer1957]

I am a left-leaning Dem sympathetic with the author's general point.

But I recall that FDR treated the Wall Street/London swindlers of his day to either jail or Chapter 11 re-organization--not a blank check from the tax-payers to cover their gambling losses.

Will the author apply his logic to the Senator from Goldman, Sachs--Barack Obama--who has strangely turned himself into a poster-boy for this bottomless hyper-inflationary bailout that will gut the US and crash the global dollar-based system? Bush has financial friends in the UK, especially, who will benefit greatly from the bailout. Why is Obama helping W line those pockets??

Won't be much to be president of, if the House capitulates to Obama's financial sponsors and "leadership." As they run the printing presses at the US Mint to print the trillions of dollars the financial predators demand to cover their losses--we could all become millionaires--and our millions wouldn't buy us jack.

Apparently Sen Obama along with Sen. Dodd, Reps. Pelosi and Frank , et al rather like the "economic royalists" that FDR fought.

Why else the rush to hand them the keys to the treasury? Let us not confuse statesmanship with prostitution.

[LeftRight]

Not only did FDR put them in jail and out of business, but Hoover tried to bail them out very similar to what bushco is trying to foist on us right now....

[wrabbitt]

A more fair question. Will those in office resign if they profit from this bail out? Will the taxpayer become invisible after the election? When they don't need our vote anymore will they forget us as they have in every election since Nixon? When in our nations history has any elected official ever offered to step down because of mistakes in judgement? Nixon no he was railroaded. Too many of those that wrote and or supported this bail out have vested interests on both sides of the issue,They are not going to do anything to financially injure their portfolios. This was also a good smoke screen,for health care, Our government has used the smoke screen and mirrors routine on us to long. Reward them on election day!

[BushSunkOurShip]

Doesn't take much of a look - see...
Paulson working since 1972 for Goldman Sac (paid $37 million in 2005 alone) before Bush gave him the Secretary of Treasury position. Goldman Sac will receive one of the largest welfare checks from the $700 billion..
Sounds like another Cheney and Halliburton dream deal to me...Except there are no no-bid contracts involved and corruptions immunity given in advance...
We need a tea party and we need it now...
All these democratic groups should join and pool their funds and resources to select and fund our independent candidates for all officies.....
Are we not tired of being s... on each and every day.....

[bobalu49]

Here's another reason I like Dean Baker's economic analyses - not only does he provide me with a lot of information and expertise on a subject on which I am ignorant, he shares some fundamental values
My only problem with Mr. Baker's question is that it puts the solution first and the responsibility second, after a time when it no longer makes any difference. Bush will be out of office in January 2009 anyway. Will we really know whether a problem that has been years in the making has been solved within 90 days?
Bush, Cheney, Paulson and Bernanke should resign NOW and let Pelosi (next in line in succession) be the President for the next few months and then hand over the reins to McCain or Obama (listed here in alphabetical order) in January. Show their good faith and sincerity by giving up power now so that we don't doubt that this is just another attempt to lie to the public in order to push some private agenda. Will they do it? I didn't think so. Kiss your taxes goodbye, America.

[defeatobamabinbiden]

Bob, don't you think that Maxine Waters D- Mich., Greg Meeks D-New York and Barney Franks D-Mass. should resign as well? Maxine Waters touts Frank Raines " outstanding leadership" Barney Frank thinks "nothing in here suggests a saftey and soundness issue". They were warned by Republicans and regulators. Check out this video.
http://www.youtube.com/watch?v=_MGT_cSi7Rs

[QWERTY007]

How could any earth-abiding human being want Nancy Pelosi as President?!?!?!?!?!?!?!?!?!?!

[MsYellowDog]

Why,after 8 years of continual malfeasance and misrepresentation from
EVERY Bush appointee,are we suddenly expected to believe what they say? And why, when it was these very people who drove us into a ditch,should we again listen to "the sky is falling" rhetoric from them? I guess The Mushroom Cloud will be next.Pardon me, but I have a LIMIT upon how much B.S. I can stomach before drawing the line.

[loudspeaker]

I just hope our congressmen don't cave in to the threats they are receiving from the Wall Street mafia.

[LeftRight]

We aren't SUDDENLY expected to believe them. We are expected to have ALWAYS believed them, never mind the truth....

[QWERTY007]

It was the Dems that so fully pushed the Bush/Paulson bailout plan while the House Repubs pushed their own BETTER plan.
But once the Dems saw all of that money (and power) in their hands come January, they put the peddle to the metal for the original crap bill with SWEETENERS!
I hope the media investigators have one scrap of integrity left and highlight the real cause of this mess.

[Having hope isnt wrong]

Not much better. It's filled with hundreds of millions of dollars in pork, including the study of wool and wooden arrows for children.

*sigh

[QWERTY007]

Questions about the new Emergency Economic Stabilization Act (H.R. 1424):
-With the government now owning so many mortgages, do they now have access to all of the mortgagees personal data? Does this now counter the Democrats" criticism of the FISA Act by giving the government more access to your private information? (The FBI now can access the mortgagees' personal data per HR1424.)

-Since the tax credit, in this bill, for electric vehicles demands that they use "offboard sources" of energy to recharge the battery, does this exempt the new GM vehicles which use the onboard gasoline engine to recharge the battery while driving?

-How will the "Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity" provision affect employer and employee health care premiums?

-Why were hundreds of pages of tax deduction sweeteners and National Disaster Relief included in this bill where there can be no open debate about these provisions?

And this is a good bill- HOW?!?!

[LeftRight]

It's not a good bill. It was never a good bill. It was a bad bill even before ANY pork was added, now it's just an extra hundred billion or so for no good reason!

[hosshoss777]

You want continued access to easy money, you're for the bail out.
Is the bail out blackmail? Some think so, if it is, you can be sure the blackmailer will be back for more, that's just the way it works.
Perhaps this bail out is for some other reason not quite so publicized, say, American finance in general is suffering from a diminution of cash investments from over seas, perhaps due in part to something as obvious as lower oil prices. If the bail out were to continue dropping the prices of gas and energy, that would be a reason to be for it right there.
Before you write this possibility off let me remind you that one advantage of the trade imbalance is people overseas have an abundance of dollars they must invest somewhere. Most of it comes right back here to buy Government debt, placed at disposal of banks to loan one way or another or just to buy stuff.
The US Dollar is still the world's reserve currency, do we even know what that means?

[apduncan1]

Ahem... the US Dollar is no longer the world's reserve currency. Have you heard of the Euro or gold?

[Ironfox]

The Chinese are propping up the US Dollar for the moment, when it becomes advantageous to dump it, they will. There are other, stronger currencies in which to take refuge. Most Americans still do not get it, the party really is over.

[Numbskull]

WHEN ANY FORM OF GOVERNMENT BECOMES DESTRUCTIVE TO THESE ENDS IT IS THE RIGHT OF THE PEOPLE TO ALTER OR TO ABOLISH IT AND TO INSTITUTE NEW GOVERNMENT.......WHEN A LONG TRAIN OF ABUSES AND URSURPATIONS PUSUING INVARIABLY THE SAME OBJECT EVINCES TO DESIGN TO REDUCE THEM UNDER ABSOLUTE DESPOTISM IT IS THEIR RIGHT, IT IS THEIR DUTY! TO THROW OFF SUCH GOVERNMENT AND PROVIDE NEW GUARDS FOR THEIR SECURITY.
-Declaration of Independence--
Our founding Fathers saw this coming before it ever started. We need to march on Washington and show who is in power. The President is not our boss, the congress is not our bosses who tell us what t their going to do since we don't know any better being thier stupid constituents. They are supposed to be elected representatives. We are no longer represented in Washington. Only Billionaires and Corporations have a voice in Washington, while the media jams two candidates down our throats who are already bought and sold by special interest and the political machine. Until We As a People Unite Against These Tyrants We Will Never Have A Voice. Money Buys Candidacy and Money Buys Candidates

[QWERTY007]

This is why the second amendment is so important to the citizenry.

[Ironfox]

And when W declares a state of emergency under the Patriot Act and sends in Blackwater thugs to cart you all off to the concentration camps already built and provisioned, what then? The American people have voluntarily given up so many Constitutional rights that a Jeffersonian Revolution is an impossibility. Where have you been for the last eight years, this has been going on right under your nose with no oversight from the MSM. Good luck with that. Declaration of Independence, Constitution; just pieces of paper, they are defunct.

[GatoPreto]

"Will our political leaders (...) just get up and tell us that they need still more money?"

You can bet they will, which is why it is better to cut the festering member before the infection spreads. Let Wall Street die, it's looong overdue.

[PaulL2]

In any other industrialized democracy, those who caused the problem would be forced to resign, because the system is parliamentary. As a matter of fact, the Bush-leaguers would have been out in November 2006 when they lost Congress. And maybe this mess could have been avoided. We suffer greatly when a lame duck president and his staff can manipulate the will of the voters for two years and three months (Nov 2006 to Jan 2009). And yes, I know, the same could be said of Clinton in 1994.

[scared4ALL]

Open Letter to Media, Obama & McCain:

No Bailout/Band-Aid.

Google "Michael Moore's plan"

Google "Ron Paul and Bob Barr on bailout."

Please don't allow middle-class to be buried any deeper.

There's a better way.

A Band-Aid now will insure we suffer much more and longer later.

There's much we could do if you'd listen to the people.

Like make churches, instead of government, responsible for welfare of poor in their vicinities and surrounding areas where clergy may lack.

Many made their voices heard already, wanting to back their candidate and are willing to give up their 501 (c) tax exemption.

That's a lot of money.

Downsizing DC by eliminating positions that milk our economy is necessary.

Citizen committees could be formed to oversee much. Could be voluntary, rotating and unpaid positions to insure honesty with just reasonable expenses paid.

Please help save "US" before it's too late.

Ignorance will be no excuse later because many of "US" are telling you!

Sincerely:
A Terrified Citizen (Especially for our children)

[scared4ALL]

Monday at 5 pm will be last day you can register. Tell everyone. The children will thank you.

Voteforchange.com

For you to speak out on important issues like the bailout>>>

Congress link:
http://www.congressmerge.com/onlinedb/index.htm

Capitol switchboard:
[phone]

Media:

Paul Colford,
Director of Media Relations: [e-mail]

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[dianhow]

I agree...Paulson & Bernanke should promise to resign if this massive bailout / rescue plan does not work. That would take guts, something politicians hardly never do ! Instead..taxpayers take the hit.
They do not seem to care that the people are fed up and disgusted.
Republicans have had power for 20 of the last 28 years..most of those with a friendly Congress.
So how can they blame the Democrats ? No more Republicans..for a long while, unless we get the real deal again, and that's not likely to happen soon.
The whole lot of them have to go. George W has given Republicans a very bad name. I am now an
Independant voter..who will support Obama. Only because, he's better than the alternative this time.
With Obama's intelligebnce and drive..he just might be able to rise to the occasion. I'm betting on it.

[ThomasDark]

Unfortunately Paulson will spend the money as quick as possible, then come January when he and Bush are out he will be added to the board of directors for several companies he helps now and start receiving very nice checks by way of thanks. It is legal but immoral. I am willing to bet $700 billion on it....

[Oldtimer]

This bail out sucks but Pelosi and Reid have as much chance of resigning as George Bush.
it's appropriate that we have lousy leadership custom cut for a lousy bail out.

[hotwire]

Don't forget to throw Chris Dodd and Barney Frank in with Pelosi and Reid. Those two guys are more to blame for this than anyone in Congress. They should all resign immediately if not sooner, especially Barney Frank, he stands in front of the camera blaming everyone but himself. The man has no shame.