No bailout for now: Economy takes on some water … as it should?

A small group of protesters stood along 8th St. in front of the Democratic Party's office in Traverse City, Michigan on Sept. 29, 2008. The House's first vote on the $700 bailout wall street package failed to get the simple majority needed to pass and house leaders have vowed to bring it up for a second attempt quickly. (Photo: Gary L. Howe)

Centrists from the Michigan congressional delegation joined Barack Obama, John McCain and President Bush to make up a coalition of the willing Monday. But the power of an unhappy constituency only five weeks away from scanning their ballots at the polls scared some House reps, and raw ideology deterred the rest of the “nay” voters who outnumbered “the willing” on the big bailout bill yesterday 228-205.

Voting yes were:

Michigan Democrats John Dingell, Dale Kildee and Sander Levin and Republicans Dave Camp, Vern Ehlers and Fred Upton.

Voting no were:

Michigan Democrats John Conyers, Carolyn Cheeks-Kilpatrick and Bart Stupak and Republicans Peter Hoekstra, Joe Knollenberg, Thaddeus McCotter, Candice Miller, Mike Rogers and Tim Walberg.

The reasons for the the bipartisan support on the “yes” side is obvious. Both sides think the bailout is better than no bailout.

As for the “no” voters, the bipartisanship boils down to two divergent philosophies: Republicans’ love of free market Puritanism and fear of communism, and the Democrats’ dislike of corporate welfare and fear of fascism.

With common ground among the “no” voters also being a healthy distrust of the Bush administration and lack of comfort with the time pressure hoisted upon the passage of the bailout.

Michigan reps explain their “no” votes

For his part, McCotter, the only member of the Michigan delegation to sit on a committee relevant to the financial crisis, said he voted no because government involvement — even allegedly designed to stave off consequences for Main Street — violated the sanctity of free-market principles. In a speech late last week on the House floor about the bailout, the Livonia Republican blamed “cowboy capitalists who shot themselves in the foot” and said that the bailout, if passed, would “destroy the prospect of the free market.”

Democrat Bart Stupak yesterday wrote a column about his “no” vote on the bailout and published it on his Web site.

In the statement, Stupak, who represents the U.P. and much of northern lower Michigan, wrote that he was uncomfortable with the pressure from the Bush administration.

Over the past 10 days, Democrats and Republicans have worked with the Bush Administration to craft H.R. 3997, the Emergency Economic Stabilization Act of 2008. During this time, I have heard from thousands of my constituents across northern Michigan. My staff and I have reached out to banks, credit unions, small businesses, and economists. Most sense the urgency of addressing the financial crisis but had many more questions than answers.

And it continues:

Although $700 billion is the number being attached to this bailout, even the Treasury Secretary acknowledges it was arbitrarily chosen to calm the financial markets. No one can tell us the total cost of the bailout or even if the infusion of $700 billion will solve the problem.

My review of H.R. 3997 shows the limitations on Wall Street executive pay only apply if a financial entity receives $300 million in government help. The bailout raises the national debt to $11.3 trillion and leaves taxpayers no way to recoup the interest we will have to pay on the $700 billion bailout. Perhaps most importantly, no one can tell us where or how the United States will come up with $700 billion.

I am concerned $700 billion is just the beginning and additional billions of dollars will almost certainly be necessary. The bailout is likely to go on for years and over that time I fully expect corruption and criminal activity will be found on Wall Street.

I cannot ask American families -– who work hard, play by the rules and struggle to meet their own financial obligations -– to bail out Wall Street executives for their reckless, lavish lifestyles.

For that reason, I voted “no” on H.R. 3997. This bailout does not represent our northern Michigan values, but instead rewards excessive financial shenanigans without any accountability.

Stupak ends his column with a reassurance that Congress will do something, and that he “expects to be called back to Washington in the coming days to consider an alternative package.”

Anti-bailout protesters demonstrate at Traverse City Democratic office

Word that the bailout plan had failed was warmly received by the group that gathered in front of the Democratic Party headquarters in Traverse City Monday afternoon in a hastily organized protest intended to mobilize public opinion against the deal.

Jackie Freeman counsels people on debt consolidation. When asked what brought her to the demonstration, she told Michigan Messenger that the bankruptcy reform act passed in 2005 removed safety nets for families who used to be able to keep their homes when going through bankruptcy. “I am resistant to an easy solution that helps people who created the problem,” she said of the bailout. “Banks have too much influence over lawmakers. I have clients that are dying and losing their homes. They are impacted by the economic climate. I blame banks and the reckless issuance of credit cards.”

Freeman held a NO BUSH BAILOUT sign.

A few demonstrators agreed that reduced access to credit might not be all bad for American culture.

Passing motorists honked and waved in support.

“The way they talk about the economy is incomprehensible to most people,” said Marian Kromkowski, “Maybe the system should just collapse. We need to weigh the pros and cons.”

“I think it’s going to get worse before it gets better,” Tom Mair, Green Party candidate for Grand Traverse County Commission said of the Michigan economy.

Of the bailout package, he said the administration’s approach is “scare them and get them to help out your crony buddies.”

(Photo: Gary L. Howe)

Main Street is angry, frightened, confused

If you’re like me, you have no idea what the right thing to do about this financial crisis is.

All the choices — action, no action, a different action — seem as bad as they are uncertain.

When the bailout was all but a done deal Sunday night, like a majority of Americans, I went to bed with apprehension — a feeling of imminent swindle. Just like a similar vote right before an election five years ago when a rushed Congress gave Bush the War Powers Act and the Iraq War.

When the bailout, supposedly improved greatly from the one Treasury Secretary Henry Paulson first sent to the House, shockingly failed this afternoon, there was also apprehension.

I looked outside, half-expecting that soup lines would be forming on our shady suburban lane. But … everything was the same.

Was the president bluffing us again, this time on behalf of his buddies in the financial sector, about the dire need for a bailout the way he had conned a nation about Saddam Hussein and mushroom clouds? Or were he and the rest — who were predicting systemic credit crunch and utter meltdown — deadly serious?

Wall Street ended the day with a record loss — a loss of equity greater in value than the bailout ceiling of $700 billion. Was this a part of a natural correction, or the first stiff wind of a Katrina-sized hurricane now due to make landfall in a matter of days? Would student loans and auto loans and business loans really dry up and would there be massive going out of business?

Economics, we like to think, is a science. But it’s a science in the way psychology is. At the end of the day, diagnosis and a course of treatment come down to a matter of opinion and the results are not predictable in the way a certain liquid will always turn blue under the flame of a chemistry class Bunsen burner.

Add in politics, partisanship, special interests and a huge election, and you’ve got a recipe for Michael Brown/FEMA-style paralysis.

But as far as a bailout package goes, maybe the majority on the margins of the political spectrum — those on the right and those on the left — will end up agreeing for differing reasons that no plan is better than one we don’t know we need, don’t know will work, and can’t afford.

Maybe Main Street will be willing to take its lumps. Now, if only we knew how big the hammer.

(Eartha Jane Melzer contributed to this story.)