Saturday, October 4, 2008

Congressman McCaul Defends his Vote for Freedom

This is directly from Congressman McCaul's weekly newsletter, word for word.


October 3, 2008

Dear Friends,

Today I stood up to pressure to rescue the economy using a flawed and risky plan that would balloon the deficit to $11 trillion. I believe I made the responsible decision to vote against the Senate’s Wall Street bailout bill. Now that it has passed and signed into law, I pray for our Nation that it works.

I have heard from many of you who want a solution to our economic crisis because of the fear that has been injected into this process, and I appreciate each and every one of your opinions. But this bill was not the right solution. And as evidenced by the events of this week, I don’t believe that the stock market is directly tied to how we voted.

I voted against this bill because it provides no reforms to assure the crisis does not happen again. It includes pork projects – including tax cuts subsidies for wooden arrows and Puerto Rican rum – that have no business in emergency legislation and that increased the price tag to $850 billion! And you wonder why Americans have little confidence in their elected leaders? Further, supporters of this plan cannot provide assurances that it will work, and it puts taxpayers on the hook for the irresponsible lending practices of some of the nation’s largest banks.

This is about responsibility. It’s what you teach your children and what I teach all five of mine. Should Wall Street have to pay for its own mess or should the responsible, hard working taxpayers? I was elected to look out for the taxpayer. And in my estimation, Congress got this wrong. And if we indeed made the wrong move out of haste and fear, our economy will suffer far greater losses.

The FDIC Solution
Among the great minds opposing this plan is William M. Isaac, chairman of the FDIC from 1981 to 1985. Isaac asserts that the Federal Deposit Insurance Corporation (FDIC) has the ability and the authority to address the single greatest short-term economic challenge we face: shoring up our credit markets so that banks have enough money to keep making loans, allowing businesses to continue to meet their payrolls and employees to collect a paycheck and provide for their families.

In my view, if the FDIC were to declare an emergency and vow to protect all general creditors of failed banks and institute a net worth certificate program, the financial markets will calm down immediately. Banks will once again feel comfortable lending to other banks and to customers of banks. They will stop hoarding their liquidity...The Senate bill is an irresponsible raid on taxpayer money,” Isaac wrote.

Isaac supports many of the same free market solutions that were in a Republican plan I sponsored this week. One of them is suspending the Capital Gains tax to unleash private capital into the market now sitting on the sidelines.

Reforms Needed
Without reforms, this economic bailout is useless and we’re throwing good money after bad. We need to keep working. In 2005 I voted to force more oversight onto Fannie Mae and Freddie Mac to reduce the number of risky loans that they could back. However, the bill died, allowing risky loans to continue to spread through the entire financial system. If reforms had been passed this bailout might not be necessary.

We need to get back to work immediately to institute the reforms not contained in this bill to address the failed government policies of the 90’s that encouraged banks to overextend themselves. It remains incumbent upon each of us elected to serve to put our partisan beliefs aside and work hand in hand to reach a long-term solution that is not convenient, but that upholds our constitution and the principles on which this great nation was founded.

Standing Up to Paulson
Treasury Secretary Paulson had known about this impending economic crisis for one year before he and President Bush decided it was dire enough to drop it on Congress in our final week of the session and right before an election. This issue deserves to be deliberated, not hastily rushed through Congress because Paulson injected fear.

I am proud that I was among a small group of House members who stood up to Minority Leader John Boehner to oppose the Bush-Paulson plan from the time it was released. The notion of expecting the Congress to give the Treasury Department carte blanche is foremost a violation of the system of checks and balances on which our country was founded.

I worked to incorporate better oversight and accountability into the plan. As a result, the bill that was initially defeated in the House was much improved but still required taxpayers to fund the bailout. The Senate bill was virtually no different.

More than 200 leading economists from across the country agree that Congress can’t be rushed to judgment and should take its time to do this right. They also agree that the bill still forces taxpayers to make a significant sacrifice, with little evidence to suggest that the troubled markets will be settled.

You don’t work hard to pay for the mistakes of others, but to provide for your families. I stand by my conservative principles and will continue to push for a free market solution. And I have faith that our country, and our economy, will overcome even the worst decisions. May America stand strong and prosper.

With best regards,

Michael T. McCaul
Member of Congress

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