Sen. Jim Bunning (R-Ky.) has pledged to block a Bush administration proposal being steamrolled through Congress to grant the Treasury Department and the Federal Reserve sweeping new powers. Slowing things down would allow Congress to debate the issue fully before approving measures that could put taxpayers on the hook for billions in debt incurred by Fannie Mae and Freddie Mac, the government-backed home-mortgage giants.
Fannie and Freddie are government-sponsored enterprises, or GSEs. They are stockholder-owned corporations that were chartered by the federal government to buy and package home loans and make loan guarantees. Fannie Mae was founded in 1938 as part of President Franklin Roosevelt’s New Deal and has since been converted into a private corporation.
Treasury Secretary Henry Paulson last week testified before Congress and requested swift legislative action to expand the Treasury’s ability to lend to these two troubled GSEs and to allow the department to buy stocks in them if necessary. Bunning was stunned: “When I picked up my newspaper yesterday,” he said at a Senate hearing, “I thought I woke up in France. But no, it turns out socialism is alive and well in America. The Treasury Secretary is asking for a blank check to buy as much Fannie and Freddie debt or equity as he wants.”
Politicians sometimes try to solve problems by providing no-cost guarantees, but the S & L debacle showed that this type of government intervention actually subsidizes excessive risk and leads to taxpayer bailouts. Without true reform of the GSEs, the Bush administration’s plan to expand a risky form of government intervention by putting taxpayers at risk for future bailouts of investment banks would be unwise. A Fannie and Freddie bailout might be worthwhile if that was the price we paid to privatize these reprehensible examples of crony capitalism. But if this proposal merely keeps Fannie and Freddie unreformed, the taxpayers will lose in every possible way.
Bunning (a baseball Hall of Famer) should be applauded for throwing some verbal fastballs at Secretary Paulson during the Banking Committee hearing last week. Let’s hope Bunning digs in to make sure the Congress doesn’t take any action that would harm the long-term economic growth of our nation.
Rep. Michael McCaul (R-Texas) has introduced legislation seeking an accounting of how many American children are in Pakistani radical Islamic schools, or madrassas. The McCaul resolution encourages the U.S. “to work with the government of Pakistan to secure the return to the United States of all American children being educated in madrassas in Pakistan.” Imran Raza, a Pakistani-American documentary filmmaker, has made a gripping film, The Karachi Kids, about the plight of two American boys forced into a madrassa in Pakistan who were forced to memorize the Koran before being freed and returned to the States.
Raza was in downtown London on July 7, 2005, when terrorists attacked, motivating him to understand the radicalization process of Islamic youth. In his investigation he discovered two American children in an Islamic school in Karachi, Pakistan. This movie should spur a national debate about the true nature of the most radical form of Islam. Conservatives should applaud McCaul and Raza for elevating this controversy into the public debate.
Home-Grown Energy at Last?
Last week President Bush lifted the executive order that barred energy production off America’s shores. If Congress reciprocates, American consumers could have access to more than 19 million barrels of oil and nearly 84 trillion cubic feet of natural gas (probably more, as these preliminary estimates tend to be on the low side). Oil’s flirtation with $150 a barrel should be enough to convince Congress to lift its 26-year-old restriction on American energy production.
Congress has been missing in action as oil prices doubled over the past year. House Speaker Nancy Pelosi called Bush’s action on offshore production “an absolute hoax.” But what has Pelosi and her colleagues done in the past year to lower the price of gasoline?
Congress has failed to pass a single energy production bill in the past year. Instead, they have spent their time on green building standards, increasing regulations, raising taxes, designating historic and scenic trails, bailing out mortgage companies, increasing ethanol mandates and increasing subsidies for farmers.
How high do oil prices have to go before Congress decides it’s time to act?