Emerging from the session behind closed-doors that Republican House Members had with Secretary of the Treasury Hank Paulson yesterday, lawmakers I spoke to said that sentiment in their ranks was moving significantly against the Administration’s proposed $700 billion financial bailout.
“Right now, I would say that about a third of the House Republicans are probably behind it, another third are strongly against it, and another third say ‘no way, no how,’” Rep. Tom Feeney (R.-Fla.) told me late yesterday afternoon. The onetime speaker of the Florida House described himself as “somewhere between the latter two.”
As for Paulson’s attempt to pitch the bailout measure to the House Republican Conference, the Florida lawmaker said: “Secretary Paulson’s a brilliant man. But like a lot of brilliant people, he has trouble connecting with average people and putting this very serious situation in terms the average American can understand.”
“He didn’t give us a sufficient reason for doing this,” is how Rep. Michele Bachmann (R.-Fla.) summarized Paulson’s pitch to me. “He never could explain why we should pass this [bailout] and raise the power of the secretary of the treasury to above the status of a king. This is a big ‘ask’ we’re getting from the Administration — to approve $700 billion with no power of oversight and no review.”
“Secretary Paulson has not done a very good job of selling this,” ” Bachmann said, “and could not give assurance that an economic Armageddon would not ensue even if we approved this package.”
Bachmann, Feeney and other GOP conservatives in the House have already praised the free-market-oriented alternative package proposed by the House Republican Study Committee. But none would dismiss a second alternative package proposed by Rep. Thad McCotter (R.-Mich.), with Republicans believing that several good points could be culled from several different alternative packages coming from Congress.
“We need radical reform,” insisted Bachmann, “that means getting rid of the capital gains tax, cutting back the corporate tax rate from being the second highest in the world to 10%.” The Minnesotan also echoed the calls of former Federal Reserve Board Chairman Alan Greenspan that mortgage titans Fannie Mae and Freddie Mac be divided into several private entities in much the same way that the phone colossus “Ma Bell” was.
Bachmann told me that real reform ‘also means repeal of the Community Reinvestment Act, which was signed by Jimmy Carter and enhanced under Bill Clinton. As a result, people who shouldn’t be getting loans from banks are now getting them because the CRA forces the banks to do this. And that’s why we have a situation where people are rewarded for irresponsibility and punished for responsibility. The 95% of the people who pay bills on time and forego vacations will be taxed to take care of the 5% who don’t do this business.”
“We have to be willing to let some businesses fail so we don’t make this mistake again,” she told me.
Republicans House Members have also cited the President’s huddling with Democrats to come up with the package and not keeping them in the loop on when the bailout proposal was coming and what it would contain.
Before he and his colleagues had their private summit with Paulson, Rep. George Radanovich (R.-Cal.) told me that “I’m leery about doling out about $700 billion. I’m getting no calls supporting this thing.” Radanovich predicted that the session with Paulson would be “a rough ride.”
It apparently was, and the treasury chief clearly did not make new friends. Another congressman who requested anonymity told me about asking Paulson at the meeting that if he kept coming back for rescue packages for Bear Stearns, Freddie and Fannie, and AIG, what was to keep him from coming back again even if the $700 billion was approved.
“He replied that ‘we need to have this so we won’t have a collapse of our financial system,’” the congressman told me, “and then Paulson came up to me and expressed the same sentiments in language I won’t repeat and you couldn’t print!”