Posted by: Bob McAlister | September 29, 2008

What is Sen. DeMint Going to Do?

Okay, our conservative brethren and sistern got just what they wanted in the financial bailout issue, which is nothing. The House defeated it. The Dow Jones at this minute is down about 716 points.

Here’s the question I now pose to my philosophical soul mates: What’s your plan? I particularly address this to Dr. No, Sen. Jim DeMint. Jim: You opposed this from the word go. You obviously had a better grasp on Hill sentiment than the president, but we still have a problem, as in the national economy might be tanking.

So what do you say “yes” to? I don’t want philosophy. What do you say “yes” to that will pass a Democrat Congress? Seems to me you have two choices: either come up with your own plan or sit back and watch what happens. What will it be?

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Responses

  1. Jim is following the sentiment of the general public. Most people do not care to bail out Wall St. Even knowing the pain it may cause, most would rather ride this out and have the fat cats lose, the financial firms that caused this shut down, and let the situation bleed until it has cleansed itself. Maybe it will put us in a depression era type of situation, but no one believes that a bail out will be any better. taxes are going to increase because of this in some form or another. After all, $700 billion is only a guess by the “experts”, and that usually means twice that guess.

    So we are talking about a hand out of about half the yearly national budget. Where is the rest of the money to run the country going to come from? It is well known that the country is already in deficit, so where is the reserve cash for such a bail out? Another one of those Wall St. type of imaginary paper funds? So now congress is doing what Wall St. did to get us in a mess? And congress does the imaginary money trick to bail out more imaginary money? And who really gets it?

    Why not do this instead? let the firms fail. Provide government protection for mortgages on owner occupied homes. let the speculative real estate and “flip” houses fend for themselves. If it is necessary to bail out some firm, the government should demand 1/3 of all assets of each board member, president, VPs, CFOs, and all top management of the failing company before agreeing to a bail out. But those head honchos will still be liable for legal action in any cases of illegality. Guarantee those same legal immunity for 2/3 of their assets, along with truthful testimony in court for any legal action. Fraudulent testimony will, of course, negate the deal. Refund $2000 to every taxpayer in the country as a stimulus check.

    Maybe you will actually see business improve while seeing far less greed, corruption, graft, and shaky deals in big business.

    Jim just represents the average man, who is disgusted with the idea of giving his money to a guy that will still own several houses here and overseas, and fly to them in his jet, to be met by his staff with his Mercedes.

  2. Support the Farah plan.

    My bailout plan

    ——————————————————————————–
    Posted: September 29, 2008
    1:00 am Eastern

    © 2008

    Congress is beginning debate on a $700 billion plan for U.S. taxpayers to bail out banks, mortgage companies and investment firms that made bad loans to unqualified consumers, including illegal aliens, and became insolvent as a result.

    Officials say this plan is designed to protect us from further harm and to prop up the teetering economic system the government has created.

    I have a better idea.

    Let’s not put more money into the hands of those who created the problem. Let’s put the money into the hands of the people who were victimized. Why should the victims pay twice and the victimizers get off scot-free?

    Here’s my plan:

    Those who bled Fannie Mae and Freddie Mac dry by lying about the government-created mortgage companies’ real worth so they could secure billions in personal bonuses should make restitution. They should be forbidden from ever holding any government job or position in the financial world for the rest of their lives.

    Anyone who made more than $1 million a year in the other failed banks and institutions should be forced to contribute all their income in excess of $1 million a year to my bailout program.

    The chairmen of the Senate and House banking oversight committees should be forced to resign in disgrace from their positions.

    Sen. Charles Schumer, D-N.Y., who literally started the first bank run in California with his irresponsible public statements, should be forced to resign from the Senate.

    All candidates for federal political office who received contributions from Fannie Mae, Freddie Mac or any executives of those institutions, or the other failed banking, mortgage and investment firms, should be required to give the money to the bailout fund.

    Since the Bush administration is trying to sell the idea that Fannie Mae and Freddie Mac actually hold assets of greater value than the cost of their proposed bailout, I suggest they auction those institutions off to the highest private bidders.

    Instead of paying $700 billion to prop up the institutions that created the mess, I propose $700 billion be paid directly to those victimized by the scandal – the American people – in the form of a tax cut. This would stimulate the economy and help the country grow its way out of this crisis.
    (Column continues below)

    I’m sure this plan has a few holes in it. That’s because I made it up in about 15 minutes.

    But I’m also certain it is far better than any official plan being floated in Washington today.

    So, I’m asking you to get on board. Make amendments if you like. But tell those scoundrels in Washington stop picking your pocket and your children’s pockets with this bailout of the banking class.

    If my business goes belly up because of bad decisions I make in running it, no one is going to bail me out. I fail to see why businesses thousands of times bigger than mine should face no risk and, in effect, be insured against mistakes and bad judgment by the taxpayers of the United States.

    This is not the way the free market works.

    What is at stake in this bailout scheme is not just amounts of money few of us can even imagine. What is at stake is not just massive tax increases in the future. What is at stake is not just rewarding criminals and shysters. What is at stake is whether America will protect the last vestiges of a free enterprise system for our children and grandchildren and great-grandchildren.

    No more quick fixes that, in fact, cost us far more in the long run.

    No more cover-ups of wrongdoing.

    No more rewarding the worst kind of fiscal irresponsibility.

    Support the Farah plan.

  3. http://demint.senate.gov/public/index.cfm?FuseAction=PressReleases.Detail&PressRelease_id=af75ab62-a348-6122-cffe-1ff3fff3a186

  4. I am glad Senator DeMint voted against this bill. He voted my sentiments which is more than I can say for Bob Inglis. Inglis will not get my vote in the next election and neither will Lindsey Graham, if he votes yes in the Senate vote.
    This mess started with Bill Clinton and his blackmailing the institutions to float loans to indigents and welfare people who could not afford to buy a house.
    They should have exposed Clinton for his dirty work and refused to fall into the trap, but then its all about money isn’t it? I have no sympathy for them. Let them fall and then they can see how to live meager as some of the middle class does. I managed my affairs with a 30 year 8% mortgage, paid it in full and never missed a payment nor was I late with one. My home is paid for, my two cars are paid for and I did all on $32,000(which was a high for the last three years before retirement. And I don’t live in the slums, but I don’t live at the cliffs either.

  5. How about let the market react to the government meddling that we have already had through the mismanagement and socialism put upon us via Fannie and Freddie?

    Let the bad loans fail. Let the people who can’t afford a house give it up to someone who can. Let capitalism work and we will all be better off.

    This is a huge market correction caused by the unsustainable run caused by government interference. We don’t need more gov’t, we need less.

  6. Sen.DeMint,A bailout is not the answer but rather allowing the market to adjust.It may be the only real answer to the problem.Otherwise,we are looking at handing our free market system over to the very people who have allowed this to happen.It is either now or later we pay for bad decisions!Lets get it over with and learn from our mistates!Thanks!Richard

  7. The problem with “letting the free market work” is that we, as a country are not willing to followup on that in a deep recession or depression. If GDP drops a couple trillion a year, to say 12 trillion, then we will be in more debt as a nation than if we pass the bailout. The loss of tax revenue plus the explosion in Medicaid, welfare, food stamps, unemployment benefits, etc, will be over 700 billion in a year or two. When it comes to people suffering (by US not world standards) the Government will write more checks.

    It seems like we are heading to the point where the US will no longer be able to borrow and the pyramid will crumble, but the bailout will delay that. When we get to the point that we are printing money to meet the demand of the run on the banks, will another 700 billion through the printing press really matter?

  8. I say let all those drug dealers spend the dollars they have stored on pallets in warehouses in Mexico to buy up the mortgages. I’ll bet they won’t have any problems collecting payments or finding tenants. That will also get those dollars back into circulation. Seems to me like the financial system is taking care of itself. Buffet invested $5 bill. Wachovia found a buyer. I’m sure those Wall St. millionaires wouldn’t mind buying up those mortgages that they thought were such a good investment to sell. I say let the market shake itself out. I’m a dad and sometimes you have to let your kids learn their lessons the hard way.

  9. I say yes to a free market shorter recession vs socialist/ gov’t intervention and VERY prolonged, artificial flatline of the economy:

    1. letting the free market quickly and efficiently take care of the financial mistakes and misdeeds of (mostly large NYC) commercial and investment banks, insurance companies, and hedge funds. If left alone, these banks will be seemlessly bought/taken over by well managed banks (see USBank, BB&T, Wells Fargo, larger community banks, credit unions, etc.)

    2. Implement ZERO Capital Gains tax to stop disincentive to savings, Flat Sales Tax, NO Personal or Corporate Income tax (and cut spending…)

    3. Reform Accounting Rules to reflect reality (change mark to market rules, and repeal Sarbannes-Oxley)

    4. Reinstate uptick rule, allow covered short selling, (and lift ban on short selling)

    5. Privatize Fannie and Freddie (and Social Security while you’re at it…)

    6. $5,000 Homebuyer Tax Credit (1 time use for everyone – not just 1st time buyers, and even on investment/second homes)

    7. Repeal Money Market fund ‘guarantee’ and FDIC insure $250,000 per account for bank deposits per account (vs current $100k)

  10. This bill was nothing more than a cow patty with a nice big cherry in the center!! Make the Wall street investors and banks find their own way out, if we bail them out, our dollar will only decline further. My solution, cut the capital gains tax, cut the business/corporate tax, cut every tax that you can, and get our economy running again, Oh, and while they are at it, we need to DRILL HERE AND DRILL NOW, DRILL, DRILL, DRILL. It will create hundreds of jobs right here at home that can’t be outsourced, ohhhhh forget it, Obama is going to fix everything, right???

  11. If at first you don’t suceed, try, try again. The third time will be the charm. Cutting the capital gains tax (or eliminating it) will spur investment. That’s a start. If banks won’t lend to other banks because they don’t know what the other bank has on its books….go to a smaller bank that did not take advantage of the ARM or sub-prime mortgages. Go to http://www.youtube.com/watch?v=_MGT_cSi7Rs

    http://www.youtube.com/watch?v=_MGT_cSi7Rs&ytsession=EqBaFJpH_Lw7ds5hVq2C9MHhjWZGg8T7YGMyBb-DWZJrzze4hEPuDWeaIMYYY-n8tNnxE6de3HKj95GncgcCTBuUG4NiwK0K70F9D3LU8kjnM6RX8McWXYVRDKjQgKkLYNlqX6WZFbJZWs4mNbpmbLVsStRlbPtRxvYjlpRBP25rLyLiE4RrzICYr3rUMzP-BJvnJzesxFrKaZIGttOgOL1aBYVpQd2qxRsINgV66TGMgzGg5otST3lKwIhkLDLV for more information on how this problem was ignored in 2004 by Congress.
    If the devil is truly in the details, then this short delay to consider more options and to eliminate some dumb portions is a positive step. Simply put, we need DeMint to say NO and Lindsey Graham to later say “this is a compromise,” but only after some real pushihng and shoving away from the government making a guarantee and towrd a free market economy with some insuracne – and assurance – from and by our federal government.
    Here are some DeMint proposals according to his recent e-mail:

    REFORM A TAX CODE THAT DISCOURAGES CAPITAL FORMATION

    • Suspend Capital Gains Tax for 2 Years, Index it for Inflation: Immediately suspend the capital gains rate from 15% for individuals and 35% for corporations on assets, including stocks, homes, and commercial real estate investments. This provision would unleash funds and materials to create jobs and grow the economy. After the two-year suspension, capital gains rates would return to present levels but assets would be indexed permanently for any inflationary gains.

    • Reduce the Corporate Income Tax Rate: Reduce the corporate income tax rate, which discourages job creation and investment in the U.S., from 35% to 25%. For over a decade, the U.S. corporate tax rate has been 50% higher than the average among our counterparts in the industrialized world and nine key trading partners cut their rates during 2007. According to the Tax Foundation, the corporate tax quietly taps family pocketbooks for nearly $370 billion per year, over $3,000 per household, in the form of higher prices, lower wages and poorer return on investment.

    REFORM FAILED GOVERNMENT REGULATION

    • Suspend “Mark to Market” Accounting: Suspend the mark-to-market regulatory rules for long-term assets. These rules require financial firms to mark assets at current market levels, even where no market exists and any immediate transactions would result in fire-sale prices. Instead of allowing firms to mark these assets to their true economic value, these rules contribute to a downward spiral as firms have to evaluate their assets not on the basis of their long-term investment but rather on a short-term panic.

    • Reform Section 404 of Sarbanes-Oxley: Make voluntary the duplicative reporting requirements under Section 404 of the Sarbanes-Oxley Act, allowing companies to comply with standards that better fit their size while still insuring that they protect their investors. The average compliance cost for a business under Section 404 is $3.8 million, with smaller businesses paying over twice as much in percentage of revenue as large businesses. Relieving this burden will reverse a policy that is chasing capital offshore and encourage more companies to go public in the United States.

    • Repeal federal mandates for risky loans: Repeal the Carter-era Community Reinvestment Act, which requires banks to make loans available to borrowers who would otherwise be deemed as too high a credit risk, and who often cannot afford to repay the loans. Under this law that contributed to our current crisis, if banks don’t make enough risky loans, community organizers can take financial institutions hostage during regulatory proceedings when banks try to merge, acquire or otherwise alter their status.

    EXPAND ENERGY EXPLORATION

    • Repeal Bans on Energy Exploration and Expedite Production: Expedite offshore and oil shale exploration, ensure states share in energy revenues, and prevent endless litigation from frivolous environmental lawsuits. American reserves offshore are estimated to hold over 20 billion barrels of oil and 97 trillion cubic feet of natural gas. In the West, oil shale is estimated to be between 800 billion and 2 trillion barrels of oil — that is more than three times the proven oil reserves in Saudi Arabia alone. Permanently ending these bans on American energy will help fuel our economy and stop sending billions of dollars overseas for foreign oil.

    REFORM FAILED GOVERNMENT INSTITUTIONS

    • Schedule the GSEs for Privatization: Transition Fannie Mae and Freddie Mac over a reasonable time period to truly private companies without special government privileges and expose them to real market competition. This reform would 1) establish commonsense limits for their capital requirements and portfolio holdings relative to their size, 2) focus their mission on affordable housing only, not profit making, 3) require them to pay an appropriate risk-based amount for the government guarantee they enjoy, 4) subject them to state and local taxes and accurate SEC filings like every other private for-profit corporation, and 5) ultimately provide for the phase out of their GSE charters once their conservatorship has ended.

    • Stabilize the Dollar: Repeal the Humphrey-Hawkins Full Employment Act, which diverts the Federal Reserve’s attention from long-term price stability to short-term economic growth. In an effort to fuel the economy, this additional mandate has encouraged the Fed to keep rates artificially low, leading to economic booms and busts, a rise in inflation and the decline of the dollar. This reform would require the Fed to establish a numerical definition for price stability and maintain a policy that promotes it over the long-term.

  12. […] however, crystallized in a local column by South Carolina political consultant Bob McAlister, who bluntly asked leading bailout opponent U.S. Sen. Jim DeMint “what’s your […]

  13. Thanks for voting against the bail out bill as proposed. Finally a Senator with some guts that listens to his constituents. Push for the following before voting yes for any bill.

    1. Risk Reduction – Repeal of H.R. 2895: National Affordable Housing Trust Fund Act of 2007
    2. Restricted Use of Funds – Elimination of Section 105(d) of the bail-out plan calling for deposit of not less than 20 percent of any profit realized on the sale of each troubled asset purchased under this Act into the Housing Trust Fund established under section 1338 of the Federal Housing Enterprises Regulatory Reform Act of 1992 (12 U.S.C. 4568); and 35 percent shall be deposited into the Capital Magnet Fund established under section 1339 of that Act (12 U.S.C. 4569).
    3. Securities Fraud – Federal investigation of misleading publicly made comments by officers and management concerning the financial stability of all private sector companies that require bail-out assistance or accept federal funds.
    4. Protection of Assets – Seizure by the Federal Government of all funds and assets available as severance pay, golden parachutes, fringe benefits, stock options and bonuses for all officers and executive managers of companies requiring bail out assistance or of companies declaring bankruptcy in any form.
    5. Criminal Action – Federal investigation and charges for misrepresentation of the facts and dereliction of duty brought against any government official making misleading or false statements concerning the financial strengths of any government agency, quasi-government agency or private sector company.
    6. Transparency – All funds distributed as a result of the bail-out bill be available for public viewing, be provided in a form that can be easily traced and accounted for, and provide a rate of return that is equal to or greater than loans available to small businesses in the private sector.
    7. Finite Time Period – All funds distributed as a result of the bail-out bill to have a set maturity date. Any companies not repaying the funds by that maturity date will be subject to financial penalties and Federal Government controls.
    8. Executive Compensation Restrictions – All officers and executive management of companies receiving funds as a result of the bail-out bill to receive limited and monitored compensation with no severance packages, bonuses, retirement or fringe benefit packages. Performance to be reviewed annually and termination if company does not provide growth.
    9. Aid for the Taxpayer – Elimination of the AMT tax.


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