Topic: Economics
Bob Barr on the Bailouts

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You may have missed it, but one presidential candidate has been speaking out on this issue. Here is what he's been saying:

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by George Dance
(libertarian)
Sunday, September 21, 2008

While the presidential campaigns of John McCain and Barack Obama have stepped gingerly around the financial crisis and the question of government intervention, third party candidates Bob Barr and Ralph Nader ... have embraced the market meltdown, viewing it as a rare opportunity to highlight bold economic positions and, perhaps as important, claim credit for sounding the early warning alarms. "We've been hammering it," said Shane Cory, Barr's deputy campaign manager. "When this first came about with Fannie Mae and Freddie Mac, Bob was explaining, 'When we bail out Fannie and Freddie, expect more to come.'" -- Ben Adler, "Nader, Barr & Paul: 'Told you so'," Politico, Sep. 21, 2008. http://www.politico.com/news/stories/0908/13699.html

The campaign has been highlighting this issue for months, both on talk shows, in press releases and at campaign stops. We cannot continue to make mistakes of the past and keep intervening in the economy. The free market must be allowed to work. -- Jason Pye, "Barr ahead of the curve on financial crisis," Barr Blog, Sep. 21, 2008. http://blog.bobbarr2008.com/2008/09/21/barr-ahead-of-the-curve-on-financial-crisis/

June 2: Bob Barr Criticizes Plan to Bail Out Insurance Industry

Congress should not socialize insurance for natural disasters, warns Bob Barr, the Libertarian Party nominee for president.[...] The House has passed and the Senate is considering legislation for the federal government to provide "reinsurance" in all fifty states to subsidize large insurers in the event of a natural disaster, such as a hurricane. "It comes as no surprise that some of America's biggest insurers are lobbying for this legislation, which would enrich their bottom lines if they had to pay out under their policies," observes Barr.

The bill, supported by both Democratic presidential contenders, also would lower premiums for people who choose to live in disaster-prone areas, encouraging even more growth. This subsidy program, says Barr, "would be a triple play against the American people: taking their money to bail out big corporations, subsidize home owners who want to live on the beach, and promote even more damage to environmentally sensitive areas." After years of spending wildly under Democrats and Republicans alike, Congress must say no to special interest bail-outs.

http://www.bobbarr2008.com/press/press-releases/13/bob-barr-criticizes-plan-to-bail-out-insurance-industry/

July 3: Barr Criticizes Housing Bail-Out for Including IRS Snooping Provision

"When this Congress makes a bad bill, it really makes a bad bill," says Bob Barr, Libertarian Party candidate for president.[...] Indeed, this is precisely "how the Congress should not legislate," notes Barr, a former member of the House of Representatives. "First, the overall housing bill is tainted. The industry helped draft its own bailout and Sen. Christopher Dodd, chairman of the Banking Committee, received a cut-rate mortgage from one of the mortgage companies being bailed out."

Second, "the bill's supporters tossed in a broad requirement for a fingerprint registry of mortgage industry employees that could even include clerical workers," explains Barr. The provision made no sense anyway, since the industry collapse was not caused by convicted felons taking over the mortgage industry.[...]

Third, some legislators took advantage of this supposedly "must-pass" bill to add the requirement for credit card companies and major online payment systems, such as Amazon, eBay, and Google, to turn over most credit card transactions to the government. "The legislation even adds back-up withholding for transactions which are entirely legitimate and offer no evidence of tax evasion," says Barr.[...]

Finally, "since many small businesses use their Social Security number as their tax ID, the provision would create a vast new data directory open to identity theft and other abuses." This is precisely the wrong direction for America, since the government has used the excuse of fighting terrorism to steadily increase its surveillance and privacy-busting powers since September 11. "Any new request for increased authority should receive the strictest congressional scrutiny, and not be stashed in a big bail-out bill out of the public view," says Barr.

http://www.bobbarr2008.com/press-releases/43/bob-barr-
criticizes-housing-bail-out-for-including-irs-snooping-provision/

July 15: Privatize Fannie Mae and Freddie Mac, End Government Subsidies

The latest financial crisis involving Fannie Mae and Freddie Mac, which guarantee home mortgages, demonstrates yet again how government intervention in private markets almost always comes to grief.[...]

These problems are almost entirely the fault of the federal government. Congress created programs to artificially inflate the housing market, established Fannie Mae and Freddie Mac to be exempt from normal scrutiny, oversight, and competition, and expanded their activities in response to the sub-prime lending meltdown. Government must get out of the mortgage business, but must do so in a way that least harms taxpayers and the economy.

In the short-term, government has little choice but to provide an explicit but limited loan guarantee, thereby capping the public's liability, now widely assumed to be without limit. At the same time, Congress must restrict the number and size of loans by Fannie Mae and Freddie Mac and set more substantial capital requirements, while authorizing greater Federal Reserve oversight of their operations. The organizations must begin downsizing their portfolios, reducing their risks, and reestablishing their financial credibility.

However, the ultimate objective must be full privatization with both organizations turned into private companies, responsible for their loan portfolios, and without access to government guarantees or other forms of support. Government should not be in the business of creating multi-billion dollar enterprises to manipulate markets for the benefit of one group or anotherin this case, in order to shave the interest rates for selected home buyers by a quarter or half percent.

Finally, we must learn the lesson that government subsidy programs almost always end up running out of control, causing financial disaster for taxpayers.

http://www.bobbarr2008.com/press/press-releases/56/bob-barr-says-privatize-fannie-mae-and-
freddie-mac-end-government-subsidies/

July 16: Campaign Updates

Many Americans have been paying close attention to the housing loan situation that has caused the FDIC to close one bank and the federal treasury (that means YOUR tax dollars) to prop up the two government-backed organizations known as Fannie Mae and Freddie Mac.

Yesterday I was on Fox News' "Your World with Neil Cavuto" and I said that first and foremost we need to protect tax payer interests. Government intervention in the free market is to blame for the problem. The long term solution is a complete overhaul of how our federal financial systems operate.[...]

As election day gets closer, watch for more financial difficulties and you'll also see that there is virtually no difference in how Senators Obama and McCain propose to solve this problem.

http://campaign.blog.bobbarr2008.com/2008/?w=29

July 21: To Fight Inflation, Curb Economic Micro-Management and Bail-Outs by Government

"Americans thought they slew the dragon of inflation years ago, but it seems to be back, with the biggest monthly increase in the consumer price index in 26 years," observes Bob Barr, the Libertarian Party candidate for president.[...] "Unfortunately, the government bears much of the blame, since the Federal Reserve's continued cuts in interest rates and increases in the money supply have naturally inflated the general price level," says Barr. "In its desperate attempt to bail out the housing industry and spur business investment, the Federal Reserve appears to have infected the entire economy with the inflation virus."

"Federal Reserve policy has reached a dead end, since the Fed can ill afford to continue pressing interest rates lower, further stoking the fires of inflation and undercutting the value of the dollar. Yet the housing market remains depressed and the long-feared recession may finally arrive on our economic doorstep," notes Barr.

"There is no painless way to avoid market adjustments to past mistakes. But we should learn the obvious lesson that there is no free lunch: government cannot magically grow the economy and create jobs. Instead, manipulating the interest rate and money supply has resulted in significant costs for all Americans," explains Barr. "Turning the Treasury Department and Federal Reserve into bail-out agencies of last resort for everyone from Bear Stearns on Wall Street to the housing industry, along with Fannie Mae and Freddie Mac, compounds the problem.

"It is very important to maintain price stability," Mr. Bernanke told congress recently. "So it is," says Barr. "But the only way to do that is to end the governments attempt to micro-manage the economy, while protecting companies and industries from the consequences of their mistakes. If we dont change current policy - really change it - resurgent inflation will be just one of many economic charges that we will all have to pay."

http://www.bobbarr2008.com/press-releases/61/to-fight-inflation-curb-economic-micro-
management-and-bail-outs-by-government-says-bob-barr/

July 24: Senate Should Reject Housing Bailout

"Both the House and President George W. Bush have surrendered in the battle to protect America's taxpayers from yet another expensive and unnecessary bailout," says Bob Barr, the Libertarian Party candidate for president. "The $300 billion measure yesterday approved by the House and endorsed by the White House won'tjust pay off improvident borrowers and lenders. It will create yet another piggy-bank for activist groups at public expense. Now it is up to the Senate to say no[....].

"The sub-prime lending crisis is largely a crisis of government," adds Barr. "Congress and both Presidents Bill Clinton and George W. Bush pressed banks to lend more money in poor neighborhoods to less credit-worthy borrowers. The Federal Reserve pushed down interest rates to encourage more lending. Fannie Mae, Freddie Mac, and the Department of Housing and Urban Development subsidized home ownership. Now we are all paying the price for a boom gone bust," says Barr.

"However, Congress insists on exacerbating the problems it helped create," adds Barr. "This legislation is a shameless special interest Christmas tree: it bails out foolish homeowners and lenders, provides money for the irresponsible Fannie Mae and Freddie Mac, diverts taxpayer money to new home buyers, gives the earnings of Americans to state and local governments to purchase foreclosed homes, and takes more money from hard-pressed taxpayers for low-income housing. The bill also increases federally-funded housing insurance and reduces federal restrictions on state tax-exempt housing bonds. We are creating a no-fault economy, in which the taxpayers bail out everyone for every mistake they make," Barr observes.[...]

http://www.bobbarr2008.com/press-releases/64/senate-should-reject-housing-bailout-says-bob-barr/

July 25: Your share of the debt is about to climb another $1,300.

The bill passed the House of Representatives and will be taken up in the Senate and once through that pork factory, President Bush has said he will sign it. If I were your President I would veto it so fast, heads would spin.

The bill - and that's exactly what it is - is a bill you are going to be expected to pay! It's for an estimated $400,000,000. That is, of course, $400 Million that we don't have, so more borrowing is ahead. Your share of this expense? About $1,300.

And that's on top of the more than $31,000 you already owe!

In 2001, the national debt crossed $6 Trillion. Today, it is closing in on $10 Trillion. Our debt is growing faster than at any time in our nation's history and there is no end in sight.

http://campaign.blog.bobbarr2008.com/2008/07/25/your-share-of-the-debt-is-about-to-climb-another-1300/

Aug. 28: No Auto Industry Bailout

"It's time to say no to another raid on the Treasury," says Bob Barr, the Libertarian Party's presidential candidate, as America's money-losing automakers go to Washington asking for nearly $4 billion in loans, in what Barr says is just part of the $25 billion in loans authorized last year for building new autos. [...]

"Michigan's Senators and Congressmen argue that an auto industry bailout would be another form of economic stimulus,'" explains Barr. "We can't afford more of this sort of stimulus.'"

Barr explains that the market must be left free (to the extent it still is "free") "to respond to its own 'stimuli,'" which, over the long run, will move America's automakers toward new products and innovative solutions.[...]

Barr believes American consumers will demand such changes in response to the high price of gasoline, and automakers "should not shrink from those challenges or hide behind the artificial prop of taxpayer bailouts." Barr says that he and the Libertarian Party "have more faith in America's automaker industry to meet such challenges than many in that industry appear to have in themselves."

http://www.bobbarr2008.com/press-releases/110/no-auto-industry-bailout-says-bob-barr/

Sep. 5: No Bailout for Georgian Government

"Americans are a generous people, but they should not be expected to bail out governments which start wars," observes Bob Barr, the Libertarian Party's presidential nominee. "Vice President Richard Cheney has gone to the country of Georgia with the promise of $1 billion in U.S. foreign aid. While we should sympathize with the Georgian people, it isn't fair to stick Americans with the bill.

"First, their government cannot be trusted with the money. Foreign aid has an awful record. For more than a half century the U.S. has subsidized foreign governments, mostly subsidizing socialist economies and petty dictators. Georgia's President Mikheil Saakashvili was democratically elected, but he is an authoritarian nationalist who triggered the Russian invasion by irresponsibly launching his own attack on the disputed territory of South Ossetia. Providing Tbilisi with $1 billion would reward him for the very policies that have caused his people such distress.[...]

"Americans who want to help the Georgian people should contribute to private groups, outside of the control of the Georgian government. But the U.S. government should not underwrite President Saakashvili's government, thereby relieving him of responsibility for his bad decisions. Americans are generous, but they expect peopleand governments to be held accountable for their actions. It is especially important to do so in this case, given the human and financial costs of this unnecessary and tragic war."

http://www.bobbarr2008.com/press-releases/121/no-bailout-of-georgian-government-says-bob-barr/

Sep. 6: Barr Blasts Latest Government Bailout

"The federal government is preparing to take over Freddie Mac and Fannie Mae," says Bob Barr, the Libertarian Party presidential nominee. "Congress set up the taxpayers for big losses when it established these quasi-government agencies to subsidize the housing industry, and then earlier this year voted to approve direct federalsupport for them. Policymakers should learn from the latest financial disaster and say never again," Barr argues.

Barr says the bailout alone could cost $100 billion or more, and blames Fannie Mae and Freddie Mac for its role in creating the overall subprime lending crisis that prompted Congress to approve a $300 billion bailout of the housing industry.

"First, government subsidizes an industry," says Barr. "Then, after the industry crashes, government bails it out! The one factor that never changes is: the taxpayers lose.[...]

"It is time to say no more. Fannie Mae and Freddie Mac need to be privatized and sold off. And Congress must stop treating the federal government like a national soup kitchen for businesses in trouble,"says Barr. "Even former Federal Reserve Chairman Alan Greenspan has cautioned against bailouts such as the Bush Administration is now championing for Fannie Mae and Freddie Mac." [...]

http://www.bobbarr2008.com/press-releases/123/barr-blasts-latest-government-bailout/

Sep. 15: Take Future Taxpayer Bailouts Off the Table

"The bill is coming due for years of reckless federal spending," says Bob Barr, the Libertarian Party candidate for president. "Yet Washington politicians have trouble going cold turkey on more corporate welfare and business bailouts."

Although Treasury Secretary Henry Paulson refused to bail out Lehman Brothers, he stated, Don't read [that position] as no more' government support; however, Barr says this is precisely what government officials need to say."

"The mere possibility of a bailout will discourage companies and markets from adjusting in the future," explains Barr. "Analysts say that Lehman Brothers had more trouble attempting to raise money because of expectations created by the $30 billion Bear Stearns bailout. The fact that investors viewed Fannie Mae and Freddie Mac as having an implicit government guarantee encouraged irresponsible behavior by both the organizations and private investors," Barr adds.

"Now that the consequences of this behavior have become so obvious, American companies and markets look a lot less attractive to foreign investors," notes Barr. "And the prospect of more multi-billion dollar bailouts makes federal debt a more dubious investment. In fact, Moody's Investors Services has announced it is considering downgrading federal bonds because of the federal government's growing financial liabilities. Every new bailout adds to the total," Barr warns....

"Unfortunately, those bills just keep climbing. Yet Senators John McCain and Barack Obama spend more time arguing about lipstick on pigs than about how to cut the deficit, pay down the national debt, or deal with the coming entitlements crisis," says Barr.

http://www.bobbarr2008.com/press-releases/134/take-future-taxpayer-bailouts-off-the-table-says-bob-barr/

Sep. 17: Another Federal Bailout: "I Told You So"

"It appears that President George W. Bush should say that we are all socialists now," says Barr, as he explains that the government has now taken over insurance giant AIG with an $85 billion loan, for which it received an 80 percent equity stake in the company. "In other words, the federal government now will own and run one of the nation's largest insurance companies."

"This administration, supposedly devoted to free markets and fiscal responsibility, has bailed out the housing industry, the quasi-government mortgage companies Fannie Mae and Freddie Mac, the investment house Bear Stearns, and a leading insurer. What's next?" asks Barr.

"And how will we pay for this ever-rising bill for corporate welfare? The national debt already runs $9.5 trillion," Barr explains. "The deficit this year will run a record $407 billion. Next year the red ink will be even greater. And there are trillions upon trillions of dollars that will come due under Medicare and Social Security as the Baby-Boomers retire," he adds.

"Moreover, the latest bailouts are being made in secret by the Federal Reserve. At least the housing and Fannie/Freddie bailouts came with congressional authority, if not understanding," notes Barr. "However, no one voted to pour taxpayer funds into Wall Street. And no one voted for the government to take over an insurance company. If the Federal Reserve can spend as much money as it desires to bail out any company that it desires, is there anything that it cannot do with taxpayer funds?"

http://www.bobbarr2008.com/press-releases/135/another-federal-bailout%c2%a0-i-told-you-so-says-bob-barr/

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See also:

Barr on Bailouts

ALG (Americans for Limited Government) News Network, YouTube, Sep. 17, 2008. http://ca.youtube.com/watch?v=_55NI5D9EQo

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Also read:

Barr Campaign builds on Bailout issue

http://www.nolanchart.com/article5124.html

Barr blasts Bush on Iraq, Bailout bill

http://www.nolanchart.com/article5148.html

©2008 George Dance, all rights reserved. You must have written permission from the author in order to republish this work.
Published: Sunday, September 21, 2008
Last modified: Friday, October 17, 2008

The views expressed in this article are those of George Dance only and do not represent the views of Nolan Chart, LLC or its affiliates. George Dance is solely responsible for the contents of this article and is not an employee or otherwise affiliated with Nolan Chart, LLC in his/her role as a columnist.

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