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Ending the bailout gravy train

By Congresswoman Virginia Foxx

During the summer of 2008 anyone predicting that gas prices would fall by more than half in a few months would have been laughed off the national stage.  Anyone suggesting that the federal government would commit $8.5 trillion to bailouts and loan guarantees (when the entire federal budget is only $3 trillion) would have faced a similar fate. 

Yet this is the situation in which we find ourselves today: gas prices halved from their summer highs and federal bailouts as common as a Christmas tree farm in the High Country.

As oil prices hover around a third of what they were at their peak ($147/barrel), the national debate over alternative sources of energy, offshore drilling and all things energy-related has subsided.  In its place we have a debate over the future role the federal government will play in our economy. 

Amidst the credit crunch and housing crisis too many Washington policy-makers have decided that the federal government must not only bail out teetering banks, but also credit card companies, automakers, life insurance companies and any other company that looks like it might benefit from a billion-dollar infusion of government cash. 

The last straw came in mid-November when reports surfaced confirming what some of us knew and many suspected: the federal government was spending hundreds of billions in taxpayer money on a bailout that has no oversight.

As the Washington Post reported, the Bush administration is almost finished doling out the first $350 billion in bailout money.  Meanwhile, the independent oversight expected by the public is non-existent.  And the status of the progress report detailing where the money is flowing?  Late and getting later. 

The whole bailout concept is now completely different from the bailout that was sold to America back in September (a concept I didn’t buy in the first place).  After this bailout bait-and-switch why should anyone believe that the next round of $350 billion in taxpayer money is necessary or even that it will be used judiciously? 

With this question in mind, I thought it was time to exercise one of the few checks and balances in the bailout law. 

One of the main problems with the bailout, of course, was that Congress abandoned its responsibility to oversee federal spending.  Never before has Congress written so large a blank check with so few strings attached.  The result is that unelected officials with little accountability, people like Secretary Paulson and Chairman Bernanke, now hold the federal purse strings. 

Nevertheless, the bailout law does give Congress the power to “disapprove of” the second half of the $700 billion in bailout cash. 

With the first half of the $700 billion bailout nearly exhausted, $350 billion is sitting in the hopper waiting for the next industry or company the government deems “too big to fail”.

Congress can stop the madness. According to the bailout law, Congress can withhold the next $350 billion of the bailout when the President—whether it’s Bush or Obama—requests the second half of the money. 

I’ve introduced the appropriate Congressional resolution that will do just that.  Thanks to the way the bailout was written, this resolution must be considered by Congress within five days of when the White House requests the balance of the bailout cash. 

It’s not the role of the government to pick winners and losers.  By propping up mismanaged companies and not allowing bad ideas to fail, we are inflating the next bubble that is waiting to burst.  And it’s with your tax dollars.

If Congress agrees to disagree with the next $350 billion, our future economic prosperity won’t be the only thing to come out on top.  Other benefactors will be America’s budget, our tradition of free markets, and most importantly, future generations freed from the shackles of $350 billion in new national debt.

Over the course of 2008 our country has face many unexpected challenges, whether sky-high gas prices or the financial crisis of a generation.  But I am convinced that we remain a strong and an optimistic people who will prevail in the end. 

By putting the brakes on the perpetual-motion gravy train of bailouts we can sever this unwarranted dependence on government for the next round of cash.  This would be an important step in towards restoring America’s competitive strength and the innovation that fuels our optimism, opportunity, and economic growth.