An alternative to the bailout plan

As always here on Logipundit.com we want you to know that there is more than two ways to look at a subject, and that it occasionally might require us to use our imagination (and well…brains)  to come up with alternative solutions.

For instance, let’s imagine for a second that our Congress had authority over our economy…which if I’m not mistaken was the way our Constitution was originally intended.  Second, let’s pretend that whoever is in charge has FISCAL authority, and not simply MONETARY tools with which to manipulate our financial system.

And let’s further go down the yellow brick road and pretend that it might be a good idea to make our country even MORE economically competitive (and attractive to outside investment) by NOT trying to tax our producers to death.

If we were to live in this dream world, then the following article from NRO might represent an alternative to just forking out $700 BILLION of taxpayer money for Bureaucrats in Washington to have “tight controls” over our financial institutions:

Rep. Jeb Hensarling (R., Texas) chairs the Republican Study Committee, the congressional caucus of idea-driven, free-market stalwarts. These practicing Reaganites seem appalled to watch their GOP president morph before their eyes from GWB to LBJ to FDR. At a Capitol Hill press conference at high noon on Tuesday, Hensarling and a dozen RSC members expressed deep misgivings about Bush’s $700-billion baby. Preferring to drown it in the bathwater, Hensarling and his band of true believers rejected Bush’s collectivism and offered their own proposals for escaping this rubble — and returning America to a path of robust growth:

Give the capital-gains tax a two-year vacation. “Suspending capital gains taxes would bring as much as a trillion dollars of capital sitting on the sidelines back into the market,” Hensarling predicts. Also, as the Tax Foundation proposes, cutting America’s 35-percent corporate tax — the industrialized world’s second highest, after Japan’s — would boost U.S. global competitiveness. Since equity prices partially reflect long-term after-tax profits, lowering corporate levies should buoy stock markets.

Denationalize, then privatize Fannie and Freddie. “These troubled financial Frankensteins — created in a government laboratory — are not creatures of the free enterprise system,” Hensarling said. “We must ultimately take their monopoly powers away and return them to the marketplace.” Why not array Fannie’s and Freddie’s loans according to mortgage holders’ surnames? They then could be divided alphabetically into 26 units and auctioned off.

Waive “mark-to-market” accounting. As the Competitive Enterprise Institute’s John Berlau argues, when distressed mortgage-backed securities sell at bargain-basement prices, unhelpful new bookkeeping regulations require that similar instruments elsewhere — including viable loans — be valued at equally low prices. This needlessly stains balance sheets.

Strengthen the dollar. Bernanke should boost U.S. currency, not pose as America’s uber-stock broker. A strong dollar lowers inflation, cheapens oil, and soothes world markets.

Sounds crazy, people who profess to be proponents of Free Markets actually proposing alternative legislation to keep our markets free. As the article goes on to point out, nothing can be less imaginative than the Bush plan to simply buy “troubled assets.”

Meanwhile, as of a few hours ago, a bunch of “Bi-partisan” big government schmuckheads swore they were getting “close to a deal.”

Nothing scares me more than “Bi-partisanship” in today’s Congress. The next time I hear the terms “Bi-partisan” or “reach across the aisle,” I think there is not enough duct tape on the planet to keep my head from exploding.

One comment on “An alternative to the bailout plan

  1. Ripp says:

    Just wanted to interject on something I know a little about…waiving mark-to-market accounting is inherently inconsistent with providing adequate disclosure of a company’s financial position (which promotes the capital formation that is essential for a successful market-based economy). Here’s an article with details (since I prefer to write about this topic only when I’m being paid to do so):
    http://www.city-journal.org/2008/eon0925ng.html

    Also, the bailout plan is a disaster and absolutely not the best way to “fix” what’s ailing us. And, to beat it all, the government now will likely end up receving equity in these companies in order to “profit” from their turnaround. Exactly what country am I living in? And what party is in the executive office?

    A plan based on expanded insurance (as is being proposed by by Boehner) would be a far less intrusive way to address this situation.

    It will be great if Bush and the Dems pass Paulson’s plan. Kind of like No Child Left Behind. The Bush presidency comes full circle. Gotta love it.

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