Meeks' Message From Capitol Hill
September and October have been like a gigantic roller coaster ride full of ups and downs and unexpected twists and turns. No, I'm not referring to the presidential and congressional election campaigns where it's been mostly up for my side and down for the other party's candidates. I'm talking about administration and congressional efforts to get a grip on the interlocking crises that threaten America's economic well-being.
September started with the crisis in the housing market, the mortgage foreclosure crisis, and a bad asset crisis piling up into a severe credit crisis. Lending institutions not only began to deny loans to creditworthy businesses and prospective homebuyers, but also to each other. This happened because banks and lending institutions weren't sure whether the assets held by other banks and lending institutions were good or bad. The resulting lack of confidence and fear staggered some of our most prominent financial institutions. Some of them actually failed. The danger loomed that our financial system might collapse.
By mid-month, Treasury Secretary Henry Paulson asked Congress for the authority to use up to $700 billion virtually as he pleased to shore up faltering or failing Wall Street firms. On a bipartisan basis, House and Senate leaders responded positively to the need but fundamentally reshaped Paulson's proposal. With strong congressional oversight, consultation, and supervision, Congress would: permit the Secretary of the Treasury to buy mortgages and other assets that are clogging the balance sheets of financial institutions; direct federal housing agencies to modify the loans they own or control to help more families keep their homes; ensure that taxpayers will benefit from any future growth of companies participating in the rescue program; prevent executives in these companies from using taxpayer money to finance excessive compensation packages; release the first $250 billion immediately but thereafter require the president to certify that an additional $100 billion is needed and that an independent oversight board be established.
All that remained was approval by both the House and Senate.
But, in another unexpected twist this bipartisan compromise was defeated in the House when 128 Republicans and 95 Democrats voted no. Chaos ensued. The same day the stock market dropped a record 777 points, a loss of $1.2 trillion in value.
Thank goodness the Senate took a different course two days later, passing its own version of the rescue package. The Senate also added clean renewable energy tax incentives, relief for 20 million families who could be hit by the Alternative Minimum Tax, additional tax cuts for families and businesses, and an increase in Federal Deposit Insurance Corporation coverage of bank deposits to $250,000.
The House adopted the Senate measure two days after that. What Economic Stimulus Package
turned a 228 to 205 defeat into a 263 to 171 victory? The pressure mounted by retirees and Americans who would like to retire one day who saw their 401k's devastated, farmers needing credit, community bankers, pension fund managers, mayors, and governors, persuaded many of my reluctant colleagues that in reality Wall Street intersects with Main Street. This was precisely the reason I voted yes both times.
The rescue package hasn't halted the financial and economic roller coaster. The interlocking crises we are riding are going to last a lot longer than a few weeks. It is also going to be very rough with many twists and turns, and ups and downs. And it is global.
In particular, Congress and the administration need to take additional steps to stimulate the economy sooner rather than later. Congress is on recess until Election Day, but tens of millions of hard-hit Americans aren't. They can't wait until the next Congress convenes and the new president takes office in January. I favor a post-election lame-duck session.
Earlier this year, Congress passed and the president signed an economic stimulus package centered on tax rebates. Congressional Democrats and Barack Obama, the Democratic nominee, have long advocated a second economic stimulus focused on helping hard-pressed states and cities, workers and their families, and employers, particularly small and medium-sized businesses.
Not just Democrats feel this way. By a powerful 368-28 bipartisan vote, the House passed a bill shortly before its recess that would extend unemployment benefits for seven additional weeks; an additional 13 weeks in states where the unemployment rate is higher than 6 percent. Unfortunately, Senate Republicans stood in the way of adopting this extension. Maybe the 159,000 layoffs in September alone; nine straight months of job losses; a 6.1 percent unemployment rate; a jobless rate anticipated to average as high as 6.9 percent in 2009; and the message I am confident voters will send on November 4, will make conservative Senate Republicans more compassionate. House Democrats have not been willing to wait until the election or the next Congress or the next administration. Hearings are being held now on what the key provisions of a fiscally responsible yet effective economic recovery package should be. Again, I believe this ongoing preparation and the worsening circumstances justify holding a lame-duck session provided there's a basis for a bipartisan consensus to: create jobs, conceivably through rebuilding the nation's infrastructure and targeted assistance to small businesses; improve health care coverage; extend unemployment benefits, help families afford rising food and fuel costs, and provide emergency aid to help states and localities avoid drastic cuts in essential governmental services at a time when they are needed most.