The biggest mistake the federal government has made with respect to its economic rescue plan has been allowing it to be described as a “bailout.” It isn’t; rather, it’s a plan for the government to interject necessary capital into our financial markets, thereby enabling them to get through this period without collapsing, by buying assets. The problem for the markets is that these assets have dropped in value, but that doesn’t mean they have no value; they will generate income for taxpayers while they’re in government hands, and assuming they’re purchased at a reasonable price, it should be possible at some point in the relatively near future for the government to sell them at a profit. As such, this isn’t really a case of the government giving away hundreds of billions of dollars; rather, it’s a case of the governmentinvesting that money in order to bridge our economy across a difficult period and, ultimately, pay down some of the national debt.
That’s why it’s good news that a deal appears to be coming together for a clean plan—one that includes additional protections for taxpayers, but not diversions of money to left-wing interest groups; and that’s why no less a conservative economist than Larry Kudlow says, “For taxpayers, the bank rescue plan is a win-win-win-win.”
Update: a tentative deal appears to be in place despite the efforts of a handful of Democratic senators who crashed the negotiations and began making various additional demands, including the reinsertion of the slush fund for ACORN. Apparently, Senate Majority Leader Harry Reid couldn’t control his own troops, but the people who were actually empowered to put the deal together found a way to work around them; this was partly due to his opposite number, Speaker of the House Nancy Pelosi, who used the power of her office to help get the deal done. If the deal holds and both parties are able to support it, a lot of the credit will also belong to John McCain, who played a significant role in bringing the House Republicans into the process. As Hugh Hewitt says, this deal represents “a reassuring return of purposeful legislating by the Congress.”