Tim Walz: Why I voted against the bailout bill

Though improvements were made, it was still a raw deal for taxpayers.

By TIM WALZ

October 7, 2008 at 12:15AM

Throughout the debate over how best to address our nation's financial and economic crisis, I have been guided by a simple question: What is the right policy for the American people? We face a real and serious economic crisis, and inaction is not an option. But action motivated by panic and fear is no substitute for getting it right.

The public is, I believe, poorly protected by the bailout plan that Congress was asked to vote on, so I voted against it both times it came before the House of Representatives. The Star Tribune Editorial Board called those votes "reckless." To the contrary, I believe they were responsible.

Virtually everyone reacted with horror when Treasury Secretary Henry Paulson released his initial, three-page plan giving him unchecked power to spend 700 billion of our tax dollars to bail out Wall Street. The proposal read like a ransom note, and I appreciate the efforts of congressional negotiators to make the best out of a bad situation. But at the end of the day, Wall Street was well-represented in the negotiations in a way that Main Street wasn't.

The plan we voted on is a bad deal for the American taxpayers on several fronts:

•It lacks taxpayer protection, and there is no guarantee the American people will get their money back from Wall Street. The legislation simply requires that if, after five years, we have not gotten a good deal on our investment, the president must make a proposal for doing so. That proposal is not binding and will likely go nowhere.

•It offers no real help for homeowners. As the New York Times reported on Saturday, the way the plan is structured makes it highly unlikely that more than a handful of struggling homeowners will end up with more manageable mortgages.

•It continues to permit excessive CEO compensation by instituting so-called limits on compensation and golden parachutes that are essentially all bark and no bite. As the Washington Post puts it, "executive pay experts said the regulations are too weak to spark major reform in the way companies compensate top officers, and too narrow in scope to change the pay structure that encouraged finance executives in boom times to take on enormous risks."

•The plan proposes only weak oversight by putting enormous power in the hands of the treasury secretary, leaving an oversight board that can critique but not halt any of his actions.

Too many public opinion leaders, including those in the media, committed the cardinal sin of panicked policymaking and fiscal recklessness: They fell prey to the delusion that just throwing a lot of money at a problem would solve it.

As for the notion that there was not time for developing an alternative, that is simply untrue. Several better alternatives floated around Washington last week, including one I helped draft with members of the Agriculture Committee, which has partial jurisdiction over the matter. This alternative not only would have provided greater protection for taxpayers, it would have begun the work of making sure we do not end up in such a mess again.

I do not believe we got the deal that taxpayers need and deserve. But now that the legislation has passed, our country must turn its attention to making sure this never happens again.

In the short term, Congress will hold hearings aimed at pinpointing just what went wrong and beginning the process of setting up the smarter regulatory framework to make sure it cannot happen again.

Meanwhile, we must continue to focus attention on the real economic pain that middle-class Americans, in southern Minnesota and elsewhere, are facing, and we must continue working to address it.

Directly addressing declining home values, investing in infrastructure to create and sustain jobs, making health care affordable and accessible, ensuring that No Child Left Behind does not restrict learning and has the funding it needs to provide the basis for a strong workforce -- we must continue to fight for all this and more.

And the next time someone tells me we cannot afford those essential priorities for the American people, I will remind them of what we decided we could afford on behalf of Wall Street last week.

Tim Walz, D-Minn., is a member of the U.S. House of Representatives.

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about the writer

TIM WALZ

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