Editorial: Much risk, little clarity
“But the risk of doing nothing … far exceeds the risks of any action we may be forced to take.”
ó President George W. Bush
You’d be excused for thinking the above statement came from the president’s Wednesday speech urging rapid passage of the proposed $700 billion bailout to keep the money flowing in America.
It has the apocalyptic tone of recent pronouncements about the dire state of credit markets and the global financial network, with the implication that failure to swiftly deploy our fiduciary defenses invites economic Armageddon.
But Bush didn’t make that statement Wednesday. He said it more than five years ago (on Feb. 25, 2003, in a speech to the National Economic Council), as his administration was preparing the way for the pre-emptive strike against Iraq. We bring this up not to rehash the war but to point out that there’s more at stake in this proposed bailout than our nation’s financial future. Like the war in Iraq, this proposed strike against financial weapons of mass destruction will, for better or worse, have significant bearing on how we view our government’s leadership, its ability to accurately gauge the extent of looming problems and respond in appropriate ways and, not least of all, the credibility of those in key decision-making positions.
If the proposed bailout is approved, and the economy improves sooner rather than later, then those who advocate this massive injection of cash may feel vindicated. (True free-marketers will argue that the ship would eventually have righted itself anyhow.)
If the proposed bailout fails to pass Congress, and the financial markets suffer catastrophic implosion, then those who opposed the bailout may be vilified as enemies of the state who were derelict in their duties. (But again, not by true free-marketers.)
And if the bailout proves ineffective ó well, to paraphrase the language of Wall Street, politicians’ past promises are no guarantee of future returns. Whatever we do, it’s a shoot-the-moon gamble. And at this point, we appear to have little choice but to accept the consensus opinion of people like Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson, who warn that failure to act will precipitate an economic ice age. Even that most stalwart advocate of unfettered capitalism, the Wall Street Journal editorial page, supports government intervention.
Still, is it any surprise that many people are boiling mad about this bailout proposal? Bluntly put, it stinks to high heaven that the American taxpayer will be on the hook for the obscenely expensive mistakes of others ó and those others, in this case, include not only master-of-the-universe financial wizards but the government regulators who didn’t do their jobs, Congressional leaders who failed to heed earlier warnings, lenders who willfully made bad loans and the borrowers who knowingly took on too much debt. Greed, lax business practices and feckless governance at many levels created this monster.
Now, it seems, the American people are being asked to step up and help slay it. Although this crisis was years in the making, the remedy is being rammed through in a matter of days. Otherwise, we risk the very security of the nation.
Or so we’re told.