The new bailout pitch: It's NOT a bailout
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President Bush makes a statement about the economic bailout bill and financial crisis, Tuesday in the Diplomatic Reception Room of the White House in Washington.
WASHINGTON — The Bush administration is searching for a new way to sell its financial rescue plan after acknowledging some blunders and missteps in presenting it the first time around. One big key: Insist it's not a Wall Street "bailout."
Now it's not about financial institutions. The focus has switched to everyday Americans. And it's not an expenditure of taxpayer money, it's an "investment."
This was clearly evident in Bush's grim warnings on Tuesday of "economic hardship for millions" if the plan can't be revived. He declared, "For the financial security of every American, Congress must act."
This emphasis was echoed on the presidential campaign trail.
"Let's not call it a bailout. Let's call it a rescue," said Republican John McCain.
Democratic rival Barack Obama said, "This is no longer just a Wall Street crisis — it's an American crisis, and it's the American economy that needs this rescue plan."
House Speaker Nancy Pelosi's take: Its not a bailout but "a buy in, so that we can turn our economy around."
Bush, McCain, Obama and top congressional leaders agree the plan — which would nationalize large numbers of bad mortgages and securities tied to them — is needed to unclog the nation's financial arteries.
But it proved extremely unpopular across the country and was rejected on Monday in the House, a stunning setback to the administration that led to a dizzying 778-point plunge in the Dow Jones industrials. The Dow bounced back 485 on Tuesday amid word of efforts to salvage the plan.
Language seemed to matter.
An AP-Knowledge Networks poll last week that asked whether people supported Bush's proposed federal "bailout" of financial institutions found only 30 percent backing it. Surveys by the nonpartisan Pew Research Center that asked whether people support "investing" or "committing" billions to keep markets secure found slightly more favoring the plan than opposing it.
White House spokesman Tony Fratto agreed the administration's initial efforts to explain the legislation to Congress and the public left something to be desired.
"We need to be able to better demonstrate that there are impacts for American families, for retirees, for small businesses, for larger businesses who are hiring, for our banking system, for the ability to get home loans, for businesses to be able to make their payrolls, their small-business accounts," Fratto said.
He said "it's a hard thing to do" because of the complexity of both the problem and the solution. "There are four or five steps involved ... before you get to the kitchen table of the average American family and how it affects them."
Bush was trying on Tuesday.
"The dramatic drop in the stock market that we saw yesterday will have a direct impact on retirement accounts, pension funds and personal savings of millions of our citizens," he said.
From the initial three-page request by Treasury Secretary Henry Paulson for unchecked powers to spend up to $700 billion with no oversight to the confusing explanations for why the plan was needed, the Bush administration's sales pitch has followed a rocky path.
Perhaps because he was the former CEO of investment bank Goldman Sachs, Paulson talked to lawmakers about the plan in Wall Street-speak.
The treasury secretary and Federal Reserve Chairman Ben Bernanke spent more than 10 hours before congressional committees last week trying to explain to skeptical lawmakers why the rescue package was not a Wall Street bailout.
It was not an easy sell, in part because Paulson and Bernanke occupy jobs where most of the time they go out of their way to sound upbeat so as not to spook investors and send the markets crashing. But, as Senate Majority Leader Harry Reid, D-Nev., noted after one negotiating session, "We deal with Wall Street but we also deal with Main Street."
"Those appointed officials, like Paulson and Bernanke, are going to have to become more realistic," Reid said.
To many lawmakers, the request to put so much taxpayer money at risk was politically toxic — too risky right before an election, in a vote that an opponent could cast as a bailout for Wall Street.
"Lawmakers were upset because Secretary Paulson was asking them to give him a blank check and just go away. I think some of them were offended by what he presented to them initially," said Sung Won Sohn, an economics professor at the Martin Smith School of Business at California State University, Channel Islands.
Bush himself appeared uncomfortable in talking about the crisis at first. He used phrases like "a substantial step to provide additional liquidity to the U.S. financial system." And "the American people can be sure we will continue to act to strengthen and stabilize our financial markets and improve investor confidence."
Now Bush is seeking to relate the crisis more directly to family and small-business economics.
Is there time?
Wayne Fields, an expert on political rhetoric at Washington University in St. Louis, said "talking about it as a bailout has hurt" the plan's chances. That's because most Americans don't understand the intricacies of what's involved but can relate to seeing their tax dollars used to reward those who helped create the mess in the first place.
"I don't think you can change the language now," he said.
Oct 3, 2008 at 4:22 p.m.
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GREAT POST raystone!
Another thing that should be pointed out in this SHAM, is that the bill STARTED as a 3 page bill that was a $500 billion bail out package. The house made it a 100 page bill and turned it to a $750 billion bailout. After if was voted down, the senate made it a 450 PAGE BILL, and it increased to a $850 billion bailout that is LOADED WITH PORK. TAX BREAKS, and HAND OUTS all over the 450 pages!
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We have ALL just been SCREWED........AGAIN by our politicians!
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It should be noted the the UK had a $150 billion bank bail out last week. It has changed NOTHING as far as bank liquidity. The SAME will happen here. Anyone who supported this will be soon shown just how DUPED they were. The banks will simply HOARD the money. They will basically just deposit it, and make $$$ off it, drive up their stock price, pay their executives millions more, and just go on with the same business as usual. After they screw up again, they will just come asking for ANOTHER BAILOUT, and all these morons who bought into this sham, will fall right for it again. As PT Barnum said "there is a sucker born every minute". We have just been officially HOSED by our government!
Oct 3, 2008 at 7:06 a.m.
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The only people this bailout helps are the people that can't afford loans anyway. In the good 'ole days you had to save up 20% for a down payment on a house before you could get a mortgage. Lately they have been giving out to anybody that held a job for six months. The government wanted to pressure banks to get people into homes to achieve the "American Dream". Well, it seems the "American Dream" turned into the "American nightmare". This helps out a minority of people that can't pay their mortgages. For the majority of us that pay their bills and mortgages on time we get lost in the shuffle. This bill is not going to help anything.
Oct 2, 2008 at 11:14 a.m.
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Cheers to Senator Feingold who voted against the bailout. I like to think he listened to the 90% of his constituents (same as all Americans) that are against this large corporate bank bailout.
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To Rep Baldwin, Ryan, Sen Kohl who voted to socialize our banking system with taxpayer money, unbelievable.
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If it does pass the House now, here's what will happen in next 2-3 years. 1) This $700,000,000,000+ will be used to keep this subprime housing bubble inflated longer, and result in a bigger crash later. It's not solving the fundamental poor investment problem. 2) Prices for everything will rise dramatically. Because, the government will be pumping in 1/3 the size of the entire U.S. federal budget causing massive inflation, including $6+/gallon gas. 3) Our children will be gaining a now $10T debt. Their standard of living will be less than what it is now.
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To those who think this is a good investment and "we'll get our money back", why are private investors not jumping in on this deal ? It's not a good deal, the non-elected, ex Goldman Sachs CEO is simply helping out his Wall St. bankers.
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As the Gazette reported just this week, local banks like M&I still have plenty of cash to lend to borrowers. This bailout is not about Main St.
Oct 2, 2008 at 9:48 a.m.
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The saddest part is when the constitution was written people cared...Now so many don't....some do but many dont
Oct 2, 2008 at 9:19 a.m.
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I am just sick of it. Almost all the posts here make some good points. Idiot nope sorry don't think I am. You buy for x sale for y ( but Y is less than X ) = loss. Charge lose to company that got in this position to begin with? Nope sorry they file bankruptcy or some other legal loop hole then their still off the hook.
Quit protecting the crooks and help the little man. Time to get rid of ALL of those in office and get fresh ideas in Washington. NOT one person Obama, McCain, Ryan, Kohl, Feingold or the others have HONESTLY shown me they are willing to put their personal interests aside and step up for Joe on Main street USA. They all talk it get elected then forget it. Let the system fail. Punish the executives of these companies, Banish their lobbyist from Washington and RETURN OUR GOVERNMENT TO THE PEOPLE.
OK bash me know for whatever you feel like but I'm sorry I didn't let my government down they let US down. That includes the Democrat and Republican parties.
Oh I missed my cup of Coffee this morning.
Oct 2, 2008 at 5:19 a.m.
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http://www.americanthinker.com/blog/2008...
Oct 2, 2008 at 1:36 a.m.
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Sorry I meant without a 900 trillion dollar debt........
Oct 2, 2008 at 1:34 a.m.
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A business wouldn't be able to take the risk that the government can because an actual business would never be able to maintain a 53 trillion dollar and rising debt... The government will more than likely manipulate the system in some way to profit from the so called bailouts. We need to give this country credit walking away from 8 years of bush with a 900 trillion dollar debt is an achievement at some level. I ask any of you to honestly tell me that Bush is smarter than you....he might be more educated but he's a touch slow.
Oct 2, 2008 at 12:39 a.m.
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whocares:
I think most do realize that. The big problem is that if ANY business took on this bad paper, the CEO would be FIRED ON THE SPOT for his/her recklessness. When it's the TAXPAYERS $$$, no one seems to care at the risk that is involved. Sure there is the POSSIBILITY that it will not cost the tax payer anything at all, but when no business in there right mind would take on paper this bad, I sure as hell would not want to as a tax payer. If this does NOT work, I can not even begin to describe the damage that would be done. The dollar will fall off a cliff, which will send oil, and all commodities through the roof. Not to mention the burden of debt you put off to future generations. If and when this passes, mark my world, crude oil will spike. You heard it here 1st, and no one will be making the connection.
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woodsman: I agree with your posting.This bail out just shows how the well connected in government all take care of one another, and party affiliation makes little difference. There is a few looking out for the tax payer. I see that Feingold voted AGAINST this. I'm no Feingold fan, but I give him a lot of credit on that vote.
Oct 2, 2008 at 12:07 a.m.
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How stupid are you idiots that you don't understand that if the government buys $700 billion worth of securities, it then owns $700 billion worth of securities - taxpayers are not out the money! The government gives cash to the investment businesses and get securities back from them.
The $700 billion is NOT A GIFT! It's a sales transaction!
Moreover, there are ways to liquidate those securities to get the cash back out with minimum loss. And why not chargeback the exact loss to the businesses, when it's known and if there is any?
Oct 1, 2008 at 9:07 p.m.
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The enemy of united states is the government,that includes bush,now WE find that the two candidates that are running for office,i think have the sheep's closing on, BOTH of them. Traders to ALL of america,now what do we do?? The next president,just put another trillion dollars debt on the american people before he's even elected,just sick i am! So much for helping the middle class of people,great speech obama,we already knew mccain is big trouble for this country. We the people,need to take back our country from the government,like Lou Dobbs said,they are a bunch of lieing,crooked thieves,i couldn't have said it any better.
Oct 1, 2008 at 8:21 p.m.
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Who needs a free market any way, when the government can just bail it out?...when ever it feels like it?
Oct 1, 2008 at 7:59 p.m.
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What exactly is meant by "Wall Street Bailout?"
If I run short of cash I can sell my boat to get it. Is the buyer of my boat "bailing me out?" Perhaps, if I can't sell the boat to anybody else, and the buyer knows I'm hurting for cash. But doesn't the buyer get something for his money? If the buyer really doesn't need a boat, he can always sell it to get his cash back.
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But what if my boat's buyer of last resort is the US government? Is it wrong for the government to buy private sector property? Would it be harmful for the government to buy the $700 billion of junk securities as proposed? It's arguable, of course, but there is good reason to believe that any harm caused by purchasing them will be less than that caused by NOT purchasing them.
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In 1939, after Hitler invaded Poland, the US needed to start gearing up for a war against Germany. But there was enormous foot-dragging by two powerful special interest groups who were very suspicious of each other. The New Dealers feared war preparations because they feared the power of a combined business-military conspiracy. The business-military group knew that mobilizing the economy for a major war would require strong government controls, and they feared that the New Dealers would continue that control after the war was over - a shrewd and sneaky way to force socialism on the US. Both those powers inhibited US war preparations until December 7 forced both their hands. And the fears of neither of those parties were realized after the war.
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The government will not hang on to those junk securities any longer than they have to. They have every motive to liquidate them as quickly and as profitably as possible.
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As an aside, I think a good way to get rid of them would be: 1) invite homeowners troubled by their mortgages to sell back their homes to the government, getting back their down payments and any payments they made on the loan principle; and 2) letting the government raffle off the homes selling $100 tickets. That's about the only way the government will get back the money loaned on houses that are now worth less than the loan amount. All revenues from these raffles should go into the government's general fund.
Oct 1, 2008 at 7:33 p.m.
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Michael Moore… Isn’t he the biggest source of facts one can believe? Or is he just the biggest source?
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I find it simply amazing that a handful of people that live in the self created reality called Hollywood can herd so many people, like sheep, toward the abyss of socialism.
Oct 1, 2008 at 6:50 p.m.
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RE dkush21: "The richest 400 Americans -- that's right, just four hundred people -- own MORE than the bottom 150 million Americans combined. "
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Those richest 400 also pay more taxes than the bottom 150 million Americans combined.
Oct 1, 2008 at 5:56 p.m.
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To say this is all Republican deregulation is ridiculous. It was the Republicans who warned of the mismanagement and coming collapse of Freddie Mac and Fannie Mae 4 years ago. They proposed REGULATION and government over site of both of the two mega home mortgage lenders. Barney Frank, Cris Dodd, and and those on the banking committee said there was NO PROBLEM with Freddie or fannie. Both institutions were running just fine, and needed NO regulatory over site, and they consequently blocked all legislation to regulate them. After both went bust, Franklin Raines (fannies CEO) and all the top executives walked away with MILLIONS. While all those on the inside who knew they were going down also made MILLIONS off shorting both companies, or playing puts on the options market. The big LOOSER...The tax payer, and those dumb enough to have invested in Freddie and Fannie who the government kept assuring is "JUST FINE" (which anytime you hear is just code to call your broker and SHORT sell the company...Same thing was said about Enron, MCI, Tyco, ext)
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This is just one big political game. Both sides have been fully exposed with massive corruption in this. If you can't see that you are totally blinded by your political side.
Oct 1, 2008 at 5:01 p.m.
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I thought you might like to read this:
The richest 400 Americans -- that's right, just four hundred people -- own MORE than the bottom 150 million Americans combined. 400 rich Americans have got more stashed away than half the entire country! Their combined net worth is $1.6 trillion. During the eight years of the Bush Administration, their wealth has increased by nearly $700 billion -- the same amount that they are now demanding we give to them for the "bailout." Why don't they just spend the money they made under Bush to bail themselves out? They'd still have nearly a trillion dollars left over to spread amongst themselves!
This is from Michael Moore, if you would like to read his proposal which makes alot of sense, go to MichaelMoore.com.
Oct 1, 2008 at 4:53 p.m.
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How do you tell when a politician is lying? Watch his lips -- if they move he is lying.
Oct 1, 2008 at 4:34 p.m.
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Ya, and we'll see if they fix it. That's the point. Anybody can say what the people want to hear. It isn't up to one person. Who are you kidding? You think someone is going to just step in and have all the answers? When we quite fighting amongst ourselves, we may be able to solve some problems. Right now, the democratic/republican battle really isn't getting us anywhere. We have a problem. How is it going to get fixed?
Oct 1, 2008 at 3:15 p.m.
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"How would all you democrats with all the answers like to fix the problem this country is in?"
Looks like they'll have to.
"It doesn't matter who did what, it's about fixing it."
It certainly matters five weeks before an election. Those who ignore history are doomed to repeat it.
Oct 1, 2008 at 2:49 p.m.
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How would all you democrats with all the answers like to fix the problem this country is in? It doesn't matter who did what, it's about fixing it. Why do you have such a hard time seeing that? Get over yourself.
By the way, Ryan does a great job and won't be voted out.
Oct 1, 2008 at 1:33 p.m.
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They can call it whatever they want. It's still socialism! Throw all that vote for this Marxist legislation out of office!
Oct 1, 2008 at 12:43 p.m.
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Vote No to Ryan in November he got us into this mess with deregulation.
Oct 1, 2008 at 12:41 p.m.
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Bail out, Rescue plan, now mortgage Bail out. How stupid do Ryan and Bush think we are? This is Bush and Ryans last bite of the public arse for their fat cats. They want their fat cats to get our children in proverty. Kick these bailing bums out. Call your Senator they are voting on this tonight and tell them He-l No. Call the White House and tell them to shove it up the Corporated arses not ours.
Oct 1, 2008 at 11:54 a.m.
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The Bush administration is like the boy who called wolf...how do we know if they are telling the truth THIS time? We don't and so no one trusts that this government is really looking out for all of us and not just trying to bail out their friends on Wall Street. This is what happens when you have a President who is not a leader and has no credibility.
Oct 1, 2008 at 11:38 a.m.
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you know I hope this doesn't pass either. I think it would be wrong to have government get ahold of businesses. They should just let this be and let the rest take care of itself. If my business was failing I don't think the government would bail me out and I wouldn't want them to!
Oct 1, 2008 at 11:05 a.m.
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Time for a new pitch man. I wonder if Chester Cheetah is busy?
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