Posted on 09/23/2008 9:58:06 AM PDT by Reagan Man
The Republican Study Committee has released an alternative to the Treasury Department's bailout proposal and will discuss the proposal at a press conference today. Conservatives have expressed concern that the Treasury's proposal will alter the country's free-market system, awards massive authority to the Treasury, and fails to penalize debtholders and shareholders. The committee's free-market alternative is listed below:
REFORMING A TAX CODE THAT DISCOURAGES CAPITAL FORMATION
Two-Year Suspension of the Capital Gains: Immediately suspend the capital gains rate from 15% for individuals and 35% for corporations. By encouraging corporations to sell unwanted assets, this provision would unleash funds and materials with which to create jobs and grow the economy. After the two-year suspension, capital gains rates would return to present levels but assets would be indexed permanently for any inflationary gains.
REFORMING A FAILURE IN GOVERNMENT INSTITUTIONS
Schedule the GSEs for Privatization: Transition Fannie and Freddie over a reasonable time period to truly private companies without special government privileges and open them up to real market competition. This reform would 1) establish commonsense limits for their capital requirements and portfolio holdings relative their size, 2) focus their mission on affordable housing only, not profit making, 3) require them to pay an appropriate risk-based amount for the government guarantee they enjoy, 4) subject them to state and local taxes and accurate SEC filings like every other private for-profit corporation, and 5) ultimately provide for the phase out their GSE charters once their conservatorship has ended. In a matter of mere weeks, Fannie and Freddie have gone from too big to fail to too dangerous to repeat. This hybrid illusion must not be allowed to continue.
Stabilize the Dollar: Repeal the Humphrey-Hawkins Full Employment Act which diverts the Federal Reserve’s attention from long-term price stability to short-term economic growth. In an effort to fuel the economy, this additional mandate has encouraged the Fed to keep rates artificially low, fueling economic boom and busts, and now a strong up-tick in inflation and the decline of the dollar (as investors free dollars for hard assets). This reform would require the Fed to establish a numerical definition for price stability and maintain a policy that promotes it over the long-term.
REFORMING A FAILURE IN GOVERNMENT REGULATION
Suspend “Mark to Market” Accounting: Suspend the mark-to-market regulatory rules for long-term assets. These rules require financial firms to mark assets at current market levels, even where the no market exists and any immediate transactions would result in fire-sale prices. Instead of allowing firms to mark these assets to their true economic value, these rules contribute to a downward spiral as firms have to evaluate their assets not on the basis of their long-term investment but rather on a short-term mania.
Thank God. I have been waiting for someone to divise some rational solution to this "crisis". This is our party's opportunity to educate voters on the free market and how rewarding behavior always gets more of the rewarded behavior.
I agree.
Most of the other changes mentioned in this proposal should be done anyway. But this is extortion to expect us to support the bailout to get them to do away with the capital gains taxes which they should get rid of anyway.
Let the market play out naturally, let the losses fall, let the institutions fail. Where there's a market for their services, new institutions will grow in no time. Where the market was artificial to begin with, we don't want those particular type of institutions to exist and this bailout merely encourages more of the same risky behavior
Thank you. A real plan and not just voting no to everything.
A 1000 times better then the socialist crap Paulson and Co want to force down our throats.
While there are some worthwhile things in this proposal, it's hardly "rational". It's extortion to dangle these carrots in return for their bailout.
If we do this bailout, the next one will only be larger and the more catastrophic.
Let the chips fall where they may, and let them fall now.
I like this plan a lot! The $700 billion bailout plan is a disaster building on a disaster.
Wrong. The problem with the Fed is they wrongly blame economic growth and full employment for inflation, which causes them to raise rates too high when the economy is doing well. The resulting recession is what causes them to lower rates too low.
My wife said this today....
“This $700-billion bailout is unconstitutional and should be rejected in principle by all conservatives. “
“This $700-billion bailout is unconstitutional and should be rejected in principle by all conservatives. “
“This $700-billion bailout is unconstitutional and should be rejected in principle by all conservatives. “
“This $700-billion bailout is unconstitutional and should be rejected in principle by all conservatives. “
>>>This $700-billion bailout is unconstitutional and should be rejected in principle by all conservatives.
Even if we get beyond the constitutionality question, it doesn’t even make good business sense.
MONEY WASTED: Will the $700 billion be used to pay million dollar bonuses to employees?
FRAUD: Will the $700 billion be used to stop this fraudulent accounting (immeasurable, unseen, off-balance sheet derivatives) and outlandish risk assumption from happening again?
MORAL RISK: Will the $700 billion be used to encourage more bad behavior (gamble with other people’s money and win a big bonus... and if the high risk bet is bad, the taxpayer will bail out the position)?
-1 * ROBIN HOOD: I just don’t see any protection for the future from the $700 billion. It’s looking more like “robbing the poor and middle class to pay for the rich”... kind of like a reverse Robin Hood.
HUGE AMOUNTS: These amounts being asked for are really trillions... not “mere” $700 billion and will ultimately be hugely inflationary or hugely deflationary, depending on how they are financed or paid for.
Therefore in 21st Century America, it is doomed...
Bump.
Finally a counter proposal, not just complaining.
Pass immediately energy production act which fast tracks all drill, mining and nuclear energy.
Begin top to bottom review of all federal spending to balance the budget in two years.
Why?
Agreed, but unless I missed something in this article, this proposal does not include 700 billion in bailouts.
she’d have a stroke because she’ll have to be for a very unpopular big bailout that gives Bush too much power.
I hear you. I just think that there will have to be some sort of incentive to avoid the bailout.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.