I am talking about ‘this’ bill. The contract here is that these type of high yield risky investments (subprimes )are NOT insured or guaranteed by the taxpayers like FDIC accounts are. Now McCain and Obama are ,after the fact , after the loss, guaranteeing these with tax payer money. So those of us that put our money in safe FDIC investments will now pay income tax on that interest to pay the investors for their losses for risky high yield investments.
Worse : Given this McCain has no basis for opposing any other bailout, takeover, power grab, or tax increase without looking like he favors the investor over the average guy. In fact, why would we believe anything he says??
“Now McCain and Obama are ,after the fact , after the loss, guaranteeing these with tax payer money. So those of us that put our money in safe FDIC investments will now pay income tax on that interest to pay the investors for their losses for risky high yield investments.”
That’s not quite how the bill works. It directs the Treasury to buy distressed assets keeping in mind the taxpayers interest. In other words, to buy distressed assets in a way that its as good an investment as possible. (Actually the GOP House was proposing an insurance mechanism which would be that.) The Govt gets warrants for some upside benefit to firms.
In short, the bill is not guaranteeing any particular loss nor does that operation impair any contract. It is, like the Resolution Trust Corp in the wake of the S&L crisis a ‘mop up operation’ of distressed mortgage assets.
“Given this McCain has no basis for opposing any other bailout, takeover, power grab, or tax increase” McCain has been consistent in the need to regulate wall st better AND to cap spending AND to oppose tax increases. This bill costs money but the argument is that the harm to economy would cost us more so its worth it (we can disagree with that argument but that is the thought process).
I dont see any change or lack of consistency there. McCain is not a hard-core free-market type so if your point is that he will support other govt interventions down the road, point taken. It’s clear that there is a big differences with obama on taxes, spending and regulation.