October 2, 2008
Complex and complicated issues make for difficult votes; this was never more true than the vote in the U.S. Senate on H.R. 1424, the Emergency Economic Stabilization Act. On October 1, 2008, I voted against the legislation for the very reason that Iíve publicly stated ever since Administration presented its initial proposal to Congress a little over a week ago: After exhaustive research and review of multiple analyses, I remain unconvinced that this legislation adequately protects taxpayers against as yet unknown financial losses. While it is indeed very true that we are facing a severe economic crisis and the cost of inaction is dire, Congress had no time to consider options that may have provided better protection for taxpayers and helped us define the crisis more effectively. Most people donít make monumental decisions that affect their lives or livelihood in less than two weeksí time; Congress shouldnít either. This legislation puts taxpayers in the first position to assume losses of the most toxic assets in our economy, and that is not right.
Indisputably, a serious and real threat faces our financial markets and economy, and it must be dealt with, but this legislation requires the taxpayer to assume the majority of the risk that comes with this buyout. We have begun to see the extremely serious repercussions throughout every aspect of our economy as a result of the credit crunch. For these very reasons, Congress owes it to the people who elected us to get this right. Frankly, we have not spent any time determining if Congress has chosen the best response; there are many well-informed people who argue that we have not.
This complicated issue requires careful evaluation of all the alternatives available, but Congress only addressed one way to face the crisis. And while questions from the public certainly forced needed improvements regarding executive compensation, oversight, accountability and transparency, this measure needed more work, more evaluation and more debate. There may be better ways to address this matter, including an equity position for taxpayers so that shareholders and other financiers of risky behavior take the financial hits first and the taxpayers take losses last. This measure, as passed by the Senate, has the taxpayer purchasing the distressed assets with no real guarantee that the taxpayer will be able to recoup that investment.
One of my greatest concerns is that this bill does not resolve the over-reaching problem of how we reached this point in the first place. What sequence of events happened, and what choices were made that put the financial services industry in this catastrophic state of affairs? There are efforts that Congress needs to undertake to improve our economic posture such as regulatory reform, tax policy reform and simplification of our natin's regulatory structure to retain American businesses here at home. The next Congress is going to have to do more to address this crisis and make significant reforms as to how our capital markets are regulated.
I appreciate the thousands of Idahoans who have contacted my offices, expressing their concerns about this situation over the past few weeks. I took into consideration those voices and also carefully considered concerns expressed by Idaho employers, many who are now starting to experience credit tightening and financial difficulties as the repercussions from this crisis trickle down to our hometowns. Without a doubt, this was one of the most challenging votes that Iíve cast in my time in public office. Complicating matters further, the Senate leadership chose to attach additional provisions onto the legislation that included critical tax relief extensions, county payments and Payment in Lieu of Taxes, all of which affect Idahoans in some way. However, I stand by my vote and offer this word of caution: regardless of the final outcome of this particular legislation, many uncertainties will continue. We are facing tough economic times. We must remain vigilant and be prepared to adjust course in the next session of Congress if we find the economy has not sufficiently improved.
The Emergency Economic Stabilization Act aims to solve the credit crisis, but it does not solve the other problems plaguing our economy--problems that will only begin to recede when we have a stronger job market and growth in key financial sectors. Congress must get to the business of ensuring that solid foundation proactively, in the manner Iíve outlined, so that we donít find ourselves in a cycle of massive taxpayer buyouts of troubled financial systems.