When First You Fail, Propose a Greater Boondoggle

The people came out against the House of Representatives' bailout plan on Monday with calls, faxes, and emails. This plan was slightly over 100 pages long. Taking this as a mistake, the Senate has drafted a new bill, which they will vote on shortly. The Senate bill gives even more power to the Treasury and to the Federal Reserve.

The Senate bill is 451 pages long, more than four times the length of the original bailout bill. The Constitution states that appropriations bills must start in the House of Representatives. In an end run around the Constitution, the bill is actually an "amendment" to an old House Resolution that the Senate gutted:

To amend section 712 of the Employee Retirement Income Security Act of 1974, section 2705 of the Public Health Service Act, section 9812 of the Internal Revenue Code of 1986 to require equity in the provision of mental health and substance-related disorder benefits under group health plans, to prohibit discrimination on the basis of genetic information with respect to health insurance and employment, and for other purposes.

Amendment:

Strike all after the enacting clause and insert the following: [bailout bill follows]

You can download the bill, H.R. 1424, as amended [PDF].

I called my Senators, Voinovich and Brown, to encourage them to vote against the bill. The gist was:

• I am an active Ohio voter
• calling to voice my opposition to the amendment of H. R. 1424
• Both the means (amending an unrelated House bill) and the ends are unconstitutional
• It will cause long term economic hardship if passed because of increased inflation, an invisible, regressive tax that hits the poorest the hardest
• By subsidizing bad decisions we encourage more of them

I encourage you to also call your Senators and urge them to vote against the bill. Find your Senators' contact information at Congress.gov. Aides at both offices told me that calls were "mainly against," and for some of the same reasons I gave.

For a prescient analysis of why this sort of thing is a bad idea, see Mark Shuttleworth's blog post from January on why Economic Oversteering is like giving money to a drug addict. Also recommended is The Great Bank Robbery of 2008 by Robert P. Murphy, and anarticle by Chicago Business School Professor Luigi Zingales,

Hopefully this will be the last blog entry dealing with politics for a while.