The House of Representatives earlier this week, by a vote of 205 to 228, rejected the financial bailout package hammered by a bipartisan group of congressional leaders and the White House. The defeat of the bailout package was followed by a record 777-point drop in the Dow.
Most observers expected the bailout package to pass with just enough members from each party willing to hold their noses and vote yes. But political leaders in both parties underestimated the public's anger over a bailout that failed to address the root causes of the crisis and that seemed to reward Wall Street for its greed, especially at a time when working people on Main Street have struggled for so long.
So, Democratic freshman incumbent Steve Kagen voted against the bill, stating the administration failed to make the case for the bill's potential effectiveness or to put to rest concerns over who would ultimately profit from it. The Appleton Democrat did the right thing for his district, and has promised to stay in Washington, D.C. for as long as it takes to help solve the financial crisis.
House Republicans provided 20 votes fewer than they had promised to deliver and ended up with far less than half of their caucus supporting the bill. Ironically, many "free market" House Republicans opposed the bill because they oppose government intervention and regulation -- even after the colossal failures of deregulating and leaving the markets to themselves.
More than 10 days ago, the AFL-CIO urged action that we believe is essential to address the jobs and housing crisis, as well as the massive credit freeze that also threatens jobs and savings. We urged Congress to respond with a package that would:
*Provide concrete help to Main Street in the form of unemployment relief, aid to state and local governments, and infrastructure spending to create good jobs;
*Protect taxpayers and get full value for any money invested by the federal government;
*Provide real relief to homeowners, starting with letting bankruptcy judges rewrite mortgage loans;
*And contain binding limits on executive pay and effective regulation of Wall Street.
Late last week, Democrats had put forward a plan that met most of these conditions, but by the time the bill reached the floor Sept. 29, Republicans had successfully insisted on eliminating the bankruptcy relief for homeowners and weakening both the independent oversight and limits on executive compensation.
The lessons from this crisis have a direct bearing on the upcoming elections Decades of financial deregulation and attacks on the middle class -- together with a failure to address the housing bubble -- led us straight into the current crisis. Kagen wisely chose to reject the initial package because he needed more assurances before he could cast a "yes" vote.
The bailout bill that emerged from congressional negotiations last weekend gave too little relief to homeowners and too much power to an administration that has demonstrated neither competence nor foresight. Stay tuned as negotiations continue ...
-- Rogers is executive vice president of the Wisconsin State AFL-CIO.
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Freshman Congressman Steve Kagen is in a no-win situation as it relates to the financial crisis facing America.
Kagen, an Appleton Democrat, was one of 95 House Dems to vote against the initial $700 billion bailout package that failed in Congress by a vote of 228-205. Kagen said he was “listening to his constituents back home.” But was he really listening to his constituents or was he hearing footsteps from John Gard?
Gard, the former speaker of the Wisconsin State Assembly, lost to Kagen by a razor-thin margin two years ago. Many believe this race was decided more by the tidal wave against the GOP than by the differences between the candidates. The 2008 rematch is nothing like the 2006 race except in the amount of money that is likely to be spent by both sides to win. Gard has run an aggressive campaign telling voters Kagen is out of touch with the 8th District.
Recent polls in the 8th suggest this race is a dead heat. The financial crisis has bolstered Obama’s poll numbers, but it could have a devastating impact on vulnerable Democratic incumbents like Kagen.
Kagen has effectively boxed himself in on solving the financial crisis. If Kagen votes "yes" on the more expensive bailout package passed by the Senate on Wednesday then Gard can hammer him over the cost of the plan and all the pork-barrel goodies that were added. Don’t forget, a clear majority of Americans are either against or undecided on the bailout package.
If Kagen votes "no" again then Gard can say Kagen is going to raise taxes on 20 million middle income American’s through the alternative minimum tax. Either option is a problem for Kagen’s re-election.
Just how bad is the financial situation anyway?
Here's what Gregory Valliere, a senior vice president of the Stanford Washington Research Group, told a Madison audience on Wednesday: “With the bailout deal, we only get a recession. Without the deal, we get a depression.”
Wisconsin Sen. Herb Kohl said, “We cannot allow this crisis to worsen and bring down the country’s economy and ordinary Americans whose jobs, life savings, homes, college funds and retirements are on the line.”
Kagen can try to dodge and blame the Bush administration, but he has been a member of the majority party the past two years. It is the majority party’s duty to lead. Obama and Biden voted for the Senate package. So did McCain. How does Kagen explain his lack of leadership in a time of real crisis?
Finally, Kagen’s position on the latest bailout is inconsistent with an earlier vote to bail out Fannie Mae. Interestingly, Kagen accepted, and later returned, a PAC check from Fannie on the same day of the vote to bail them out. How can Kagen protect the corruption at Fannie and do nothing to help taxpayers in the 8th?
No matter what Kagen decides to do on the Senate bailout package it will have a negative, and potentially devastating, impact on his campaign and his re-election.
-- McCoshen is senior vice president of the lobbying firm Capitol Consultants and served as Commerce secretary under former GOP. Gov. Tommy Thompson.
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