Pelosi: “We will not simply hand over a $700 billion blank check to Wall Street and hope for a better outcome.” Dems say they won’t get fooled again

Sen. Patrick Leahy (D-Vt.) says he’s seen this movie before: The Bush administration, citing an unprecedented national threat, puts the hammer on Congress to ram through gargantuan legislation with a minimum of review — and the murkiest of repercussions.

“We will do something this week — but if we learned anything from right after 9/11, it’s that the biggest mistake is to pass anything they ask for just because it’s an emergency,” Leahy says.


The Senate Judiciary Committee chairman knows of what he speaks. He sponsored the original Patriot Act, only to feel betrayed later when the Bush administration used it to justify domestic wiretapping.

Historically, breathtaking national crises have spurred Congress to act swiftly, sweepingly and in bipartisan lockstep, with ornery legislators casting aside years of bickering to produce consensus at breakneck speed.

But the current generation of Democratic congressional leaders feels burned — and not a little humiliated — by the Bush administration’s use of the 2001 attacks to justify both the speedy enactment of the controversial and complex USA Patriot Act and congressional authorization of the resolution authorizing the use of force in Iraq.

“They can’t get away with what they did in 2001,” Leahy said. “This will be ‘trust but verify.’ The biggest mistake they can make is holding a press conference while we’re negotiating to say there’s going to be a worldwide depression if Congress doesn’t do exactly what we want them to.”

The legislative hangover from 2001 isn’t going to derail — or even seriously stall — the $700 billion bailout. The consequences of inaction are too grave. But it has emboldened Democrats to seriously question Treasury Secretary Henry Paulson’s two-and-half page demand for the reins of the American economy, even as Paulson worked the Sunday shows to warn of economic Armageddon if a “clean” version of his bill isn’t passed soon.



If the coming week’s theme song is “Come Together,” the B-side will be “Won’t Get Fooled Again.”

A spokeswoman for John McCain told reporters Sunday night that the GOP presidential candidate is “greatly concerned” that the Treasury plan “gives a single individual power to spend $1 trillion on the basis of not much more than ‘trust me.’” McCain wants a high-profile oversight board to watch over the bailout.

In a statement issued Sunday afternoon, House Speaker Nancy Pelosi (D-Calif.) said Democrats believe a “responsible solution” should include oversight of the bailout plan, help for homeowners and “constraints” on the compensation received by executives whose companies will be bailed out.

"We will not simply hand over a $700 billion blank check to Wall Street and hope for a better outcome. Democrats will act responsibly to insulate Main Street from Wall Street,” Pelosi said. "As we proceed to deal with this crisis, this is clear recognition that the party is over for the Bush administration's anything goes, failed economic policies that have damaged our economy, undermined the middle class and further pointed out the need for a new direction."

Princeton University history professor Julian Zelizer, who has written a history of Congress in the 20th century, says the Democrats will try to extract whatever they can out of Paulson — but must eventually bow to the reality that the perils of not acting quickly are just too devastating, economically and politically.

“It’s a huge danger to not do something,” said Zelizer. “There’s a knowledge that this is being rushed through and that there are likely to be unintended consequences, but the middle of a financial meltdown is not conducive to saying we need another week to look at this. ... It’s hard to imagine there will be any speed bumps.”

Nonetheless, Democrats are under mounting pressures not to roll over. Republicans may be facing the bankruptcy of their free-market philosophy, but Democrats could face a populist backlash from blue-collar voters if they are perceived as Paulson’s poodles. After regaining Congress on pledges of fighting for common people, the party of Jefferson is on the precipice of approving a $700 billion, no-strings-attached gift to the most wealthy and — in the eyes of some — least responsible Americans.

And that could prompt some blowback from voters.

“The public doesn’t like a blank check,” former Labor Secretary Robert Reich said in Politico’s Arena forum. “They think this whole bailout idea is nuts. They see fat cats on Wall Street who have raked in zillions for years, now extorting in effect $2,000 to $5,000 from every American family to make up for their own nonfeasance, malfeasance, greed and just plain stupidity.”

Reich notes that the bailout proposal comes as many Americans are struggling to keep up with the rising costs of gas, food and health insurance. “And so,” he said, “ the public is asking: Why should Wall Street get bailed out by me when I’m getting screwed?”

On Sunday, congressional leaders said they agreed with Paulson’s desire to quickly pass a bill unencumbered by a “Christmas tree” of additional demands. But Democrats also seemed to be holding their ground on requests that the unprecedented measure also include limits on executive compensation and workouts for homeowners coping with foreclosure.

“It would be a grave mistake to say that we're going to buy up the bad debt that resulted from the bad decisions of these people and then allow them to get billions of dollars on the way out," House Financial Services Committee Chairman Barney Frank (D-Mass.) said on CBS’s “Face the Nation” Sunday.

Sen. Charles Schumer (D-N.Y.), chairman of the Joint Economic Committee, estimated there’s a 50 percent chance that the measure will pass both houses by Friday while reiterating his desire that the Paulson plan also help middle-class homeowners.

That position was adopted by Barack Obama, who broke his silence on the plan Sunday, calling on Congress to “act quickly in a bipartisan fashion to resolve this crisis.” He also criticized the Paulson plan as a “blank check,” demanding “independent accountability and oversight,” some kind of mortgage relief and tighter regulations on banks.

Obama didn’t say whether these changes should be part of the current bill or addressed in later legislation.



That may be the crucial question this week: Can Democrats succeed in loading their proposals onto Paulson’s runaway legislative train — or will they be content with promises that their concerns will be addressed soon after?

Leahy isn’t sure how things will work out. But he says Paulson’s reputation as a straight shooter means it’s more likely that Democrats will trust his assurances.

“Paulson carries far more credibility than most people in the administration — apart from [Defense Secretary] Bob Gates,” Leahy says.

This article tagged under: 2010

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