My No Votes on the Wall Street Bailout Explained

The past few weeks have been difficult for all Americans, and all indications are the tough times will continue.  We have watched with concern as the turmoil on Wall Street impacts our economy and everyone who does business on Main Street.  I believe we need to work together to figure out the best way to bring long-lasting stability and confidence to Wall Street while limiting taxpayer exposure.

I have taken some criticism, including on the pages of this paper, for my recent NO votes on the Emergency Economic Stabilization Act.  I want to make sure people understand why I voted no.  

First, I spent a lot of time listening before I made my decision—listening to Eastern Washington taxpayers who were being asked to foot the bill, listening to business owners on main street who were concerned about getting loans and what was happening to the credit market and listening to our local banks, many who didn’t take the risks those on Wall Street did.

Second, I believe the process was flawed.  We started with the Administration’s proposal, which was essentially a blank $700 billion dollar check granting unlimited spending authority to the Secretary of the Treasury.  We’ve made a lot of good progress on the original bill.  But I believe when faced with such great economic challenges, we owe it to the taxpayers to actually solve the problem for the long term.  I am not convinced this bill addresses the root causes of the problem, one of those being the subprime lending situation.

Third, the bill does little to reform the subprime lending practices which got us into this mess.  In 2005 I voted to reform government-sponsored enterprises like Fannie Mae and Freddie Mac but those reforms failed in the Senate.  We need to reform these organizations that encouraged banks to relax lending standards and accumulate enormous amounts of unsafe investments. 

Finally, the size and scope of this bill was a lot to get our arms around.  It’s hard to imagine $700 billion dollars.  That amounts to an indirect tax of $6,034 per Eastern Washington household.  It’s more than we spend every year on Social Security, Medicare and Medicaid.  And the money would be used to buy “bad debt” from Wall Street.  I am concerned about the government using your tax dollars to clean up that “bad debt” without doing more to ensure these same institutions won’t continue to accumulate bad debt. 

The final bill passed Friday contained a lot of positive benefits for Eastern Washington families, small businesses and schools.  I am a strong supporter of the Alternative Minimum Tax patch, extending the state sales tax deduction and extending the Secure Rural Schools program that provides federal payments to school districts and counties that lost money due to federal lands under their jurisdiction. 

My record shows my support of Secure Rural Schools.  Since I was elected to Congress in 2004, I’ve cosponsored six pieces of legislation funding Secure Rural Schools, and repeatedly urged House leaders to include funding for Secure Rural Schools when considering supplemental spending bills. 

However, the good and positive aspects of the bill that I’ve supported in the past like Secure Rural Schools weren’t enough to convince me to support the overall bailout bill.  I remain unconvinced the current $700 billion Wall Street rescue proposal is the right approach for the market and the best value for taxpayers.

–By Congresswoman Cathy McMorris Rodgers