Life not so wonderful

By The News Virginian Staff

Published: September 26, 2008

Visions of Jimmy Stewart and mobs at the building-and-loan door swim in our heads, pleasanter still than those flashing on television screens, of President Bush and Democrats Barney Frank and Christopher Dodd joining hands to save America. If the soil on politicians’ hands was invisible before, it is plain now. Wall Street and Main Street need healing; Washington needs cleansing.

But first the apocalypse. Bush and his newfound Democratic pals admonish those chafing at the $700 billion federal bailout plan to shutter their angst, close their eyes and sign on the dotted line. Or else come the four horsemen in consequential succession: bank runs, more bank failures, a stock market crash and the Great Depression reincarnate.

Feeling a dilemma’s stab, Republicans have been thorny. Should they bow to the bailout’s socialist implications or plug their ears to Bush’s cries of looming economic ruin? Pulling their hands from the wheel means allowing Democrats, who possess the votes to do as they please, to steer the economy deeper into socialism’s abyss.

Leftists are accelerating in that direction in the manner of Madame Defarge pursuing the aristocrats, calling for executive compensation limits for bailout recipients, potentially as part of a larger initiative to manage pay for all executives, a class warfare salvo that salves the angry masses but does nothing to staunch the economic bleeding.

To be clear, we have no sympathy for CEOs of ailing investment firms. Columnist Charles Krauthammer draws a sardonic nod when he writes, “Capping executive pay is piffle. What we need are a few exemplary hangings.” Similar thinking applies to Frank and other leftist architects of the Community Reinvestment Act and its expansion, all in the name of enabling those who could not afford it to own homes, adding spice in the recipe for the subprime car wreck.

Conservatives tout, among other things, a free-market alternative, which would cut the capital gains tax and allow financial institutions to purchase government insurance in place of using taxpayer money to buy distressed mortgage securities. The rub is that if Bush and his fellow doomsayers are to be believed, the fuse on the Wall Street powder keg might burn to ignition before the insurance plan can snuff the spark.

Selecting from evils, the lesser for Republicans is the battle many are waging, seeking to limit the bailout’s size and scope, restraining the breadth of Treasury Secretary Hank Paulson’s power and reforming the accounting regulations that exacerbated the turmoil. Democrats have the advantage of votes, but Republicans have their own lever: across-the-aisle colleagues who refuse to refrain from socialist impulse risk going it alone on a plan that still might implode and bespatter its backers.

We concur with those who suggest that the principled course is to allow the institutions and borrowers whose avarice and ineptitude precipitated the coming calamity to swallow the poison they brewed. But we also recognize that Washington will assuredly act, absent prudence, if necessary. Conservatives participating in crafting the bailout plan might take uneasy solace in keeping socialism’s hounds at bay.

Voters, meanwhile, would do well to take note of those who sought political gain in crisis. They deserve no better fate than the CEOs Krauthammer would send to the satirical gallows.