US crisis more than economic

The News Virginian
Published: September 22, 2008

Its monolithic successes over the course of more than two centuries sapped of vigor by a decade of monolithic hubris, the American experiment stands wavering on the precipice with the hand of government threatening to sweep the country into an abyss of socialism, or something worse. Jim Gilmore, the former governor and Republican candidate for the U.S. Senate, watches and winces.
During a far-ranging interview with The News Virginian’s editorial board Monday, Gilmore acknowledged what can hardly be disputed: that government must seek to steady an economy teetering on the verge of toppling. That effort, in the latest and most dramatic in a series of incarnations, entails a $700 billion plan to pull financial markets from a sea of ruin into which indiscretion threatens to plunge them.
After apparent initial unanimity among lawmakers on the plan proposed Friday by the Bush administration, fissures formed Monday inside the Beltway over the cost and details and the fairness of saddling taxpayers with a burden not of their own devising. Still, on the necessity of doing something, no one quibbles. “I don’t like it,” Gilmore told The News Virginian. But “we don’t want the financial system to go down to the ground.”
Action, to Gilmore’s thinking, ought principally to include “reasonable oversight” by a federal agency mandating sounder lending practices by investment banks and securities companies. Such firms form the nucleus of America’s economic crisis, enflamed by the Securities and Exchange Commission’s slumber amid the kindling of sparks, allowing, among other things, massive leveraging – the use of borrowed money to increase returns to equity. The agency Gilmore and others envision would restrict this.
But Gilmore, repeating as mantra his distaste for shaking aside traditional conservative mores calling for government to stand aside as the market heals its own wounds, gazes beyond the present turmoil and worries over what America might become, a faint semblance of its former, freer self. “I am concerned that this will turn into the nationalization of finance,” he said. “We cannot allow that.”
Leftists not only would allow it, but hope to compel it, and see a moment to be seized. Drumming up blame for the crisis, they wag fingers at a free-market herald, President Reagan, and disciples such as Republican presidential nominee John McCain, who was for deregulation before he was against it. But the blue hordes lit the fire under the subprime pot by compelling banks to lend money to the poor in the name of expanding home ownership and prodding government-backed Fannie Mae and Freddie Mac into risky loans.
For those inclined to trust government rather than people or the system of personal and economic liberty which engendered American greatness, the New Deal era gleams, especially now. Franklin Roosevelt depicted many of his heavy-handed interventions, credited with rescuing America from the Depression’s darkness, as temporary measures to be lifted once the economy brightened. Instead, programs such as Social Security – another crisis to come – remain.
Gilmore’s voice of caution in the fire this time is one worth heeding. Government must play a role in stabilizing the wavering economy, but failing to safeguard the principles and spirit that separate America from the world will result in a victory of Pyrrhic proportion, one, alas, not worth the winning.