"The most fundamental fact about the ideas of the political left is that they do not work." --Thomas Sowell
Modeled after the original $700 billion bailout bill (TARP), the Democrats' H.R. 5297, commonly known as TARP III, would create another bailout fund and authorize the Treasury Secretary to make capital investments in banks with less than $10 billion in assets. The bailout fund would be supported by the taxpayers to the tune of $32 billion, with $2 billion appropriated to assist states with funding their small business lending and guarantee programs. While Democrats are promoting H.R. 5297 as necessary to "increase the availability of credit for small businesses," a recent National Federation of Independent Business (NFIB) survey revealed that uncertainty about the economy is a more immediate problem than the lack of access to credit. In fact, in a June 8, 2010 article, William C. Dunkelberg, NFIB's chief economist stated, "The small business sector is in maintenance mode, not growth...The best thing Washington and state legislatures can do is adopt a ‘do no harm' mentality. If they want small business owners to start hiring again, they need to stop considering policy proposals that raise the cost of doing business." Much of that uncertainty is the direct result of the Democrat-led Congress's excessive spending and its unprecedented levels of intrusion in the free market.
ISSUES OF CONCERN:
Excessive Spending: According to the Annual Report on the Public Debt, issued by the Treasury Department, by 2015 the national debt is estimated to rise above $19.6 trillion with the ratio debt to GDP rising above 102 percent. Yet, rather than producing a budget to get the nation's finances in order and a plan that prevents the taxpayers from propping up Fannie Mae and Freddie Mac into perpetuity, the Democrats have chosen to create a $32 billion slush fund to bailout troubled financial firms. Such irresponsible spending serves as a drag on the economy and ensures a debt burden for future generations.
Lack the Proper Focus: In 2009, the Democrats enacted a $1.138 trillion "stimulus" plan, including the cost of interest, and promoted it as being necessary to create jobs. The Bureau of Labor Statistics' recent jobs report indicates that the unemployment rate for May 2010 was 9.7 percent. Democrats touted the 0.2 percent decrease as a significant accomplishment and evidence of their effective policies. However, 412,000 of the 431,000 jobs "created," were temporary government census worker positions that will soon be eliminated. Rather than reducing taxes, government spending, and the regulatory burdens for small businesses to generate growth, Democrats have focused on more bailouts. TARP III would inject capital into financial institutions, not small businesses, and it does not require participating institutions to lend for up to two years.
More Government Intrusion: According to the Congressional Oversight Panel (COP), the panel created to oversee spending under the original TARP, neither the Treasury Department nor the Federal Reserve exhausted all private sector options before they committed the taxpayers to bailing out AIG. The report also found the rescue of AIG distorted the marketplace by exacerbating the "too big to fail" problem and failed to protect the taxpayers, which according to the Congressional Budget Office, will lose $36 billion. The report concluded, "The government's actions in rescuing AIG continue to have a poisonous effect on the marketplace." On May 13, 2010, COP released a report that expressed doubt that H.R. 5297 (TARP III), could ever be successful. However, the Democrats have determined that as long as it's only the taxpayers' money being wasted, the mistakes of the past should be repeated.