The congressional rejection of President Bush’s bailout bill came as a shocker to me. As I was writing my blog yesterday about how one can always count on conservatives to cave in and abandon any semblance of a commitment to free-market principles, they went and surprised me by voting against Bush’s financial socialism. Sure, it might have had something to do with the countless telephone calls and emails they were receiving from angry and outraged citizens, but still — let’s give credit where credit is due — they stood up against Bush’s fear-mongering and his attempt to assist his Wall Street cronies before he leaves office.
Let’s clarify exactly what is going on here, especially since Bush is unlikely to give up on trying to get his friends off the hook.
The root of America’s financial and economic woes lies with the federal government and, specifically, with decades of such socialist and interventionist federal programs as Fannie Mae and Freddie Mac. There are the thousands of federal agencies and departments. There are the tens of thousands of rules and regulations. There are the armies of bureaucrats, inspectors, and regulators regulating and controlling financial and economic activity. There is the income tax, which sucks massive amounts of what ordinarily would be productive capital out of the pockets of the American people. There are the millions of dollars in welfare that is paid out to welfare recipients, both at home and abroad. There are multitudes of trade restrictions and immigration controls that interfere with people’s ability to enter into mutually beneficial trades that would increase their standard of living. There is the Federal Reserve that, decade after decade, has debased our currency, induced enormous misallocations of investment, and nurtured a culture of spending rather than saving among the American people. There is the massive, out-of-control federal spending to fund the welfare, the regulatory enforcement, the drug war, and imperial adventurism, including the invasions and occupations of Iraq and Afghanistan. There is the ever-growing national debt.
All this is bound to bring about financial crises. There is no way to avoid it. After all, don’t forget what conservatives used to say about how Ronald Reagan supposedly brought down the Soviet Empire — by making the Soviet government spend the nation into bankruptcy. The longer they try to prop up all this junk to avoid small crises, the bigger the later crises will be.
Of course, it is impossible to say how major the current financial crisis will be. But what’s important to keep in mind is that Bush’s bailout could not solve the crisis simply because the roots of the crises are being left intact. Instead, all that Bush’s plan could accomplish is to ensure that Wall Street cronies wouldn’t have to share in the pain of it. Under Bush’s plan, his cronies’ financial losses would simply be transferred to the American people.
The bailout is actually no different from the commutation of sentence that Bush gave to Dick Cheney’s loyal aide Scooter Libby or the civil immunity that Bush and Congress gave the telecoms who illegally spied on their customers. In the one case, Bush is giving his friends immunity from the criminal and civil law. In the other, he is immunizing his friends from financial losses by ensuring that those losses are suffered by the American taxpayer rather than by Bush’s Wall Street friends.
Let’s not forget that as long as our nation remains in the grip of the welfare-warfare paradigm, the crises will continue regardless of what socialist-interventionist plans are put into place to address them. Thus, the only real solution to America’s financial and economic woes is the restoration of a free-market paradigm, one in which people’s economic activities are free of government control, regulation, and intervention.