Bailout Bill Just Got Worse, But Congress May Approve It Without Reading It, Based on Misleading Claims

The bailout bill has been larded up with additional welfare that will increase its cost, but the House will likely approve it today without even reading the bill, which had already expanded to more than 100 pages last night.  Worse, some conservative lawmakers may vote for it based on the misleading claim that it contains no welfare for delinquent and defaulting borrowers who are now facing the consequences of years of living beyond their means.

The Associated Press, which didn’t bother to read the bill before reporting on it, claimed today that “not in the bill” is “help for troubled homeowners.”  (See Martin Crutsinger, Associated Press, “Rescue Bill Includes More Oversight, Insurance Option,” Washington Examiner, Sept. 29, 2008, at page 14).  In reality, the bill includes provisions that allow some irresponsible borrowers to get not only their interest but also their principal reduced, and that expand a government program that helps defaulting borrowers cut their mortgage payments.  But the Washington Examiner, which wisely opposed larding up the bailout bill, has today reluctantly come out in favor of the bailout as a necessary evil, after reporting on page 1 that the “$700B bill contains no” welfare for defaulting borrowers.  (The Examiner earlier chronicled how government handouts and regulations helped spawn the mortgage crisis). 

Michelle Malkin has an excellent post explaining the many ways that the bailout shafts taxpayers, and endangers the long run health of the economy.  She notes that Section 109 of the bill includes debt forgiveness, requiring the Treasury Department to consent to “reasonable requests” not only “for mortgage term extensions” and “rate reductions” but also “principal write-downs.”  Similarly costly give-aways are authorized in Sections 110 and 124 of the bill.  Section 107 of the bill mandates affirmative-action in contracting, through cumbersome requirements we earlier discussed.

Freedom Works lists 10 good reasons to oppose the bailout.

John Berlau explains how the bill may harm the economy.  The bill may lead to more inflation and future bubbles.  The bailout ignores cheaper alternatives (see here, here, and here) and how repealing regulations might reduce the need for a bailout.  It leaves intact regulations and affordable housing mandates that spawned the current crisis.