When the President asks for Seven Hundred Billion Dollars, more money than we'll spend in the next two years (by this estimate) on the wars in Iraq and Afghanistan, more money than we've spent in 50 years on space exploration, I expect the reason to be impending economic catastrophe.
And what does Fed Chairman Ben Bernanke say will happen if we don't pass the bailout?
What? Recession? No depression? No collapse of the Republic? Dogs and cats sleeping together? Mass hysteria?
As my old-school friends in the debate-judging world would say, if you want us to vote for that plan, you've got put death on the flow. And Bernanke ain't doin' that for me, not against the disads Democrats and Republicans are throwing at Team Bush-Paulson:
Senator [Chris] Dodd [D-CT] called the Treasury proposal “stunning and unprecedented in its scope and lack of detail.”
Asserting that the plan would allow Mr. Paulson to act with “absolute impunity,” Senator Dodd said, “After reading this proposal, I can only conclude that it is not only our economy that is at risk, Mr. Secretary, but our Constitution, as well.”
Another expression of disgust came from Senator Jim Bunning, Republican of Kentucky, who said the plan would “take Wall Street’s pain and spread it to the taxpayers.”
“It’s financial socialism, and it’s un-American,” Mr. Bunning said.
Congress is going to do something, but it won't be Bush's plan. And unless Team Bush can put a bigger threat than recession on the table, it shouldn't be. Scale it down, keep your heads... and try to leave some money for our kids.
Update 16:53 CDT: Even Herbert Hoover didn't throw as big a freakout as Bush:
In 1932, at the height of the Great Depression, the government created the Reconstruction Finance Corp. to make loans to banks, railroads and others. President Hoover asked for $2 billion—equivalent in today's money to $30 billion—and spent just under that amount in the RFC's first year. The country then was in the midst of an economic catastrophe. Economic output had dropped 45 percent. Production of steel and autos were each down by three-quarters. Unemployment was 24 percent, and so on.
The allocation sought by Paulson is 23 times bigger. And it is in addition to the tens of billions pledged to back loans to Bear Stearns, Fannie, Freddie and A.I.G. [Roger Lowenstein, "The Wrong Emergency," The New Republic online, 2008.09.23]
Update 17:22: But quit listening to me: check out this very detailed dissection of the Bush-Paulson plan at Naked Capitalism. Excellent explanation of what's wrong with this picture, including one unnamed source who claims to have heard Sec. Paulson tell the House Democratic Leadership that Treasury plans to pay above market rates for the mortgages banks can't unload.