Op-Ed: Government Bailout - High Price With No Guarantees

The last two weeks have been a wild ride for the United States economy and for the presidential campaigns. The stock market has taken a tremendous beating.

Financial institutions once thought of as solid, have now reached the verge of collapse under the weight of bad decisions and lack of oversight. The government has taken an unprecedented step at a bailout plan that will cost up to a trillion dollars of taxpayer money, while offering no guarantees that it will stop the bleeding. Treasury Henry Paulson, appearing on Fox News Sunday, said that our nation's still frozen credit markets are fragile, urging congress to act quickly on a $700 billion dollar package for financial firms. This plan will let the federal government buy up bad mortgages to prevent a complete economic meltdown. Not since the Great Depression has a rescue of such magnitude been attempted. This legislation grants Treasury Secretary Paulson extraordinary powers to fund or buy mortgage assets from any U.S.-based financial institution, but limits his buying power to $700 billion dollars. Congress and the Bush administration were to negotiate throughout the weekend in hopes of hashing out the details of this plan, which Paulson admitted offers no guarantees that further financial bleeding would not occur. Politically, both the McCain and Obama campaigns took potshots at one another, with Barack Obama painting John McCain as a free-market buccaneer who until this past week championed the kind of deregulation that led to this crisis. McCain has portrayed Obama as having ties to Fannie Mae and Freddie Mac, and called for more oversight and government intervention. McCain has also been highly critical of the idea of bailouts. While this week's presidential debates will focus on foreign policy, it's clear that the economy has taken center stage as the pivotal issue in this election cycle. A poor economy has traditionally favored the Democrats, yet Barack Obama has said he will hold off on announcing what he would to to act in this situation. McCain, on the other hand, has said he would call for the creation of something he referred to as a Mortgage and Financial Institutions trust, which would identify problems in an institution and solve them before they go bust. It will be interesting to see what congress comes up with in the next few days. Jon Kyl, on the Finance Committee, and Chuck Schumer, chairman of the Joint Economic Committee, said there was little better than a 50 percent chance that a package will be hammered out by the end of this week. Strong conservatives, although ceding that not acting in such a dramatic way might lead to the collapse of the economy, nonetheless cringe at the thought of the government taking over control and saving private institutions that go belly-up due to poor decision making and bad leadership. Whatever happens, the United States debt will increase to never before seen levels, and without any assurances that this bailout will work.