Bailout denounced as it passes Congress
The financial bailout package was passed by the US House of Representatives on Friday but 108 Republicans and 63 Democrats still refuse to approve the bill. Markets drop anyway with the Dow Jones losing 818 points on the week. Jobs in September slashed by 159,000 and home foreclosures at 770,000 since August 2007 expected to continue to rise. The Real News Network talks to Michael Perelman, Professor of Economics at California State University, Chico.
House passes bailout bill
Producer: Carlo Basilone
REP. ELLEN TAUSCHER (D-CA): On this vote, the yays are 263, the nays are 171. The motion is adopted.
CARLO BASILONE, TRNN (VOICEOVER): The US House of Representatives passed a financial bailout bill on Friday. President Bush signed it into law shortly after it won final approval. The final vote, 263 to 171, was 58 more votes than the measure garnered in Monday’s stunning defeat, when the bill first went to the vote. The Senate passed the bill on Wednesday, changing the original three-page proposal into 451 pages, and ballooned the price tag from $700 billion to over $850 billion. Many members of the House from both parties again refused to support the bill, with 108 Republicans and 63 Democrats still voting against it.
REP. PETER DEFAZIO (D-OR): This is at its core the same deeply flawed Bush-Paulson plan: borrow $700 billion in the name of the taxpayer; give Paulson unrestrained, unprecedented authority to buy anything he deems a troubled asset from anyone at any price.
REP. STEVEN LATOURETTE (R-OH): There was little investigation, and they asked the Treasury, "Where did you come up with the number $700 billion?" Well, they answered it last week in Forbes Magazine, and here’s the Treasury spokeswoman’s quote: "It’s not based on any particular data point. We just really wanted to come up with a really big number." Well, they succeeded—$700 billion is a really, really big number. And the bill left the House, and it went over to our good friends in the Senate, who of course are very fiscally conservative. They’re wiser than we are because they have six-year terms—we only have two-year terms. And would you think that they just were happy sending it back to us at $700 billion? No. They sent it back to us at $850 billion, and they added such wonderful things like $192 million for rum. Now, listen, I like rum, and it may be some of the Senators were nervous that they were losing the pirate vote. I don’t know. But there’s $192 million for rum. A hundred million for NASCAR. I like NASCAR, but what’s it doing in this bill saving the Treasury? Eighty one billion dollars [sic] to Hollywood and $2 million for wooden arrows for children. Now, listen, all of these projects might be okay; they don’t belong in a bill when the administration is saying that we need to act now or else the economy’s going to melt down.
BASILONE: Dennis Kucinich of Ohio mentioned the plight of an elderly Akron woman in Congress.
REP. DENNIS KUCINICH (D-OH): At the age of 90, Addie Polk found herself in foreclosure this week, about to be forced from the home she’s lived in for nearly 40 years. So with a gun in her hand, the Akron widow apparently shot herself in the chest as deputies were knocking on her door with eviction papers in hand.
BASILONE: The story made headlines worldwide and got extensive coverage in Ohio.
VOICEOVER: On the day of the economic bailout, Addie Polk lies in a hospital.
ELISHA GARRETT, ADDIE POLK’S NEIGHBOR: They’re bailing out the big wheel, but they ain’t doing nothing for the little man. You know, she still had her troubles.
NEWS ANCHOR: The 90-year-old woman is being treated for two gunshot wounds to the shoulder at Akron General Medical.
KUCINICH: This bill does nothing for the Addie Polks of the world. This bill fails to address the fact that millions of homeowners are facing foreclosure, are facing the loss of their home. This bill will take care of Wall Street, and the market may go up for a few days, but democracy is going down here.
BASILONE: The approval by the House of the bill was initially good news on Wall Street, where there had been a lot of anticipation.
EXCHANGE-FLOOR TRADERS: Yay! We’re rescued.
BASILONE: But the announcement of high unemployment numbers pushed the markets down again. The Dow lost another 157 points at Friday’s close, bringing the total to an 818 point drop for the week. The Labor Department announced that 159,000 jobs were slashed in September, a total of 760,000 jobs lost in the US since January. More than 770,000 homes have been repossessed since August 2007, when the credit crunch took hold, and with 91,000 families having lost their homes this August, the numbers for September are not expected to improve. Many believe that the almost trillion-dollar bailout package is not enough to erase the bleak financial future and that the economic woes are deep-rooted.
PROF. MICHAEL PERELMAN, ECONOMICS, CSU-CHICO: Everybody out there knows deregulation was very important. But another factor was exceedingly important, and that was real hourly wages—what you could buy for an hour’s work—peaked 1972. Wages have oscillated since then. They’ve never come back to 1972 levels. If you look at real income, almost all of the growth in the GDP in the last 35 years has gone to the upper 10 percent. So what happens then is you’re not able to sell that much to ordinary people. The real profits come in finance. So the companies that had once been industrial companies—General Electric, General Motors, Ford—they became finance companies. Well, if you look at the finance industry, finance makes up 41 percent of the profits in the US. So everybody’s making money in finance; you don’t make money building stuff unless you’re either protected, say, by intellectual property, like Microsoft or the pharmaceuticals, or by government contracts—the defense contractors. Finance accounts for 41 percent of the profits and about 8 percent of the labor force.
BASILONE: What can we expect in the next few months?
PERLEMAN: There was a very famous economist named Yogi Berra, and he said, "Prediction is very difficult, especially for the future." What you do is you look at the underlying trends, and you see the tendencies. And the tendencies—I don’t know if it’ll fall. To me the economy looks like a drunk stumbling around. It takes one step and gets his balance back, and then looks like he’s going to fall again, gets his balance back. Eventually he’ll fall, but I wouldn’t dare tell you it would happen next week or next month or even in the next decade, because one thing that you have to give capitalism credit for is it has shown remarkable resilience, just remarkable.
Please note that TRNN transcripts are typed from a recording of the program; The Real News Network cannot guarantee their complete accuracy.