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Libertarian Presidential Candidate Bob Barr's take on the economic meltdown
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Original Message
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Barr Says Financial Crunch Teaches Folly of Government Bailouts
September 15, 2008 3:09 pm EST
“Financial reality has hit Wall Street despite past federal bailouts,” notes Bob Barr, the Libertarian Party candidate for president.
Barr says that massive subsidies for the housing industry and Bear Stearns, as well as a government takeover of Fannie Mae and Freddie Mac, could not insulate financial institutions from the tsunami of bad mortgage loans.
"While the Bush administration has thus far refused to again put the taxpayers at risk by bailing out Lehman Brothers, we should not hold our breath that this or further bail outs will not be approved," Barr observes. "What is required is a long-term solution that incorporates a series of important steps to wean the country from depending on Uncle Sam, which has already put the U.S. taxpayer at risk for irresponsible decisions by private or quasi-government entities."
"First, government must say firmly and unequivocally 'NO' to more bailouts of the very people and firms that have shaken the financial system," explains Barr. “Government cannot wish away mountains of bad debt. It can only shift the burden of failure and delay the adjustment process. Eventually untold billions in bad loans will come due. It is not the responsibility of innocent taxpayers to settle the bill,” adds Barr.
Barr notes that the adjustment process will be painful, but it will be smoother if government makes it clear that banks and investment houses should not wait around with their hands out for taxpayer aid.
"It is impossible for politicians and bureaucrats to decide if the answer in any particular case is bankruptcy, merger, or buy-out," says Barr. "The main task of Washington is to stay out of the way as the market works through necessary economic changes."
Barr says Washington must get its own financial house in order, noting the deficit this year is expected to hit a record $407 billion.
"Next year the deficit is almost certain to exceed half a trillion dollars. These deficits come on top of an already staggeringly high, $9.5 trillion national debt,” says Barr. “We must eliminate all nonessential programs, as well as those with no constitutional authority or which are properly left to the states. The good times when Congress could spend as if there were no limits are long gone.”
“America’s biggest problem is an entitlement explosion resulting from an aging population and rising health care costs,” Barr notes. “Social Security and Medicare have unfunded liabilities in excess of $100 trillion. That is more than seven times our annual GDP. Finding answers will become more painful, both economically and politically, the longer we wait to act. Addressing entitlements should be a top priority of the next administration.”
“The shake-ups on Wall Street have just begun,” warns Barr. “But government should stay out of the process. The principal cause of today’s financial chaos is past government subsidies, bailouts, and poor policy choices. The first step in making the financial system sound is to insist on government making its own finances sound,” says Barr.
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