By Richard G. Thomas
Thomas Voting Reports

(Editor’s Note: This story was released Oct. 22, 2008, for publication by our newspaper subscribers.)

It’s not often that members of Congress, within sight of Election Day, find themselves voting on a bill so important it could prevent national or global financial catastrophe, so radical it would partially socialize a swath of the U.S. economy for at least the remainder of the decade, and so costly it ranks as the most expensive taxpayer bailout in American history

Such a perfect political and legislative storm struck Capitol Hill when Congress voted to infuse more than $700 billion of public funds into financial services firms in hopes of adding stability to a plummeting U.S. economy. When President Bush, a free marketeer, signed the bill Oct. 3, he authorized the most intrusive reach by Washington into private financial institutions since the 1930s.

The House and Senate roll calls on the bailout are featured in this report on 24 of the most newsworthy congressional votes of 2008. The report also spotlights members’ stands on issues such as home foreclosures, energy taxes, paycheck discrimination, global warming, tobacco regulation, Iraq troop withdrawals, GI education benefits, free trade, congressional ethics and government spy and torture policies.

Supporters called the bailout objectionable but essential. “Doing nothing is the worst thing we could do,” said Rep. Paul Ryan, R-Wis., a prominent fiscal conservative, in floor debate. “This is one of those once-in-a-century kind of crises, and we need to act to prevent it from becoming a once-in-a-century kind of a recession.”

But Rep. Mike Pence, R-Ind., spoke for many when he said he “did not come to Washington to ask working Americans to subsidize the bad decisions of corporate America,” and Rep. Jeb Hensarling, R-Texas, called the bill “the slippery slope to socialism.”

What members didn’t know at the time was the true nature of what they were voting on. Congressional leaders had presented the bailout as a Treasury purchase of distressed, mortgage-backed assets that would rescue troubled firms and lubricate frozen credit markets. But Treasury Secretary Henry M. Paulson Jr. announced days later the government would actually take ownership positions in financial institutions, starting with a $125 billion partial nationalization of the nine largest U.S. banks.

Paulson said, “Government owning a stake in any private U.S. company is objectionable to most Americans, me included. Yet the alternative of leaving businesses and consumers without access to financing is totally unacceptable.”

Although Paulson said the original plan to purchase distressed assets was still in the works, Alan Blinder, a Princeton University economist and former Federal Reserve vice-chairman, told The Washington Post, “If I were a member of Congress, I would be wondering about bait and switch….”

In the weeks since Congress rushed to approve the bailout and begin a pre-Election Day recess, outside observers have read the fine print and found taxpayer protections lacking.

For one thing, loopholes riddle the bill’s limits on executive compensation. For another, the nine largest U.S. banks are permitted to use a share of the $125 billion from taxpayers to pay dividends to common stockholders, a non-essential benefit. Congress also oversold prospects of the Treasury eventually recouping a significant share of the $700 billion, since the bill contains few mandatory provisions to achieve that.

The most costly U.S.-taxpayer bailout before the Economic Stabilization Act of 2008 was the Treasury’s $124 billion lifeline to the savings-and-loan industry in the 1980s and early 1990s.

In the Senate, 82 percent of Democrats and 69 percent of Republicans voted for the 2008 bailout, and in the House, 75 percent of Democrats and 46 percent of Republicans backed it.

Whether the landmark measure eventually is judged a savior of the U.S. economy or a disastrous misstep won’t be sorted out for years. As to whether individual members cast a “right” or “wrong” vote on the bill, constituents can weigh in as early as Nov. 4.

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Copyright 2008, Votes in Congress Newspaper Syndicate