Voting for the Bailout Bill

Updated: The bill failed in the House. Congress must act quickly to craft a bill that:

1) the American people can support;
2) assures the markets that we will do something positive both short and long term
3) will actually grow the economy not band-aide it
4) fits our market beliefs
5) fixes regulations immediately that are crippling our financial service sectors

More soon.

##########

Previous post: I have sadly come to two painful conclusions.

First, the crisis of the credit markets is real and could have horrendous consequences dislocating the world market, causing enormous economic pain, and discrediting free market capitalism for a generation.

Second, as long as Secretary Paulson is in charge, it is impossible to get a creative or significantly better solution. The House Republicans, reinforced by John McCain, have improved this bill significantly so it is less bad than the original Paulson proposal. However, they cannot improve it more because of Paulson’s intransigence, which is an even greater obstacle to a good bill than the liberal Democrats who run the House and Senate.

Therefore, while I am discouraged at the final collapse of the Bush Administration, and frustrated by the Democrats’ passion for the taxpayer’s money, I would reluctantly and sadly vote for the bailout were I still in office.

I understand and sympathize with any member who votes no.

The bill is not the best proposal for solving the crisis. It is not even a good proposal for solving the crisis.

However it is the only proposal Secretary Paulson would support and his support was essential in this setting.

This bailout is a temporary emergency measure to stop a hemorrhaging of credit and the potential collapse of the American and world economy. However, it is not a cure nor is it a roadmap for the future. The American people need to know that we will fight for an economic growth program and an energy independence program that will put them and their country back on the path to prosperity. Anything less will be a betrayal of their future.

Congress should move beyond this bill by passing an economic growth bill and an energy bill. We need growth and we need to bring home at least $500 billion of the $700 billion a year we are sending overseas.

If we do not get an economic growth bill and an energy bill, the economy will continue to limp along and there will be a grave danger of yet another bailout next year.

The Congress should also begin a series of public hearings on how we got into this mess and what kind of insider-dealing has been at work.

Yesterday, New York Times reported that the head of Goldman Sachs was the only private sector person in a New York Federal Reserve meeting on AIG (in which Goldman Sachs had a $20 billion interest). If this report is true, this is further grounds for demanding Paulson’s resignation.

Having a former chairman of Goldman Sachs preside over disbursing hundreds of billions of dollars to Wall Street is a terrible concept and inevitably will lead to crony capitalism and the appearance of - if not the actual existence of - corruption.

The Bush Administration has now provided three case studies in arrogance, isolation, and destructiveness: Michael Brown during Hurricane Katrina, Ambassador Jerry Bremer in Baghdad, and Secretary Paulson at Treasury. It is a tragic and very expensive legacy. No conservative and no Republican should doubt how much it has hurt our cause and our party.

The Congress should demand that the Securities and Exchange Commission suspend the mark-to-market accounting rule pending reevaluation of its destructive role in the current downward spiral. There is a grave danger the bailout itself may trigger further asset devaluation and actually worsen the liquidity crisis.

If the SEC refuses to suspend mark-to-market accounting, Congress should pass a free standing bill requiring it to do so.

Finally, if the economy continues to weaken, the Congress should consider a bold and dramatic program to restart economic growth and rebuild market efforts.

In particular the Congress should repeal Sarbanes-Oxley, which failed to warn of every single bankruptcy, but provides a $3 million a year accounting and regulatory expense for every small company wishing to go public.

The Congress should consider a dramatic cut in the United States corporate income tax (the highest in the world when combined with state taxes) so we can compete with the lower tax rates across the world in attracting high-value, productive, and desirable jobs back to the United States.

The Congress should look at the Chinese and Singapore growth patterns and match them by zeroing out the capital gains tax to induce massive flows of private capital to rebuild the market and minimize the need for a taxpayer funded bailout.

This is the kind of pro-growth, pro-entrepreneur program that would accelerate America’s recovery and lead to the next economic period of real growth.

While all these steps should be taken, the immediate crisis must first be met. Sadly, under the circumstances, the current administration binds us to that fact that the only possibility of needed timely action is this bill. Therefore I reluctantly sadly support its passage.

EDITORS NOTE: If you have a question about Newt's position on the bailout bill, leave it in the comments section (include your first name and location with your comment please) and Newt will respond via audio podcast this week. Thank you.

Tag |

Email |

Comments

By DLL @ Sunday, October 12, 2008 2:36 PM

hbt2008,

I believe you and Newt have the right ideas and solutions for restoring the U.S. economy. However, the Dems with NEVER go along with it. We may get bits and pieces but they'll throw in a ton of "Christmas tree ornaments" like the 20% of return going to ACORN and others. It's sad and frightening to think of what is to become of us if Obama and the Dem house are in control. :-(

By Anonymous @ Thursday, October 09, 2008 7:30 PM

here are some great books to read for the 2008 election:the obama nation by jerome corsi,the case agaist barack obama by david freddoso and faith of my fathers by john mccain , woth the fighting for by john mccain and my dad john mccain by meghan mccain. all great gift ideas!!!!!!!!!!!!

By forevergrace @ Thursday, October 02, 2008 1:46 PM

I believe all of the creative accounting caused this mess. What was creative was how the cronies defend themselves. When will companies and corporations pay what is rightfully due and quit lying through these creative numbers! I have been a Republican throughout my voting career except the big mistake with Jimmy Carter, but this arrogance from Bush causes me to reconsider voting for anyone who is Republican.

By Anonymous @ Thursday, October 02, 2008 1:11 PM

Hey hbt, you requested input?
Here it is. Most of your thoughts are well intended and will probably be a good proposal AFTER we fix our nations crisis!
Your proposal does not seem to allow for the citizens that have already lost their homes/jobs/fmailies/401k accounts and the like.
Your proposal lacks immediate relief for those citizens that cannot QUALIFY for refinancing, students withour jobs, and generaly speaking families in dire straights due to misleadership.
When will this BAILOUT actually do something for those American citizens?
Baaaaah, baa, baaa

By Anonymous @ Thursday, October 02, 2008 1:03 PM

What happened to the nation of wolves in sheeps clothing?
Are we now a nation of sheep in wolves clothing?
It is the same old haves vs have nots!
the havenots have always suffered albeit through slavery (newest form being defined in America as we speak) or some form of drreprivation.
"I believe Amerians can come together during tough times"...cheerleading speach to keep followers running off the clff!
Why are we following the PIGS over the edge of the cliff, for the BBQ?
We are the ones (have nots) that are being BBQ'd, can't you smell what the haves are cooking?
Wo lost theri home? Who lost their job? Who has been unemployed due to no fault of their own...US American Citizens that built this country.
Our leaders OWE us something other than more of the same old special interest sweetening and fear voting tactics to get what they want.
When will America unite to out these crroks and demand what is right?

By hbt2008 @ Thursday, October 02, 2008 12:29 PM

Here is what I think:

I find any support of the current bill HR 1424 appalling.

The Problem
I agree something must be done and done this week to unfreeze the capital markets. However, that does not mean the outright abandonment of economic and market principles. The answer is not for the government to buy the private assets to then manage them in a very large, quickly created bureaucracy. I believe this is the wrong direction for several reasons: 1) the free enterprise market forces have been proven more efficient that the government time and time again; 2) the incoming receipts from the sale of these assets will be spent on new government programs – particularly with a Democratic super majority. Again, this has been proven again and again by congressional action – Social Security/FICA tax receipts are spent annually; 3) the management of these assets is ripe for corruption within the government – Washington insiders and campaign contributors being charged with the management of these assets; and 4) it sets a precedent that the government will buy bad businesses rather than let them fail if there is a political impact. Where does it end – the auto industry, airlines?

The Solution
I believe the answer lies in several actions. First, suspend and reinterpret FASB 157 Mark to Market. I understand the SEC has a new interpretation and I agree with the language in Section 132 of the Bill. This will have an immediate impact on the asset side of the balance sheet for companies holding MBS and CDO assets. Second, increase the limit on FDIC insured deposits to whatever you have in the bank – period for a temporary period. This will allow you to go back to the appropriate limit. An increase to $250,000 will never be able to be reversed. I would not increase the insurance premium to the banks at this time. Third, I would adopt the principles in Section 102 of the bill to insure the financial institutions against total loss of these assets. This would create a backstop. Fourth, I would allow all mortgage interest to count 2x with no limitations to deductibility for people earning (AGI) less than $1,000,000 during the tax year on loans originated prior to March 14, 2008. This will allow people to pay less in overall taxes based on the percentage of how much they are leveraged giving them a little breathing room for those affected by the culture of leverage without removing responsibility and providing incentive to stay in their current loan and making the payment. This goes DIRECTLY to Main Street and affects housing costs. Fifth, I would remove all corporate income taxes for Q3 2008, Q4 2008, and Q1 2009. Sixth, I would remove all capital gains taxes for the tax year 2008 and 2009. Seventh, I would create a Universal Home Price Index by zip code and publish it monthly and mandate that all asset valuations use a specific method. Right now, there is too much subjectivity in the assessment of home (and consequently asset) values by different institutions. Eighth, if the government has to step into a failing organization, excessive executive pay must be eliminated. Golden parachutes should not be tolerated in a government required takeover. If you are in an executive position in a company that is “too big to fail” you are making enough year on year to be able to survive if your management leads to a government takeover. In addition, I think that the regulatory environment surrounding executive pay can be modified to once again let the market rule. Executive pay changed when the government changed the expense deductibility of executives making over $1,000,000 annually which led to stock options which got even more out of control until a few years ago. I think that executives should be paid a salary and cash bonus that the market will bear with total expense deductibility. Any and all fringe benefits can be counted as taxable income. For the top 5 executives of a company, they should only be eligible for restricted stock grants not options. Their financial future is based on the stocks performance and they lose money is the stock falls period. It creates real losses as opposed to just making an option worthless. Finally, I would remove the tax implications of an early distribution of 401k’s for the tax year of 2008 and 2009 in case struggling home owners need to tap into savings to get over this hump.

By taking these actions, the credit markets will loosen, businesses will get a booster shot, the market will be flooded with new capital and individual home owners will get a stimulus, and maybe more importantly, an incentive to stay in their homes and make their mortgage payments. I would be open to some common sense revision in the bankruptcy law as well given the poor situation many people are facing with adjusting ARMs and an economic down turn. By helping all sectors of the economy – credit, business, and homeowners, I think the financial services sector will benefit by the rising tide. Banks will be encouraged to work with borrowers to restructure loans to keep them in their homes. In the end, if we all do our part, we will come out of this stronger than ever.

Newt - why won't the listen to you??

Anyway - everyone please let me know what you think of my proposed solutions - most of which was inspired by Newt's thinking.

By Anonymous @ Wednesday, October 01, 2008 8:43 PM

How about Newt for VP? Sarah's gonna implode and we need Newt as VP!!!!!!!

By Anonymous @ Wednesday, October 01, 2008 4:38 PM

I do not believe that increasing the FDIC insured limit is a solution to this problem (maybe another, but not this one).
It is a common perception that the FDIC could NOT payback cutomers in their entirty if customers were to be subjected to too many more of these bank failures as the last one cost the FDIC almost all of its reserves.
Insuring the uninsurable is bullcrap, just look at what insurance did for Katrina and her victims!
Big business, ig insurance, big government equals big bullies!

By Anonymous @ Wednesday, October 01, 2008 4:33 PM

I would support any bailout that included us citizens recieving a cah income, reward, rebate, or whatever you want to call it as I firmly believe that Americans can invest the monies (if deposited directly into their accounts) far better than our current leaders can.

By Anonymous @ Wednesday, October 01, 2008 2:47 PM

Mr Speaker:
These low mortgage values are artificially induced by "mark to market" rules. This rescue does not help the banks. Those advocating for the bill predict future profits. This means the govt buys the assets at distressed levels. Therefore, the bank remains in trouble because it merely exchanged one asset (the mortgages) for another asset (cash) at a very low price. Meanwhile, congress will have seized control of some private sector assets. That opens the way for more centralization of power, more socialism, and windfall profits for the govt as the mortgages pay off or are sold.

Solution: Suspend the "mark to market rule" (your idea). Make the mortgage pool carrying value the face value of the underlying mortgages. Banks may then set aside reasonable reserves for defaults, but the reserves would be much less expensive than the mark to market debacle.
Example: A bank's "mark to market" writedown of 1 billion causes 10 billion of available lending to vanish with the stroke of a pen. This is because banks can lend 10 times their capital. By removing the mark to market rule, a huge pool of lending is made available with the stroke of a pen. Crisis solved.

Govt involvement is then reduced to some form of govt assurance as a backstop against bank failure. If a bank fails, the feds step in, as they do anyway, and sell the failed bank to a healthy bank. Healthy banks that purchase the distressed banks can be given tax incentives to encourage them to participate. This effectively funds the bailout with foregone tax revenues as opposed to actual tax revenues. It also increases tax revenues by invigorating the economy. By the way, banking deregulation has allowed Bank of America to buy M Lynch, making that a private sector solution.

Secondarily, congress amends the "Community Reinvestment Act" and related legislation to inject reasonable standards into the lending process. As a carrot for the socialists, congress could require states to license all mortgage brokers and provide a common set of rules for them to follow. Part of this lending reform would be to prevent lobbying by F Mae, F Mac, and similar quasi-govt entities. They should also stop Acorn's coercing of lenders.

I believe some in congress saw this as an opportunity to seize a big pile of money. Regs caused the asset devaluation...the feds would step in and take over the troubled assets at the low price caused by the regs, and the banks would be left hanging without the artificially undervalued asset that would have eventually returned a much higher value to them. That future value becomes the property of big brother. Big brother promises to return the funds to the taxpayer, but that actually means big brother keeps the money (on behalf of the taxpayers), and applies the funds as only big brother can do. Most people do not understand this thing.

An added clause could be that, if at any time a rescue or bailout occurs with taxpayer funds involved, then any profits made by the govt should go toward social security and nothing else. That would stop the legislators from grabbing the loot.

By Anonymous @ Wednesday, October 01, 2008 12:41 AM

Dear 'Anonymous',

I'm an Independent, actually, and I certainly hear what you are saying. I would ask that you try to step back from the current difficult situation and try to look at what's happening from a reasoned, impartial point of view.

I submit to you that the problems we have are equally shared by both political parties, and nither the Democrats or the Republicans are blameless. The current crisis, for example, was caused as much by a lack of oversight in the Republican Administration as it was by a complete lack of desire on the part of the Democratically-controlled congress to rein in Freddy and Fanny.

There is more than enough blame for both political parties to drown in it's murky waters.

I would ask you to judge your final decision on whom to vote for on one simple question: Which team (Obama/Biden or McCain/Palin) has the greatest chance of actually implementing radical change in Washington?

Now, let's be clear. When I say 'change', I don't me simply kicking off our shoes and pulling on a new pair of trousers politically, but rather, I mean to be ripping down the building we live in, carting away the rotted, decaying remnants of cronyism, corruption and influence-peddling, and rebuilding a structure that protects the American People?

Who is more likely to do *that*?

Obama or McCain?

By Anonymous @ Tuesday, September 30, 2008 10:26 PM

Henry Ford once said, “It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

I am a Christian republican pro life 46 year old female who has voted Republican always but this will be the first time I, my 72 year old mom and siblings and aunts who were strong republicans will not vote republican for the first time for these reasons:
1) The economy: One works so hard and saves and invests some so that one day in the future when we are older or there's an emergency we will have something to fall back on. I have life insurance with AIG, monies in Merryl and Wachovia and these are uncertain and scary times. McCain says "the fundamentals of our economy are strong'" and his economic adviser Gramm said we're in a "mental recession". We are living a mental depression! They seem out of touch with people like us. I feel for people near retirement or retired like my mom. She has lost $170K since december. Our gdp this year so far has been 1 percent while China's has been over 10 percent since 2003. I was in China in 2005 and along with the group of people I was with were shocked and amazed by its growth and innovations. And now this debacle of foreclosures, the financial sector being in major trouble,unemployment, it was this administration not regulating and being asleep at the wheel and Mr McCain has been in DC for over 20 years!
2) Education: During this republican administration money was severely cut. Now our schools are looking to the Philippines to bring teachers on math and science from elementary to high school. I have a sister who is a research scientist(has worked on Parkinson's and cancer) and along with her colleagues is disheartened. I didn't know this was happening. One of her friends left research and became an administrator of a university. She herself is thinking of going to Italy. Many are leaving the USA even fron NIH and opening labs in China. For all consumers research in universities is crucial if we want to pay less for treatments and medicines than if done anywhere else. All R&D drug companies are no longer here but in CHina. Most bioengineering students are Indians not Americans. What made the USA prosperous and great was its innovative spirit and critical thinkers. Also,
"America's dominance of the technological landscape is shrinking fast, says Richard Elkus, a longtime Silicon Valley exec (he introduced the first VCR). The problem, he argues in Winner Take All: How Competitiveness Shapes the Fate of Nations, is that by abdicating high-tech manufacturing, America handed more astute nations the tools to produce the next big technological leap forward. " We have fallen behind and cannot compete.
2) the war in Iraq is costing billions monthly and leaving us in the red. And Ms. Palin suggested we may attack Russia, that is ludicrous! She seems really scary to moderate republicans like myself. We're still in Iraq. To deal with Iran we need Russia and China.
3) Energy and environment: Brazil learned its lessons from the 70s and became innovative and their cars run with fuel made out of sugar cane. If something happens in the world their econom will keep going while ours will stop since we depend heavily on oil.
Gov. Palin is a very pretty lady, hard working mom with dreams and I applaud her at an age like mine has accomplished so much. But seems our country is headed the wrong direction under the republicans. I had to think long and hard. I know of many republican women who are questioning and they all say no more of the same Bush policies, no more wars. Just go to the grocery stores, your gym and the women will tell you. McCain and Bush supported deregulation and we are in this mess now. And I was floored when Gov Palin didn't know what a vicepresident of the USA does, she said someone needs to tell her! We don't think she is prepared to take such a task.
I just think it sad that this country no longer has the desire or its leaders to dream big but just remain a servicing country to China and India.

By Anonymous @ Tuesday, September 30, 2008 9:25 PM

If I understood correctly Limbaugh said today that the credit markets are stalled because the banks are holding their money to see if they will get a better deal out of the US Govt. than from private sector investors. If that is true, then we should let the chips fall where they may. No to the bailout. We should make the type of corrections suggested here and let the market correct itself.

By Anonymous @ Tuesday, September 30, 2008 5:35 PM

Newt, why don't you, Dick Morris and Karl Rove go over and try to straighten out the McCain camp (if it's not too late!). They are not handling things very well at the moment and I'm afraid of what happens if/when they fail! HELP!

By Anonymous @ Tuesday, September 30, 2008 5:32 PM

newt your thinking on things are right on
how can I help?

By Anonymous @ Tuesday, September 30, 2008 3:31 PM

The crisis was created by excessive spending and we cannot spend out way out of it. The fundamental problem was that the Congress attempted social engineering by pushing mortgages for people who could not afford them and guarenteeing these mortgages (which people could not pay) by the Federal Govt. Couple this with a persistent consumerism in our economy (the same people who cannot afford a mortgage have a big screen TV financed on a credit card) where the old time concept of fiscal responsibility is thrown to the wind.

I don't believe that without the bailout the credit market will "melt down" -- but it will be corrected. Those who are living within their means and pay their bills will have no problem getting credit -- in fact the banks will love them.

The others will find more appropriate housing and the market will clear itself. A bailout is a bad idea, instilling in the population an expectation that failure must be prevented and that risk will be cushioned by the government. That is a receipe for disaster.

By nunzw @ Tuesday, September 30, 2008 2:52 PM

I hope you will reconsider and not vote for that "bailout" Let the chips fall where they may. It is too bad that America has become a Country of credit. What kind of a company has to borrow money to make payroll? Not a very solvent one.
We are Americans and we will survive and be better off. And God willing Nasty Nancy, Doddering Dodd and Barney Fife will be gone.
To Chris from OR. Give Sarah a chance, she has done a good job in Alaska.
N from MA

By Anonymous @ Tuesday, September 30, 2008 2:17 PM

Dear Mr. Speaker:

Boy I would love to be saying those words today instead of Dear %&#$#!!!

Newt you are a great american!!! I watched you and Steve Forbes last night. You are the only two that had any other suggestions to this problem. The suspension of mark to market is a great idea and would give us time to think of the best way to deal with this. Yes it needs to be dealt with but we with the Bush administation have rushed to judgement before and we are still paying the price. Yes we need Paulson gone. (cut out the cancer before it speads.)
Newt if you have any contact with John MCCain call him tell him to stand up put every thing on the line and push for this concept.

He is running on country first. This would be bold but would put country first. Just think with suspension of mark to market and this stablizing two week before the election what can happen for John McCain.

By Anonymous @ Tuesday, September 30, 2008 1:52 PM

to the person who suggested that we give the aig money to the people......sorry sir, unfortunately your math skills are lacking.
giving 85bil to 200mi people would only be $425 per person.....not 4250000. nice try, though. how about we not bail out aig anyway? these "overnight, over the weekend, etc." moves to spend taxpayer $$$ are really getting my blood pressure up! taking the taxpayers money to fix these problems only goes to prove that congress AND the executive branch are a bunch of do-nothings! they already know they would never agree to DO something that would fix the economy...so they steal our money. hang 'em high & hang the lot of 'em says I !!

By flow51 @ Tuesday, September 30, 2008 1:01 PM

Newt, I admire your service to our cause of Ronald Regan Conservatism! Your suggestions are "on the money" as far as I understand them. Might I suggest an addition? If WE are serious about "fixing" the problems, how about adding: 10% Reduction in PAY for our Congressional "Leaders", across the BOARD! At least a 10% reduction in spending, again, Across the BOARD! And of course "Drill NOW!!"
Add YOUR Recommendations and my suggestions and I will contact my Rep and ask him to support the "Relief Package".

By Anonymous @ Tuesday, September 30, 2008 12:59 PM

Here is an interesting approach that I received in an email this week...just thought I would share it:

I'm against the $85,000,000,000 bailout of AIG. Instead, I'm in favor of giving $85,000,000,000 to America in a "We Deserve It Dividend".

To make the math simple, let's assume there are 200,000,000 bonafide U.S. Citizens 18+. Our population is about 301,000,000 +/- counting every man, woman and child. So 200,000,000 might be a fair stab at adults 18 and up. So divide 200 million adults 18+ into $85 billion that equals $425,000.00.

My plan is to give $425,000 to every person 18+ as a "We Deserve It Dividend". Of course, it would NOT be tax free. So let's assume a tax rate of 30%. Every individual 18+ has to pay $127,500.00 in taxes. That sends $25,500,000,000 right back to Uncle Sam.

But it means that every adult 18+ has $297,500.00 in their pocket. A husband and wife has $595,000.00.

What would you do with $297,500.00 to $595,000.00 in your family?
• Pay off your mortgage – housing crisis solved.
• Repay college loans – what a great boost to new grads
• Put away money for college – it'll be there
• Save in a bank – create money to loan to entrepreneurs.
• Buy a new car – create jobs
• Invest in the market – capital drives growth
• Pay for your parent's medical insurance – health care improves
• Enable Deadbeat Dads to come clean – or else

Remember this is for every adult U S Citizen 18+ including the folks who lost their jobs at Lehman Brothers and every other company that is cutting back. And of course, for those serving in our Armed Forces.

If we're going to re-distribute wealth let's really do it...instead of trickling out a puny $1000.00 ( "vote buy" ) economic incentive that is being proposed by one of our candidates for President.

If we're going to do an $85 billion bailout, let's bail out every adult US Citizen 18+!

As for AIG –
• liquidate it.
• Sell off its parts.
• Let American General go back to being American General.
• Sell off the real estate.
• Let the private sector bargain hunters cut it up and clean it up.

Here's my rationale. We deserve it and AIG doesn't.

Sure it's a crazy idea that can "never work." But can you imagine the Coast-To-Coast Block Party! How do you spell Economic Boom?

I trust my fellow adult Americans to know how to use the $85 billion We deserve the "We Deserve It Dividend" more than the geniuses at AIG or in Washington DC .

And remember, The Family plan only really costs $59.5 billion because $25.5 billion is returned instantly in taxes to Uncle Sam.

Ahhh...I feel so much better getting that off my chest

Just think what we could all do with $700B!!

By robertmack @ Tuesday, September 30, 2008 12:50 PM

Voters are always surprised when their denial comes back to hit them in the face, e.g. mortgages. We are all staring at another huge denial that rarely gets painted as such...the U.S. budget. Two-thirds of the budget is tagged as mandatory, but a quick look reveals this red herring when you look at what is considered discretionary: almost all of defense, education disaster relief, justice and government administration. Just adding these back jumps the "mandatory" to around 90%. On a 2.5 trillion budget that leaves a whopping 250 billion. The American people are in total denial about this. Why can't this simple fact become the central point rather that keep pressing the losing tactic of cutting costs, voters have long since become deaf to that drum. Add this to your "workout" rather than "bailout" ideas and Republicans could really cast themselves as being at the core of what this country stands for.

By robertmack @ Tuesday, September 30, 2008 12:37 PM

Catch phrases often define ideas. Bailout clearly tagged the defeat just seen. By tagging your solution as "workout" offers a clear contrast to "bailout", something that disgruntled voters can unite behind. Indeed, it could become a rallying cry for lost Republicans like me.

By Anonymous @ Tuesday, September 30, 2008 12:30 PM

I agree with Newt. A "workout" must take place because we have securitized Main St. debt in order to enable us to have access to the worldwide capital pool rather than just what's available locally. The owners of this debt are our cities and towns, foreign investment funds, American and foreign pension funds, anyone looking first for stability and returns, not necessarily liquidity. They got just what they didn't want. If we want to continue tapping into this pool we have to satisfy the rule-makers of the pension, investment and other funds who have money available
otherwise these funds will be forbidden to invest in real-estate securities and the geat pool of money will dry up.
The saving grace is that hopefully most of that money is still around in the hands of the previous homeowners. If the markets are stabilized and capital gains tax is lowered or eliminated, I'm sure that money could go right back to work.

By JKennedy @ Tuesday, September 30, 2008 11:55 AM

Newt,

I faxed this letter to Senator McCain on Monday, September 29, 2008

September 29, 2008

United States Senate
241 Russell Senate Ofc. Bldg.
Washington DC, 20510
Phone: (202) 224-2235
Fax : (202) 228-2862

VIA FACSIMILE

Attention: Senator John McCain/ The McCain writing staff

Senator McCain,

You failed us! Not since Ronald Reagan have we had someone we could actually believe in, and now after your few words about this bailout, we can't even count on you.

What "We The People" need is a leader, who listens to the people, just like you "FINALLY" did on the immigration issue. However, your actions show that we have no one to lead us.

Every politician standing in our Government, will be voted out, if there is a bailout.

Can't you see that while fear remains of an economic collapse, oil prices come down. Let it fall. Let the Corporate bigwigs fall. They gambled, and lost. Now they might as well have been playing with Monopoly money. It all goes back in the box when the game is over.

Ok. Government wants to play a game. Then hit the reset button, and "We The People", as Americans, will pull up our bootstraps and rise again, without paying the tax that would prove inevitable, for a process that might not even work.

"We the People" are tired of the same old Washington. You promise to make them famous, yet you get your fellow Republicans to vote for a "BAILOUT" of Wall Street, to what end.

At the end of the day, foreign economies will stabilize, and the American Taxpayers, (not the illegal aliens off course) will once again pay the price for our Government’s failures.

How many of "Your Friends", have their hands in the till? How many will benefit from this bailout. It seems these things are always cloak and dagger, yet you use the words transparent in your campaign.

I'm more of a Federalist then you claim to be, and I'm just one of the regular people of this great nation.

Not all of us are stupid. Not all of us are sheep.

There isn't much time left, so you need to do something big, and then keep your word.

I assume that the following words are somewhat familiar. I hope I don't assume too much.

That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.

The founding fathers knew at the beginning that people would or will become sheep eventually, but then there are some who step up, and revolt. I and so many other Fellow Americans, had hoped that you were the one to get us back on track. To clean out the dead wood, and to mend the fractures in our government.

Your support for this "Bailout" bill, will prove otherwise, and come election day, everyone now seated will kindly clean out there desks.

Vote "No Bailout", Maverick.

Vote no bailout, and convince everyone else to vote "NO BAILOUT"!!!

John S. Kennedy

I was surprised to see that you Mr. Speaker would reluctantly "have to" vote for this bill if you were still there.

When I was a kid, my parents got their first Credit Card. It was a Master Charge. Before that, the corner store would let you put your purchase on credit, thus the phrase "Put it on my tab".

When the banks figured out that they could make money by issuing credit, they took, and ran with the ball.

I've heard rumor that there is enough money still left on Wall Street, to bail themselves out, so there's an idea. Make them accountable, and make them pay back some of the money they've taken. Hard to do though when our corrupt officials have benefitted from "The Causes" of the situation we now face.

Now, our economic quagmire has left all taxpayers having to pay the "Tab" drawn by a greedy few. It's not right. If the actions of these few, can only be rectified by an increase in taxes, then we should let our economy fall. We are the People, and although we elect officials to speak for us, we have the right and responsibility to speak to them as well, and they have the responsibility to listen to us.

I remind you again, of this particular phrase in "The Declaration of Independence"

"...Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed..."

I read these words to mean, that most people of the world, will get used to and go along with anything, once that "anything machine" is turned on. The longer the machine runs, the deeper the roots grow, and the harder it is to stop.

The next phraze in the Declaration goes on to indicate, and of course my opinion is interjected, that it is the right and responsibility of "We the People", to remove our government, and start over.

I saw you on Gretta last night, where you shared an idea to let this problem go on for a couple of weeks, and see if it rights itself. I agree. In the mean time, "prepare" to act responsibly and do something about it without harm to the taxpayer, and without propagating armageddon.

Do it right, or let it fall.

John S. Kennedy (No relation)

By Anonymous @ Tuesday, September 30, 2008 11:38 AM

Please explain your stand on the FairTax proposal.

By Anonymous @ Tuesday, September 30, 2008 11:29 AM

You don't need to over-reach here. First, You need to stimulate demand for mortgages and MBS; and this can be done by eliminating capital gains taxation for 3 years or so (with the possibility of extensions) on any mortgage-related financial instruments purchased AFTER 10/1/2008. Second, you need to prevent forced sales of these assets by eliminating mark-to-market accounting for these assets. The combination of these would create a market. You could also consider creating some liquidity in the underlying housing market itself, by suspending capital gains taxes in some fashion on pre-existing residential housing and/or developments that are purchased between 10/1/08 and some future date, recognizing that these buyers would be investors, not end-users.

By Anonymous @ Tuesday, September 30, 2008 10:56 AM

CAPITAL GAINS TAX HOLIDAY FOR REAL ESTATE.

Newt, thanks for leading our country toward a better bailout bill. I very much support your suggestion of eliminating the capital gains tax entirely.

If it's not possible politically to entirely eliminate the capital gains tax, please consider suggesting a targeted capital gains tax holiday for real estate.

Encouraging capital investment in real estate will help shore up the housing market, the root cause of the mortgage backed securities crisis.

Investors will purchase vacant homes, fix them up and rent them out if they are incented to invest. This investment will shore up the values of surrounding homes, the real estate market in general, and the toxic mortgage backed securities causing this financial crisis.

Purchasing a single family rental home in much of the country today is a great investment, returning around 5% income on cash after expenses and providing an asset that will appreciate over the long run. Investors are hesitant to jump in, though, until we see a bottom in home prices.

Tax incentives to fix-and-hold real estate is the prescription needed to help put a bottom in the housing market, allowing the forward looking financial markets to recover much more quickly. Jobs fixing up homes will also be created for the struggling construction trades people, many of whom are looking for work during this housing downturn.

Please consider a targeted capital gains tax holiday for real estate investment as part revised bailout legislation.

By Anonymous @ Tuesday, September 30, 2008 10:54 AM

By Anonymous @ Tuesday, September 30, 2008 10:53 AM

I value your opinions on matters concerning the federal government and OUR representatives and thank you for always being up front with the American people. Newt Gingrich for PRESIDENT!

By Anonymous @ Tuesday, September 30, 2008 10:27 AM

Newt, I agree that something really stinks with Sec. Paulson. If so, why demand his resignation? Why should he not be summarily fired? Also, on Rush's 24/7 site, there is audio from CSPAN on the committeee hearings where all the dems on the committee defended Fannie Mae and Freddie Mac, and Raines, blamed the regulator who was coming forward warning them of accounting problems. This is public record. Those democrats are still in office today, blaming Bush economic policy. The justice dept should be forming a case of them, since they are part of the problem. They should not be trusted at all to be part of the solution. They are lying through their teeth now, including Barney Frank.

By Anonymous @ Tuesday, September 30, 2008 10:19 AM

Keep talking Newt! I have heard your sensible, practical, responsible solutions to this crisis for a week now and am astonished that no one seems to be listening. Yet, there has not been one commentator I have heard that refutes your conclusions, especially about the effect changing the accounting rules would have. What bone heads. I, for one, refuse to panic. The DOW has dropped only about 12% since mid August despite the horrific financial news and moves - hardly enough reason to jump out any windows and not even close to REAL market crashes of the past. So, just keep talking Newt. Sooner or later somebody will listen and we will get the right, conservative, American solution to this crisis.

By Anonymous @ Tuesday, September 30, 2008 10:11 AM

Newt, You are the only voice of reason this little person can make sense of! Please continue to speak out as Congress still does not 'get' why Main Street is so opposed to this bill. We are already accustomed to not buying new cars on credit and having our tax dollars send someone elses kids to college, while we mortgage our homes in order to send ours. Finally 'Main Street" is mad as H__L and we're not going to take it anymore!

By Anonymous @ Tuesday, September 30, 2008 9:54 AM

http://www.kentucky.com/101/story/540569.html

We'll be fine folks. Worst possible scenrio - recession. Don't let the fear mongering get to you. If the stock market goes down it will eventually go back up. The economy work in cycles. It appears we are heading to a recessionary cycle. We are Americans we will endure. If our parents and grandparents could endure a Great Depression we can surely handle an real economic down turn, even if it lasts a few years.

By Anonymous @ Tuesday, September 30, 2008 9:49 AM

Thanks Mr. Gingrich, as always, for your intelligent, no non-sense explanation of our current financial crisis. I only wish more citizens could see through the smoke and mirrors and vote more leaders into office such as yourself.

By Anonymous @ Tuesday, September 30, 2008 9:44 AM

Hank Paulson = Barney Fife...I love it.

By Anonymous @ Tuesday, September 30, 2008 9:41 AM

Ever seen a person who has been sniffing cocaine one night suddenly run out at midnight? The manic "gotta find more" behavior?
By the way - what's the difference between this and Enron?

By Anonymous @ Tuesday, September 30, 2008 9:37 AM

In response to the fellow wanting the Stock Market closed. The SEC could suspend trading like was done after 9/11. If it was a real crisis of epic scale they probably would. It is not. The Fed and the Treasury Dept. already have measures on the books to deal with the current situation. The Fed released close to 200 billion funds late yesterday afternoon. The Treasury Dept all ready has provisions to buy up bad paper close to the toon of 1 trillion dollars that was in the housing bill this summer. Lay off the panic folks.

By Anonymous @ Tuesday, September 30, 2008 9:32 AM

When I was a young man renting an apartment in Long Beach, Calif., if I didn't have the rent at the first of the month and asked the landlord to wait until next month, he said to me: "If you can't pay one months rent, how are you going to pay two months?". So my question to anyone who knows the answer is:
If these mortgage holders couldn't pay their mortgage the first time, how are they going to pay their mortgage after the bailout?

By Anonymous @ Tuesday, September 30, 2008 9:32 AM

By Anonymous @ Tuesday, September 30, 2008 9:06 AM

Would it make sense for the President to issue an emergency Executive Order to close the Stock Market for a few days? This would not solve the problems of the financial markets. But it would be akin to FDR declaring a Bank Holiday. It would freeze any further erosion of 401ks, pensions, etc that are associated with the Stock Market. Obviously, closing the Stock Market would be temporary & could be lifted once a bill is passed. I think it would remove the daily hysteria that occurs every day when the 4:00pm bell is rung. Thanks in advance for your reply.

By Anonymous @ Tuesday, September 30, 2008 9:05 AM

It drives me crazy that there is so little GOVERNMENT TRANSPARENCY, even in a crisis like this. Deals struck behind closed doors seem to have gotten us into this mess in the first place, and yet we still have no idea of how our representatives are representing us, other than a record of how they voted, and that after the fact. Can't we get those C-SPAN cameras rolling in the smoke-filled back rooms on Capitol Hill? They are doing the official business of the people and I for one want to see and hear how they go about it.

By Anonymous @ Tuesday, September 30, 2008 8:56 AM

Newt, you let the country down. I am one of the biggest fans of yours. I have never heard such ridiculous things as you bantered about this weekend. YOU HAVE PUT THE COUNTRY IN PERIL. In the 3rd qtr of a football game, regardless of how far down you are, you have a lot of options. In the 4th qtr with 1 minute left on your own 20 yd line you don't have many options. You misread the situation. You gambled with our future. If this is the start of your Presidential bid, count me out!

By Anonymous @ Tuesday, September 30, 2008 8:51 AM

Tell a lie often enough and long enough and people will be believe it.

We do NOT need a bill.

By Anonymous @ Tuesday, September 30, 2008 8:41 AM

This to shall pass. We all want and need a bill, but it has to be a good bill that provides a clear path to recovery. Leadership involves taking people where then need to go, not always where they want to go

By Anonymous @ Tuesday, September 30, 2008 8:05 AM

Newt, thanks for hanging in there with us the American people. I feel that you are the only person I can trust in the current situation. Newt in 2012.

By Anonymous @ Tuesday, September 30, 2008 7:55 AM

I totally AGREE to the post if anyone in Congress is listening to Newt's idea? Everyone, PLEASE write to your senators, and state representatives, and the media about Newt's idea. If they won't CONSIDER his idea about Mark to Market, which could go in effect TODAY, we have to ask WHY NOT? We are supposed to be their #1 priority. Also found it interesting, that like Newt said, the media won't cover that Paulson came from the same company that has a 20M interest in that AIG did not fail. I do agree, the deputy Secretary SHOULD replace Paulson.

By Anonymous @ Tuesday, September 30, 2008 7:52 AM

Yes, I saw Ms Mitchell on MSNBC also, she also said that 'lots' of house members say it is his plan for a presidential run in 2012, t hen also plugged her tv show. She is NO better than N Pelosi, keeping it all political. At least Newt is trying to come up with solutions!

By Anonymous @ Tuesday, September 30, 2008 7:46 AM

Is anyone on the hill listening to Newt's ideas?

By Anonymous @ Tuesday, September 30, 2008 7:38 AM

wouldn;t be talking about the Paulson Blueprint now would you? Do you belong to the Financial Services Forum too?
Is it a Coincidence? That the Paulson Plan prepared over a year ago and presented to Financial Services Forum (non profit so called org with 20 CEO's as its founders) seeking to have the power all go to the Treasury and this buying old bad debt as an excuse to get the support of Congress use panic as a way to get Less regulation??? all just a coincidence, perfect timing or a perfect storm....read it yourself and compare visit http://www.treasury.gov/press/releases/reports/Blueprint.pdf than go to the Financial Service Forum web site.

By Anonymous @ Tuesday, September 30, 2008 7:36 AM

Following Mr. Speaker since I was in high school. Newt is on point.

By Anonymous @ Tuesday, September 30, 2008 7:28 AM

Andrea Mitchell was just on "Morning Joe" MSNBC blaming Newt for undermining the vote.

By michelle2010 @ Tuesday, September 30, 2008 5:20 AM

let's not forget Gillette......and the Sweetheart Paulson Deal...
My my what short little memories we all have. But not those of us who live in the shrinking state of Mass. Thanks to the fabulous negotiating skills of Hank Paulson via 2005 with Goldman Sachs “fairness opinion” in evaluating, or should I say “under-evaluating….the stock of the Gillette and P&G Deal...Yes, that "sweetheart Deal" to quote Warren Buffett. thousands of Mass. Jobs where lost, shareholders got screwed, employees with pension plans too.... and big CEO bonus were negotiated on that buy-out. What tax payers should be asking is why do we trust this guy? Paulson......should be fired......
Ask yourself taxpayers what is really going on here with this Paulson deal….maybe just a tiny bit of a conflict of interest......

Just the facts…..Goldman Sachs (headed by our CEO at the time..Happy Hank) values Gillette stock much lower during the P&G acquistion of Gillette....super lower than guess who….Lehman….raising big questions as to the reasons why? …..no coincidence Lehaman comes out a little short on the Paulson money train….still touchy over that one HAnk....they were the honest guys on that one.....
Who got screwed on that deal. State Of MA. lossing hundreds of jobs, tax rev's. and oh yes the little guy, stockholders much of who's employee retirement was tied to it... Big thanks to Hank on that deal... State of MA. thanks you, oh you too Barney Fife...

Warren Buffett called it the “sweetheart deal” but not for Gillette……

big CEO pay outs like that of fired CEO Kilts over 11 million to be exact who incidentally help negotiate the deal carving himself a big piece of the pie…. No wonder Hank is not caving in on that one...

Who else got a big chunk of that rich pie…..Hank of course netting a salary of 37 million that year compared to the following year at 16 million….quite a difference in pay wouldn't you say....

One last thing small point where did Hank get that 700 billion price to tag the taxpayers, Well that was Hanks estimated net worth…in millions….in 2007...yes he was estimated to be worth 700 million…wonder how Hanks money is invested now and how he is feeling over his little shrinking pot Wake up America....This guy is a real parasite... ….Thank the Republican newbies…they are so dumb they happen to get it right this time..……..HANK....RESIGN.....

By Anonymous @ Tuesday, September 30, 2008 5:05 AM

Doesn't Bush get it? The more he talks the less we believe. He has lost complete credibility everywhere...I never thought I would say this, but if he is for it, I am not. McCain either needs to cut all ties w/ Bush and Bush needs to hush up, or else their will be NO Republicans in washington next year!

Unfortunately Wall Street has been spoiled in that they have rec'd multiple bailouts over the last decade, some less obvious than others. But they cried for cuts in interest rates in a time when all the real indicators if followed would have increased rates...they whined, the Fed & Treasury gave them cookies rather than sending them for Time Out. So we'll all struggle through this, but this time let's do it without the crooks and cronies...let them sell their own grandmothers, not my grandchildren!

By Anonymous @ Tuesday, September 30, 2008 4:28 AM

Simple answers dissolve complex problems especially when greed, lies, and gross missuse of power created them. I will focus on the thought of YOU calling the shots for one day. Newt, I hope others will join me, and that miraculously a simple truth can prevail to guide the minds of those idiots who would harm us in both houses.

By Anonymous @ Tuesday, September 30, 2008 1:04 AM

Newt!
Thank you for your hard work and commitment. This url just came to me. At first blush- it seems to have done a good job of tracking the path to the current crisis, but I hope that you can verify it it.

www.youtube.com/watch?v=2ewJdT_iHxU

If this is all true, the country should know

By Anonymous @ Tuesday, September 30, 2008 12:38 AM

Newt, keep fighting!

By Anonymous @ Tuesday, September 30, 2008 12:29 AM

I have a few suggestions for consideraion.
Saving the Economy from Main Street to Wall Street

Offered by: Todd R. Warlick,
850 E. Ocean Blvd. Long Beach, CA.92802
562-972-6868

September 29, 2008

1. Stop Housing Decline
a. Stop housing decline by reducing current mortgage loans to one half of one percent with no interest for a period of 6 months with a 6 months addition option.

b. Current homes on the market in foreclosure/ bank owned would be guaranteed sold to buyers with a 30 year fixed loan, at three percent interest.

c. All properties must be published for sale for a minimum of 30 days, before accepting winning offer/bid.

d. Buyers must have pre-approval with FHA or Fannie Mae

e. Properties under this plan could be sold after one full year as an assumable loan; standing in first position, no piggy backs or second loans will be allowed.

2. Personal Credit

a. Freeze all personal credit lines at current limits. And they would not be increased for a period of one year.

b. All repayments of credit card debt would be at one percent of current maximum balances, for one year.

3. Government Action to Strengthen Economy

a. Government will hold no assets from any business or company in partnership or equity.

b. All loans given to businesses will be back by Federal Government/ US Treasury.

4. Banks
a. All banks holding current properties in foreclosure will be covered at their current market value, until sold through FHA/ Fannie Mae.

5. Stop Property Deprecation
a. Only for homeowners that are 90 days behind on current mortgage; the original purchase price is not negotiable for less, but the interest rate would change to 3% for 30 years – Fixed and assumable, backed by Federal Government.

Thank you, TW

By Anonymous @ Monday, September 29, 2008 11:40 PM

I strongly respect and admire your honesty and integrity and I appreciate your knowledge and your basic ways of communication. I do NOT do pc [political correctness] However, I was