Senate candidates hammer Blunt on bailout vote

Reporter’s note: The chronology and quotes related to passage of the Emergency Economic Stabilization Act of 2008 were drawn from Associated Press wire reports as published in The Democrat from September 2008 to January 2009.

Perhaps no single issue has come to symbolize voter anger with Washington politicians more than the $700 billion Emergency Economic Stabilization Act of 2008, passed by both houses of Congress and signed into law by President George W. Bush.

The issue has become a contentious one for Missouri Rep. Roy Blunt in both his primary and likely general election campaigns for the U.S. Senate seat left open by the retirement of Missouri Sen. Kit Bond.

His GOP primary rival, state Sen. Chuck Purgason, and his assumed Democratic challenger, Missouri Secretary of State Robin Carnahan, have hammered both Blunt’s vote for the initial program and his work as House Minority Whip to secure the votes need to pass the measure in the House in October 2008.

The EESA called for the creation of the Toxic Asset Relief Program, or TARP, which authorized then-Treasury Secretary Hank Paulson to use up to $700 billion to purchase troubled mortgages in the hopes that the influx of capital would free up credit markets.

Questions regarding both Carnahan’s and Blunt’s positions were raised by readers and the Carnahan campaign after a July 9 story detailing her campaign stop in Sedalia. In the interest of fairness leading up to the Aug. 3 primary, The Democrat requested interviews with Blunt, Purgason and Carnahan to address the issue.

Purgason and Carnahan spoke with The Democrat on Wednesday.

Carnahan told The Democrat she believes the plan was rushed through and private sector alternatives were not fully explored. She said she would have voted against the measure if she had been a member of Congress at the time.

“I wouldn’t have voted for it then, and I don’t support it now,” Carnahan said.

Purgason, Blunt’s chief rival in the Aug. 3 primary, said he also would have opposed the measure and suggested that Blunt’s vote was part of a larger question of free market principles and government spending.

“Well, I think all it did was delay the crisis and create a Band-Aid over a sore. The underlying problems with the economy were not addressed and in the end we traded short-term pain for a long-term cancer. I believe Blunt took the pain away from the people that caused it and sent that pain to the American taxpayer,” Purgason said.

Blunt declined The Democrat’s request for an interview, and instead released the following response relating to questions posed to the candidate regarding his votes on Sept. 29 and Oct. 3, 2009, both in favor of the proposal:

“I was concerned that the global economy was in a crisis in 2008 that could have been worse than the Great Depression and that doing nothing was not an option.

“On one side, President Bush was asking for too much money, which is why I wanted greater oversight and demanded that the bill be cut in half.

“On the other side, the Washington liberals had loaded up the bill with hundreds of millions for ACORN and other wasteful spending that I demanded be cut from the bill. This was a short-term investment in the economy and mostly all of the $350 billion has been paid back with interest. I opposed a second bailout because I believed the administration misled the American people and have opposed every bailout since then.”

The Emergency Economic Stabilization Act of 2008

With the government takeover of mortgage giants Fannie Mae and Freddie Mac and insurance giant AIG, the bankruptcy of Lehman Brothers and a collapse in the housing market, economists and Bush administration officials began sounding alarm bells of an impending economic disaster in September 2008.

On Sept. 18, 2008, Paulson released a three-page plan similar to the Resolution Trust Corporation created in 1989 to help liquidate assets from failed savings and loan associations. The next day, Bush laid out details of the plan to buy up to $500 trillion worth of so-called “toxic assets” with an expected outlay by the government of at least $500 billion.

As the White House and lawmakers began working out the details of the proposal, House Majority Leader John Boehner named Blunt as the House Republicans’ chief negotiator.
On Sept. 29, a bill calling for a $700 billion Treasury Department authorization was defeated 228-205 in the House, with Blunt voting in favor of the measure.

According to a C-Span video clip and transcript (c-spanvideo.org/videoLibrary/clip.php?appid=595264049) of House floor debate before the failed vote, Blunt said “we believe that all of the transparency that you could possibly hope to have in a government program is here.”

“All of the oversight is here. In fact, if anything, we may have overdone the oversight, but none of us want to underdo the oversight,” Blunt said.

The measure’s defeat in the House sent U.S. and global markets reeling, with the Dow Jones plunging 800 points in its largest single-day loss ever. A nearly identical measure was then introduced in the Senate.

The measure passed in the Senate on Oct. 2, by a vote of 74-25, after senators added “sweeteners” to the bill, including a $110 billion tax break for small businesses and middle-class families.

As the measure was being debated in the Senate, Blunt was busy as minority whip trying to find at least 12 Republican votes to help get the bill passed. In the end, 25 Republicans and 33 Democrats changed their votes to favor passage.

The law allowed for an immediate payment of $250 billion to the Treasury Department to begin purchasing mortgages, with an additional $100 billion available to Bush to continue the program. The law required the second $350 billion to be held in reserve, pending a presidential request. In order to block the second disbursement, both houses of Congress had to vote in favor of disapproving the president’s request.

The measure, hugely unpopular with the American people, was barely two weeks old when Paulson suggested that the plan to buy up mortgages was too cumbersome and feared banks could not be re-capitalized fast enough. On Oct. 13, Paulson directed the Treasury Department to stop buying toxic assets and instead began buying preferred stock in the banks.

Public anger was fueled even more when, in December, Bush announced that some TARP funds would go to an emergency $13.4 billion bailout of General Motors and Chrysler.
On Jan. 12, acting on a request from President-elect Obama, Bush requested the second $350 billion disbursement.

With the Senate ignoring the resolution for disapproval, the House, in what multiple news outlets at the time called a “symbolic vote,” voted Jan. 22, 2009, to approve the resolution by a vote of 270 to 155, with Blunt casting a “yes” vote in favor of blocking the disbursement.

When is a bailout not a bailout?

Rich Chrismer, communications director for the Blunt campaign, flatly rejected criticisms from Carnahan and Purgason that Blunt voted for a $700 billion bailout plan, noting “the first bill only provided for $350 billion, otherwise a second vote would not have been necessary.”
“On the second vote, the immediate crisis had passed and it had become clear that both the Bush and Obama administrations had not used the money the way the bill was designed. In short, Roy Blunt was disappointed in both administrations for how they implemented the plan and spent the dollars,” Chrismer said via e-mail.

Carnahan said she doesn’t accept assertions that banks were in crisis, noting that within a year many TARP recipients were “making record profits and paying record bonuses.”
She said while TARP was being debated and paid out in Washington, D.C., she was using the Missouri Secretary of State’s Securities Division to go after brokers who misled investors about the value of auction rate securities. Carnahan said the efforts of the office have seen some $10 billion returned to investors.

Purgason said TARP did nothing to deal with issues related to Fannie Mae and Freddie Mac and believes the whole plan goes against “core Republican principles of free markets and fiscal responsibility.”

“If you are a free market Republican that believes all business should have a level playing field and everyone should be treated equally, there is no reason to vote for something like this. I think when it comes to the TARP vote, Cash for Clunkers, earmarks, and unbalanced budgets, this is all a pattern of [Blunt’s] votes not being consistent with Republican principles,” Purgason said.