Saturday, September 27, 2008

Conservatives Viewed Bailout Plan as Last Straw

Published: September 26, 2008

WASHINGTON — The seeds of the House Republican revolt over the financial industry bailout were sown in an e-mail message circulated Monday night as internal animosity built quickly over the Bush administration’s request for $700 billion to prevent an economic collapse.

In a message to members of the conservative Republican Study Committee, leaders of the bloc of more than 100 lawmakers solicited ideas, calling for a “free-market alternative to the Treasury Department’s proposal so that, regardless of how individual R.S.C. members vote on final passage, House conservatives have something to be for.”

As the week progressed, it became abundantly clear that one thing conservative Republicans were most certainly not for was the Treasury plan, prompting them to begin searching for an alternative to avoid the perception of strictly being naysayers.

By the end of Friday, at least a portion of their alternative seemed likely to be included in the broader proposal as a sweetener for Republicans, although closed-door negotiations continued into the evening on Friday, and the contours of the final package remained in limbo.

After years of acceding to the White House on a variety of initiatives despite deep misgivings, House Republicans found the administration’s latest proposal to be too much to swallow.

Just as they were trying to reassert themselves as a party of fiscal restraint, President Bush, on his way out the White House door, was asking them to sign off of on a $700 billion bailout built on taxpayer dollars, with very few questions allowed.

“You were being asked to choose between financial meltdown on the one hand and taxpayer bankruptcy and the road to socialism on the other and you were told do it in 24 hours,” Representative Jeb Hensarling of Texas, head of the conservative group, said. “It was just never going to happen.”

As they dig in against the White House, House Republicans are drawing strength and encouragement from outside critics of the bailout, like former Speaker Newt Gingrich and the Club for Growth, a conservative economic group known for financing primary challenges against apostate Republicans.
Richard Viguerie, the longtime conservative leader, on Friday heralded House Republicans for guarding against “this total cave-in by President Bush and the Senate Republicans.”

The resistance caps two years of frustration among House Republicans after losing the majority in 2006. They believe they have suffered serious mistreatment at the hands of the Democrats and that they have been marginalized in legislative negotiations since they, unlike their Senate counterparts, do not have the procedural weapons to force their way to the negotiating table.

They also complain that Treasury Secretary Henry M. Paulson Jr. has been too quick to bargain mainly with Democrats, led by the House Speaker, Nancy Pelosi of California, and Representative Barney Frank of Massachusetts, not only on this plan but on the stimulus proposal earlier this year, a subsequent housing bill and other economic measures.

The Monday e-mail message, which led to a statement of principles that many other conservatives embraced, became their manifesto. By Thursday, a legislative alternative was circulating, one centered on federal insurance for mortgage assets combined with tax cuts on investment gains. When Representative John A. Boehner of Ohio, the Republican leader, put that alternative on the table at the White House on Thursday afternoon, a verbal brawl broke out, scuttling a grand compromise and forcing negotiators back to the table.

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