The Bailout Follies: Taxpayers Will Be Forced to Buy the Bad Debt of LOCAL GOVERNMENTS

(By Andy McCarthy, National Review Online) - Orwell must be having a good laugh today. Nancy Pelosi yesterday released a summary of the bailout. Under the heading of "Protection for Taxpayers ..." Madame Speaker includes this whopper (my italics): The scheme "[a]llows the government to purchase troubled assets from pension plans, local governments, and small banks that serve low- and middle-income families."

So in addition to rewarding irresponsible lenders and borrowers, we taxpayers are now to be "protected" by buying the toxic debt of states, cities and municipalities. It's one thing to throw a life-line to the credit industry; local governments, by contrast, have the ability to cut spending drastically or raise taxes if their inhabitants want government services. Elected politicians are then accountable for runaway spending and mismanagement. If Detroit or Chicago is sinking because of big-government policies, that's what the citizens of those cities asked for by voting for Democrats year in and year out. Why should the rest of us be on the hook for that?

Basically, the agreement struck over the weekend with key participation from many of the guiltiest politicos provides no mechanism for valuing the debt that Americans are being asked to assume; places few meaningful limits on the public/private recklessness we will be forced to underwrite; would go into effect right before an election which, if Obama wins, would turn management of the bailout over to a new, big-government administration; and protects not the taxpayers but the defaulters to whom Democrats compelled the banks to extend credit beginning in the nineties (lighting the fuse for today's big bang), while responsible borrowers are denied what would otherwise be available credit and a more honest housing market.

Other than that, it's a great deal.