Congress tackles bailout's bottom line
Proposals for rescuing financial institutions go to Congress this week, but lawmakers worked through the weekend to get a head start. The budget deficit is expected to balloon. Danielle Karson reports.
U.S. Capitol Building (Paul J. Richards/AFP/Getty Images)
More on The Economy, Taxes, Wall Street, Politics, Fed. Budget/Govt. Spending, America's Financial Crisis
TEXT OF STORY
Stacey Vanek-Smith: Lawmakers have been burning the midnight oil this weekend to hammer out the details of that $700 billion plan to save financial markets. Big fights are reportedly shaping up over bankruptcy laws and capping executive pay. Proposals for rescuing financial institutions go to Congress this week. Some analysts say the bailout could add billions to the federal deficit. Danielle Karson reports.
Danielle Karson: Mopping up Wall Street's bad assets may provide a more permanent solution to the financial crisis. But it also adds red ink to the federal government's balance sheet.
Bob Bixby: We're looking at a baseline deficit of over $500 billion for next year. And with the figures being tossed around now, that would be an astounding deficit of a trillion dollars.
Bob Bixby is with the Concord Coalition, a government watchdog. As Congress drafts a plan to shore up financial markets, Democrats may put up a fight to divert some of the money into another stimulus package. But Bixby says that creates another problem.
Bixby: Congress is going to have to take actions elsewhere in the budget to try to mitigate the effects. Everything Congress is thinking about doing, from tax cuts to a new stimulus program, is going to potentially add to the deficit even more.
And Bixby expects a bigger deficit and the interest charged on that debt will drive up interest rates.
In Washington, I'm Danielle Karson for Marketplace.
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From Gilroy, CA, 09/24/2008
Bottom line is we should not bail out those people who got the mortgages. They new interest only loans was not sensible. They got their huge houses and now we are gonna pay for them to keep them. They could have easily taken the same loan for a cheaper house and be fine right now. This is wrong!!!!
From Washington, DC, 09/23/2008
Where do your sources come from? I would also like to what information as a high school students and future college freshman that i should know about the economy and governtment?
From Rochester, IN, 09/23/2008
My husband and I are in our mid-twenties who are both driving an hour to and from work just to pay our bills. On top of paying for gas in our vehicles, we see money coming out of our paychecks left and right for taxes, social security, and 401Ks. We will most likely never see social security and we are loosing money in our 401Ks...Who's bailing us out??? I am outraged that we have to work so hard to bail out the greedy executives on Wall Street when we are on our own. It seems that the bailout would be a double edged sword as well...Congress says it will help keep us out of a recession, but from where I am standing it's causing a lot of people to loose confidence in the market. The #1 thing I hear colleagues and friends say is that they are tired of loosing money on their 401K and they are going to pull their money out. Now what good will that do?
From littlerock, AR, 09/22/2008
7 billion dollars? If i understand right we are buying a lot of bad debt, so why cant we call it good debt. What if we put people back in there houses for 25 precent of the deed holders income? Sudenly some of that debt is not so bad. And mabee people never pay there home off, but atleast they retain an afordable home. And i bet most will eventaly make good on there lones given the chance.At the very least it would shave that 7 billion down a little.
From Winston-Salem, NC, 09/22/2008
The current madness over “reforming” our financial system is misplaced. Please read this article, “How to Save the Financial System”, from the September 19 Wall Street Journal.
http://online.wsj.com/article/SB122178603685354943.html
It is vital that we fix the SOURCE of the problem, rather than throw taxpayer money at it.
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