We can find plenty of faults in the government's handling of the financial crisis. But sometimes politicians surprise us. To wit, the problematic auto bailout passed the House but was Thursday night, probably putting off congressional action until January. The plan had its merits, but . While Chapter 11 isn't a walk in the park, it's probably more effective and likely way less harmful long term than an ad-hoc federal bailout headed by a car-czar with no auto experience. If there's anyone who could run the Big Three worse than management, it's probably Washington.
Amazingly, another wise move from Congress also surfaced: as well as ease federal pension funding requirements. (The bill, if signed, likely wouldn't take effect until 2009.) RMDs can force investors to sell at relative lows, so it would have been nice if it had been in place this year. But even so, this small concession is an easy, quick move to give investors more control over their assets and incent folks to remain invested instead of artificially forcing sales. We'd like to see more rational moves like that. For instance, how about losing the caps on annual tax deferred savings—wouldn't that be a simple way to stimulate investment? There are plenty of non-invasive methods to attack the crisis head on, yet so far the government has preferred wieldy to aerodynamic.
And true to form, though momentarily encouraged, we soon had plenty to shake our heads at too. As soon as the Senate nixed the auto bailout, the White House and Treasury called the vote a congressional breakdown and may tap . Remember, TARP was intended to stabilize the financial system—which is instrumental to the proper functioning of all sectors—not just rescue any failing company in need of cash. But now, they would recapitalize failing businesses—that aren't banks—in the face of a clear "no" vote by the legislative branch. Sadly, in today's political climate, whether it's by renewed congressional effort or a dip into TARP, it's still possible we'll send public money to Detroit anyway.
And hence, balance is restored—some good action, and plenty of ill-advised. Just about what we've come to expect from Washington.
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