Paulson Urges Swift Approval of Bailout Legislation
Sunday, September 21, 2008; 1:05 PM
Treasury Secretary Henry M. Paulson Jr. today defended the escalating price tag of his plan to rescue the financial markets, saying it is unlikely that taxpayers will end up paying the full $700 billion the Bush administration is requesting to buy the troubled mortgage assets of crippled financial firms.
Paulson appeared on four Sunday news talk shows to urge Congress to pass legislation immediately authorizing the Treasury to act on its plan. He rejected comparisons of the plan to government spending on the Iraq war or massive programs such as Social Security and Medicare.
"This is not traditional spending. This is money to purchase illiquid assets. Those assets will be held and will be sold" so the government will recoup some of the costs, Paulson said.
"The cost won't be anything like what is put out to buy these investments," he said.
But Paulson acknowledged he does not know what the cost ultimately will be. "We can't determine what the cost is today," he conceded.
Paulson delivered his plan to Congress yesterday with a price tag $200 billion higher than he had estimated on Friday. Democrats have responded well to the plan, although they said they would propose several provisions that could generate opposition from the Bush administration, such as efforts to help homeowners struggling to pay off their mortgages or limits on executive compensation.
Some Republicans, meanwhile, have raised concerns about the sweeping nature of the government intervention to bail out the private markets.
Paulson urged Congress not to load up the legislation with controversial provisions. "We need this to be clean and quick," he said.
Rep. Barney Frank (D-Mass.), also speaking on the Sunday shows, reiterated concerns that corporate executives not profit from the rescue plan. "We have a difference on what's clean . . . ," he said. "It would be a grave mistake to say that we're going to buy up a bad debt that resulted from the bad decisions of these people and then allow them to get millions of dollars on the way out."
But Sen. Charles Schumer (D-N.Y) acknowledged that time was of the essence and Congress could not pack the this bill with other benefits. "We will not 'Christmas tree' this bill," he said. "The times are too urgent. Everyone has their own desires and needs. It's going to have to wait."
Paulson said without action on the plan this week, the credit crisis could quickly affect average Americans.
Last week, "the capital markets were frozen, we had a situation where American companies weren't able to borrow money," Paulson said. "This could ultimately affect small banks, loans to businesses, loans to farmers, jobs, people's retirement."