The U.S. House of Representatives voted against a proposed $700-billion financial bailout plan yesterday, hampering federal legislative efforts to reinvigorate struggling financial institutions in the midst of serious economic troubles.
The bill fell by a narrow margin of 228 against and 205 in favor. If it had passed, the bailout would have authorized the Treasury Department to infuse a vast amount of capital into the troubled economy in an effort to stabilize credit.
“It’s back to the drawing board,” said Daniel Keyserling, deputy communications director for the University Center for Politics. Keyserling, who also formerly served as executive editor of The Cavalier Daily, said he thinks Democrats and Republicans alike will soon be in discussions to find another, modified solution to the economic crisis.
“Both parties left this week with the idea that something must be done,” he said. “What that final version will look like — your guess is as good as mine.”
Rep. Virgil Goode, R-Va., who represents Virginia’s Fifth District, including Charlottesville, was among the majority that voted against the bailout. He released a statement yesterday explaining his belief that authorizing loans to those with little hope of repaying them “may be politically correct, but it is not financially correct.”
Goode also stated that he does not believe taxpayers should bear the responsibility of funding the legislation and that he believes alternative means of generating capital for banks would be preferable.
“Under the legislation put before the House, taxpayer funds from the United States could be used for payments directly or indirectly to foreign banks,” Goode stated. “The calls and communications from citizens in the Fifth District were strongly against the measure.”
Rep. Jim Moran, D-Va., who represents Virginia’s Eighth District, located in part of Northern Virginia, disagreed with Goode’s sentiment. He voted in favor of the bill, according to his press secretary Austin Durrer, because he believed the stimulus plan would be effective and benefit the economy.
“We’re hopeful that we can get some sort of package together for Thursday,” Durrer said, adding that he believes after yesterday’s 777-point drop in the Dow Jones Industrial Average — the largest single drop in U.S. history — there will be support for such legislation.
“Hopefully the downturn we see in the market will spur more Republicans and Democrats to change their positions and vote in favor of some bailout package,” Durrer said.
Keyserling, though, said he thinks some congressmen perceived the proposed bailout as a threat to economic freedom. He said others may have felt that House Speaker Nancy Pelosi politicized the issue unnecessarily by pointing a finger of blame at the Republican Party for the nation’s economic problems.
“It is as much a political issue as it is an issue of policy,” Keyserling said, noting that the factors contributing to the vote’s outcome go beyond simple economics.
A larger percentage of Democrats supported the bill than Republicans. Keyserling said Pelosi’s speech added polarity to the issue that may have affected the bill’s ability to gain support.
“This is an incredibly complex and unprecedented issue and solution,” he said, adding, “I don’t think either side is entering into it lightly.”
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