The House of Representatives will today pass President Obama's $900 billion stimulus bill, despite the beliefs of many economists that it will do nothing to help the economy, and despite concerns that it's nothing more than an aggregate of the spending wish lists of Washington Democrats, saved up for decades.
And while Congressional leaders are going full steam ahead, some House Democrats are starting say publicly what others have been saying privately for weeks: this debt spending package is not going to solve the problem, and it may actually work against needed legislation in the future. Pete DeFazio told the Washington Post that additional legislation will likely be needed, and worried that "after this initial rush . . . a lot of people are going to begin to wonder about whether we're pushing the limits of our borrowing capacity here." Paul Kanjorski says he'll probably vote against the bill, and that more bailouts will be necessary.
To what is Kanjorski referring? Perhaps to the growing interest of Democrats in a TARP II, which seems necessary if there is going to be a new 'Bad Bank':
FDIC Chairman Sheila Bair is pushing to run the operation, which would buy the toxic assets clogging banks' balance sheets, one of the people said. Bair is arguing that her agency has expertise and could help finance the effort by issuing bonds guaranteed by the FDIC, a second person said. President Barack Obama's team may announce the outlines of its financial-rescue plan as early as next week, an administration official said...
Obama is under increasing pressure to drastically revamp the $700 billion Troubled Asset Relief Program for the ailing industry. While setting up a bank to buy underwater assets is emerging as a favored approach, it could drive up the cost of the rescue in excess of $1 trillion.
Frank told reporters that he would be open to expanding the size of the bailout if the Obama administration "can demonstrate the need for it."
Senate Banking Committee Chairman Christopher Dodd said yesterday he wants to hear more about the bad-bank idea when he meets in coming days with newly installed Treasury Secretary Timothy Geithner.
At his confirmation hearing, Geithner talked about a need for $3-$4 trillion in order to take all the 'toxic assets' off the books of America's banks. We'll soon learn how much additional money the Obama administration believes is necessary to do this -- trillions of dollars, or something less. However, whenever the announcement comes it is likely to dramatically change the current stimulus debate.
