26 September 2008

An open letter to Change Congress

I support the Change Congress movement, which seeks to sever the connections between Congress and the wealthy lobbyists who fund their campaigns. I was disappointed to receive an email from them today titled "How bad can it get?" In this message, CC lays the blame for the ongoing financial crisis squarely at the feet of Congress, which is itself a dubious claim. They then go on to lambaste Congress for giving $700 billion to "Wall St millionaires" as an example of the utmost folly.

I'm incredibly disappointed that this usually quite sensible organization has got this issue so dead wrong, so I'm posting this letter which I sent to them in response:

Dear Change Congress,

I'd like to write to express my disappointment with the email which you've sent to supporters like myself. I associate the Change Congress movement not only with the goal of severing the connection between monied interests and Congress, but also with a desire for political discourse based on facts instead of scandal.

Your appeal is very misleading about the nature of of the proposed Wall St bailout. You say, "They can never find the money we need for health care or education, but somehow they can write Wall Street a $700 billion blank check." This is a gross misrepresentation. Congress isn't giving $700 billion away, they're using it to buy securities, which can some day be resold. Now it may be true that the eventual sale price will incur a net loss, but it might just be the case that the venture makes a profit. In 1992, Sweden spent 4% of GDP in a similar bank buy-out, but it ended up costing betwen 0-2% of GDP after the assets were re-sold. Surely you should know better than to blatantly misrepresent the truth of this bailout.

Furthermore, you say, "I would happily pay an extra $2,000 for health care for poor children. But $2,000 for Wall Street millionaires? What is wrong with our system?" Notwithstanding the point above that this money isn't being given away, the bailouts are not going to be pocketed wholesale by investment bankers. The purpose of the bailout is to inject liquidity into the lending markets which will, it is
true, help out the ailing banks, but also help those millions of Americans you mention get mortgages, car loans and jobs generated by companies borrowing to expand their operations.

I support Change Congress to get away from this hyperbolic fear-mongering, so I'm especially shocked and disappointed to see it coming directly from you!

Jeffrey Barrett

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