Wall Street Golden Spoon: Boucher Yes, Davis No

One congressman’s bailout bill is another’s financial lifeline.

Take U.S. Reps. David Davis, R-Tenn., and Rick Boucher, D-Va., who split their votes Friday on a $700 billion measure aimed at freeing the flow of credit through a government buyout of bad loans.

Both area congressmen voted again Friday as they had on Monday, with different overall results.

“This is a necessary step. It is a responsible step. It will restore confidence in our credit markets and assure they flow smoothly and do so in a way that will not result in the taxpayers losing money,” Boucher said in a telephone interview minutes before voting for the bill.

The Southwest Virginia congressman noted the government will recoup its money within five years, or else a provision in the bill will force financial services firms to ante up the difference.

Four days after the initial House vote failed, Boucher said he saw a sea change in public attitudes. Many constituents who opposed the bill earlier this week changed their minds, he said.

Not so in Davis’ district, the Tennessee Republican said, noting that his constituents continued to oppose the bill by more than 9-1.

“Make no mistake about it, this legislation provides a taxpayer-financed bailout of those who have acted irresponsibly,” Davis said in a written statement. “It federalizes and socializes another sector of our economy, fundamentally changing yet again the federal government’s role in the private economy.

“And, most importantly, this bill does nothing to address the problems that led to this financial crisis in the first place,” Davis said.

In a short telephone interview before casting his no vote, Davis said the revised bill was an improvement, but not enough to draw his support.

He applauded the provision that raises the Federal Deposit Insurance Corp. insurance limit on bank accounts to $250,000 from $100,000, but noted the legislation raises the national debt ceiling to $11.3 trillion.

“That is something taxpayers in the future will have to deal with,” said Davis, who leaves office in January after losing the GOP primary to Phil Roe.

Boucher defended the estimated $150 billion in additional tax incentives and earmarks the Senate added to the bailout/rescue bill two days earlier. He said the legislation simply extends the tax breaks that Congress approves every year.

“The merits of those benefits [earmarks] have long been debated and accepted,” said Boucher.

One of the earmarks will have a significant benefit to Southwest Virginia, he said. Schools in rural U.S. counties that contain huge tracts of nontaxable federal land once again will receive billions of dollars in federal subsidies, which the Bush administration stopped in 2006. In Boucher’s 9th District, the big beneficiaries will be Bland, Lee and Scott counties. Rural school districts count on that money, Boucher said.

In addition, the legislation extends tax credits for the development of clean coal and such energy alternatives as wind, he said.

Davis said he understands the severity of America’s financial crisis but noted that the bailout bill was “hoisted” on taxpayers without the consideration of better, cheaper alternatives.

For example, he said, the Securities and Exchange Commission could have acted without congressional approval to rewrite onerous accounting rules and to limit the self-fulfilling practice of investor short selling – or betting against a stock and thus driving down its value.

“The plan considered today rewards or bails out investment groups who made poor decisions at the expense of those who acted responsibly,” Davis said. “Furthermore, it transfers the burden of these poor decisions onto the honest taxpayers who have made prudent financial decisions, lived within their means, and budgeted responsibly.”

Reporter Mac McLean contributed to this report.

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