A Trillion More in the Red: Where Do We Go from Here?

Now that the Federal Government has stuck us, our children and our children's children with over a trillion dollars in new debt to bail out the financial industry and is well on its way to collectivism and mercantilism, we probably should ask ourselves, How do we clean up this mess? We should already know that it is our generation's battle to get government and its politicians and regulators out of the economic distortion business. As the problem has political, economic, and monetary aspects, we know we have a large job ahead of us. But what can we do now to both further the healing process and provide some security to future generations? How can we ensure that our children and grandchildren do not grow up with near insurmountable debt and government gone wild shackling their futures?

It will not be easy; no politician or industry leader is likely to voluntarily step up to the job of identifying the causes and culprits, nor implement the strict fiscal restraints required to truly fix these problems. As always, it is up to the American people to do the hard work; as Jefferson said: '[we must] set them right as to facts, pardon & pacify them.' When aroused, the American people--just as we did with the McCain-Kennedy immigration bill--can still get the politicians to bend to our collective will. If we can simply unite to get but a single piece of legislation introduced and passed, that legislation needs to require: One, the establishment of a Sub-prime Lending Crisis Commission; Two, sequestering from the General Treasury all funds that accumulate as a result of the bailout; and Three, all sequestered funds must only be used to pay down the Federal debt.

Such legislation will accomplish several positive goals: first, it will prevent our profligate, political leadership from simply spending the proceeds on whatever special interest group is currently critical to their re-election. Never doubt that they will if we let them. Second, it will remove some of the debilitating consequences of our fiscal irresponsibility off the backs of future generations; and finally, it will give clear guidance on what policies to avoid in the future. The sequestration elements of the bill are rather straightforward and are intended to mitigate the impact on future generations, and thus require little explanation. The Sub-prime Lending Crisis Commission, is complex and critical to understanding what got us into this mess and what should be avoided in the future. If structured improperly, the results of the Commission could lead America down the same failed policy paths in the future.

A rough outline of a successful Sub-prime Lending Crisis Commission would be similar to the structure of the 9-11 Commission or the Church Commission with some tweaks. Since political and regulatory manipulations of the economy are deeply seated in the problem, every effort must be made to isolate the Commission from undue political influence. With this caveat in mind and taking into account the political, economic and monetary components of the problem, I suggest the following basic criteria for this Commission: A nine member Commission selected as follows: One each by the House Majority and Minority Leaders and the Senate Majority and Minority Leaders; two by the President; two by the Federal Reserve Chairman; and one by the Supreme Court Chief Justice. The appointees cannot be sitting politicians or Federal government employees, and must have directly applicable credentials in the fields of finance, accounting, economics, monetary policy, or regulatory law; each field must be represented. The Commission will have subpoena power. All hearings will be open to the public and made available for live, unedited broadcast. The full Commission will be established within 30 days of the effective date of the legislation. A final report--with recommended corrective measures--will be submitted for publication within 240 days of establishment, unless a 2/3 majority of the commission votes to extend the deadline. In no case can the final report be submitted for publication later than 360 days from the initial establishment date. The Commission will elect its own chair and vice-chair from within the Commission membership.

This legislation will not 'fix' the systemic problems; it will however, give us the information we need to insure that this type of failure does not happen again. It will allow this generation to pay for its mistakes and not saddle our children with them. If we can keep it simple--prevent the festooning with pork projects which turned the original three-page bailout bill into a 450-page special interest monstrosity--future generations will thank us.