bailouts big and small

After stepping in to rescue progressively heftier Wall Street giants - Bear Stearns, Frannie Mae & Freddie Mac, and AIG - the Fed turned to Congress asking it to okay a bailout to - hopefully - end all bailouts. Congress complied in early October '08, greenlighting the Fed to give up to $700 billion (to be given in three installments) to ailing financial firms.

Although the bill looks like it's a bailout for irresponsible financiers, the rationale behind injecting money into Wall Street is that it will ward off a credit freeze - which could push us all into a deep recession. With financial firms spooked by toxic securities, they are increasingly worried about extending credit to other firms; a credit freeze on Wall Street eventually translates to dried up credit for the rest of America. By cushioning the cash flow of weak firms, however, a bailout hopes to give Wall Street the confidence to start lending again.

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08 Stimulus

With signs that the fracturing real estate market was putting a damper on the economy, Congress passed a $152 billion stimulus package in early '08. It may sound like chump change when compared to the nearly $800 billion Congress pumped into the economy in early '09, but that doesn't mean the package wasn't heatedly debated. Below is an archive of that debate.

the debate over the '08 stimulus

Not all economists agreed a stimulus package was necessary (or would be effective). For those gung-go on an immediate boost, however, "targetted, timely and temporary" was the going mantra on Capitol Hill - getting cash to consumers and producers as soon as possible and with the biggest bang for the buck. Still, there were different schools of thought on what were the best ways to target cash back into the economy.

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big three facts

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the current economic "situation"

When cJ first penned this page we were worried about sounding too doomsday-y, lest our alarmism add to the fear cycle that leads to economic collapse. No point in worrying about that anymore. There's little doubt the global financial world is in seriously bad shape these days - and there are few economists who think we aren't in a deep recession - but how deep is still an open question.

The Treasury, the Federal Reserve (the US's lending arm which tries to keep the economy on an even keel) and Congress got an early start in intervening in the economy in ways they hoped will cushion the crash - although critics say many of their interventions were too little, too late, and too confused. Through interest rate tweaks, stimulus plans, heavy lending, new regs and bail-outs big and bigger they're hoping to give the economy enough bounce to keep the crisis from turning to catastrophe.

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the diff: The Economy

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business & economy bills 2008

Bills in Brief

Congress kicked off its year working on an economic stimulus plan, but it could get to other business-related bills left hanging from '07 later in the year.

Housing: With everyone blaming the subprime market for turning the economy sour, Congress started last year looking for ways to keep foreclosures to a minimum while taming the subprime market from future excess. It didn't get far, but this year the pressure is on to wrap up a series of bills introduced last year - from expanding federal loans to making it harder for brokers to sign off on risky loans. See our "Housing Jitters" page for more.

Food and Oil Futures: with gas and food prices on heady upswings, Congress is moving to tame commodities' future markets, which some believe are helping to nudge prices up.

economy booster

what's up

With economists, Wall Street and Americans increasingly leery a recession was on the horizon, DC hustled to put a "stimulus" plan in place to give the economy a little pre-emptive boost in early '08. Congress followed up with a second, mini-stimulus - really just extending unemployment benefits (as part of a war funding bill - WP) - in June '08 and then tossed in another extension for benefits in November. Other measures to shore up the economy - by tossing life lines to homeowners and financial institutions - followed later in the year.

In 09, with worries a recession could become that "d" word, Congress patched together a second - mammoth - stimulus package it passed mid-February.

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This Week on Capitol Hill

The Week of July 13

The floors of Capitol Hill are busy with spending matters this week. While the House churns through two more of its twelve spending bills for fiscal year 2010 - a $33b Energy and Water bill and $24b for Financial Services - senators will wade into lengthy debate over the $690b defense authorization bill, HR 1390. The "authorization" bill doesn't write the check for the military ("appropriations" bills do that), but it does okay what can go into an appropriations bill for next year. One budgetary item that will slow up passage is a $2b allotment for F-22 fighter planes: the Pentagon says it doesn't need the extra planes; the administration doesn't want to pay for them; but lawmakers in the homestates that build F-22s are pushing to buy them anyway.

business bills 2007

Bills in Brief

The new Democratic Congress continues to work on business issues that dogged last year's Congress - at the same time as giving a Democratic twist to new and old issues.