The Baumgarten Report

Last night, Pres. Bush made an impassioned plea in an address to the American people for swift action on his Wall Street bailout plan. Which he says needs, and is getting, bipartisan support.

The president used dire language to underscore the need for quick action. Asserting that the “entire economy is in danger.”

He needs to sell the $700 billion plan to the American people, because so many citizens are phoning and writing their representatives saying they are opposed to it. And many, on both sides of the congressional aisle, are expressing reservations.

A poll suggests that about one-third of Americans support the plan. One-third oppose it. And the final third are confused about it and undecided.

Among those not confused are 166 economists from colleges and universities across the United States who are in the second third, and are staunchly opposed.

They’ve signed a letter addressed to the House and Senate, explaining why it’s not good for the nation.

While they agree with Treasury Secretary Henry Paulson’s assessment that the current financial situation is “difficult” and there is need for “bold action” to ensure that the economy will continue to function, they see three “fatal pitfalls” in his plan.

First, they say in their letter, it is unfair.

“The plan is a subsidy to investors at taxpayers’ expense,” they write. “Investors who took risks to earn profits must also bear the losses.”

This is a theme that’s oft repeated by non-econonomists, regular Americans who are wondering why they have to foot the bill. Why give money, their money, they ask, to the very people who created this mess? And what about the victims of these bad lending decisions? Those who face foreclosures on their homes? No one is offering to bail them out.

The economists suggest in the letter that it’s possible to make new loans to creditworthy borrowers without bailing out institutions whose choices “proved unwise.”

The economists also feel the Paulson plan is ambiguous.

“Neither the mission of the new agency nor its oversight is clear,” they write.

Finally, they argue, the plan fails to address long-term effects, which, they note, will be with us for generations. “For all their recent troubles, America’s dynamic and innovative private capital markets have brought the nation unparalleled prosperity,” the letter says.

“Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.”

For these reasons, the economists are urging Congress to slow down the process, hold hearings and “carefully consider the right course of action.”

This is a point we all can agree upon. The administration, for some reason, is trying to to ram this down the nation’s throat.

“The government’s top economic experts warn that, without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold,” Bush said last night.

Immediate action. That’s the advice of the government’s top economic experts.

The 166 economists who signed the letter to Congress would beg to differ.

The bailout plan will be the topic on today’s News Talk Online on Paltalk.com at 5 PM New York time. CLICK HERE to join in the conversation.