Udall, Schaffer agree something must be done

But two part ways on best course to take on package

By Ed Sealover, Rocky Mountain News

Published September 25, 2008 at 12:05 a.m.

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Mark Udall and Bob Schaffer agree that major changes must be made to the proposed economic bailout package, but Colorado's U.S. Senate candidates differ wildly on what those alterations must be.

Udall, the Democratic congressman from Eldorado Springs, said he can only back legislation that concentrates more on helping average Americans and less on helping big Wall Street firms. He wants to add measures to keep people who are on the brink of foreclosure in their homes and to set a time limit on how long the government will buy bad assets from private companies.

Schaffer, the former Republican congressman from Fort Collins, says a $700 billion package focused only on the government buying risky assets and providing bailout money will drive inflation through the roof. Congress must add economy-stimulating measures such as a reduction in investment taxes and a holiday on the repatriation tax to avoid a complete recession, he said.

Both men agree something must be done, however. Even Schaffer, who is usually in favor of keeping government out of the free market, said that because Congress has made this mess, it has to dig itself out.

"It would be a mistake to adjourn without doing anything. It would hasten a recession," said Schaffer.

The blueprint for the bailout involves the government buying hundreds of billions of dollars in bad assets from banks and other financial institutions that have seen the value of their mortgage- security assets evaporate. Republicans and Democrats also have agreed that there must be a board to oversee the purchase and resale of those assets.

Udall, who said his vote "is not a given," thinks Congress must go further to provide relief for homeowners with bad mortgages.

The bill should include encouragements for financial institutions to renegotiate mortgage policies and financial counseling for people facing foreclosure, he said. He also wants to look at the idea of allowing judges to rewrite mortgages, but that could be dealt with in another bill, he said.

Congress must retain oversight of the treasury secretary's buyout and should get regular updates, Udall insisted. And while it will be up to the next Congress and president to overhaul the financial regulatory system, this bill must outline a road map on how it will get there, he said.

"Clearly this is a laissez-faire attitude that's run amok and, as somebody quipped to me, now we have laissez-fail," Udall said.

Schaffer is confident, too, provided that the bill contains provisions that allow the market to right itself.

The proposed bailout coupled with those already put in place will saddle taxpayers with a $1 trillion burden, he said. This was necessary because the government has pushed credit limits to irrational levels to get more people into housing, he added.

Americans won't see tax bills rise but will see costs of everything else go up to the point where each family is paying $11,000 for the package now being considered in Congress, he said.

Therefore Congress must stimulate the economy as well as pump money into it, Schaffer said, adding that can be done by reducing investment taxes or capital-gains taxes.

And there needs to be a holiday on the repatriation tax - a roughly 40 percent tax on American corporations with overseas holdings when they bring those holdings back into the U.S., Schaffer said.

Other views

Third-party candidates weigh in on the bailout:

* Green Party Candidate Bob Kinsey says the current package proposal "stinks," equating it to a blank check for the financial gamblers who caused the problem. He supports ending foreclosures and rewriting them to make them affordable, adding a 10- to 20 percent tax to anyone making more than $500,000 a year and requiring the government to have equity in any company receiving bailout money so that some future profits come back to the government.

* Independent write-in candidate Buddy Moore says the financial market collapse is a result of the government allowing easy credit years ago as a smokescreen to distract people from an unpopular war. He would not support any type of immediate bailout but would investigate what led to this situation, he said.

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