Last week, thousands of phone calls, letters and emails came into my office and those of my colleagues–so many that House websites crashed more than once.
The issue on the minds of almost every constituent: the economic rescue package.
I’m not happy with the legislation we voted on last Friday. And from a tabulation of the calls, Northern Virginians aren’t either. My judgment, however, is that the consequences of inaction would have far outweighed the bill’s cost.
By virtue of the policies of deregulation — the idea that the government which governs least governs best — our economy stands on the verge of collapse. While no silver bullet, the best minds in the financial world believe that this short term solution may be able to avert an economic disaster not seen since the 1930’s. Make no mistake, this is no quick fix. It will take time for the U.S. Treasury to implement the rescue package and begin purchasing the toxic mortgage-backed securities that have contributed so heavily to the financial mess we’re in. Further, the next steps to economic recovery require a new administration working closely with Congress to develop a new regulatory framework that provides proper government oversight without intervening detrimentally into the market.
While much of the debate early-on focused on Wall Street, the American people are now beginning to more fully realize the negative economic impact our frozen credit markets are having on the economy. Students are being denied private loans to pay for their education. Small businesses are being refused the necessary short term credit to stock the shelves and meet payroll. Qualified individuals are being rejected for home loans. And everyone’s 401K retirement savings are deteriorating, witnessed dramatically as the Dow Jones Average dropped below 10,000 this week.
As of this writing, the Federal Reserve has taken some of the funding in the rescue package to create an entity that will purchase “commercial paper,” the short-term debt that funds the daily operations of not just banks and ordinary businesses to purchase inventory and meet payroll, but also the City of Falls Church and Commonwealth of Virginia to ensure there is no disruption of critical services. The hope is that by providing a federal backstop for short term credit markets, much of the uncertainty causing banks to horde money will decrease and normal lending operations will resume. Congress is monitoring the Federal Reserve closely throughout this process. We may even come back into session after the November 4th elections to deal with further problems as they may arise.
The coming weeks and months promise to be very trying for our nation. The next President and next Congress will face a multitude of economic issues; in many ways charting uncharted waters because international markets are more intertwined today than during economic downturns of the past. I appreciate the feedback provided by so many of you over the past week and know that you will continue to let me know of your news and concerns in the months ahead as we work to get our economy moving in the right direction.