With a slim margin of victory, the new economic stimulus plan passed the senate. The final vote was 61-37 (60 was the required vote to pass). Only three Republican senators voted for the bill (which, incidentally, is three more Republicans than the House bill received).
The Senate economic stimulus is estimated to be $838 billion. According to Republican Senator Charles E. Grassley of Iowa, the bill could actually exceed $1 trillion when interest is accounted for (remember this money comes from somewhere, and after taxes the next source is loans taken on by the government).
The vote today comes on the heals of President Obama’s speech to the nation pressing the importance of getting a stimulus bill passed for fear that further delays could turn into an economic catastrophe for the nation.
The Senate bill now has to go back to the House for approval before it can get to the President to sign. It’s estimated the the President will have a bill to sign within a week or so.
This morning, Treasury Secretary Timothy Geithner unveiled the new bank rescue plan. You can see the details from the fact sheet for the Financial Stability Plan. In the plan Geithner outlines the following:
- Financial Stability Trust – This includes a “stress test” for banks to determine their viability as well better transparency and capital assistance.
- Public-Private Investment Fund – Private funds will be used with public funds to buy up bad assets from banks (you know, the ones the were supposed to be bought up in the first place).
- Consumer and Business Lending Initiative – Increase liquidity in markets by helping to back securities.
- Transparency and Accountability Agenda – Tougher standards and accountability for firms that receive assistance (more economic help and less executive bonuses).
- Affordable Housing Support and Foreclosure Prevention Plan – Keep mortgage rates low and help stem foreclosures.
- Small Business and Community Lending Initiative – Increase lending for small businesses which are now hurt by the credit crunch.
In the words of Geithner: “this comprehensive strategy will cost money, involve risk, and take time.”
Indeed! It doesn’t look like this mess will end soon. There’s also much debate as to what the correct way to fix this is. What do you think?
The Orange Savings Account. Great rates, no fees, no minimums.
Sources: Senate Approves Stimulus Plan; Meet The New Bail Out; Geithner Details New Bank Rescue Plan
{ 9 comments… read them below or add one }
I have mixed feelings on the stimulus bill. Why aren’t they also arresting all those crooks on Wall Street and persecuting them? It’s like they’re just putting more money into their pockets.
Historically, I guess these types of cures have worked. I’m keeping my fingers crossed.
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Grassley (who is my senator!) also said that a lot of the spending measures in the bill are inappropriate because they are not going through the proper channels in order to get passed. I agree with that. This bill should focus solely on job creation and bolstering our economy, not other government programs that, though they may be worthy, have no business being advertised as “stimulating the economy.”
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@ Hannah – I think there may be a bit of the Dems getting what they can in while the getting is good. It’s a shame politics gets in the way.
I think I have to agree with Hannah. There is a lot of excess in here. I’m also really annoyed with the bank rescue. Really, this bank rescue highlights something scary about all this “economic stimulus.” The $800 billion in this bill is just a drop in the bucket. Since December 2007, “economic stimulus” has cost more than $7.2 trillion. Most of “economic stimulus” is not being passed in large packages that the public really hears about. Most of the spending has been broken up in smaller bits, and the true cost is disguised. Most people just think about the big legislative packages of now and in the fall. The reality is much, much scarier.
Miranda’s last blog post..News Round Up: Senate Economic Stimulus and Bank Rescue
@ Miranda – Scary numbers! What could really be done with 7.2 trillion?!?
This bill still has too much pork in it, the Dems did exactly what Obama asked them not to do. Obama knew adding pork would lose the Rep vote. Flippin idiots.
I give it 30 days until “Bank of America” is the nationalized “Bank of America”.
@ Weakonomist – Not sure we’ll see the banks nationalized. The gov’t really doesn’t want to have to deal with that.
I agree with the weakonomist about too much pork. I don’t like the esp being passed right now, but I do think Geithner has a realistic plan. David Brooks wrote a great editorial in the NYTimes about it.
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@ FrugalCPA – I hope that these economists, Geithner included, know what they are talking about! At least this is their profession. But the Dems did put in too much from things I’ve heard.
@ Greener Pastures – It’s not all of the CEO’s fault. It may be a bit more complicated. The gov’t made a push for Freddie Mac and Fannie Mae to back more loans which caused lenders to give more loans. Everyone jumped in on what seemed a sure thing in real estate. The CEO’s did what their shareholders wanted. Not that I agree with that it’s just that it would have been tough for many CEO’s to just say no. Of course if a few did they would look like geniuses! I don’t like that bank rescue money went into the pockets of many executives though. That seems like abuse of the funds.
What’s scary is we haven’t had a period in history that was just like this. In many ways the “experts” are winging it hoping what they do is the best thing. Hindsight will tell us whether they were right.