By Matthew Benjamin
Sept. 25 (Bloomberg) -- More than 150 prominent U.S. economists, including three Nobel Prize winners, urged Congress to hold off on passing a $700 billion financial market rescue plan until it can be studied more closely.
In a letter yesterday to congressional leaders,
166 academic economists said they oppose Treasury Secretary Henry Paulson's plan because it's a ``subsidy'' for business, it's ambiguous and it may have adverse market consequences in the long term. They also expressed alarm at the haste of lawmakers and the Bush administration to pass legislation.
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Some lawmakers are already citing the letter as reason not to endorse the Paulson plan. Today Senator Richard Shelby, a Republican from Alabama, said he has ``five pages of the leading economists in America that wrote to me and the leadership saying the Paulson plan is a bad plan. It will not solve problems. It will create more problems.''
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The structure is designed for the Treasury to be the first line of defense,'' said Levine, who studies organizations and incentives. ``A whole lot of people made money supposedly by putting their capital at risk, and those are supposed to be the first line of defense, that's how capitalism works.'
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Democrats have been slamming this plan for days. This is nothing new. Some reports claiming that Shelby opposes the plan are simply designed to confuse people into believing his opposition is to the negotiated plan and not to Bush's. Shelby isn't innocent either, he gets to scream no deal while toeing the GOP ambiguous line. Republicans rarely act responsibly, and when they see an opportunity to put party first, they take it.
Watch for their "no deals" to be attached to more calls to get government out of the way. In other words, expect them to push more deregulation. They will be pushing their failed philosophy, which is responsible for creating this mess, by appealing to people's fears that the bailout worse than situation that brought about the crisis. Watch as they create a plan that combines bailout (they will not call it that I'm sure) with more deregulation.