The March on Capitol Hill

10/10/2011 10:15 am EST


Terry Savage

Author, The Savage Truth on Money

Protesters are focusing their ire on Wall Street, and there’s little wonder, although most of the issues this country faces were created about 200 miles due south, writes personal finance expert Terry Savage.

The “Occupy Wall Street” movement is picking up steam, as discontent over job losses and foreclosures is pointed at the banks and financial institutions most directly associated with the economic slowdown.

Now perhaps it’s time for another target: Occupy Congress. They’re just as much to blame for this mess as anyone.

But Congress is a moving target, not a sitting duck like Wall Street. And just as Congress is divided along party lines, they’ve learned how to divide America. So instead of finding our target, we find ourselves shooting across the line at each other—while Congress goes on recess!

Targeting Wall Street
The financial sector is an easy target. They made the mortgages, so their names are on every monthly coupon—as well as the foreclosure documents. They have “recovered” because they can pay depositors low interest rates, and charge much more for loans. And they can impose fees, dodging legislation designed to “protect” consumers.

Most offensive of all, they received a huge, taxpayer-funded bailout amidst headlines of impending disaster. And once saved, they became stingy with loans to small business and individuals.

Instead, they have been building hoards of cash for the next crisis. After all, bad loans got them in this shape in the first place. We did want them to learn a lesson so we don’t have to bail them out again.

But paying big salaries and huge bonuses while sitting on piles of cash does have the feel of rubbing salt in the wounds of ordinary Americans.

The rallying cry of the “Occupy Wall Street” movement has been: We bailed you out; where are you when we need help?

Maybe we should ask that same question to Congress. Because as egregious as the behavior of Wall Street may be, it was encouraged by the incentives created by Congress. Both parties, over the past few decades, have responded to political pressure from the powerful.

It was Congress that encouraged Freddie Mac and Fannie Mae to guarantee mortgages without down payments or documentation. The idea was to encourage housing for all.

Look where that got us. Not only those who shouldn’t have had them in the first place, but millions of others, are now losing their homes.

Why were so many so vulnerable? Because in the late 1980s, Congress decided that interest on consumer debt would no longer be deductible, thus encouraging the use of tax-deductible mortgage debt and the creation of home equity loans.

Every action taken by Congress has a consequence—and not all of them are examined or apparent at the time our laws are passed.

Occupy Congress
We Americans will have our chance to “Occupy Congress," since the entire House and one-third of the Senate will be up for election in 13 months. And between now and then, there will be plenty of opportunity to influence their actions. Or at least, to try to get Congress to act, instead of digging in their heels.

The debt ceiling fiasco of last summer is too likely to be repeated as we face more deadlines in the coming months. Here are just a few of them:

  • Joint Special Committee Deadline: The Joint Special Committee will soon present its ideas for long-term Federal budget reform. And both the Senate and the House are required to have an “up or down” vote on the proposed package by December 23—or huge, automatic spending cuts will be triggered.
  • US Postal Service Bankruptcy? Next year, the US Postal Service, with over 600,000 employees, will run out of cash to make its payroll. An act of Congress will be required to keep the Postal Service running, setting up another Washington showdown. With an $8 billion gap, and jobs on the line—as well as retiree benefits in question—Congress will have another chance to step up and craft a compromise. Or duck and watch the country face a postal shutdown.
  • Bush Tax Cut Expiration: The Bush tax cuts will expire at year-end 2012, unless Congress acts to extend them. Whatever your politics, the last thing this economy needs is a tax increase on the horizon. And doing away with the Bush tax cuts will hit the middle class hard, as the dreaded Alternative Minimum Tax comes back in full force.
  • Debt Ceiling, Again: Politicians—both sides of the aisle—have managed to push the debt-ceiling issue out into the future—specifically until 2013, when a new Congress will have to deal with it. Will we go through this entire fiasco again?

Divide and Conquer
You’ve heard the old saying: "Divide and conquer." It’s a strategy for victory in any war.

And now that strategy is being turned on us, the American people. Our politicians are dividing us—and the result will be a loss of our liberties and our free-enterprise system.

Let’s unite to turn the tables. Let’s Occupy Congress! Let’s gather intelligent people on both sides of the political spectrum to come to rational solutions for our problems.

It’s easy to “Cccupy Congress.” All we have to do is demand leaders who confront problems, instead of pushing them into the future. We need to elect leaders who unite, instead of divide. We need leaders to solve the problem, not contribute to it.

That’s the only way to get our economy growing again, to create jobs and prosperity. And that’s the Savage Truth.


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