A group of conservative congressmen will unveil an alternative to the Treasury Department’s Wall Street bailout plan on Capitol Hill today.
The Republican Study Committee, a backbenchers club for conservative Republican congressmen, will call for a two-year suspension of capital gains taxes, a suspension of mark to market accounting and the privatization of Fannie Mae and Freddie Mac. Most dramatically, they propose that the Federal Reserve focus on the stability of the dollar and inflation fighting, along the lines of the European Central Bank. They would repeal of the Humphrey-Hawkins Full Employment Act, which requires the Fed to balance monetary stability and the goal of full employment. Although the dollar rose against the euro today, in the past five days it has suffered its greatest decline since January 2001.
Despite the call for a repeal of Humphrey-Hawkins and a suspension of mark to market rules, the scale of the proposal is far less grand than the Treasury Department’s or the plan being formulated by Capitol Hill Democrats. For the most part, it simply echoes traditional Republican themes and does little to address the immediate concerns of a financial meltdown that many believe will ensue if the mortgage mess/credit crisis/capital shortage is allowed to continue. It also lacks support from the Republican leadership in the House, which Washington insiders believe signals that the Republican congressional leadership will go along with the Treasury Department’s plan.
