For what may be obvious reasons, we don't often quote Warren Buffett, the renowned expert on financial matters who also happens to be chairman of The Buffalo News. Today we will. This is what Buffett had to say Wednesday about the economic crisis that the House of Representatives has thus far been unable to comprehend:
"This really is an economic Pearl Harbor," he said on the "Charlie Rose" show on PBS. "That sounds melodramatic, but I've never used that phrase before. And this really is one."
Follow that analogy. One day after Pearl Harbor, Congress declared war on Japan. More than a week after the declaration of this crisis, the ideologues in the House of Representatives are posturing, as though this unfolding catastrophe were an exercise in PoliSci 101.
A majority of House members declared on Monday that they would rather wipe out the American and world economies than take the only actions available -- however regrettable they may be -- to preserve jobs, homes, retirement accounts and everything else that flows from a functioning economy. Among those "nihilists," as conservative New York Times columnist David Brooks labeled them on Tuesday, was one Western New York representative, Rep. Randy Kuhl, R-Hammondsport, whose district reaches into the western end of the Southern Tier.
Today, the House has a chance to get it right. House members can hold their noses if they need to, but in their expected revote, they should follow the example of the Senate, which overwhelmingly approved the $700 billion bailout on Wednesday. They might also offer a prayer that their foot-dragging hasn't made matters worse.
That's a real possibility. No one knows for sure what it will cost to relieve the economy of hundreds of billions of dollars in bad debts and, equally important, to restore psychological confidence in the financial system, but there is a belief that the longer it takes Congress to act, the higher the bill will be. If this ends up costing even more than $700 billion, the House's economic martinets may be to blame, at least in part.
The bill approved by the Senate and sent to the House is somewhat different from the bill that the House spurned on Monday. In an effort to attract more Republican and Democratic votes, the bill now includes $150 billion in tax breaks and a temporary increase to $250,000 in the maximum deposit covered by the Federal Deposit Insurance Corp. The current maximum is $100,000. If it seems a shame that House members have to be bribed to save the economy, it's better than the alternative, which is grim, indeed.
"In my adult lifetime, I don't think I've ever seen people as fearful economically as they are now," Buffett said.
There is, potentially, a bright side to this debacle. As Buffett also observed, for their $700 billion investment, American taxpayers could be salvaging assets that are actually worth around $2 trillion. With expectations that much of this investment could be repaid, there is the possibility that the bailout will not only rescue the economy, but even make a profit for taxpayers.
In any event, except for economic suicide, no other choice exists. President Bush said on Thursday that the shrinking credit market is already threatening the existence of small businesses -- constituents of the same myopics who couldn't see the forest for the trees on Monday.
This is a blood-letting. The House needs to act.