Bailout Gains Should Be Used to Pay Down Debt, Sununu, Gregg Say
SUNUNU
New Hampshire Union Leader
Jenny Paul
Boston University Washington News Service
9/24/08
WASHINGTON—The government’s $700 billion bailout proposal should include a provision to make sure that revenues from the program are used first to reduce the national debt, not to boost spending, New Hampshire Republican Sens. John Sununu and Judd Gregg said Wednesday.
The rescue plan would authorize the government to buy and eventually resell troubled mortgage-backed securities.
Gregg said he is circulating a proposal to ensure that returns on government investments won’t be spent on new initiatives or “pet programs.” He said the proposal has been “well-received” by the Senate leadership.
If the government spends $700 billion but makes $800 billion, Gregg said he would like to see the $100 billion profit go to paying down the federal debt, but would be open to allowing the profit to be used for other purposes.
“My druthers would still be to pay down the federal debt with anything you made here because we have a lot of debt,” he said. “It would be a constructive use of the money.”
Separately, Sununu said in a conference call, “Gains should be used to pay down the debt, not increase government spending. I think we need that kind of a commitment and a guarantee so that again taxpayers know that they’re being put first.”
The provision would show taxpayers that the government is committed to putting their interests first, said Sununu. He said oversight mechanisms also should be added to the rescue plan to protect consumers.
“Oversight is the best place to start, to look at ways to get the Government Accountability Office or an independent overseer involved in keeping track of the program, how it’s structured, the prices it’s paying for securities and, of course, whether taxpayers’ interests are being protected,” Sununu said.
Sununu said he is not opposed to restrictions on compensation for the executives of companies involved in the bailout and would look at specific proposals and “give them a fair consideration.”
“I think there’s a strong argument to be made for doing that when the government is stepping forward to provide capital directly to a firm that’s in distress,” he said. “The government should not be in the business of telling companies what they can and can’t pay employees as a general point, but if the government is stepping forward to save a company, to inject capital, as we did in the case of AIG [American International Group] or Fannie Mae, I think it’s certainly appropriate to raise the issue and to make any assistance conditional.”
Sununu said congressional leaders want to consider bailout legislation by the end of the week. The plan is likely to be introduced in the House and then taken up in the Senate if the House passes it, he said.
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