Congress' fiscal conservatives declare free market 'dead'

WASHINGTON — Fiscal hawks who dominate the Republican Party's conservative wing have watched in dismay as President Bush, presidential candidate John McCain and Republican leaders in Congress fall in line behind a federal rescue mission of historic proportions.

Almost overnight, Republican lawmakers who came to Washington vowing to slash Big Government are powerless to stop what could be one of the largest government expansions since the Great Depression.

Sen. Jim Bunning, a Hall of Fame pitcher-turned-senator from Kentucky, threw a knockdown pitch Friday from the crumbling mound of fiscal conservatism.

"The free market for all intents and purposes is dead in America," Bunning said.

Treasury Secretary Henry Paulson acknowledged that the Wall Street rescue plan will cost "hundreds of billions" of dollars.

Sen. Jim DeMint, a South Carolina Republican who has railed against government spending since joining the Senate in 2005, thought that estimate was low.

Decrying "this socialization of risk," DeMint said, "What we need now is not what could be nearly a trillion dollars in new taxpayer bailouts, but pro-growth policies that allow our markets to correct and start growing again."

For DeMint and other anti-spending politicians, the summer of 2008 has been disastrous.

Fiscal conservatives have fumed for months as Washington bailed out investment bank Bear Stearns, took over mortgage companies Fannie Mae and Freddie Mac and rescued global insurer American International Group.

Congress is also weighing a $25 billion loan sought by the Big Three automakers in Michigan.

Those moves are spare change compared with the sweeping series of new steps aimed at averting financial panic and recharging the economy.

"We must act now to protect our nation's economic health from serious risks," President Bush said Friday.

Not all were convinced. Conservative columnist Michelle Malkin lambasted "the mother of all bailouts" and declared "the death of fiscal conservatism."

Malkin scolded her readers who were blaming the crisis on the Democrats who took control of Congress in the November 2006 elections.

"This is your Bush legacy — not Pelosi's, not Reid's, not Obama's," Malkin wrote, naming the leaders of the House and Senate and the Democratic presidential nominee. "Fiscal conservatism has been on life support for quite some time. Bush/Paulson pulled the plug permanently today."

McCain, the Republican presidential nominee, now backs increased government regulation with a huge price tag that contradicts his career-long stance against excessive government spending.

Events moved so fast this week that McCain opposed the bailout of AIG on Wednesday but backed it by Thursday.

Thirty-one House Republicans sent a letter to Paulson and Federal Reserve Chairman Ben Bernanke, asking them to stop using federal funds to save private firms.

"These massive federal bailouts have exposed taxpayers to literally tens of billions of dollars of new risk," they wrote.

Among the letter's signers were Reps. Tom Feeney and Connie Mack of Florida; John Doolittle and Darrell Issa of California; Jerry Moran of Kansas; Jeb Hensarling, Louie Gohmert and Sam Johnson of Texas; Virginia Foxx and Sue Myrick of North Carolina, and Thad McCotter of Michigan.

"Government can't just continue to put the taxpayer on the hook for paying for everything," said Myrick, who has one of the strongest records of voting against federal spending.

As the political freight train of the financial-services bailout hurtled forward, the fiscal conservatives' appeals could barely be heard.

On the campaign trail in Minnesota, McCain said "an inexcusable lack of financial transparency allowed Wall Street firms to engage in reckless behavior that padded their profits and fattened executive bonuses when times were good."

Behind the scenes, McCain economic adviser Douglas Holtz-Eakin said that the Republican presidential candidate would support the rescue plan being hammered out by Bush, his financial team and congressional leaders.

McCain "welcomes all proposals that reasonably address this crisis," Holtz-Eakin said.

(Halimah Abdullah and Lisa Zagaroli of the McClatchy Washington Bureau contributed to this article.)


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