BY CHARLES McCLURE

Members of the U.S. House of Representatives with constituents in the Lake Travis View readership boundaries were split in support of $700 billion the Emergency Economic Stabilization Act of 2008 on Monday.

The rescue plan, strongly backed by Republican President George W. Bush, had been brokered along bi-partisan lines by House leadership to help credit concerns in the financial markets.

Within minutes of the 228-205 vote, the stock market fell into a freefall, as trading on Wall Street dove to a record single-day loss.

Although the plan was backed by approximatley 60 percent of Democrats, Rep. Lloyd Doggett voted against the majority in his party. Rep. Lamar Smith also bucked the trend of Republicans by voting for the bailout. Two-thirdsof GOP House members opposed the measure.

“Certainly, I want to avoid further deterioration of our economy and return stability to our financial markets as expeditiously as possible,” Doggett said in a statement to the Lake Travis View on Tuesday. “I could not support a $700 billion bailout that placed all the burden on taxpayers for a problem they did not cause and demanded that they bail out the entire world.” 

Doggett said he believed his stand was in keeping with his contituents.

“I heard from many folks in Lake Travis who said they did not want to pay for a mess they didn’t create,” Doggett said. “I continue to work with my colleagues on a more responsible solution.”

Smith said he believed the plan was necessary to avoid a meltdown of the U.S. financial sector.

“Much of our economic crisis today is rooted in misguided policies of the past,” Smith said. “Permitting home mortgages with nothing down was a disaster waiting to happen when home prices fell. Unfortunately, all the bad mortgages and the resulting credit crisis have dragged down our economy and threatened the financial well-being of all Americans.”

Smith said the failure of Congress to approve the package would have an adverse impact on average Americans.

“If companies big and small cannot access funds they need to operate and pay employees, this will adversely impact the entire economy and punish hard-working Americans,” Smith said. “If credit to buy homes, cars and other purchases dries up, home prices will fall even further and loans will become even harder to get.”

Doggett complained to the Austin American-Statesman that the process of drawing up the legislation had “been rather closed.”

“It was all about trying to make the (U.S. Treasury Secretary Henry) Paulson proposal better, rather than to consider whether there were alternatives,” he said. “It strikes me that there are sensible steps that would address market concerns without such a huge cost to the taxpayer.”

Smith acknowledged the widespread dissatisfaction with the proposed legislation.

“Many people felt the original proposal was unfair,” Smith said. “It would have been far more unfair to do nothing and allow a recession to occur, which will hurt everyone. Changes were made to the plan to address those concerns. Measures were successfully included to ensure Wall Street would pay its share and taxpayers were protected.”

Smith said he feared a run on financial markets, similar to the events that precipitated the Great Depression.

“We’re facing the economic equivalent of a cattle stampede,” Smith said. “To stop a stampede, you have to act quickly and decisively and get ahead of the herd to turn it. I think that this plan, while not perfect, would have done that.”

Smith said there was a common misperception among the public that the proposal was designed only to help Wall Street.

“This was not about bailing out Wall Street,” Smith said. “It was about protecting American jobs, the financial security of families, and the economy of our nation. Since half of all households own stocks either directly or indirectly through 401(k) accounts, IRAs, and pension plans, we need to find a solution to this crisis.”

According to Smith, the money in the compromise plan would have been used to purchase the mortgage-related assets he believed to be at the center of the problem.

“When the financial markets stabilized, many of those assets would regain their value and be sold by the federal government to recover a substantial portion of the cost for taxpayers,” Smith said. “I believed the plan would have stabilized the economy, strengthened home values, and prevented a devastating recession. It was designed to be an investment in the future of the American people.”

Another objection that Doggett had was that the plan would give the Treasury secretary “pretty unlimited authority.”

Lawmakers are expected to return to session today after observing a holiday on Tuesday and Wednesday.