Democrats Propose PAYGO Trigger
House Democrats introduced into the marathon financial bailout negotiations on Saturday a new proposal to protect taxpayers that would force the financial services industry to pay for any losses. The new proposal, known as a pay-as-you-go trigger, would kick in if after a number of years assets purchased by the government were losing money. The Treasury secretary would be required to impose a fee on the financial services industry to make up any losses and protect taxpayers. The proposal, outlined by House Majority Leader Steny Hoyer (D-Md.), appears to move Democrats and Republicans closer to an important political goal for the package: guaranteeing that Wall Street pays for its mess. The House Republican proposal of charging financial institutions an insurance premium to backstop faltering mortgage assets has the same general idea, although the Democratic proposal puts off any decision on whether any kind of fee would be needed for as long as five years. Leaders in both parties and President Bush have argued that the prices of assets are so depressed that the government could end up making money from the purchases by holding on to them until markets improve. The trigger proposal was floated by Rep. John Tanner (D-Tenn.) and Blue Dog Democrats, who have been concerned about the need to enforce PAYGO budget discipline. Hoyer also said its possible that the House could vote on a proposal early Monday, depending on how negotiations go. Several Democrats said they are looking at the trigger idea, and that the key is being able to tell their constituents that they wont be paying the price to bail out Wall Street, which is political poison.