Peterson, Menze oppose bailout
Collin Peterson and Glen Menze are in agreement on at least one issue in their Seventh Congressional District race for a U.S. House of Representative seat.
Both candidates are opposed to the $700 billion bailout that was passed by the U.S. House last Friday.
Peterson, the Democratic incumbent, didn't switch his vote despite 35 of his House colleagues changing their minds.
"As I reflect on this, I don't see how anyone could think that taking a bill that already was weak in a lot of places and will expose taxpayers to $700 billion more dollars in debt can be improved by adding on another $150 billion," Peterson said in a news release.
The main concern for Peterson is the matter of how to pay for it all. He stated that the immense cost of financing a bailout would just be passed along to future generations.
"And all of this spending is unpaid for -- it will be added directly to the national debt," Peterson said. "In effect, we're mortgaging the future (something that should belong to our children and grandchildren), and turning to China and other foreign nations to finance it."
Menze, Peterson's Republican opponent, said that the bailout doesn't help the situation because it doesn't fix the main problem -- the subprime mortgage crisis that has caused the shut down or takeover of several noted financial institutions.
"I think it's the wrong kind of package," Menze said in a telephone interview.
Instead, Menze said that he would have liked to see a bailout package to restructure subprime mortgages so that the problem is fixed once and for all.
"That would have calmed the markets everywhere, because it's really the mortgage mess and housing mess that's caused this," Menze said.
One of Menze's suggestions is government involvement in refinancing existing mortgages. If a homeowner can't refinance because the value of the house has plummeted, Menze said that the government could step in to fill the gap between a home's existing value and the original value when the mortgage was taken out.
"It keeps people in their homes if they want to stay," Menze said.
Because it's only the tip of the iceberg, Menze said that more bailouts are likely to happen. "By doing it piecemeal, there's pressure to do more of this," he added.
Peterson said that there is $60 trillion more debt out there that can go bad.
He said that the additional debt comes from credit default swaps, where lenders purchase insurance in case their investments falter.
"Speculators who think a financial firm such as A.I.G. will fail can buy a credit-default swaps contract, and they will profit if they are right," Peterson said.
For Peterson, the takeover of A.I.G. is a concern because it was heavily involved in the credit default swap market.
"As we have already seen with the sudden collapse of the insurance firm A.I.G., there is real reason to be concerned," Peterson said. "The collapse of another major firm in the credit default swaps market could set off a chain of problems that would cascade through our economy."
Voters will have a chance to see how Peterson and Menze stack up during the candidates' only scheduled debate, which will be broadcast on Friday, Oct. 17 at 8:30 p.m. on KFME (Channel 13), a PBS affiliate.
The debate was taped on Oct. 7 in Fargo.