Rep. Jeb Hensarling makes the case (via email) against the bailout:

“My top responsibility as an elected official is to protect the families and people who trusted me to represent their interests in Washington. I do not take lightly the critical nature of the credit crisis that our capital markets face today and the grave situation that every American will face should our credit markets freeze and remain frozen. Inaction has never been an option, but the Paulson plan should have never been the only option.

“In my heart and in my mind, I believe that this plan is fraught with unintended consequences, would force generations of taxpayers to pick up the tab for Wall Street losses, and could permanently and fundamentally change the role of government in the American free enterprise system. Once the government socializes losses, it will soon socialize profits. If we lose our ability to fail, we will soon lose our ability to succeed. If we bail out risky behavior, we will soon see even riskier behavior.

“I also believe that this Congress, in a rushed effort to provide stability to a troubled credit market, did not adequately discuss or investigate potential alternatives that would have constituted a work out and not a bail out. Even at this moment, it still remains more important for Congress to do it right than to do it fast. I stand ready, as do many of my colleagues, to stay here for as many days as it takes to do this right.

“For the last week, House conservatives have fought to protect innocent taxpayers from an unprecedented government raid on their wallets to bail out Wall Street from their bad decisions and financial losses. Principled Republicans like Paul Ryan and Eric Cantor helped improve the legislation before us by adding increased taxpayer protections and additional Wall Street accountability. But mere improvement is not the test for support. The test is whether, after weighing both the good and the bad, you believe that the plan ultimately leads America in the right direction. Using that test, I cannot in good conscious support this legislation.”

I think Hensarling’s point is an important one.  We talk a lot about what the dire consequences will be if we don’t do the bailout, but what happens if we do the bailout?  Do we fix this problem?  Or do we just delay an inevitable collapse?

Delay it so that our children and grand children end up paying for it?

This bailout rewards risky behavior.  And yes, a lot of that risky behavior (such as mandating loans on low-value homes to borrowers with marginal credit backgrounds) was caused by the government, but what incentive is there to change those things if we bail the mortgage industry out?

I think we have to face this, because I think we’ll eventually have to face it no matter what we do, and better now than later.

Update: “A slippery slope to socialism.” Jeb Hensarling on the floor of the House just a bit ago: