Coming off of the August recess, most expected the 2009 fiscal year budget and energy legislation to dominate the Congressional agenda for the five weeks until the scheduled October adjournment. However, with the recent shocks in the U.S. financial markets and the resulting calls for government action, Congress and President Bush scrambled to figure out their gameplans. Plus, Massachusetts had its congressional primaries and Don Young narrowly edged out his primary challenger in Alaska when the final votes were in.
Proposals for the crisis recovery scenario generally involve the government infusing the financial sector with massive funds, either through purchases of rapidly devaluing mortgage-based securities, loans, loan guarantees or purchases of large stakes in the companies, effectively making U.S. taxpayers the largest shareholders in some of the big Wall Street players.
The action to bail out Wall Street would have far-reaching effects. Not only would it supplant other congressional priorities this session, but the amount of money required would handicap domestic spending in the 111th Congress as well. That would leave little discretionary funding heading into the next congressional cycle, and a new president would have few options to pursue on the domestic spending front.
While players on Wall Street and officials in Washington were striving to halt the deepening financial crisis, Congress did accomplish some other work this week. The House approved an energy bill that would allow some coastal states to determine whether oil companies can explore for oil offshore. In addition, the bill would extend a series of tax credits and other incentives for the development of renewable energy alternatives.
A close primary race in Alaska was finally resolved this week, when absentee ballots were tallied for the state’s at-large congressional district. Rep. Don Young, the incumbent, narrowly defeated Lt. Gov. Sean Parnell in the Republican primary. Young will not face Ethan Berkowitz in November. In Massachusetts Tuesday, incumbents carried the day in the two contested races. Sen. John Kerry and Rep. John Olver, both Democrats, held off challengers from within their party. Kerry and Olver are also being challenged in the November general election, but are expected to win their respective races with ease.