Conservatives rip bailouts as affront

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By Donald Lambro

The Federal Reserve's unprecedented $85 billion takeover of American International Group is prompting a fierce backlash among many Republican stalwarts who openly decried the Bush administration's recent string of financial bailouts as a betrayal of the party's long-held, free-market philosophy.

Many conservatives and at least a few liberals are questioning whether so large a commitment of taxpayer dollars was either wise or fair, even suggesting that it smacked of a socialist form of selecting economic winners and losers.

They ask: Why pick AIG and not General Motors Corp., which has been pounding on Congress' door for a helping hand? But most of all they complain that the AIG decision thrusts the government too far into private waters.

"You cannot nationalize every failing business in America," said Rep. Mike Pence of Indiana, chairman of the House Republican Study Committee. "If government now becomes the safety net for every private enterprise too big to fail, we are going to end up with an economy that looks a lot more like France than like the United States."

Conservative leaders like Mr. Pence who cheered the administration's decision last week to allow Lehman Brothers, the giant investment bank, go bankrupt rather than bankrolling it, are now attacking the White House's third corporate bailout of the month - sparking an intraparty debate.

"You can't be for capitalism on the way up and socialism on the way down, and you can't be for a welfare state for the rich," former House Speaker Newt Gingrich, a Republican from Georgia, said in an interview with The Washington Times.

The White House on Wednesday defended the administration's action, arguing that the failure of a company as large and far-reaching as AIG posed a much costlier risk than the $85 billion federal loan.

"You have a government that is willing to lead, act where appropriate, and govern to make sure that we limit broader financial harm to the economy," said White House press secretary Dana Perino.

But Mrs. Perino acknowledged that Americans wanted to know why AIG was chosen and not other companies.

"I can understand why a lot of Americans would be confused as to why this company, and not another company," she said.