$700 Billion

The argument goes something like this: we have to do something, or thousands of people in the financial industry will lose their jobs. Banks, leery of taking on more bad debt, will stop lending money, and we'll have a credit crunch. If no one can borrow money, that'll prolong the housing market collapse. Thousands of people in construction will lose their jobs. More people out of work means more people behind on their mortgages, more foreclosures, more bad debt and failing banks. A downward spiral. The bottom? A recession, or maybe this century's Great Depression.

Okay, let's put aside for a moment the very necessary discussion of just how likely this doomsday scenario really is. Let's stipulate that, if we do nothing, disaster will play out just this way. Let's assume that we have to do something radical and expensive to avert calamity.

That still leaves a $700 billion question: is a huge bailout for bad debt the best way to stop the meteor? Right now, it's the only solution the Bush administration is offering: make taxpayers the buyers of last resort for Wall Street's mistakes.

But $700 billion is a lot of money. It can pay for a lot of restructured mortgages to keep people in their houses. It can pay extended unemployment benefits for a lot of laid-off workers. And it can ease a credit crunch by guaranteeing debt - new, solid debt issued by lenders willing to submit to rational regulation in return for a federal guarantee. The kind of debt that gets repaid.

Any Wall Street dealmaker knows that you don't take the other guy's first offer. We taxpayers should keep that in mind as we look at the Administration's bailout plan.