OUR PRINCIPLE: Americans are rightly concerned about the slowing economy, the housing crunch, high gas prices and wild swings in the markets. The Federal Reserve’s extraordinary response to Bear Stearns underscores the challenging nature of the current economic climate. Working families are reacting as well, doing what they can to tighten their belts and make ends meet with their household budgets. Taxpayers have every right to expect similar restraint from the Congress with its budget. House Republicans will continue to work get our economy back on the right track and protect investors, small business, and middle-class families from the largest tax hike in American history.

Democrats’ answer to a slowing economy is the largest tax increase in American history. Democrat leaders are doing working families and our economy no favors by passing a toxic combination of job-killing tax hikes and hundreds of billions of dollars in new spending in their 2009 budget. The right tonic for the economy should protect workers, parents, married couples, seniors, entrepreneurs and small businesses from the Democrat tax hike.

• “Democrats in both House and Senate pressed ahead with budget plans that would saddle millions of Americans with higher tax bills in three years by allowing some or all of President Bush's reductions to die after he leaves office.”(AP, 3/13/08)

• “The House approved a budget blueprint that would raise taxes by $683 billion over the next five years.” (AP/Arizona Republic, 3/14/08)

• “If the Democrats are serious about the U.S. being in a recession, raising taxes is the last thing we should be doing.” (Investor’s Business Daily, editorial, 3/17/08)

The Fed is rightly taking actions it deems necessary to prevent a widespread economic emergency. By stepping in to assist J.P. Morgan Chase in its acquisition of Bear Stearns and cutting key interest rates, the Fed helped to prevent a collapse that would have sent huge shockwaves throughout the economy.

• Federal Reserve Chairman Ben Bernanke: “The Federal Reserve, in close consultation with the Treasury, is working to promote liquid, well-functioning financial markets, which are essential for economic growth.” (The New York Times, 3/17/08)

• Former CBO Director Doug Holtz-Eakin, economic adviser to Sen. John McCain: “The Federal Reserve has undertaken creative and, in some ways extraordinary, initiatives to insure the stability of the financial system.” (The Wall Street Journal, “Washington Wire,” 3/17/08)

We must take care not to overcorrect or encourage risky behavior by sending a signal that the government will bail out banks en masse. Creating a dangerous “moral hazard” will only cause further economic difficulties and stick American families with the bill.

• Treasury Secretary Henry Paulson: "We're very aware of moral hazard. But our primary concern right now -- my primary concern -- is the stability of our financial system." (ABC’s “This Week,” 3/16/08)

•  “Moral hazard describes a situation in which a party is insulated from the consequences of its actions. Thus protected, it has no incentive to behave differently … Treasury Secretary Henry M. Paulson Jr. said the bank got away with nothing. Trading for as much as $172 per share last year, Bear Stearns was snapped up by J.P. Morgan Chase for $2 per share. ‘And when we talk about moral hazard,’ Paulson said on Monday, ‘I would say, 'Look at the Bear Stearns shareholder.’’” (Washington Post, 3/19/08)