Bailout Politics (Updated)
An interesting meme is developing among smart commenters from across the political spectrum that the House’s failure to pass the bailout bill demonstrates the soft underbelly of our political system itself.
Above all, though, this is a failure of politics. Like with global warming, with health care, with the national debt, with immigration. It is further proof that we have a calcified political system incapable of responding to either long-term threats or short-term crises. The electoral and partisan incentives have made actual action too dangerous and rendered obstruction everyone’s easy second choice. The Republicans killed this bill. Without their cover, the Democrats refused to save it, rather than take ownership of it.
It’s easy enough to imagine a society running atop a stable economy even when it has an unhealthy politics. And it’s simple enough to see how an unstable economy can be calmed through concerted action by an effective political structure. But an economy in chaos and a political system in paralysis? What happens then?
I didn’t think it was possible to be more disgusted with politicians than I usually am, but I find it impossible to express the seething contempt that I feel at this kind of opportunism. I don’t mind when they screw with the normal operation of the economy for venal personal gain. But risking a recession in order to get a cut in the capital gains tax? Letting it tank because you can always blame it on the Republicans?
[T]he idea of the package was to prevent a financial mewltdown. But here’s the thing — no one gets credit for stopping a meltdown if it doesn’t happen. To use a security analogy, think about what would have happened if either the Bush or Clinton administrations had killed the leadership of Al Qaeda and the Taliban prior to June of 2001. Even if they had claimed that they were foiling a terrorist plot against the United States, no one would have known about it, and it would have been pretty easy to attack either administration for belligerent unilateralism. In other words, it was only after 9/11 that the American public was ready to take the actions that would have prevented 9/11.
Maybe letting the representatives of the people, assembled in Congress, vote on such important issues — especially five weeks before their political futures are on the line — is asking too much. After all, even those of us who read the newspapers voraciously don’t really understand this mess; certainly, Joe Sixpack doesn’t.
Then again, I’m not at all convinced that anybody truly understands what’s going on here, let alone that there’s an expert consensus on what the impacts of the compromise legislation arrived at some 24 hours ago will have on the economy. That some action needs to be taken and soon seems to be a given. This action? Right now? That’s hardly settled.
It may be true that when forced to eat a crap sandwich, the thing to do is to take big bites. But it’s not unreasonable to first take another look in the pantry to see if there’s a more palatable option.
UPDATE (Dave Schuler)
See my update to the post below for my thoughts on the likelihood of a plan more palatable to the Republicans being brought up before the election. Voting down a bill whose original form was proposed by a Republican administration and which had bipartisan support effectively indemnifies Democrats against blame for the fallout and, as noted above, nobody will get the credit for anything that doesn’t happen.
I agree that maybe this is not the right plan, or maybe it is a little bit premature. But the thing I’m disgusted with is why they can’t craft something that they know will get enough votes before bringing it to a vote.
Isn’t this something of begging the question? This is only a political failure if you think passing the bailout bill was the correct course of action. Which clearly a large portion of the electorate does not.
Completely agree James which leaves me mystified over McArdle’s anger about the cap gains tax cut. Removing that could limit the amount of money for a bailout if one is still necessary. It is almost as if she has turned into some sort of central planning fanatic or something. I dunno.
Klein…well I’ve never liked him. He strikes me as a person with no principles and out of his depth when it comes to economic policy and even health policy.
Not enough democrats voted for this bill. To believe that the failure is because republicans “killed it”, is simply false. Speaker Pelosi ought to get her House majority minions in order. Speaking with better tone before a vote would not hurt either.
Which does make me suspect even more that Pelosi wanted it to die in a way she could lay it at the GOP’s feet.
Why would a speaker bring a bill to the floor when 40% of her own party is going to vote No and much of the opposition party is in opposition? Either she can’t count votes, she knew it would fail and wanted it to, or she is an idiot.
Some birthing pain is likely a good thing. This is a big deal and should be stressful for all parties. Working it over top to bottom will likely create a better bill and better results.
Now the time for serious people to step up. Speaker Pelosi has ruined her chances for such a role.
I guess that’s all the GOP has at this point. It will play to the base. No further.
The speed with which McCain is sprinting away from the bailout he tried so hard to own is kind of impressive. That’s leadership you can time with a stopwatch…
I don’t follow. The blame obviously isn’t entirely on them, but there were democrats who voted against the bill as well.
Fair or not, the Republican party will take the blame for whatever bad results can be attributed to not passing the plan.
Note that Rasmussen polls are starting to show growing support for the plan. Politics is difficult. The public will hate you on Friday for having your position on Monday.
Voting down a bill whose original form was proposed by a Republican administration and which had bipartisan support effectively indemnifies Democrats against blame for the fallout
I would point out that the GOP house members weren’t on board with the administrations propositions either.
If bipartisan support was needed maybe a little more bipartisanship out of the democrats would have been in order. I think the WH was and still is willing to sign almost any bill whose intent is to help the problem (note I said intent, because there are no guarantees that there is anyting congress can do to help).
If it is bipartisanship that is desired, Pelosi needs to take the lead and act in a bipartisan way-to date i haven’t seen that from her.
However, no matter what I do think the GOP will get all the blame on this one, but then they were already getting the blame anyway, even though the history indicates a big part of the problem was the community reinvestment act and requirements to extend high risk loans-and a whole lot of denials from well funded democrats that there was absolutely nothing wrong with Fannie or Freddie.
I have little doubt that the line of thought you’re following, just me, played a role in the votes of the Republican refuseniks. It won’t help them stem the growth of the Democratic majority in a little over a month or slow the GOP’s slide into insignificance.
It won’t help them stem the growth of the Democratic majority in a little over a month or slow the GOP’s slide into insignificance.
See I don’t buy the concept that the GOP will become insignificant. I recall talks about the democrats becoming insignificant. The reality is that the GOP may get smacked around this election cycle-I actually don’t even think it is a “may” I think it is a “will” but when the US taxpayer gets a taste of the democrats controlling both houses of congress and the white house, the GOP will once again become far more signficant just like the democratic party became once again more significant.
It is cyclical, and the reality is that one party gets control, mucks it up, and the other party gets handed the control until they muck it up.
You might have confidence that the dems won’t muck it up, but the dem leadership through out this crisis pretty much tells me flat out that they won’t be able to lead as long as the leaders they currently have in charge remain there.
Pelosi’s leadership on this issue was an epic fail-either she really is that poor a leader, or she intentially failed because she wants the economy in the tank, which is even scarier than thinking she was just stupid.
One of my bosses once told me that you can’t call someone ugly all week and then expect them to accept your invitation to the dance on Saturday night.
You go Nancy. Just go.
Nobody knows the extent of the problem. Many of the people who say the sky is falling are precisely those who stand to benefit from a big bailout.
Despite the horror stories we are being told, people can still get loans (if they are credit-worthy). The sky hasn’t fallen YET. Yes, the stock market dropped sharply today. But has everyone forgotten last Friday? Big moves are temporary. This market moves in both directions.
Who can we believe? Are our leaders exaggerating? Do they even understand the problem? Someone is playing fast politics with the US economy. Maybe on both sides.
leaves me mystified over McArdle’s anger about the cap gains tax cut
I’m not so sure a capital gains tax cut is all that relevant in a stock market that is down over 30%. What good is a cap gains tax cut supposed to do?
Right now capital gains taxes are about the last thing investors are thinking about. Paying capital gains taxes on profits really isn’t that important when you are trying not to lose all your principal.