We’ve seen this song and dance before.
As White House Chief of Staff Andrew Card observed when rolling out the bogus Iraq war in September 2002, “From a marketing point of view, you don’t introduce new products in August.”
So after quietly working on a proposal for months, it wasn’t a surprise that the Bush administration sprang its Wall Street bailout plan on the American people in a well-orchestrated display of panic, mere weeks before the election and at the tail end of a shortened congressional session.
Unlike Saddam, this finance crisis appears to be a real danger to our nation’s security, with years of deregulation-fueled greed and irresponsibility bringing too many financial institutions “too big to fail” to their knees. Yet the administration’s solution proved too bitter to swallow — $700 billion to Wall Street, the largest transfer of wealth from the middle class to the wealthy in America’s history. Democrats tinkered around the edges to make it more palatable, but those solutions did little to address underlying concerns with the legislation.
The compromise bailout deputized Securities and Exchange Commission Chairman Christopher Cox, Treasury Secretary Henry Paulson and Federal Reserve Board Chairman Ben Bernanke to police the bailout — members of the “expert” class whose irresponsibility got us into this mess in the first place. A secondary board, appointed by Congress, would supposedly review this first board, but after the money was spent, what would it do? Write sternly worded letters? Big deal. And the bill enabled the Treasury to tap into the entire $700 billion credit line at once rather than require congressional approval for each disbursement — a necessary safeguard given this administration’s prolific eight-year squandering of taxpayer money.
Furthermore, Democratic efforts to provide assistance to homeowners facing foreclosure were blocked by the GOP, ensuring the bailout would be a rescue line only for the wealthiest beneficiaries of Wall Street’s excesses. The bailout’s cost would be borne by those never invited to that party in the first place. Even a largely symbolic effort to limit CEO compensation was watered down to the point of irrelevancy. The crisis, apparently, wasn’t dire enough to risk heady CEO salaries.
On Monday, the House refused to pass the flawed bailout. A motley coalition of Democrats and Republicans arose to kill the bill, with the fiercest opposition coming from members in electoral difficulty. According to an analysis by statistician Nate Silver of FiveThirtyEight.com , only eight of the 38 House members in the toughest races (as ranked by the electoral prognosticators at Swing State Project) voted for the bailout, or a batting average of .211. Everyone else split almost evenly — 197 for, 198 against.
The public hates the bailout, and representatives locked in tough electoral battles weren’t eager to head into November — or even 2010 — with this albatross wrapped around their necks. Conservative groups like the Club for Growth are already salivating at the opportunity to wield this vote against their Republican primary targets in 2010. A similar effort (of which I’m a part) is in the planning stages on the left. Heads from both sides of the aisle will roll in part due to Monday’s vote.
The fractured opposition to the bill makes it difficult to craft a palatable alternative to the existing framework — any measure designed to appeal to one faction will provoke a negative reaction from the other. Barring any successful strong-arming of the “no” votes, it appears congressional leaders and the White House will have to start from scratch.
Given their majorities, it may well be time for Democrats to craft a truly populist, progressive solution to the economic crisis — and then dare the lame-duck president to sign it.
Moulitsas is founder and publisher of Daily Kos .