Taking the lead

Public officials are sent to Washington to be leaders. But little leadership has been on display this week in Washington.

Monday’s stunning defeat of the Wall Street bailout bill — or financial rescue package, depending on your perspective — was a failure for congressional leaders, the president and K Street.

Excuses were plenty in the moments after the bill went down. Partisans argued the Bush administration and GOP leaders had done a poor job selling the package and that House Speaker Nancy Pelosi (D-Calif.) had turned away potential GOP votes with an overly partisan floor speech.

There’s a little truth to the recriminations.

Perhaps Pelosi might have chosen a better speech, and, more importantly, she, GOP leaders and President Bush, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke could have done a better job of selling the bill to members of Congress and the American public.

Many Americans still think the bill will help Wall Street’s traders but not businesses and homeowners in their own communities. They don’t like the sound of a $700 billion bailout that at first sight appears to benefit the irresponsible lenders who led the country to this crisis.

That’s what rank-and-file members reacted to when they voted against the bill despite pleas from the president and congressional leaders.

The problem is that the credit crunch is real, and it poses an even broader threat to the economy than what was seen Monday with the dramatic stock market plunge.

Higher inter-bank loans and other aspects of the tightening credit market mean businesses are going to have more trouble getting financing for the daily activities that drive the U.S. economic engine.

The Business page of Tuesday’s Washington Post offered one example: Caterpillar, a builder of construction and farming equipment, saw the price it pays to borrow money increase by a full percentage point. The Post reported that some companies are paying twice the rate they once paid to borrow.

Make no mistake, those rates will have trickle-down effects on the rest of the economy and the people who operate within it — which is every American.

Companies that are carrying higher borrowing costs may choose against making investments in their businesses, and will not be in a position to hire more workers. It can also lead businesses to contract and to eliminate jobs on the Main Street that members are so fond of invoking.

A number of lawmakers who voted against the bill did so because they don’t believe in it. Other lawmakers likely were reacting to complaints from their constituencies.

Both groups need to take a deep breath and a second look. They need to explain to their voters why doing something to ease the credit crunch is vital for the economy. Sometimes that’s what being a leader is.

If they don’t, those lawmakers may need to do some explaining later, when business owners in their districts are unable to secure loans, and more workers lose their jobs.