All this financial stuff is above my pay grade. If any commenters want to debate the economics of the bailout, it’s all yours. But a few unconnected thoughts first:
1) It’s the politics, stupid. One thing I did see coming, no one in a tight re-election race was voting for this $700 billion boondoggle. Voting against it was cheap & easy populism, and the obvious choice for candidates facing 100-to-1 phone calls against. (Actual public opinion isn’t that bad, but Congressmen respond to volume.) The boys over at Fivethirtyeight did the math to verify, so here’s the “vulnerable” House members:
REPUBLICANS AK-AL Young R NAY CO-4 Musgrave R NAY CT-4 Shays R YEA FL-8 Keller R NAY FL-21 L Diaz-Balart R NAY FL-24 Feeney R NAY FL-25 M Diaz-Balart R NAY ID-1 Sali R NAY IL-10 Kirk R YEA MI-7 Walberg R NAY MI-9 Knollenberg R NAY MO-6 Graves R NAY NC-8 Hayes R NAY NV-3 Porter R YEA NY-29 Kuhl R NAY OH-1 Chabot R NAY OH-2 Schmidt R NAY PA-3 English R NAY VA-2 Drake R NAY WA-8 Reichert R NAY VULNERABLE GOP = 3 YEAS, 17 NAYS (15%) OTHER GOP = 62 YEAS, 116 NAYS (35%) DEMOCRATS AZ-5 Mitchell D NAY AZ-8 Giffords D NAY CA-11 McNerney D YEA FL-16 Mahoney D YEA GA-8 Marshall D YEA IL-14 Foster D YEA IN-9 Hill D NAY KS-2 Boyda D NAY KY-3 Yarmuth D NAY LA-6 Cazayoux D NAY MS-1 Childers D NAY NH-1 Shea-Porter D NAY NY-20 Gillibrand D NAY PA-4 Altmire D NAY PA-10 Carney D NAY PA-11 Kanjorski D YEA TX-22 Lampson D NAY WI-8 Kagen D NAY VULNERABLE DEMS = 5 YEAS, 13 NAYS (28%) OTHER DEMS = 135 YEAS, 82 NAYS (62%) ALL VULNERABLES = 8 YEAS, 30 NAYS (21%) OTHERS = 197 YEAS, 198 NAYS (50%)
…and one of their helpful readers adds: Of the 26 Congressmen not up for re-election at all, 23 voted “yes” with only 2 opposed and 1 abstention.
Of course another way to read this is that the conservative House members killed it themselves; take out the “vulnerables” and the GOP still manages to sink the thing. But clearly, having to face the voters with this albatross was hugely prohibitive.
2) Revolt of the masses. (No, not the real one.) Consider that this bill had the support of the President, Vice President, both leaders in the House, both Presidential candidates, and all related Committee chairs on both the House and Senate sides; as well as the leaders at the Federal Reserve, SEC, and every other relevant government institution. And it still failed by a good 20+ votes. I can’t think of a bill that had such bipartisan support, the entire elite political establishment and most of the media, and yet failed. Fact is, not only was it a terrible bill but it was a cynical one as a leaked conference call revealed. The question then becomes…
3) What next? Probably a similar bill. Maybe some small changes to grab a few more votes. What kills me is that we’re looking to people like Alan Greenspan, Hank Paulson (former Goldman CEO,) and Bob Rubin (Clintonomics, ) to plan our way out of this. It’s the way we do things – turn to the same fools who drove us into a ditch in the first place. No one on the Iraq Study Group had the good sense to oppose the war before it started. Washington has a very small coterie of Wisened Old Whiteys (WOWs,) epitomized by Lee Hamilton who served as Chair of both the Iraq Study Group and 9/11 Commission. Hamilton’s a fine old man, but aren’t we moving towards intellectual calcification here?
I want my “experts” to have actually been a) right and b) not pursuing conflicts of interest. I’d like to hear from Nouriel Roubini instead of the de-regulators and speculators who got us here. I’d like to hear what Steve Pearlstein thinks. Galbraith. Fuck it, give me Eliot Spitzer’s prescience. (If you want Roubini’s plan, registration is free.) Why don’t we look at how someone else did it?
Instead, we’re more likely to get a scaled-down version of the same bill by the end of the week. A few words tacked on or excised to win votes, cheers from the people who put us in this situation, and a nice bipartisan signing ceremony to bring a few hundred points back to the Dow. Mazel tov, but what are the odds it constitutes the necessary rethinking of the past couple decades worth of unicorn political economics?