What a long, strange week in Washington.
Early on, you could tell things were not proceeding along their usual track. At the Senate Banking and Finance Committee, right-wing Republican Jim Bunning laid into the bailout plan as "socialism" that was "un-American," and was met by cheers and acclamations from ACORN and Code Pink members in attendance. (So much, in fact, that Bunning crankily told them to pipe down. "I've been doing this long enough," he said. "I don't need any help.") The next day at the joint economic hearing, after progressive stalwart Lloyd Doggett of Texas railed against the bill's cost, Ron Paul quipped, "You've confused me a bit because I don't know who the conservatives are and who the liberals are! I'm gonna keep trying to figure it out." And a couple of days later, MSNBC viewers were treated to the spectacle of Republican Senator Richard Shelby of Alabama railing against the bailout on The Rachel Maddow Show.
The sober mandarins who set the Beltway conventional wisdom love to praise bipartisanship, but this is not the kind of bipartisanship they have in mind. It turns out that nothing brings the left and right together quite like a Big Government intervention on behalf of Big Money. With the partisan affiliations scrambled, the fissures broke this way: on one side, the self-proclaimed responsible Establishment--Paulson, Bernanke, Bush and the Congressional leadership of both parties--and on the other side, the ideologues and the populists.
Despite the possible benefits that would accrue to a candidate who channeled the anger Americans feel at having to clean up Wall Street's mess, both presidential candidates threw in their lot with the Establishment. Neither covered himself in glory: John McCain's ludicrous stunt trip to Washington helped derail the very compromise he had said was so urgent. Obama, meanwhile, kneecapped the efforts of progressives to force much-needed provisions like a reform of bankruptcy law, publicly stating that this (minor) concession shouldn't be in the bill. In the end--like Pontius Pilate in front of a mob of angry bankers--each pledged to vote for the bill despite his misgivings.
The bill's 228-to-205 defeat on September 29 was one of the most stunning and unexpected votes in recent history. Press coverage in the aftermath pointed to partisan bickering, but the simplest answer to why the bill failed was that it was massively unpopular. Polling may be contradictory on this point. The characterization of the package--as a "bailout," a "rescue" or an attempt to "secure" financial markets--seems to determine whether people support it or not. But lawmakers were not getting mixed messages from their constituents. Calls to Congressional offices were running 100 to one against the bill. An Ohio man was so exercised about the bailout, he drove seven hours from Westerville to Washington to share in person his concerns with his senator, Sherrod Brown. As the website FiveThirtyEight.com noted, the roll call confirms that an aye vote was perceived as political suicide: of the thirty-eight members engaged in tossup races, only eight voted for the bill. Meanwhile, of the twenty-six members retiring in the fall, twenty-one voted for it.
At first blush the defeat seemed like a triumph of democracy, but I'm not quite ready to declare victory. In the absence of a legislative solution, it will be left to the inherently undemocratic Federal Reserve to keep the system from imploding. And the financial crisis, while perhaps not quite as pressing as Henry Paulson would have us believe, is real. Credit markets at home and abroad are shot through with a terrifying degree of systemic dysfunction.
There is a need for effective, enlightened and just intervention, but how we get from here to there is deeply unclear. The eccentric coalition that defeated the first bill can't serve as much of a basis for a better one: much of the conservative opposition in the House seems rooted in a desire to let the whole thing crash and burn for the sake of preserving their philosophical worldview. "For the sake of the altar of the free-market system," one unnamed GOP lawmaker asked rhetorically, "do you accept a Great Depression?" The sane members of Congress, almost entirely Democrats, are left in the position of trying to craft a bill that can pass and that will accomplish what's needed. But the two might very well be mutually exclusive. A truly progressive version of the bill would directly recapitalize failing banks, tax stock transfers specifically or the financial services industry generally to recoup the costs and, crucially, include a fiscal stimulus directed at working people--bankruptcy reform, loan modifications for families facing foreclosure, an increase in food stamps, extension of unemployment insurance and large-scale public investment in green infrastructure to create jobs. But there's little chance that a bill like that could pass the House, never mind clear the sixty votes it would almost certainly need in the Senate. While it would no doubt gain the votes of progressive Democrats, it would just as likely lose an equal number of Republicans. So it is far more likely that by the time you read this, the specter of a badly shaken economy coupled with a few stern lectures from the Chamber of Commerce and Business Roundtable lobbyists will have Republican members eating their principles and voting yes. Then progressives will have to regroup for the fight around the next big financial bill come January.
The way things are going, one thing's certain: more will be necessary.