Democrats blame the failure of the bailout bill on Republicans (even though 95 Dems voted against it). Republicans blame it on Nancy Pelosi. But the truth is that representatives on both sides of the aisle were primarily afraid of voters. If the plan passed and yet failed to turn the economy around by November 4 (and no one expects it to do that), anyone who voted for the plan will have a hard time getting re-elected.
But everyone in Washington agreed Something Must Be Done, and the Paulson proposal, as modified by Chris Dodd, was the only major plan on the table. So the real question was, which members of Congress had safe enough seats that they could vote for the plan?
The bailout bill was particularly hard because it is coming right before a presidential election. Both sides knew that, whatever happened, each party would try to blame the other for any bad things that happen between now and the election.
Years ago, a friend of mine gave me a good lesson about how Congress works. In most cases, when the leaders decide on a bill, members of their party will do what they are told. If the bill is particularly controversial, the leaders will allow party members to vote the opposite way as long as they have enough votes to pass it. That’s why so many votes end up being close — they get just enough votes to pass.
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The Senate has fewer members and so is easier to control than the House, my friend said. “I’ve won many bottles of wine betting that controversial bills would pass the Senate by one vote.”
Everybody was stunned when the bill failed because they all knew the fix was in. It may be true that, when Polosi jumped the gun by blaming Republicans for the financial crisis (which, in truth, began during the Clinton administration), a few Republican reps changed their votes in anger. Or maybe, with 435 votes, someone just lost track of who was supposed to vote “yes.”
But the fix is still in and a bill will still pass. Having lost by 23 votes, only 12 members have to change their votes for it to pass. The big argument is how many from each party will be forced to change. The Dems want at least 9 Republicans to change, while the Reps would like Democrats to take a little more heat.
When the bill finally bases, news reports will claim that the 777-point decline in the Dow changed Congress’ mind. In fact, the bill would pass on a revote even if the Dow had fallen by only 77 points.
“which, in truth, began during the Clinton administration”
???
Not that I don’t think that Democrats deserve just as much blame, I just think it’s a little McCainish to blame the Glass-Stigall (passed by a republican congress) on Clinton. I suppose he could have vetoed it.
I don’t know enough about economics to comment on weather the bailout will work, and if the situation is really as dire as the administration claims. Do you think if there was no Iraq lies, attorney firings, Halaburton, etc. that the bill would have passed? It seems to me that the President and his cronies have all but used up their credibility. The real question is, are they crying wolf to help out their buddies as they have done in the past, or are we all about to get devoured?
Everybody was stunned when the bill failed because they all knew the fix was in. It may be true that, when Polosi jumped the gun by blaming Republicans for the financial crisis (which, in truth, began during the Clinton administration), a few Republican reps changed their votes in anger. Or maybe, with 435 votes, someone just lost track of who was supposed to vote “yes.â€Â
We know now that this ‘Pelosi excuse’ was bullsh!t. IMHO, my dad having run dozens of political campaigns, this vote was partially about this bill being (as my dad used to say) a sh!t swindle and that McCain got outplayed and acted like he was the king. I think this is evidence that democracy isn’t completely dead in this country.
Nonetheless something will likely be done sooner than later (not what I want) because, paraphrasing Bertrand Russell, we can’t have regular folk standing in the way of the rich and their riches.
DS
It looks like the US taxpayer just dodged a bullet.
In the UK we have a business called MFI, which sells furniture, and it’s in trouble. Should we bail it out, since it was once worth a lot of money?
At the end of the dot-com ‘revolution’, when internet companies were worth a lot of money, despite most of them not selling anything much, and the bottom fell out of the market, should we have bailed them out?
What I don’t get is that if the business is selling money – and only in this case – we have to bail them out. At taxpayer’s expense. As if the taxpayer didn’t have anything better to spend their money on.
There are a lot of old-fashioned banks that didn’t take on risky bank loans, and fancy financial deals. They were mocked for not doing these things, and making a lot of money. They are now in a good position. Normally, we would allow the market to operate, so that dodgy companies fall, and are bought out or superceded by the better ones. Now, the US government intends to prop up the failing companies, and force out the successful companies. The UK government has already blown a fortune on doing the same thing.
All that is required to protect savings. The current protected limit in the UK is £35,000, and this will soon be increased to £50,000. Anyone with savings bigger than these should ask a financial adviser on how to spread the risk, anyway.
The thing is banking and financial institutions are central to a smooth running economy, the large majority of recessions are of course attributable to meltdowns in the banking and financial sector. Credit freezes, bank runs, the debt system that capitalism requires to function smoothly, hits the crapper and the economy retracts.
“You can always count on Americans to do the right thing, after every other option is exhausted.”
-W. Churchill
Sustainlibertarian wrote:
“The thing is banking and financial institutions are central to a smooth running economy, the large majority of recessions are of course attributable to meltdowns in the banking and financial sector. Credit freezes, bank runs, the debt system that capitalism requires to function smoothly, hits the crapper and the economy retracts. ”
Sure. But the thing is that many banks did the right things – lending depositor’s money rather than money on the open market – rating applications properly – lending responsibly – treating risk maturely – not buying up dodgy debt – and now they stand to be done over by a panicking executive, determined to prop up the old dinosaurs. At taxpayer’s expense.
Runs on banks occur because depositors fear losing their money. The smartest thing to do is to guarantee that they won’t lose their money.
There’s still plenty of money out there. There isn’t a credit freeze. What is happening is that banks are looking for deposits, and some evidence that the money will be paid back.
I’m getting fed up of being fed nonsense by ‘experts’. Take short selling for example. A broker borrows shares, sells them, waits for the value to go down, then buys them back. This is evidence of ‘immoral trading’, which should be banned. I can’t see how this works though if the shares are going up. So it looks more like a necessary adjustment to shares which are well-overpriced.
Great, how about giving $700 billion to Amtrak, with a mission of repairing America!