The National Catholic Review

Bipartisanship has become a mantra in Washington as the nation faces an unprecedented economic crisis. And, after 20 years of slash-and-burn partisanship, there is something to be said for bipartisanship. But, yesterday the blame for Congress’s failure to structure a bailout rests partly with this concern for bipartisanship.

The President put forward a plan that would have given the Treasury Secretary unlimited control over $700 billion. The original bill actually included the provision that the Secretary’s decisions could not be challenged in the courts or by Congress. Needless to say, amidst the many novel interpretations of the Constitution put forward by the Bush Administration, this was the most outrageous. But, in the spirit of bipartisanship, the Democratic leadership of the Congress worked for a week with the administration to improve their proposal.

Last Thursday, after John McCain flew back to Washington to take part in the negotiations, the negotiations broke down as House Republicans announced their refusal to back the Bush plan. To be clear: The objections raised by the House GOP did not have to do with the Democratic amendments to the Bush plan but to the plan itself. A group of very conservative House members have lost confidence in Bush and Treasury Secretary Paulson for abandoning what the conservatives believe are crucial GOP commitments to less government spending and less regulation of the free market. They would not sign on to the deal.

Another round of negotiations over the weekend brought everyone back to the same page. That same page was a muddled mess of a compromise that even its backers could scarcely explain to the American people. A group of far left Democrats and far right Republicans refused to back the measure and they defeated it.

The opposition to the bailout may lack a plan but they don’t lack for clarity. On the right, they don’t think there needs to be a plan. They support the free market and see the crisis as the result of too much regulation and government intervention in the market. Most cite Fannie Mae and Freddie Mac’s role in the sub-prime mortgage market. Others are more sweeping in their indictment, such as Texas Rep. Ron Paul. No longer a presidential candidate but still a libertarian wingnut, he was blaming the Federal Reserve System, not the actions of the Fed, but the fact of the Fed. You would have thought that a congressman whose district was just leveled by a hurricane would see the benefit of government intervention.

The Democrats who failed to back the plan were from the more lefty wing of the party. They objected to what they perceived as bailing out Wall Street executives whom they think should be put into early retirement, and with no golden parachute to ease the fall. This group was, in its way, even less principled than the GOP opponents if the bailout: Whatever else it did or did not do, the bailout was a slap in the face to the idea that capitalism and competition are always the best way to organize society, and that is a lesson the nation needs to learn.

So, going forward, the House Democrats should ignore the Republicans for a day or two and craft their own proposal, one that has the support of every Democratic member of the House. Keep communication with the administration open, but craft a specifically Democratic plan. Then let the GOP vote against it and the President veto it. The Senate, which is so evenly split, is dicier – Democrats there would need to make sure they have at least one or two Republicans on board. If the final Democratic measure is vetoed, at least the American people will know where the blame lies for the meltdown.

Sometimes ideological clarity will help to make future bipartisanship easier. Legislators will vote for a compromise, but they should not be expected to vote for the legislative equivalent of hash. Democrats want government intervention in the market to restore fairness as well as liquidity. Republicans want the free market to play out. Let’s give that choice to the American people on November 4.

Michael Sean Winters

 

Comments

Anonymous | 9/30/2008 - 10:39am
Shouldn't both Democrats and Republicans be seeing to do what is best for our country? Instead you urge the Democrats to do whatever makes the Republicans look bad without concern for what is best for America and her people. Sadly, the Democratic Party has not only adopted your views, but raised them to unprecedented levels with thier sleazy politics. Milbo
Anonymous | 9/30/2008 - 9:40am
So the problem is too much credit in the wrong hands? And the solution is more credit?? Govt intervention is what caused the whole mess in the first place. This is the definition of insanity. People have been struggling on a number of issues for a long time now, but only now does the govt want to pull ALL this money out of a hat (the fed) to solve it. Give me and everyone else a break. The market is going to be bad... because of bad economic decisions on everyone's part, but its not because this bill didn't "rescue" us, its because we never see the problem until its at our doorstep. Now we have to face the consequences, something that we haven't been able to face in too long.
Anonymous | 9/30/2008 - 11:49am
Well you are so quick to label Ron Paul a nut which tells me you are quite clueless on economic matters. Ron Paul and the Austrian school of economics predicted both the Dot Com bubble bust and the housing bubble bust and all you can say is that he is a wingnut. Grow up and read a good book on Austrian economics. Once the dollar was de-linked from gold in the early 70's to allow for government expansion via the printing press, we have had all sorts of monetary caused problems.
Anonymous | 10/1/2008 - 2:46am
What Rep. Paul was saying (and apparently was saying throughout the Presidential campaign while everyone yawned) is that yes, the markets will react whether or not we pass a $700 billon dollar bailout package. But what they are ultimately reacting to is the fact that we have spent, borrowed, and printed too much money. What started this crisis was the Fed and the creation of a huge housing bubble due to artifically low interest rates ... i.e. a massive injection of credit into the marketplace. The problems on Wall Street and Main Street are symptomatic of the malinvestment. What the bailout would ultimately do is not only create more malivestment, but ultimately, create a worldwide currency crisis ... if there already wasn't one ... with 100 times that amount of money now unwinding in the derivatives market. But, instead of listening to those who correctly predicted this, you champion those in Congress who continue to get is in this mess... those who have taken control of the ship and steered it into dark, uncharted, economic waters and expect them to somehow find land.
Anonymous | 10/1/2008 - 1:30am
Michael, Your characterization of Congressman Paul is a bit misplaced. Whether or not one believes in him, there is little doubt that artificially low interest rates are a proximate cause of the current financial debacle. His outlook seems unique - some might say outdated or quaint - in that he seems to believe that before the federal government takes any action it should ask itself, "Does the Constitution empower me to take this action, or has this power been retained by the states, or the people?"
Anonymous | 9/30/2008 - 11:12am
"No longer a presidential candidate but still a libertarian wingnut" Wow, this blog is really teaching me to value the inherent dignity in all human beings. Except if I don't agree with their political ideas, then all epithets are fair game. There may be an additional, more simple aspect to why some of the House members voted no: the constituents they represent were firmly against it and they are in tight races for reelection. This bill remains to many Americans a bailout bill that provides fluffy pillows for CEOs to land on as companies fall. Whereas the intent of the bill is to infuse capital into a credit market that is threatening to tighten very quickly and cutoff the supply that provides student loans, car loans, etc. As far as capitalism and competition, no, it is certainly not the best system, but the better system. I was born in a socialist country and the gaps I saw between rich and poor were just as, if not more, pronounced than what I've witnessed here. That being said, looking for economic utopia in any system here on Earth is a fool's work. Finally, it is clear that Mr. Winters is playing the Blame the Republicans Game. Great, I'd like to join in! But ignoring the other side of the aisle is foolish. There were warnings about Fannie and Freddie for years, but there was a concerted push by Democrats (most notably, Barney Frank and Chris Dodd) to downplay these concerns. Any attempt at regulatory oversight were opposed. Why? The dichotomy you are trying to create on which party supports regulation is not true. Both parties oppose regulation when it hurts entities that supply their campaign treasury. Go to www.opensecrets.org, where the Center for Responsive Politics has detailed the money trail for both parties. It is depressing to see how beholden both parties are to special interests.
Anonymous | 9/30/2008 - 9:30am
The bailout was a terrible idea and properly went down in flames. Over 70% of Americans oppose it. The fat cats on Wall Street need to take a bath, a haircut -- in fact, let them get the whole spa treatment. When did the media start advocating socialism for the rich anyway?