It all depends on which report you believe. Either Democratic
and Republican leaders have hammered out a “fundamental agreement” on a $700 billion Wall Street
bailout package and its passage is imminent. Or the prospects of
such a deal remain murky at best even after John McCain and Barack Obama
reluctantly joined forces to save the day.
The conflicting reports are reminiscent of the debate over
“comprehensive” immigration reform in 2007. A not entirely
comfortable but seemingly insurmountable bipartisan, left-right
coalition was formed. The president, McCain, Obama, and other power
brokers in both parties were on board. There were some dissenting
grumbles from cranky backbenchers and annoying American taxpayers,
but the deal was expected to pass easily. Then everything came
flying apart.
Once again, House Republicans may be the key. Rumors circulated
Thursday that only 45 to 50 of them are committed to voting for the
bailout in its current form. The Democratic leadership is said to
want 100 or so GOP votes in the lower chamber for cover if they are
going to support the deal without pushing it further to the left.
The conservative Republican Study Committee released a letter publicly opposing Treasury Secretary Hank
Paulson’s plan. Sen. Jim DeMint of South Carolina, an RSC alumni,
has been muddying the waters in the Senate.
Like immigration, the financial bailout is an issue where almost
everyone in Washington wants to jump together or not at all. Few
politicians wish to see credit or blame easily assigned to one
party or one side of Pennsylvania Avenue.
But there are also differences that make the bailout more likely
to pass than a bipartisan immigration bill. On immigration, House
Republican leaders refused to go to the negotiating table with
Bush, McCain, and Ted Kennedy. They were at the meeting with Bush,
McCain, and Obama today.
McCain-Kennedy faced a unified wall of House Republicans
insistent on rejecting a main tenet of the legislation — a path to
citizenship for most illegal immigrants — no matter what. By
contrast, some congressional conservatives sound an uncertain
trumpet about how far they would go in voting against a bailout.
They say something to the effect of, “Gee, $700 billion is a lot of
money. But can we really afford to do nothing?”
Reason’s Dave Weigel reported that other than Mike Pence, most speakers at
an RSC press conference seemed tentative in their opposition to a
bailout. “The rest of the press conference,” wrote Weigel, “was, if
not a circus, a carousel with a lot of mis-matching horse
heads.”
Pence, John Shadegg, Thaddeus McCotter, Paul Ryan, and Jeff
Flake are among the conservative point men in the House on this
issue. But there doesn’t seem to be anyone playing the role Jim
Sensenbrenner performed in the immigration debate: a pivotal,
respected committee leader who is willing to draw the line at any
likely bipartisan agreement. Perhaps Richard Shelby can fill that void in the
Senate.
This debate does have a Tom Tancredo, however — a
damn-the-torpedoes high-profile hardliner. Ron Paul has been all
over television and had a commentary up at CNN’s website opposing even the
concept of a bailout with the zeal of Tancredo’s opposition to
amnesty. A devotee of Austrian economics, Dr. No prescribes tough
medicine for what ails the economy: the liquidation of all bad
investments in the name of risking recession now to prevent a
credit-fueled calamity later. Paul would let the market get rid of
the “misallocation of resources into sectors in which there is
insufficient demand.”
Such a radical fix wasn’t always so outside of the conservative
mainstream. Ronald Reagan accommodated Paul Volcker’s tight
monetary policy even at the expense of the 1982 recession.
Unemployment zoomed to 10.8 percent but prosperity returned after
the Reagan-Volcker policy mix licked stagflation. But Republicans
who haven’t forgotten this also remember how many members of their
party were thrown out of office in the November 1982 elections.
Which brings us to the final advantage bailout proponents have
over those seeking an immigration compromise: there is a much
greater sense of urgency surrounding the economy as well as a
popular expectation that the government must Do Something about it.
Politicians are reluctant to stand pat while retirement portfolios
vanish and mortgage foreclosures rise. Even if the long-term
consequences of their actions are uncertain, they are fairly
confident the short-term electoral consequences of inaction will be
bad.
Opponents can still try to rally a skeptical public against the impending bailout
as a costly giveaway that won’t actually solve the underlying
problem, an amnesty for the financially reckless. It’s worked
before.
