How should we understand the defeat of the bailout package in
the House of Representatives Monday? The leaders of both parties
wrangled a deal over the weekend and it was expected to win
approval. Instead it went down to defeat and sent the stock market
falling. Therein lies an old joke.
A British wag fresh off the boat bantered with an American
socialite at an afternoon party in Manhattan’s Upper West Side,
circa 1900. A story in that day’s Times about a
prostitute’s arrest made that the hot topic of conversation. The
socialite expressed mild shock, so the wag asked, “Is it your
position that it’s wrong to have sex for money?”
“Certainly,” she said.
“You wouldn’t sleep with me in exchange for funds?”
“Of course not!”
“How about for a million dollars?”
That shut her up for a second. The lady pondered and said that,
for a million dollars, she’d consider it.
“How about for a quarter?”
She raised her voice high above the din of the party: “Sir, just
what sort of a woman do you take me for?!”
“Madam,” said the wag, “we’ve already established that. Now
we’re quibbling over price.”
An ominous item in U.S. News last week
brought that one to mind. Michigan Senator Debbie Stabenow said
that the recent $25 billion bailout for Detroit automakers “seemed
like a lot when we first started pushing this.” But “suddenly,” in
light of the looming $700 billion bailout package, “it seems so
small.”
The package that the House rejected was smaller than what the
Bush administration wanted, and had a veneer of oversight that the
Treasury proposal lacked. It would have given Hank Paulson a $350
billion bite at the apple, with a lot more pulp to come.
The legislation went down 228 to 205 not on a party line vote,
but in a bipartisan peel off — as one Nostradumus-like
pundit predicted.
Some Democrats blanched at giving such a large handout to large
financial firms. Most conservative Republicans voted against it as
well, a fact that wasn’t lost on financial journalists. CNN Money
reported: “About 60 percent of Democrats voted
for the measure, but less than a third of Republicans backed
it.”
The legislation could have passed the House without a single
Republican vote, but many Democrats worried about backing a
political package that is unpopular with the public without the GOP
providing serious political cover. The Republican refusal to go
along left them exposed and thus doomed the legislation.
President Bush and company should have seen this coming. GOP
leaders of the House and Senate last week refused to go along with
the myth that a workable agreement had been reached. Those leaders
had been hearing from worried members whose staffs had been hearing
from irate voters. Most Americans simply do not want to be on the
hook for an elephantine Wall Street bailout.
Of course, most Democrats received similar calls from their
constituents. Why the great disparity in how the members were
willing to vote?
Republicans, after all, are seen as the party of big business.
They want tax breaks for capital gains and an end to the
inheritance tax and they’ve certainly proved willing to go along
with more spending. Over the last eight years, the annual federal
budget has ballooned to $2 and now $3 trillion. What’s another
trillion?
When it was put that way, conservatives in the party decided
they didn’t have much choice but to help vote it down. A yes to
this bailout would have made it nearly impossible to say no to any
cause clamoring for the government to step in. If the business of
American government simply comes down to quibbling over price, then
all principled protests become rather pointless.
