The Public Policy

Libertarian Populism

A free-market message in the bailout vote.

By 9.30.08

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Nobody seemed to notice when Libertarian presidential candidate Bob Barr adopted as his campaign slogan "Send Them a Message!" -- the same outsider theme that animated George C. Wallace's populist third-party run in 1968.

Leaving aside the vast political and historical distance between the late Alabama Democrat and the former Georgia Republican, Barr's slogan clearly seeks to tap into an enduring populist conception of the government in Washington as a corrupt insider racket controlled by special interests, in which both Democrats and Republicans are out of touch with the concerns of ordinary Americans.

The defeat of the Wall Street bailout deal in the House yesterday was an amazing convergence between libertarian ideals and a resurgent populist sentiment.

Brokered by leaders of both parties, the proposed $700 billion bailout was pitched in a primetime televised speech last week by President Bush as a consensus: "After much discussion, there is now widespread agreement on the principles such a plan would include." This consensus came with the imprimatur of expertise: "The government's top economic experts warn that without immediate action by Congress, America could slip into a financial panic, and a distressing scenario would unfold."

Had this speech been made before a live audience, one could imagine the catcalls from the cheap seats. Why should these "top economic experts," who evidently hadn't been able to prevent the crisis, now be entrusted with the solution? And what an easy consensus it must be for these "experts" to agree that the answer to Wall Street's problems was to grab $700 billion from the taxpayers.

Ordinary Americans could be forgiven their skepticism toward Washington talk of "experts" warning of a crisis with "widespread agreement" on the solution. Wasn't this just what they were told a few years ago about Saddam's weapons of mass destruction? For that matter, isn't it also what Al Gore says about global warming, and what Bill Clinton used to say about semi-automatic weapons?

POPULIST RESENTMENT can be understood as the natural response of citizens toward a government that has lost credibility. Just as the loss of credibility for Lyndon Johnson's "Great Society" in the 1960s created a populist backlash, a similar response has been generated by the crumbling credibility of Bush's "Compassionate Conservatism."

Just as disillusionment with LBJ's policies undermined faith in the sixties "establishment," so have the failures of the Bush years spawned a more general skepticism toward Washington. If the president's job approval (26%) is at a historic low, approval ratings for Congress (17%) are even lower. And unlike the term-limited president, most members of Congress are running for re-election.

So extreme is the government's credibility shortage that even dire warnings of economic collapse failed to stir popular support for a taxpayer rescue of the financial industry. One poll last week found only 25 percent of voters favored the bailout plan.

Members of Congress didn't need to consult the polls to know how unpopular the bailout was -- their phones were ringing off the hook with calls from citizens angrily opposed to the plan. California Democratic Rep. Brad Sherman said calls were running 300-to-2 against the bailout. Ohio Republican Rep. Steve Chabot's office reported 350 e-mails opposing the bill, and only 10 in support.

Many of those denouncing the bailout did so in libertarian terms that would have warmed Ayn Rand's heart. "Privatizing profits and socializing losses on a scale we have never seen before in our lifetimes," Michelle Malkin said in reaction to the Sept. 19 press conference where Treasury Secretary Henry Paulson announced the plan. "The fundamentals of capitalism have been sabotaged."

House conservatives in the Republican Study Committee offered their own market-oriented plan, beginning with an immediate suspension of the capital gains tax. The RSC's chairman, Texas Rep. Jeb Hensarling called for ending the monopolistic authority of Freddie Mac and Fannie Mae, "financial Frankensteins -- created in a government laboratory -- [that] are not creatures of the free enterprise system."

The bill had its liberal detractors, too, but for every voice declaring that the Paulson bailout proposal ceded too much to capitalism, there were many more voices declaring that it ceded too much to government. FreedomWorks -- the free-market think tank led by former Republican Rep. Dick Armey -- issued a list of "Ten Reasons to Oppose the Wall Street Bailout."

PERHAPS NO ONE EMBODIED the opposition as much as Alabama Sen. Richard Shelby, whom the Wall Street Journal described as "a Democrat-turned-Republican who espouses free-market principles with a populist streak."

"I think we're going down the road of France now," Shelby told the Journal in expressing his opposition to the bailout.

Despite such opposition, congressional leaders in both parties announced early Sunday morning that a deal had been reached, and it looked as if the plan would be rammed through Congress quickly. Even as the House prepared to vote, however, Barr sounded a warning.

"The leaders of both the Republican and Democratic Parties are rushing ahead with their $700 billion bill," Barr said in a statement. "Without a single hearing and without considering other solutions, Congress is preparing to put the typical American family on the hook for more than $8,000. Legislators in both parties need to stand up for the American people and say no."

It's unlikely that any of the 228 votes against the bill were swayed by the (capital-L) Libertarian candidate. Yet in the populist uprising against the bailout, the (small-l) libertarian message was clearly heard.


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About the Author

Robert Stacy McCain is co-author (with Lynn Vincent) of Donkey Cons: Sex, Crime, and Corruption in the Democratic Party (Nelson Current). He blogs at The Other McCain.