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.
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