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.
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