The Bailout: Why Are Bush and the Democrats Combining Against Congressional Republicans?
In Washington, it's a showdown between the representatives of Wall Street and the representatives of Main Street. But have you noticed that the old partisan alliances are reversed? It's the Democrats who are now the Wall Street Party. And Republicans -- with the conspicuous exception of President Bush -- are now the Main Street Party.
Consider: President Bush proposed the $700 billion plan; after days of hiding behind the Secretary of Goldman Sachs, Henry Paulson, Bush finally emerged from the sidelines Wednesday night to tout the plan in prime time. Just this morning, he spoke again in favor of his plan, while again taking no questions from pesky reporters.
But the Congressional Democrats, who mostly despise Bush, are also mostly for the Bush plan. Sure, they made some cosmetic changes in the bailout proposal, but they have never wavered in their basic endorsement.
So who's against the plan? It's Congressional Republicans who are getting in the way. They are the heroes of the hour. Although outnumbered, these brave Capitol Hill GOPers have stopped official Washington in its tracks. Why? Because the Democratic majority, supporting the bailout, doesn't actually dare to vote for it unless they know that most Republicans will vote for it, too. And that's because the Democrats fear that this bailout legislation is deeply unpopular with the country. So the only way that Democrats can vote for the bill and be safe this November is if Republicans also put their names on the legislative dotted line. Not a profile in courage for Democrats, of course, but it's smart practical politics for them to demand some "cover."
But let's step back a minute. How did it come to pass that President Bush is siding with Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi? What thought process led the administration to support a big-government bill that the Republican grassroots all despise? Bush, of course, never met a Cheney-esque secret plan that he didn't like. And it would also seem that seven-and-three-quarters years in office have totally disconnected him from rank-and-file Republicans. Remember his support for the ill-fated immigration "amnesty" bill back in 2004? And after that misguided legislation was beaten back, he proposed it again in 2007. What was he thinking?
For their part, the Democrats are emerging as the new party of the rich, the party of Wall Street, the party that champions financiers at the expense of producers. For years now, the most affluent precincts in the country -- mostly on the two coasts -- have been solidly Democratic. And in 2008, the polls show that upper-income voters mostly support Barack Obama. And Obama, of course, guided by the likes of Robert Rubin, has been quietly supportive of the deal. Indeed, Obama personally epitomizes the Democrats' new political arrangement: He was raised mostly poor, then worked mostly with the poor, but now he is rich and works mostly with the rich -- his campaign is a well-financed corporation. Yet he has maintained his popularity with the poor. For their part, the Republicans now represent the majority of middle-income voters -- Main Street. But the Democrats, with their political pincer movement, from the rich above and the poor below, have the clear electoral advantage in 2008.
So it's understandable that the Democrats would want to take care of "their" people at the top. That's the revised Democratic model: The same old socialism for the poor, of course, in the form of the bureaucratic welfare state, and a new kind of socialism for the rich, in the form of this bailout.
In addition, the Democrats have some sordid secrets to protect -- and Paulson & Co. are helping them keep hidden. Much of the overall financial crisis can be traced back to bad mortgages made to unqualified buyers at the behest of Democratic poverty advocates; it was a neat arrangement, poor Democrats got houses, as rich Democrats got richer by manipulating the financial paper. But the Bush administration, eager for a deal with the Democrats, has made it clear that it won't point fingers. For their part, Senate Banking Committee chairman Chris Dodd (D-Conn.) and House Financial Services Committee Chairman Barney Frank (D-Mass.) are returning the favor by pushing the bill forward.
So only Congressional Republicans -- the single most implacable figure being Sen. Richard Shelby, the Rock of Alabama -- are taking a firm stance against this monstrosity. They even seem to have brought along John McCain, who has taken various positions on the bailout over the last few weeks. But bravo for the Congressional Republicans. After years of embarrassments and scandals, the Capitol Hill GOP has rediscovered principle and honor. And so rediscovered the glory of genuinely representing the people, against the powerful.
I am reminded of Aragorn's Battle Speech at the Black Gate in the third of the "Lord of the Rings" trilogy. The King tells his outnumbered troops:
"I see in your eyes the same fear that would take the heart of me. A day may come when the courage of men fails, when we forsake our friends and break all bonds of fellowship, but it is not this day.
An hour of wolves and shattered shields, when the age of men comes crashing down, but it is not this day!
This day we fight!!
By all that you hold dear on this good Earth, I bid you stand, Men of the West!!!"
And so, in the Tolkien story, the Men of the West are triumphant. But today, in the real world, could the Republican Men and Women of Capitol Hill yet prevail? The Washington DC conventional wisdom, as of Friday, is that the Bush Administration/Democratic/Wall Street juggernaut will eventually bring the Congressional GOP to heel. If so, that would be the final victory of Wall Street over Main Street.
But maybe not. Maybe ordinary people will win this epic struggle.
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Bush isn't a sideline spectator in this election, neither is Karl Rove or Grover Nordquist. They (with malice of forethought) sprung this "economic 9/11" on the world just weeks before an election in order to create chaos and fear, but more importantly, to set up the Republican Party as the great "stewards of the economy" and paint Democrats as "socialists". This was all planned in advance.
The dirty trick gets really interesting when you realize that the 3 page proposal that infuriated so many people was just a ruse. Bush & Co knew that a 3 page proposal wouldn't pass legislation. Section 8 of the proposal was put there to make sure there was an uproar. They handed it to the Democrats and said "Here, you fix it." and Dodd, Frank, Reid, etc started tweaking and setting provisions. They started calling for a "bailout of Main Street and no golden parachutes".
This is EXACTLY what Bush & Co had in mind. Karl Rove admits as much and McCain was as complicit as anyone. Paint the Dems as the ones who want 1.8 trillion, give the Republicans a soundbite on CNN to blame the "Democrats Bailout Plan", and give McCain a photo op and a chance to say that he was "busy saving America". Meanwhile, all the other issues that we are trying to solve are lost in the fray. Pretty slick, eh?
This so-called "disaster" is nothing more than another political ploy.
This essay is so full of $h1+ it must be worth about $700 billion.
1) The house republicans are not pushing against the bailout in favor of "main street." They are pushing against the bailout because they don't like the strings attached--i.e., the executive pay limits, the equity shares for taxpayers, the meek attempt to encourage restructured mortgages. Only after Bush & senate republicans acquiesed to the very demands that made this palatable did they house republicans dissent and offer an alternative plan. Their alternative plan, by the way, consists mainly of a suspension of the capital gains tax and a plan to sell of Fannie and Freddie to private companies, which will neither avert the current crisis nor do anything for average americans and small businesses.
2) The CRA did not contribute nearly as much to the current crisis as the deregulation of derivatives that Phil Gramm pushed through in 2000.
I must say, one of the few posts on this site that is accurate and truthful to a fault for this website.
In reality 1977 under Carter started this boondoogle. Opening the credit to sub-prime loans. Congress has been warned many times. In fact McCain presented a bill along with Dole and Sunu which lays in Pelosi's heap of denials.
As an Republican this is what my Senator and Congressman got. No bailout for anyone. Let it run its course and then dismantle Freddie and Fannie. We are going into a depression either way, so save your USA tax dollars for something else. Like getting Social Security straightened out or medicad or some other program that you do not have funds for. Of course someone who trusts a government that has no control is like trusting a drunk to buy you a beer the morning after.
Now we have to back up Fannie and Freddie since it is a government entity or claim USA bankruptcy. The problem here is the majority of these sub-prime loans are there and ChinaJapan holds them in Treasury Bills and want there money at some point.
I know it hurts to know, you are now the party of the rich and famous and tibits for the poor.
The truth is the Mr. O'Change bama has nestled up to the very thing he claimed to reject for change.
What was that campaign message?
"In fact McCain presented a bill along with Dole and Sunu which lays in Pelosi's heap of denials."
Way to lie like a true Republican. The bill was not presented by McCain. The bill was presented in 2005, McCain did not support it until 2006.
But lets' talk about the bill Senator Phil Gramm presented and passed in 1999 that deregulated the banking industry, shall we??? Or is the truth too inconvenient for you.....
The Democrats, for good or ill, are trying to play the hand they were dealt after all these years of Republican deregulation. In typical fashion the House Republicans are seeking a combination of denial and more of the same.
The simple fact is that the economy has been on a slow motion train wreck since the flood gates were opened when Gramm snuck in the destruction of Glass-Seagal.
So now the Democrats have two choices. Let the whole thing fail or try to do something about it before the most vulnerable are crushed. If they try to do something that does not in any way resemble what Bush will support then they might as well go home and board up the doors. Is this likely to lead to the perfect fix? By no means. Can a perfect Democratic solution be passed with Bush as President and a slim majority in the Senate? Not a chance.
The Republicans want to avoid fixing the problems they created and pretend that it's all going to work out fine. But since they care little about the middle class or the poor, doing nothing means the guys that gained the most over the last 20 years are the big winners by default
Blame Democrats for wanting to fix things if you choose. But don't pretend that Republicans are doing anything different than they always have, watching out for the wealthy.
Republicans tried to fix it in 2005, by trying to reform Fannie and Freddie. Democrats blocked the bill. They were all being paid off by Franklin Raines, Jim Johnson, and others who cooked the books and made out like bandits, while destroying economy.
Clinton required FM & FM by law to make bad loans to people who couldn't afford them. FM & FM cooked the books to make everything look ok, and Wall Street bought up these bad derivatives. Democrats covered for them.
The Paulsen plan would be the biggest THEFT IN WORD HISTORY. Any politician that votes for it should be in prison as an accesory to the crime.
There is a solution that requires ZERO taxpayer money to wipe out the bad debts. Any bank that is insolvent should be put in receivorship, their debts erased and managed by the FDIC. If you don't pay your medical bills you have to file for bankruptcy...why should banks whose BOOKS ARE COOKED be propped up? They CANNOT be saved.
If not enough banks are left to lend to to citizens and small business then those banks being managed by the FDIC can be given lines of credit from the government. When the loans are paid back the money goes back in the treasury.
Pinkerton's comments are typical of conservative pundits: propaganda dressed up as thoughtful insight. He criticizes Democrats as the "new party of the rich and Wall Street," while praising Republicans as guardians of the poor. He overlooks a few inconvenient facts: The Republicans supported the Administration's plan until McCain showed up Thursday afternoon probably to tell them to get behind it. Because conservatives despise McCain, they revolted against it, believing that anything McCain was for must necessarily be suspect, eventually proposing their own plan. The result is now a deadlock and confusion. So much for McCain leadership. Democrats examined the Administration's plan because Paulson and Bernanke showed up with dire warnings of massive unemployment and breadlines circa 1935. Pinkerton ignores those two who sit in the eye of the economic storm.
As I read this, I became more and more incredulous...until I clicked on the author bio:
James Pinkerton is a contributor to the Fox News Channel and is a regular panelist on the Fox "News Watch" show.
Credibility shot.
This is dangerous territory for both parties and their candidates. Although it is McCain who could benefit the most. He has not, as of yet spoken out against the plan. The conservatives in his party are the ones who balked and are staging a revolt.
This makes his cynical choice of Governor Palin as a running mate look even better I agree with your observation that because conservative Republicans fought the bailout plan, they are standing with the majority of voters out there who are outraged at what they see as a giant handout to greedy and incompetent bankers. This, by extension, can align McCain and Palin with the ordinary American, and portray Obama, who supports a bailout, to be an elitist aligned with those who caused this mess.
ITS A PLOY BY MCCAIN HANDLERS TO MAKE MCCAIN LOOK LIKE HE NEVER APPROVED GIVING OUR TAXPAYERS MONEY TO A DEMOCRATIC SOCIALIST BAILOUT. WATCH OUT DEMS AND BE CAREFUL WHAT YOU WISH FOR.
"Conservative Republicans, meanwhile, are insisting that other measures -- tax breaks to companies that buy up bad debt as well as temporary cuts in the capital gains tax -- be included in any agreement."
Who are you trying to fool, Mr. pinkerton?
Read his bio!
Consider the source.
The House Republicans are true believer fanatics, whose limited understanding only allows them to swallow an ideology whole, without nuances. They actually believe in the fundamentalism of the free market ideology espoused by the Republican Party leaders. So they oppose this bailout. That doesn't make them more virtuous, or on the side of "Main Street" as Pinkerton, a fellow fanatic, describes them. That makes them narrow minded, inflexible, dogmatists-- every fundamentalist movement has them. They are the type of people who would have burned witches in the middle ages, because of their absolute devotion to domatism. Such faith-based devotion is dangerous in politics. Pinkerton's pathetic efforts to valorize such lunacy will only fool those who are all ready lost.
Well then, why doesn't Pelosi just push the bill? She's got the president who wants to sign it, she's got the votes in the house and she's got the votes in the Senate. Unfortunately, she's also a coward who doesn't want the monstrosity blamed on her party, so she needs enough republicans on board so she can call this disaster "bipartisan" and not have the dems have ANY responsibility. If I were the republicans, I would just cross my arms and say, "go for it."
Let me get this straight: this all happened because the big bad Democrats made banks finance houses for black people. I'm beginning to agree that this deal smells to high heaven, but if Repubs are going to push this slanderous, evil storyline, I'm for letting those chestnuts burn in the fire. If GOP congresspeople won't vote for it, why should we? Someone needs to fall on their sword here, and I see absolutely no reason why it should be the Democratic congressional leaders.
The Democrats are making a good faith attempt to avert an economic disaster.
Will there be a disaster if there is no bailout? Who knows?
A lot of smart economists say yes.
Some Republicans have made it clear that they would rather have another Great Depression than to compromise their free market principles.
Principles are good..
But you can't sell them on the street corner when you've lost your pension, your job, and your house.
I've heard anecdotal stories about investors not being able to cash a measly (not to me, but in the scheme of things) 1,ooo,ooo treasury bond. The Federal Reserve did not have the cash on hand, told them to check back tomorrow. My brother tried to withdraw 20k from the bank, and was told it would take a few days to come up with the cash. Make no mistake it's bad. Quit playing with fire and act like a grown-up.
Yeah, this post is really helpful, Mr. Pinkerton.
Listen...this bailout is not just for the Wall St. guys. If nothing happens and banks go down, there is a credit crunch and companies cannot pay their employees. Not Wall St. businesses, Main St. businesses.
You're following the "story" rather than the facts, I'm afraid. And do you think that the Democrats WANT this? You're crazy. This is something they are forced to do by circumstance, by the Bush incompetence. They have been put between a rock and hard place, and posts like this play right into the narrative that McCain is going to try to ride to election.
"Democrats new party of the rich." This is misleading, all smoke and mirrors---and, therefore, typically Republican. While rich people may vote for Democrats, namely because they still have a heart and want to see others less fortunate than they succeed, they have no intention of enabling the concentration of wealth in a few hands (see Bush and Cheney).
And when Bush and Boehner say they are for the working man of America, as they have on many occasions, this is what you call a Rationalization---a way of rationalizing their morally bankrupt policies---which is a low-level defense mechanism.
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