The Financial Crisis Bailout Leadership Failure

Don't believe the urban myth that Nancy Pelosi was somehow responsible for the failure of the financial bailout. But also don't believe believe that the blame for this falls squarely with the House GOP leadership.

Monday's vote was a failure of presidential leadership.

I'm not talking about cracking skulls and gathering votes. I'm talking about public education.

Here's a bottom-line problem with the bailout bill and the financial crisis writ large: Lots of people don't understand either. For all the talk of the breadth and depth of this crisis, there's still an understanding gap regarding why people on main street should care to the tune of $700 billion about the people on Wall Street.

There's one person in the country who can cut through the chatter and make the case: the president. The basic reason the bill went down is because it is phenomenally unpopular. This reflects a failure on Bush's part to educate the public regarding its importance.

As I wrote in U.S. News's opinion section last week:

This crisis is presented as the most serious since the Great Depression. Regardless of its economic merits, the comparison is instructive for sake of contrast. Franklin Roosevelt was a master of public psychology, knowing when and how to use that presidential tool that his cousin Teddy termed the "bully pulpit." FDR's famed first 100 days (which started, remember, with a speech and the admonition that we had nothing to fear but fear itself) were not merely a whirlwind of activity but were punctuated by the president periodically explaining to the people what he was doing and why, in clear and simple terms.

It is the wildest of understatements to say that GWB is no FDR. But he could have at least reached for Reagan, another president who used the bully pulpit effectively.

President Bush was slow to educate the public on the crisis, letting Treasury Secretary Henry Paulson take the lead. When he did speak, Bush did so from a business school background: "We're in the midst of a serious financial crisis, and the federal government is responding with decisive action," Bush told the nation the other night. "We boosted confidence in money-market mutual funds and acted to prevent major investors from intentionally driving down stocks for their own personal gain. Most importantly, my administration is working with Congress to address the root cause behind much of the instability in our markets."

You can read the entire piece here.

(I should add that John McCain and, especially given his gifts in communications, Barack Obama could have used their debate Friday to educate the public, but both failed.)

In the mean time the political system muddles along, rudderless.

Comments

[JimR]

I applaud both the Republicans and Democrats in the House who voted to kill this ripoff of the American taxpayers.

[SamThornton]

The most amazing thing about the Paulson bailout proposal is that so many in the media have swallowed the Bush/Paulson premise that throwing money at the financial community will have any effect on liquidity in the credit markets, which it is claimed is the real problem. It's like trying to cure your cat of the mange by dosing your dog for worms.

If we really desire to deal with the problem of a credit market freeze, it needs to be dealt with directly, not with some tangential bailout which may or may not have secondary effects that might help restore credit markets.

A good example of the cluelessness in the media is being provided at this moment by CNN which has mounted a non-stop litany of doom and gloom, parroting the Bush/Paulson line with no examination of the facts. According to CNN, yesterday's market drop proves the case, while today's up-market also proves the case. What blather.