Monday, September 29, 2008

The Financial Brink?

Aside from the partisan sniping inevitably following the failed vote by Congress of a taxpayer "bailout" (aka "rescue") of America's financial services industry, what can be said about the day's shocking events in Washington?

1. Can anyone state an argument for not removing the leaders of both parties in the House from their respective positions? After hearing that negotiations had taken place all weekend and that a vote had been set for today, I laughed aside headlines suggesting that the outcome of the vote was in doubt. The laughter turned out to be wrong because it was based in a trust in the competence of congressional leaders. One of the core competencies of legislative leaders involves the ability to count noses, and it is inconceivable that such momentous legislation was brought to a vote without any certainty that it had the votes to pass.

Speaker Pelosi would blame Minority Leader Boehner for the failure of Republicans to do their part, and Mr. Boehner criticizes Ms. Pelosi for her insulting speech costing votes just before the tally began. They are both right. Mr. Boehner should have had his count. As for Ms. Pelosi, while she and Barney Frank can complain that Republicans should not change votes because they have been insulted, one must remember this: those Republicans never were wholly convinced that the legislation was good. They were leaning one direction over the fence. Ms. Pelosi's offensive remarks pushed them the other direction. No serious responsible leader would have done that. Can anyone imagine Tip O'Neill attacking people who's votes were needed in that way?

2. 40% of Democrats and 2/3 of Republicans voted against the bailout. There is, of course, irony in the fact that more Democrats than Republicans wished to bailout Wall Street financiers. However, Republicans are somewhat more opposed to government interventions regardless of the beneficiary. Even so, this was not really a vote that broke between liberals on one side and conservatives on the other. There were groups of both on each side of the vote. Rather, on one side were those who believed that the country stands on the precipice of a great depression, and on the other were those who find that first group to be made up of the heirs of Chicken Little.

3. While both sides bear some blame for the failure of the bill, ultimately the vote today was a greater risk for the Republican Party. Just because Chicken Little was wrong does not mean that the sky really could not fall, and if it does, Republicans will be standing conspicuously amidst the rubble. The 110 page bill voted on today included concessions to conservatives that improved it over the initial 3 page carte blanche for Secretary Paulson, and it is breathtaking that not enough Republicans crossed over to pass the bill.

4. What will Congress do next in light of the fact that many remain convinced that we are on the brink of a financial collapse? Who can say at this point? Can any bill providing for a bailout of some sort achieve a majority vote?

5. Are we actually on the brink of a financial collapse? Today's plunge of the stock market notwithstanding, it is not clear whether anyone knows the answer to that. However, one senses that we will know very soon.

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