Thursday, September 25, 2008

Political Economics

Congress seems to have worked out some of the issues with the Paulson Bailout as it was originally worded.

Yay, I guess. My read on the situation is thus:

1. The White House quite literally sprung this bailout on Congress and the American people simultaneously, thus creating massive amounts of chaos as everyone from esteemed economists to Congressmen to Mom and Pop America tried to digest and interpret the action, risks, and repercussions.

2. The bailout plan was universally reviled by Mom and Pop America while being celebrated by Wall Street (you know, the guys who got us into this mess?), as evidenced by the 400 point rally immediately following the announcement. That made Mom and Pop America even more angry.

3. Congressional leaders from both sides of the aisle, while generally agreeing with the concept, needed to fix some of the egregious language in the original proposal... things like, "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."

4. Republicans were in a tight spot since just three weeks ago they adopted a platform that explicitly says no to bailouts. "We do not support government bailouts of private institutions," states the platform, approved Sept. 1. "Government interference in the markets exacerbates problems in the marketplace and causes the free market to take longer to correct itself." Oops!

5. This presented quite a pickle for the Republican congresscritters, who were hearing lots and lots about the bailout from their constituents. The 'Pubbies mostly agreed the bailout was necessary (even if completely outrageous) but there would be political consequences with the base. Right before an election, too! Some clever Republicans thought it would be smart to stage a big "No!" vote while letting the Democratic congress pass the bill anyway. That way the economy would still be saved while giving the Republicans some political cover. Then they could spend the next four years blaming the Democrats for being "Tax and Spend" long after everyone has forgotten what got us in this mess to begin with.

6. Democrats, although trying to be the grown-ups in the room, were not going to fall for that one. Wow... a backbone, who knew???

7. Republicans have now resigned themselves to having to "sell" the magnitude of the crisis. Democrats, too, but for them it's not quite the same embarrassing reversal of principle. And so it was decided to hold hearings in which they could all publicly bash on Paulson, Bernake, Cox, et al, and posture a bit in front of the teevee cameras for good effect. McCain suspended his campaign (after 99% of the work was done, but whatever, it looked good politically) and then the Republicans trotted Bush out to present the dire message to Mom and Pop (I thought he did well, actually). Bush even invited Obama and McCain for a Very Important Meeting in Washington today. All of this to discuss what is already a done deal with the exception of getting Mom and Pop onboard.

8. McCain decided to declare he was "canceling" the debate on Friday. Since he doesn't have the authority to "cancel" a debate that was agreed to by his party long before McCain became their nominee, it will be interesting to see how this plays out. His actual proposal is perhaps a bit more telling than he'd like it to be: reschedule the presidential debate for Oct 2, which happens to be the date for the VP debate, and then do the VP debate at some other time tbd. Even funnier, now he's talking about having Sarah Palin suspend her campaign, too. Pretty convenient given how well the Katie Couric interview went (or not, see below). Star-eyed Hannity must have run out of prearranged softball questions to gently spoon feed her so now I guess the intent is to keep Palin sealed in bubblewrap for the rest of the campaign so as not to ruin our image of her as the mavericky wunderkind from Alaska. At least until after the election.






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