Okay, time to be honest. Tell me if you’ve heard this story: you knew “The Bailout” was a power grab, a bad idea, bad policy, fiscally irresponsible in the not-so-long-term, and a lost opportunity on several levels. But then when it went down unexpectedly in the House and you cheered, it was a slightly uncomfortable cheer. A cheer that came up from your throat, rather than your diaphragm, because it had a hard time getting past the knot in your stomach.
Was this hesitation and anxiety caused in part by mass media programming which caused you to doubt your perspective? Probably. Was it caused entirely by that? Maybe. Maybe not.
There were three modes of thinking out there on the issue: must pass now, must defeat at all costs and the third approach which was put into words by Paul Krugman who continues to be the standard bearer for liberal economics in the political media despite his high profile conflicts with Obamaphiles during the primary. Krugman’s feeling was that the bill was bad policy, but it was the only policy that had a chance of avoiding partisan wrangling long enough to gain passage in a timely enough manner to prevent a full-on economic meltdown which, let’s face it, we are not currently in (yet). A crisis, sure, but for now, the credit crisis is still an abstraction for the majority of Americans.
And this was the more intellectual process, colored as it was by jumping at shadows that may or may not have been there. There was the public as well. Sure the public was overwhelmingly against the bill on its merits, but paradoxically, the public reaction when the original bill was not passed was explosive. Minority Leader Boenher was, thankfully, such an unmitigated boen-head that he quickly got up in front of the cameras and whined about Speaker Pelosi being mean to them as his excuse for not delivering his share of the votes for passage. As a result, he moronically painted a big target on his head, and the blame for inaction swung into Capitol Hill as quickly and certainly as a wrecking ball taking the entire GOP caucus with it, while leaving the Dems unscathed… although there’s no question they felt the breeze as it went past.
So, under cover of the fig leaf of increased FDIC coverage, congressional oversight (HA! Sorry… hard to write those words with a straight face anymore), and supporting his Presidential candidate, Peter Welch voted for essentially the same bill he voted against – and for all the right reasons – earlier in the week.
But circumstances what they were, I’m not so much angry as I am disappointed. Welch got scared, plain and simple, and its easy to understand (and be sympathetic to) why he did. Not scared for his own seat – obviously that’s tied up – but scared for the economy (hard not to be) and scared of what that wrecking ball might do to his colleagues on its next pass. A brief reminder of why this was the wrong move on policy, and a deeper look at why it was wrong on politics – after the flip…
Now I could make the same criticism of Leahy, here, but Leahy’s vote was never going to be anything different. He is, in his way, deeply entrenched in the beltway conventional wisdom about such things. Part of that is a generational thing.
Welch, though, is forging his own path steadily, but not always decisively. It’s been so steady that its come to be hard to remember that he’s still only a freshman Congressman, but that occasional shakiness is a reminder.
And the path he is forging often mirrors largely what mainstream liberalism is becoming, rather than what it’s been, and that creates conflicts. Feedback. Welch’s approach has a streak of populism in it that wasn’t apparent in Leahy’s generation, and you can sense it at times in Welch’s rhetoric – but especially in those conflicts.
Let’s review in Welch’s own words what was wrong with this bill:
“First, the Paulsen plan does not offer a path to a strong economic future. Quite simply, it is the biggest taxpayer bailout in American history. It proposes to solve a problem caused by reckless borrowing and reckless lending by borrowing $700 billion more.
“Second, it is appalling that the plan is not funded. It is yet another expense put on the taxpayers’ credit card. Just as President Bush told us his tax cuts for the wealthiest Americans would pay for themselves, and Secretary Rumsfeld told us the Iraqi oil revenues would pay for the Iraq war, now Secretary Paulsen is telling us he can sell toxic debt securities that Wall Street can’t.
“Since the administration first proposed its Wall Street bailout, I have heard from thousands of Vermonters concerned about their hard earned tax dollars rewarding Wall Street’s reckless behavior. Vermonters are furious about the financial crisis and they have every right to be. They bitterly resent being asked to pay $10,000 each for a $700 billion Wall Street rescue.”
“Chairman Frank, Chairman Dodd, and House and Senate leadership did a good job making a bad proposal better, but it is still a bad plan. I cannot in good conscience vote for a fundamentally flawed plan that puts so much financial risk on the backs of the already stretched middle class.
“There are responsible ways to accomplish stabilizing our markets without leaving the middle class holding the bag. Many of us proposed to pay for an economic stability plan by establishing a financial stabilization escrow account paid for by a small transaction fee on security trades. This would protect the taxpayer and give any plan the financial muscle required for success.
“Instead, total responsibility for this crisis is transferred to the middle class. The risk of this proposal is simply too great. The burden on Vermonters is simply too heavy. Vermonters should not get caught in the undertow of greed on Wall Street.
“Resolving our economic problems will take more than a quick-fix, taxpayer funded bailout. It will take a return to the core truth Vermonters know: our economic policies must focus on building and preserving our middle class. We must reward work and entrepreneurship, not speculation, market manipulation and corporate self dealing.”
At the end of the day, this was a case of again being afraid of doing what should be done. Afraid that it wouldn’t pass and a little bit of that lingering self-doubt about the value of these liberal economic convictions folks on the left spout. Generations of GOP nonsense have been internalized by many in the Democratic caucus, as well as the greater community, and its going to take far more deprogramming to remove those doubts.
And of course, we’re all limited by that god-awful mantra that is so often repeated by so many on the left (particularly, in Vermont, Gaye Symington). That abyssmal Otto Von Bismarck quote that “politics is the art of the possible.” All that quote has ever amounted to is politicians giving themselves permission to either give up or sell out (the former being what Welch did in this case). It says that real leadership, aspirations and transformative goals are not to be bothered with because we have to live in the world of what is “the possible” – usually as defined by the opposition.
Yuck.
What should he have done? Well, on GMD there were several opinions. Some were all for the bailout. CL wanted to see the money spread out evenly among everyone for across-the-board generalized economic stimulus. A lot of folks were advocating for a grassroots-only approach to relieve individuals from those “toxic” bad, unfulfillable debts. For my part, I would’ve liked to have seen a combination of the grassroots approach, but I also felt that there was an urgency in play that would not allow for a purely “trickle up” approach to prevent further deterioration of those global economic players in such a way that wouldn’t harm everyone at any rung of the ladder, so I would’ve liked to have seen the grassroots efforts combined with direct investment into some of these failing institutions, giving taxpayers controlling interest (as with AIG) while pumping in enough capital to keep the wheels turning and allow the bottom-up approach to work. It’s hardly anything inventive I”m talking about here – pretty straight-up liberal economics (and again, from someone who doesn’t really know what he’s talking about…. this economics stuff just ain’t my bailiwick…. but it seems to make sense). Of course, such an approach would mean playing veto chicken with the administration, but I think the promise of capital would’ve motivated Wall Street to force Bushco to blink on this one.
But aside from that, Welch had – as all elected officials do – a political calculus to make, and I believe he made the wrong call, here.
Welch had cover to make either an up or down decision for a couple reasons: one, he’s not in a race this year. But two, his constituents are divided – not between pro-business or so-called “anti” business either. The fact is that even the Vermont Chamber of Commerce was divided on this.
So in terms of politics, he had nothing to lose, frankly. People were going to laud him for making a “tough decision” either way – and about the same amount in either case.
But a lot of the activist set on the left that so viscerally despises Welch for seemingly pathological reasons found itself in a state of shock this week. Why? Because a lot of genuine leftists who are also among the non-Welch-basher crowd were genuinely surprised by his vote against the first bill. They had been so often told by the basher-crowd that Welch was the embodiment of all things evil and corporate, that they honestly didn’t think him capable of agreeing with them on anything they considered meaningful. I heard so much positivity directed towards Welch this week from the solidly left crowd, that it was clear there was a fundamental realignment of their perspectives underway – and that would be a good thing. The left crowd is where most of the activist energy is, and when Welch does stretch beyond his own freshman years and develop into the longer-term incumbent Representative that he will become, he’s going to need their help to get things done.
Then, of course, there’s the cynical reality that this bill – one fundamentally the same as the one he initially opposed – was going through with or without him.
Crass as it may sound, Welch had nothing to lose and plenty to gain by not getting the creeps and changing his mind. Unfortunately, now folks will simply remember that when the biggest economic crisis in decades reared its head, and the worst President in history insisted once again on ramming through a “solution” that would only create other problems, Peter Welch was simply against it before he was for it.
A few years back, I remember Peter Welch speaking to the crowd at the David W. Curtis awards where he commented (to much applause) that “good policy is always good politics.”
Where I don’t necessarily concur with that as an absolute axiom, I do wish in this case he had heeded his own advice.