I just got perhaps the most brain-dead e-mail I've ever received, from the super-left Working Families Party here in New York.
Everything I've hated about the Cheney/DeLay Republicans is in evidence here: the blind partisanship, mindless scapegoating, one-size-fits-all policy "solutions," the staggering hypocrisy, the near-total misunderstanding of how the world actually works. Grab your nose plugs and knee-high rubber boots; here we go.
Dear WFP Supporter,
The House vote against the bailout bill is shocking and fascinating at the same time. It appears to be a combination of an unusual right-left alliance. House Republicans are angry that the bailout isn't based on "free-enterprise" principles, or so they reflexively say. More likely they are furious at President Bush for having led them into the minority-party wilderness, and they are acting out. They are not an impressive bunch.
Much more interesting are the Democrats. 95 voted no (adding to the Rs 133 No votes). It's not entirely clear, but it seems like the Democrats who voted "no" mostly did so out of a sense that the bailout was still too generous to Wall Street hot-shots who caused the problem in the first place.
In other words... Republicans who voted against the bailout measure did so because they're ill-behaved children, and their statements about doing so on grounds of principle are obviously dishonest. But Democrats who opposed the measure are (we think) not only principled, but actually heroic.
(The truth, as Nate Silver details, is that the common factor of bailout opponents across party lines was that many were in close races for re-election. This thing is terribly unpopular in the country, and a vote to "bail out the Wall Street fat cats" easily could have been worth 4-5 points in a close race.)
Anyway, back to the dumbassery:
Now it's back to the House Democratic Leadership. They will "fix" the bill and get it done. The drop on Wall Street will demand it. The question is -- who will they conciliate to get the votes they need? If Pelosi has nerve, she will do what it takes to get Democratic votes, which will mean a proposal focused less on home lenders and more on homeowners. The problem is -- she does not want a bill that relies only on Democratic votes, because the bailout is not popular with voters and she doesn't want to take the blame if it goes sour (as it certainly could).
It's a truism of American politics that when government undertakes something momentous and/or unpopular, it must do so on a bipartisan basis--both because the two parties must share the political risk, and because it's the only way to guarantee some measure of sustained commitment to the policy. Think back three years to the Bush effort to partially privatize Social Security. The Republicans had the votes to pass their plan in the House; as they had done on so many other measures, they could have rammed it through there and forced the Democrats to deny cloture in the Senate, gambling that they could win on the politics. But they didn't, because the measure was unpopular. The Clinton health care reform effort of 1993-94 is probably an even better example; the political risks of "government-run health care" were perceived as too high for the Democrats to run alone. (They might have miscalculated there, given what happened that November.)
In the current decade, for that matter, the DeLay/Frist Congresses pushed through legislation on party-line votes again and again; this is in no small part why the public currently perceives the Republicans as "owning" this disaster. But apparently for the True Believers on the left, just as their counterparts on the right, this is all part of Doing the Right Thing.
It gets even crazier when the WFP offers its ideas for a revised measure:
What to do? We are no experts, but, it turns out, the experts aren't really experts. Our principles lead us to the view that the Democrats should make it a fairer, more progressive response to Wall Street's crisis. They need to trust that people will reward them for standing up for working and middle-class people instead of kow-towing to the wealthy.
How might the revised bill look that is different than the original?
* The costs must NOT be borne by working families. If we need to bail out Wall Street, we need to make sure that Wall Street pays for it, by imposing a steep surcharge on incomes over a million dollars a year and a small tax on all financial transactions (as New York did until 1981).
* The final plan MUST re-regulate Wall Street. Any bailout needs to reverse the deregulation of Wall Street that led to this crisis, including breaking up banks that are "too big to fail."
* It must be a bailout for homeowners, not for home lenders. We need to compel any institution that gets taxpayer assistance to renegotiate loan terms. Where foreclosure is unavoidable, families should be guaranteed the right to remain in their homes as renters. And the bill needs to include direct assistance to families in financial trouble, including expanded Unemployment Insurance and Home Heating Oil assistance.
More broadly, the bailout can't stand in the way of the broader economic stimulus package that is desperately needed.
I really don't even know where to start with all this. The mindless notion that $1 million in 1981 is anything like $1 million in 2008? The apparent historical coincidence that the revival of New York City in particular began around the time that this "surcharge" was repealed? The idea that anyone who makes over $1 million a year is "Wall Street," in that they should be made to pay for the crimes? It's too easy to label these people Bolsheviks, and I'm really trying to resist... but this is basically the post-modern expropriation of the kulaks. (If the WFP calls for the toiling masses to burn down the McMansions, we'll know for sure.)
As for "a bailout for homeowners, not for home lenders," this amounts to rewarding irresponsible behavior for some while punishing it for others. Again, maybe I'm showing my bourgeois homeowner undies here... but my wife and I didn't take a crazy mortgage to buy a place we couldn't afford. I'm not feeling particularly inclined to see my tax dollars rescue those who did from the consequences of their unwise decisions. The ameliorative measures are one thing; there's ample economic justification to take action that lead to fewer people losing their homes. And where there was exploitation--as there surely was--some reconsideration of loan terms is probably appropriate. But let's not "bail out" anybody, much less justify selective aid based on a super-simplistic notion of class.
That leaves regulation and stimulus. As a goo-goo type above all else, I couldn't agree more with the point about "re-regulation." But I have this nagging feeling that wedging a complicated set of rules that should strike a balance between encouraging growth and fostering irresponsible behavior into a measure where time is a factor--in the supercharged atmosphere of a presidential campaign, no less--might not work out so well. The same goes for the stimulus idea--which, in this presentation, just happens to include all the things the WFP always calls for. I happen to think they're good ideas. But let them win on their own merits, rather than using the DeLay tactic of jamming them through as an add-on to something else.
It's profoundly depressing how much these guys resemble their putative adversaries when it comes to tactics and style.
I don't claim to be an expert either, but maybe what they should do is allocate a small (in this context, anyway) chunk of the total money now, to send a message to the markets--which, if I understand the psychology of it at all, are waiting for some sign that action is forthcoming. To preserve leverage, Congress could make disbursement of the balance of it provisional upon passing the regulatory regime and, if a majority wants it, a stimulus package. This time frame also would ease the pressure by virtue of pushing the policy moment beyond the election. Call me crazy, but I suspect it's easier to take a "tough" vote in February of an odd-numbered year than September of an even.