Politics and the Bailout

The Rasmussen Survey tells us that politicians have not quite made their case to the American public:

Only 30% of U.S. voters think the federal government should step in to rescue the country’s troubled financial markets, according to a new Rasmussen Reports national telephone survey.

A sizable majority (63%), in fact, are worried that the federal government will do too much to respond to the current woes. The survey was taken Wednesday night, even as President Bush was making a nationally televised address urging Congress to pass the $700-billion taxpayer-backed bailout plan proposed by his administration.

This result is similar to anecdotal reports of phone calls and emails into the congressional offices:

Asked about the types of responses he's hearing, Rep. Rush Holt, D-Hopewell Township, said Thursday: "I would say they are 50-50 - between 'no' and 'hell no.'"

So with public sentiment running against Wall Street and an election in 6 weeks, what politician is going to vote for a $700B giveaway to Wall Street?

I think the answer is: Only those no chance of being either reelected or unelected. Currently, only 25 House Republicans (of 199) look set to vote with the Democrats, and I can't get solid figures as to how many House Democrats will vote against.

As near as I can tell, there is a dilemma in front of the folks up for reelection. They would love to vote against the bailout, because that is the clear election-vote winner. On the other hand, if Hank's doomsday scenario unfolds, they don't want to be blamed. They also have advisors telling them that a stock-market crash may happen even if the $700B check is written, which would be the worst result possible for their reelection.

Of those up for reelection, the House Republicans have found their out: They say the current incarnations of the bill simply do not adhere to any principles of the Republican platform, and since the Democrats control the House and Senate, they can vote to stop Armageddon if that is truly what is at stake.

Currently, the best out for the House Democrats is: We will not push through legislation of this size without consensus. It is a weak argument, but seems to be the best one available.

The leadership (Bush, Pelosi, Dodd, Frank) seems hellbent on spending $700B on the way out the door. They have stuck their neck out and decreed, It will pass. Should it fail and the market crashes, they will point fingers at Congress (from the executive branch) or at Republicans (from the Congressional Democrats.)

I have no idea how the current lockup is fixed. Monday will be interesting.