To oversimplify, then exaggerate (that is the journalist’s task, according to an old Economist style book I once had kicking around here)—the Washington bank bailout has been in big trouble because a hard knob of Congressional Republicans don’t like the deal.
The bailout proposal from the U.S. treasury secretary, Hank Paulson, was put forward boldly by President George W. Bush, and defended in a speech to the U.S. nation Wednesday night. The biggest players on the U.S. political stage, including the two presidential candidates, were then called to the White House on Thursday to thrash out their differences. As of this writing, the “media consensus” is that the talks aren’t getting anywhere. Meanwhile the feared meltdown of stock markets, and evaporation of bank liquidity, draws ever nearer. Yet it seems obvious enough that, between President Bush and the Democrat majorities in both Senate and House of Representatives, the deal could be pushed through.
My own views come closest to those of the “hard knob” of Republicans, mentioned above, and yet like them I agree that some deal is urgently necessary. That is to say, I think the whole thing is a giant swindle of the American taxpayer, made nearly inevitable by 20 years of Democrat-initiated, but finally bipartisan agreement to put politics above the home truths of the financial marketplace. (See my column Wednesday.)
But every bailout necessarily presents the spectacle of the more provident rescuing the improvident. No point whining about that. The question is only, on whose terms? In the short time allowed by the crisis, could the terms not be “finessed” to transfer more pain from the relatively innocent to the relatively guilty?
That, essentially, is what the “hard knob” is about. But in the intensely politicized atmosphere of the meetings, and given mainstream media in the tank for Barack Obama and the Democrats, we cannot expect this to be reported clearly.
Instead, we see the media fashioning a noose to hang round the political neck of John McCain, the man who thought he could show leadership by suspending his presidential campaign, and flying to Washington to broker agreement between the “hard knob” and “the rest.” (Which is not to say the media know how to tie a noose.)
It doesn’t help that the complexities of the subject go beyond human understanding, and that therefore the list of unintended consequences from any measure the politicians adopt must soon also stretch beyond the intelligible. This is the background problem with all proposed political solutions to the problems of economy and society: that no individual human being can possibly grasp everything at stake.
But again: “the rest” have the votes to impose their will, and ride roughshod over the “hard knob,” conceding only minor and cosmetic amendments. A coalition between George W. Bush, Nancy Pelosi, and Harry Reid is unstoppable. With the markets crumbling and threatening to collapse, what are they waiting for?
The answer to that is quite simple. They are waiting for political cover. They know at least half of America is in basic agreement with the “hard knob,” and that even those with much different views about how the mess was created, would agree that the “$700 billion” package of government bad-debt purchases is, in its final effects, a swindle.
The Democrats can’t possibly allow McCain, Palin and company the luxury of a sprint to the general election, as the “reform” ticket galvanizing opposition to the “politics as usual” of Bush, Pelosi, Reid, Obama, and Biden.
That is why we have now had the spectacle of the treasury secretary, Mr. Paulson, literally down on one knee to beg Nancy Pelosi’s support for his package, while Ms. Pelosi is in turn metaphorically down on one knee to beg support from House and Senate Republicans.
President Bush might as well be a Democrat in this pantomime. The package he commissioned from Mr. Paulson was, naturally, designed to pass quickly through a Democrat-controlled Congress. It was arguably the only responsible thing for him to do, given the pressure of time.
I may be in a minority of one, however, by further suggesting that John McCain was in fact showing real leadership by dropping everything and rushing to Washington—for the express purpose of contributing to an agreement between the “hard knob” and “the rest.” We’ll see how badly this blows up in his face—while Barack Obama stands by doing, as usual, nothing of consequence, but “looking presidential.”