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Here There Be Dragons

(Incidentally, the leaked conference call I mentioned in my last entry turns out to be legit, or at least corroborated.)

A sign of the times, I think:

In a remarkably bipartisan effort, the House of Representatives rejected the bailout bill: 205 in favour (140 D, 65 R) 228 against (95 D, 133 R). The Dow Jones has, at last checking, eaten a 500 700-point drop (context: that's about 5-6 percent of total value), and other global markets are having a similarly bad day.

So, where do we go from here? I can't really speak much to the economic consequences - with any luck some people with more expertise than me are already typing furiously away. But politically, I can say the following:

As a spending bill, the bailout would have to be initiated by the House - if it fails here, the Senate won't even consider it, which I'm sure both McCain and Obama are thankful for at this point - going on record in favour of the current bill is political poison, and I'm surprised there were even 200 representatives willing to do it. Congress is unlikely to pick this matter up again without significant changes to the plan. From what I hear, a motion for reconsideration was advanced, then withdrawn when the House was informed that any revote would take place right away.

So the ball is in the Administration's court now. If they can make more concessions to make this more palatable to the public, it might manage to get enacted. But they're working on a deadline, because Congress is acting like a schoolkid at 2:55 PM and making twitchy gestures towards the classroom door.  Not enough people want to go on the record supporting something so rabidly unpopular, and neither party wants to own it without the other one being on board.

"Concessions" denotes minor changes, though, and I don't know if minor changes will be enough given the hideous way this has been presented to the public. This bill is, as I rambled about earlier today, subject to various lines of attack that are mutually exclusive: the conservatives suggest that this is too much intervention, the socialists (by American standards) suggest it's the wrong type and advocate either outright natioanlisation of afflicted banks, or a bottom-up bailout through assistance to homeowners in an attempt to prevent defaults.

It's far from clear which of these lines is more representative of the public view, (and I'm a socialist, so there's probably a healthy helping of confirmation bias here), but it's definitely clear which of them would win a party-line vote in the House. (not that that'll ever happen - House reps have a degree of independence that would be unheard of here). I suspect that market fundamentalism is going to be a harder sell as a solution to this problem than previous American experience would suggest, given its role in causing this problem in the first place. I'm sure some fiscal conservatives are panicked at the thought of a new New Deal, and any capital injection into the economy (whichever parts of it would get one) right now is going to be derided as "socialism". Given that, it might as well actually be socialist - it might well sell better with the public that way.

Of course, Bush and Paulson would never propose something like that (and Bush might even break out the veto pen if the House Democrats did so instead), and the things they're likely to propose are going to be dogfights in the House that will probably fail - nobody has enough political capital to force something like this through, and not enough people think it's worth sacrificing their political careers for.  (give this interview with a Republican congressman who expresses some doubts about the bill's necessity a read).

Of course, the wave of panic that's about to break in the next few days as this news sinks in might change some minds. But which of the three sides is going to blink first?

Comments

( Walk among 2 shadows — Cast a shadow )
rumor_esq
Sep. 29th, 2008 08:42 pm (UTC)
The next few days are going to be innnnnnteresting.

I'm actually kind of giddy.
rumor_esq
Sep. 29th, 2008 08:43 pm (UTC)
Nice breakdown on US political trends, btw. Spot on. I have no idea which way things are going to go, either.
( Walk among 2 shadows — Cast a shadow )