Plenty of righteous anger is being directed at the terms of the proposed bailout, whose financial cost promises to be absolutely staggering. I won’t (read: can’t) comment on the merits of the bailout itself, but I will say that tacitly ceding economic management to Paulson and Bernanke is having some unintended political consequences. Here, for example, is Senator Jim Bunning (R – KY) preaching that Old Time Religion:
“Instead of celebrating the Fourth of July next year, Americans will be celebrating Bastille Day; the free market for all intents and purposes is dead in America,” Bunning said. “The action proposed today by the Treasury Department will take away the free market and institute socialism in America. The American taxpayer has been misled throughout this economic crisis. The government on all fronts has failed the American people miserably.”
Hyperbole aside, I agree with a lot of Bunning’s concerns. So why are Republicans willingly signing off on Paulson’s carte blanche? Here, for example, is House Republican Leader John Boehner on the bailout:
Republicans, though troubled by some of the same issues as Democrats, seemed ready to give Mr. Paulson wide latitude.
Representative John A. Boehner of Ohio, the House Republican leader, said on ABC: “We don’t need 535 members of Congress adding their best idea. We need to keep it clean, simple, move it through the House and Senate, and get it on the president’s desk.”
At first glance, Bunning’s fiery rhetoric and Boehner’s quiet acquiescence seem entirely irreconcilable. But would all this political posturing be possible if Bernanke and Paulson hadn’t cowed Congress into submission? Now that the buck has safely been passed, Congress is free to gripe about the bailout’s financial excesses without taking any responsibility for formulating an alternative. Here’s Patrick Ruffini on how Republicans should take advantage of the situation:
God Himself couldn’t have given rank-and-file Republicans a better opportunity to create political space between themselves and the Administration. That’s why I want to see 40 Republican No votes in the Senate, and 150+ in the House. If a bailout is to pass, let it be with Democratic votes. Let this be the political establishment (Bush Republicans in the White House + Democrats in Congress) saddling the taxpayers with hundreds of billions in debt (more than the Iraq War, conjured up in a single weekend, and enabled by Pelosi, btw), while principled Republicans say “No” and go to the country with a stinging indictment of the majority in Congress.
A bailout may be inevitable, but so to can be the political benefit for Congressional Republicans if played correctly.
Despite the breathtaking cynicism of his suggestion, it’s actually pretty smart politics (and he isn’t the only one to have noticed). Reckless political posturing of this sort is made possible by a tremendous lack of legislative oversight. Guys like Bunning (and every other Congressional Republican) can avoid weighing the risks of creating a massive moral hazard versus the immediate need for economic relief because they’re basically powerless.
Making favorable noises about “better oversight” and “protecting the taxpayers” is little more than rhetorical window-dressing if the legislature doesn’t step up and actually exert some influence over the process. Unfortunately, ceding crisis management to Paulson and the Fed suits Congress’s political purposes, so I’m not holding my breath waiting for a “pitchfork moment” on the Hill.
UPDATE: According to Marc Ambinder, the McCain camp is considering “principled opposition” to the proposed bailout. Of course, the principle of the matter is pretty hollow if the legislation is already assured passage, but why push for real oversight when you can take cheap political potshots? McCain’s political calculations are probably correct and certainly expedient, but they expose one of the biggest problems with ceding managerial authority to unelected technocrats. In a world where Paulson and Bernanke are calling the shots, politicians have literally no incentive to push for real accountability because doing so would expose them to a share of the blame.
UPDATE II: Missed Kristol’s op-ed this morning. I get the sense that his NY Times column is basically a sounding-board for potential McCain strategies, so this could be a sign of things to come:
Or McCain — more of a gambler than Obama — could take a big risk. While assuring the public and the financial markets that his administration will act forcefully and swiftly to deal with the crisis, he could decide that he must oppose the bailout as the panicked product of a discredited administration, an irresponsible Congress, and a feckless financial establishment, all of which got us into this fine mess.
Note that this ploy would only be a big risk if Congress wasn’t already on the verge of rubber-stamping the proposed bailout.