The 133 Republicans and 95 Democrats who voted down the $700 billion bailout of the credit markets also succeeded in wiping out $1.2 trillion in shareholder value on U.S. markets as Wall Street had its worst day since the crash of 1987. Not bad for a few minutes work.
Their motive in bucking President Bush, their parties’ leaders, the two presidential candidates and the government’s top economic officials seems to have been naked political fear. Their constituents are overwhelmingly against the package — in part because it has been badly explained and with the election just over a month away they decided now was no time for political courage.
Let’s hope they’ve got that out of their system because Congress must try again. And work is already underway on reframing the package to make it more acceptable a second time around. It may be called a "rescue" rather than a bailout. It may have a more visible way for the government to profit from the assets it buys. It may, as the Republicans urge, raise the limit on federally insured bank deposits from $100,000 to $250,000. And it may confer less czar-like powers on the secretary of the treasury; since administering the bailout — pardon, rescue — will be up to the next administration, no one knows who that official will be. And this time maybe House Speaker Nancy Pelosi won’t make a speech.
It would help if the two presidential candidates would try to sell the package to the voters while they are out campaigning. Doing so might help redeem John McCain who tried to take credit for the package when it seemed a sure thing. And Barack Obama’s support for the deal has been generously described as "tepid." That needs to change.
Nobody is happy this has to be done but stability and liquidity have to be restored to the credit markets and this package in one form or another is, as someone accurately said, the least bad alternative.