Pelosi and the Bailout

When the Democrat’s took over Congress, they promised to end the practice of giving “blank checks” to President Bush. Then they basically gave Bush a free rein. They promised “the most ethical congress ever.” It wasn’t. They promised to end the war. They didn’t.

But let’s be fair—no one really expected any of that from the Democrats. I doubt there were many, even within the Democrat party, who thought Harry Reid or Nancy Pelosi were going to be reforming dynamos. I didn’t expect much from that lot.

But I did expect simple, basic competence. And apparently, the Democratic leadership doesn’t even have that. Yesterday, the federal bailout plan was all set for a vote—Congress held a bipartisan press conference announcing that all sides had worked out an acceptable compromise. Everything was fine.

Until today. Congress (which, remember, was ready to pass this bill yesterday) voted the plan down. About two thirds of Republicans voted against the bill—as did about forty percent of Democrats. Nancy Pelosi leads the Democrat majority in the House—and she still couldn’t get this (by her own admission) necessary bill though.

Apparently, the plan’s failure was due to a combination of national distaste for the plan and Nancy Pelosi’s dreadful, hyper-partisan pre-vote speech. In her remarks, Pelosi gloated that “this legislation is not the end of congressional activity on this crisis” and that “we choose a different path. In the new year, with a new Congress and a new president, we will break free with a failed past and take America in a New Direction to a better future”. Smooth, Nancy. Unsurprisingly, House Republicans were unimpressed with this message, and enough of them were angry enough to change their vote, which guaranteed the bill’s failure. Nancy Pelosi isn’t merely incompetent—she’s stupid as well.

But it’s unfair to give Pelosi all the blame for the failure of the bailout plan—the American people strongly opposed it . When was the last time Rush Limbaugh and Michael Moore agreed on anything? I’m pretty sure the only belief they share is that state sponsored murder is bad—and given Moore’s evident admiration for Fidel Castro, they might even disagree on that. But they are both against the bailout plan—Rush called the architects of the deal “thieves”, while Moore called it the “biggest robbery in the history of the country.” Millions of Americans agree with these sentiments—in fact, given recent polls (only a quarter of the country supports a bailout, according to Rasmussen), odds are, you do too.

Rush Limbaugh may be right 98.6% of the time, but Michael Moore is always wrong. It’s no different here. Rush is mistaken. We need the bailout.

I oppose the bailout in principle. Capitalism is all about ups and downs; businesses succeed, and others fail. Ordinarily, government intervention is the worst possible thing for business. But this isn’t ordinary.

After the bailout failed, the Dow Jones dropped seven percent. That’s over a trillion dollars lost, and it could—almost certainly will—only get worse. And it’s an international problem—London’s stock markets crashed today, and the British bank Bradford & Bingley failed. It’s an international crisis.

Will things get as bad as they did during the Great Depression? Of course not. (There won’t be twenty-five percent unemployment again). But things can still get pretty bad. Government played a significant role in getting us into this mess. It will have to help get us out.

Why can’t free markets do this? They can. The only catch is, it might take a while, and the consequences would be very unpleasant. Millions would lose their home, millions more would lose their life savings. The stock market would plunge, and we would almost certainly see more banks fail. Post-crash, our economic scene would be unrecognizable. I don’t like the bailout—but I think it’s worth it.

Do those CEOs getting bailed out deserve help? No. They horribly mismanaged their companies, and deserve the consequences. Problem is, average Americans don’t—and they would be the ones hurt most. Life isn’t fair.

Would this plan be expensive? Yes, around $700 billion. (It will, being a government project, run over costs, but the government will probably get at least something back from the mortgages it will own, making $700 billion—or a bit less—about right). But it’s not like, in the long run, $700 billion will affect the budget that much—we’re on the hook for about $57 trillion in entitlements over the next half century. And anyhow, the amount of money lost in a banking crash would be much more than $700 billion.

We shouldn’t need a bailout. It is expensive. It’s not fair. It unfairly benefits the rich. It gives government too much power. All true—but we still need this bill. The consequences of doing otherwise would be too great. Nancy Pelosi is incompetent—but she must find it within herself to get this through Congress. The future of our economy may depend on it.