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House GOP Financial Stand is a Colossal Mistake

Submitted by Josh Kahn on Mon, 09/29/2008 - 17:59
in

There is no possible good outcome of the House GOP’s decision to torpedo the financial bailout package this afternoon.  In every scenario going forward the decision hurts the party politically – the only question is how badly. A couple of key rules of public opinion virtually guarantee this.   

Rule #1 – In a genuinely confusing situation, experts usually win. When voters know they don’t understand something, they’re generally inclined to listen to experts if enough experts speak with a clear voice. Ask yourself what the “common sense solution to the financial crisis” is. Guess what, there isn't one - and average people are smart enough to know that. 

Rule #2 – In a crisis, you never get blamed for doing something unless it can be proved beyond a shadow of a doubt that your actions made things worse.  Libertarians hate this but it’s basic human nature to equate action with boldness and inaction with weakness. Deal with it. 

With Bernanke and an overwhelming chorus of normally somber economists are all screaming that the sky is falling unless something is done, opponents of doing something (aka House Republicans, thanks geniuses), face an impossible dilemma: 

-If the bill fails and nothing happens, no one gains anything. This is the best possible outcome for House Republicans. 

-If the bill fails and the economy tanks, they’ve wrecked the GOP economic stewardship reputation for a generation.  Not that it’s all that good right now.

-If the bill passes and the economy tanks, on one cares about the guys who voted no because the yes votes took a decisive action that had a huge amount of institutional support.  No one gets blamed in those situations. Especially since “I told you so” rarely wins votes and the electorate will be more worried about fixing things at that point. 

-If the bill passes and the economy doesn’t tank, then everyone who voted yes claims victory and every economist screaming for the bailout today is right there backing them up. 

The basic flaw in the House GOP’s logic is they’re mistaking a bunch of phone calls to their offices for an accurate barometer of public opinion (congressional office calls skew heavily towards the nutcase demographic) and they’re failing to anticipate how public opinion will evolve moving forward.  As a result, they're stuck in a no win high stakes situation and they’d better pray that an alternate package passes very soon.

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Comments

Excellent Analysis

Submitted by Jim Dandy to th... on Mon, 09/29/2008 - 18:03.

Surprising for this site, a dose of reality??  Wow.

Flawed commentary...

Submitted by foghornboy on Mon, 09/29/2008 - 18:36.

Josh only takes politics of the situation in to account.  

Republicans should demand accountability for the mess that we're presently in.  The rush to get a bailout solution is a giant CYA for the guilty.  Include consequences for the fiscal malfesance and you've started down the right track for a solution.

Oh and what about U.S. standing in the world?  Dems have played this up on account of Iraq and our go-it-alone approahc.  Nothing hits those countries more (yes, even more than Iraq) than to have the subprime loans they were told were AAA, but turned out to be worthless.  Yes, they have a right to be mad.

The fact that we've spent $7B in 6 years in Iraq and the Libs are outraged about that, but when the Dems champion a $7B bailout the Reps are to just rubber stamp?  That seem intellectuatly dishonest.

Bottom line is Kahn wants to win so bad, he wants a bailout even if its badly designed.  Odd, that sounds like the Democrats thinking.

Sorry, no Kahn-meme here.

You can't be that dumb

Submitted by gunthestops on Mon, 09/29/2008 - 20:25.

The Iraq cost for both direct and indirect cost to date exceed $700 Billion dollars--they go thru more 7 billion a month--so please get your facts together.  Since the Republicans added $3 trillion to the national debt in the first 6 years of the administration--they are a little gun shy to help the American people by keeping us out of a depression---what a bunch of losers!!!

Not so sure

Submitted by Allen Fuller on Mon, 09/29/2008 - 18:49.

Josh, I have to disagree with you here. First, let's just acknowledge that today's vote was a total cluster. It looked bad and caused mass confusion, especially in the markets. Main Street isn't too excited either.

Economically, the impact remains to be seen. But politically, what the House did today was in large part a tip of the hat to the base, who was not at all happy with the prospect of an additional $700 billion in deficit spending. By showing some fiscal restraint, they've set up a flurry of excitement among the majority of Americans who oppose this thing. By asking to stop, take a breath, and think through it, they've shown leadership on economic issues that will, I believe, be reflected in due time. Let's remember, the markets didn't really melt down this afternoon until the Democrats' press conference post-vote. It was the Dems who set off the real panic, which hopefully can be subdued once everyone shows back up in a couple of days with their big kid pants on.

And, of course, there's the obvious fact that if the Democrats wanted to pass the bill, they had the votes to do it. So for the House GOP and our free-market economy, that decision seems to be the right one. What happens next will determine if it is ultimately successful.

The House Dem's had no part in this either?

Submitted by IrishRep on Mon, 09/29/2008 - 18:51.

What  about the House Dem's that voted against the bill?  If this is such a GOP problem then all the House D's would have fallen into line like they always do.  The leadership in the House failed to put forth a bill that could be passed and that leadership is Democratic. 

Maybe the fact that the American people didn’t want to give away 700 billion dollars was actually represented in the house today.

Exactly, how is this the "fault" of the Republicans

Submitted by Big Ben 4 liberty on Mon, 09/29/2008 - 19:14.

I mean last time I checked they are the majority party and could have run roughshod over the Republicans (which they typically do when they are the majority party).  If this bill was so great and would fix the economy and everything would once again be glorious and wonderful, then they could have passed it without a single Republican vote.  The fact is that 41% of their ranks didn't even like this bill. 

Now it is time for the Republicans to going out, a la Newt Gringrich 1994-style, and offering real solutions to get this economy back on track.  If they do then they are showing real leadership in contrast to President Bush (who has truly done damage to the GOP since 2005) and the partisan hacks on the other side who love their political gamesmanship at the expense of the taxpayers.

Come to think of it, Nancy Pelosi is truly the worst Speaker of the House in history.  Her incompetence was on full display today when she attacked Republicans before she even had the votes to get this damn bill passed.  If the US were parliamentary government, then this would have been grounds for a no-confidence vote for the ruling majoity.

Josh

Submitted by Sean Oxendine on Mon, 09/29/2008 - 19:51.

I have to disagree with you on one scenario:  Pelosi rams through a partisan bill with minimal Republican support, and nothing good happens.  I don't think she'll be rewarded in 2010 if we spent $750 billion on Wall Street and we're in a recession.

I Am Guessing That Josh Is Young

Submitted by ThinkFirst on Mon, 09/29/2008 - 20:04.

I am guessing that Josh is young and lacks the perspective of time.

Josh writes "In a genuinely confusing situation, experts usually win."  There are many truisms about "experts" but this one is new to me - most of the truisms I know tend to poke fun at those presumed to be experts.

Here's one for Josh "Amateurs built the Ark, Experts built the Titanic."

Seriously, in perspective there are far too many presumtions of precedent being applied which are all way out of context - there are no precedents - this is new political ground.

I take that back, there is one, whoever controls the key theme(s) of the election wins. The economy is merely one of what could be two or three different themes between now and election day.  Israel could bomb Iran, Russia could invade another sovereign nation, Obama could be indicted ... one never knows.

Neither the GOP nor the Dems have a true charismatic leader to seize the day. Obama's handlers tried but he is such an incredibly flawed candidate they could not cover up for his empty suit and corrupt associations all of the way to Election Day.

Governor Palin could be the breakaway factor once again if she trounces Biden and casts a vision for the future beyond McCain's mumbling and Obama's rants.  Other than that this looks to be murky all the way to Election Day and the experts look to be as clueless as everyone else ... BTW:  Did you hear that one Treasury official admitted that they invented the $700 billion number because "we needed a really big number"? So much for experts!  Think First

My favorite comment about "experts" are

Submitted by Big Ben 4 liberty on Tue, 09/30/2008 - 08:28.

that they are guys who know multiple different ways to have hot, wild and kinky sex with women unfortunately they don't know too many women.

The folks who voted for Bush 41 and Clinton's budget fixes

Submitted by Ironman on Mon, 09/29/2008 - 20:21.

paid a serious price at the polls in 1992 and 1994.  So much for the "run with the pack" concept of political safety.

 

You forgot one scenario

Submitted by Patrick Ruffini on Mon, 09/29/2008 - 21:58.

To think that those who voted No assessed the likelihood of the bailout's success is assigning Congress a bit too much credit.

Why? Because no one contemplated that a bill, once teed up like this was, would fail. So the question was not whether or not the bailout would pass, or whether it would succeed, but all about individual members absolving themselves of responsibility for a $700 billion bailout for Wall Street -- whether or not the bailout succeeded or not. 

The ideal situation was in fact the following: the bailout passed and succeeded, but individual members in close races got to vote against it, avoiding the stench of having voted to bail out Wall Street. This is a win / win -- a win for the country and a win for the members who get to take an irredentist position which will have more salience in the long run.

I think that was the calculus. Unfortunately, the vote today was a classic free rider problem in which everyone wanted the bailout to pass, but no one wanted to cast the deciding vote to pass it.

The dynamics of a floor vote are....

Submitted by Ironman on Mon, 09/29/2008 - 22:04.

fence sitters watch the partisan breakdown, and do not want to cast an unpopular "yes" vote for a doomed bill.

Once the GOP realized the Dems weren;t being whipped at all, the folks who hated the bill weren;t going to walk the plank if it was failing anyway