A “Broken” Branch? Four Lessons from Congress’s Great Financial Bailout Saga
When the United States House of Representatives temporarily turned back the Bush administration’s colossal financial rescue plan on Black Monday, September 29, parts of the commentariat abandoned all restraint. In terms shrill and unsparing, the country’s political system was proclaimed to be gridlocked and dysfunctional.
The paroxysms of ridicule and contempt too often leveled at “politics in Washington” are careless and unwarranted. Incessantly declaring that the system is “broken,” we may make it so, by deepening an already alarming degree of distrust of our Republic’s venerable political institutions and its public servants, from top to bottom. It is high time to take a deep breath, and to start appreciating our democracy for what it is—a government, as the Founders stressed, of fallible human beings, not of angels. A good place to begin is by debunking some of the nonsense that was aired about the congressional bailout debate, and take from it a few valuable lessons.
First of all, the system proved to be anything but kaput. It was never likely that Congress would pass no legislation at all amid the growing economic turmoil. And sure enough, act it did—swiftly compared to, say, the EU. Yes, the House didn’t swallow hook, line and sinker the initial offer within hours of when it was floated, but as any dispassionate observer of Congress should know, it was highly implausible that the House’s protest vote would be the last word, and an irreversible abdication. Time and again throughout American history, in moments of crisis, the legislative branch, not just the executive, ultimately rises to the challenge.
There was no failure of leadership. However imperfectly, the congressional leadership of both parties rallied and performed their duties. So did President Bush who did what a president has to do: put the national interest ahead of partisan calculations. The fact that he did not prevail in the initial round had less to do with want of effort than with his (undeserved, in my opinion) abysmal public approval rating, as well as his lame duck status and shrunken political capital. Treasury Secretary Paulson and Fed Chairman Bernanke may have miscalculated how deeply skeptical the public would be of their original scheme, and how difficult it would be to ram through on inordinately short notice, but give them credit for taking the full measure of the emergency at hand, and for confronting it boldly.
Even the two presidential candidates deserve some respect for the roles they played, especially in the end. McCain was right to suspend the campaign’s business as usual in the hinterlands at a time when the real action and drama were here at the two ends of Pennsylvania Avenue. (For either of the would-be presidents to have sat irrelevantly on the sidelines at a juncture like this would have seemed even weirder than some of their fumbling maneuvers in the early going.) More than a few votes had to be changed in time for the make-or-break roll call on October 3, when the House reversed itself. As it happened, most of the members who eventually came around were hardcore liberals and conservatives. One wonders whether so many would have gone along with the final bill if either of the presidential candidates had not defended it. And Obama, in particular, should be commended for having helped convert many of the earlier defectors within his party.
Was the House vote on September 29 little more than a fit of partisan “pique and polarization,” as a Washington Post editorial concluded? Not really. Let’s be clear. The purpose of the biennially-elected “people’s house” is, as the Framers intended, to represent the people, and do so as faithfully as possible or face retribution at the polls within 24 months. The popular outcry two weeks ago against simply rubber-stamping a plan to put nearly unprecedented peacetime power in the hands of the Treasury, amid grave doubts that its enormous costs would actually achieve the desired results, was strong and extraordinarily broad in scope. A Pew survey taken at the end of September found that 63 percent of the public was profoundly worried that “government action won’t fix things that caused the problem” in the first place. Interestingly, clear majorities of all stripes—Republicans, Democrats, and Independents—expressed this skepticism. There was little chance that the House could have ignored so widespread a sentiment, especially with an election barely a month off and, no less importantly, too little time to deliberate.
It is true that, as my colleague Sarah A. Binder writes, about three-quarters of Republican conservatives voted against the original bill, and were joined by many of the most liberal House Democrats—an example of les extremes se touchent, as the French saying goes. “Ideological effects,” she observes, were “visible,” and not just among members with safe seats. The far Right may have seen the specter of “socialism.” The far Left seemed to prefer that homeowners who had overleveraged themselves be bailed out, instead of “Wall Street.” But the main story was less about the stubborn stance of polarized ideologues (or principled politicians expressing their convictions, take your pick) than about straightforward electoral imperatives—that is, elected representatives doing their job, which is to listen to their constituents. So, for example, in the 50-some House districts with seats that will be closely contested in November, their current occupants voted overwhelmingly against the bailout bill. As Binder concluded, the only perfectly sure pro-bailout votes on September 29 came from the two-dozen or so members who had announced their retirement.
Large numbers of skeptics in the House, like many taxpayers, were probably fearful that the extreme urgency with which Paulson pressed the mega-bailout had so raised the stakes that if it ultimately failed to deliver as hoped, the government would find itself out of options, thereby driving the financial panic from bad to worse. Members worried, in other words, that what they were being asked to adopt would not be the end, nor the beginning of the end, only the end of the beginning. One didn’t have to be a “lunatic” to harbor misgivings along these lines. Indeed, the way the stock market continued to tank after the bailout package finally passed last Friday should give pause.
Whatever the case, the administration and congressional leaders arguably made a mistake to be in too much of a rush. Sometimes, with projects of this magnitude and consequence, speed kills. After the initial popular uprising, there was bound to be a second wave of constituent and interest-group reaction, this time pressing for passage. Those powerful voices—call them “special interests” like the Chamber of Commerce, the Business Roundtable, the AARP, the thousands of local car dealerships, the Main Street banks, and so forth—needed a few more days to mobilize and weigh in, as they eventually did decisively.
To keep the House’s hyper-sensitivity to public opinion in check, the Founding Fathers crafted bicameralism. The Senate with its longer, staggered terms was deliberately designed to be less receptive to sudden swings in the popular mood, and its members to be perhaps less impulsive and more statesmanlike in times of need. Well, last week’s events followed that script almost to a fault. Immediately following Black Monday, the Senate took charge. Stepping over the rubble left by the House, the upper chamber forged ahead with a revised bill, and passed it by wide margin, thereby applying additional pressure on the other body to make an about-face. Senate rules, as everyone knows, can facilitate obstructionism. Critics would do well, however, to recognize the upside: the same institution also offers its members extraordinary opportunities to lead—and lead they did.
Of course, the measure that eventually cleared both houses had to be larded with provisions that would further entice a number of members to switch sides. The insertion of this bacon was met by sanctimonious Congress-bashers with the usual mockery. What those who lament “pork” and “earmarks” need to explain, however, is how else they would propose to grease the skids. Sure, some of the lubricants in this bill were unseemly and bizarre (how badly did it need a tax write-off for NASCAR racetracks?), but inasmuch as they were essential to winning passage of the overall rescue package, they amounted to a tolerable price to pay.
What, then, might be learned from all this? First and foremost, let’s call a moratorium on loose talk about Washington’s “broken” political practices and institutions, and pay them the realistic respect they’re often due. The U.S. economy is headed south. From the president on down, our public officials are trying to do what they can to avert a massive train wreck. Cut them some slack. Second, go easy on the harangues about “special interests” and even their life-blood, like “loopholes” and “earmarks.” They aren’t always pretty but (as the architects of the Constitution understood) a representative government without them is wishful thinking. Besides, as the bailout chronicle suggests, sometimes the political process even needs their services to get anything done. Finally, be a little more patient. Democracies do not typically deliberate well in a matter of hours or days. Institutions like the U.S. Congress ordinarily need a bit longer to think through their biggest decisions, even when time is running short. When Congress was called upon to fix another gargantuan banking upheaval, the collapse of the savings and loan industry in 1989, the legislators had six months to write legislation. To duly address the current crisis, six months or even six weeks on Capitol Hill was out of the question. But so was six days.