Where's the leadership? Financial crisis, political dithering
Posted on Sunday, October 5, 2008
Two points were
painfully evident
during the floundering around in Washington over the economic rescue package: an absence of leadership and the presence of politics.
Let's start with the lack of leadership. President Bush left no doubt that he is the lamest of lame ducks when it comes to matters than can't be carried out by executive order. His televised speeches urging action had little impact. With his credibility already severely damaged as a result of misleading the public about the justification for the war in Iraq and a series of mishandled issues and events, Bush was already at a low point in public opinion. Now, with the financial crisis, Bush hit a new low, with a 26 percent approval rating and a 70 percent disapproval rating, the highest for any president in the era of modern polling.
Some will argue that the rescue package (or bailout if you prefer ) was not worthy of passage. However, the president spoke for it in very strong terms and the White House, including Vice President Cheney, reportedly lobbied hard for the measure. In two televised messages to the American public, Bush emphasized the urgent need for Congress to act. Before the first vote in the House of Representatives, when the proposal failed, Bush said," The government's top economic experts warn that, without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold. "Later, he said," We're facing a choice between action and the real prospect of economic hardship for millions of Americans. And for the financial security of every American, Congress must act."
Despite these dire warnings, Bush was unable to rally most of the members of his own party in the House in Monday's vote, with less than one-third of House Republicans backing the package.
On previous occasions, Bush had used warnings of impending threats or danger to get congressional support for controversial measures. But this time the crisis was already present and the White House had done little to signal the public that it was coming. Moreover, Bush left Treasury Secretary Henry Paulson to play the central role for the administration in trying to work out the rescue proposal and steer it to approval.
The truth is that Bush was largely relegated to the sidelines. Bush and the Republican House leadership were able to get only 65 of 198 House Republicans to vote for the measure. Even among Republicans from his home state of Texas, Bush found little support. Although he reportedly called nearly all of them, only four of the 19 Texas Republicans supported the initial proposal. From John McCain's Arizona, none of the House members (four Republicans, three Democrats ) backed the bill. In contrast, the three Arkansas Democrats and one Republican all supported that measure.
A number of those most strongly opposed to the rescue package were unyielding in their determination to resist a major government role in trying to resolve the crisis, instead maintaining a devotion to an absolutely unfettered market and self-regulation, a formula that helped bring on the current disaster.
Some tried to attach blame for the defeat to House Speaker Nancy Pelosi, although she and most of her Democratic colleagues (60 percent ) supported the plan. Pelosi was criticized for an overly partisan speech. Her timing was certainly open to question, but there was no evidence that anyone was really swayed to oppose the measure because of Pelosi's rhetoric. It was mindful of Newt Gingrich's complaining that President Clinton didn't pay enough attention to him during a trip to Israel. Gingrich's pouting led all the way to the 1995 government shutdown.
The failure in the House demonstrated the weakness of Washington leadership. And too many politicians were more concerned with self-righteous posturing or misguided ideological dogma. They were less concerned with helping to clean up the disastrous financial mess, which some of them had helped create or maintain, than with teaching Wall Street a lesson.
And so we got the financial panic Bush belatedly warned about. On the day following the House's failure to act, the Dow Jones fell a record 777. 68 points, the biggest one-day drop in history, and other market measures also plummeted. About $ 1 trillion in wealth was wiped out. The once-proud standing of the United States as the pillar of the international economy suffered a major hit.
The bill defeated in the House Monday was far from perfect. Few, if any, of us want to bailout the greedy financiers who helped bring about this crisis. Yet the failure to act is extremely costly and ripples throughout society. The stock market decline, which has particularly troubling implications for many retirees and those looking toward retirement, is only one part of a complex network of entangled problems. And the severe strains in the credit markets have far-reaching ramifications.
In mid-week the Senate stepped up to approve by a convincing 75-24 margin a revised measure, supported by majorities from both parties, including presidential candidates McCain and Barack Obama, and Obama's running mate, Joe Biden. Both Arkansas senators supported the package. "Time is of the essence," said Sen. Blanche Lincoln. "Not taking action will lead us on a downward spiral. "Sen. Mark Pryor said," The risk of doing nothing is too high."
In addition to authorizing up to $ 700 billion to buy bad assets from distressed financial firms, the Senate proposal would extend tax breaks worth $ 108 billion to businesses and families next year. It would help shield more than 20 million taxpayers from the controversial alternative minimum tax. And it would temporarily increase the limit on federal insurance for bank deposits to $ 250, 000 from $ 100, 000, a provision strongly pushed by Obama in the final days before the vote.
If the current leadership proved to be largely ineffective in dealing with the crisis, what about those who are vying to be the next occupant of the White House ?
In immediate political terms, Obama seems to have come out best, as opinion polls suggest definite movement in his direction and belief that he is best able to deal with economic challenges. It is also notable that voters closest to retirement age are trending toward Obama.
While McCain splashed loudly around the political pool and may have done a bellyflop, Obama generally stayed in the shallow end. He did identify himself with the need for quick action and got some notice for pushing the increased federal deposit insurance.
McCain made a big show of "suspending"his campaign and returning to Washington to deal with the crisis (although as David Letterman repeatedly pointed out, it took him some time to get there ). McCain expressed his support for the proposal the House eventually rejected and was said by some Republicans to be actively working for its approval. However, when his campaign prematurely claimed that the Republican candidate played a key role in getting the measure passed in the House, that quickly had to be revised - and it was - with a suggestion that somehow Obama was to blame for its failure to pass.
What ensued then was finger-pointing and a blame game all around. MoveOn. org released a 60-second TV ad called "My Friends' Mess," blaming McCain and Republican allies who supported banking deregulation. The McCain-Palin campaign released its own TV spot, saying "Obama was notably silent"and claiming Democrats blocked reforms leaving taxpayers "on the hook for billions."
If anything is clear amidst this turmoil and divisiveness, it is the need for strong leadership in the challenging task of stabilizing the economy. Voters will almost certainly give significant weight to that in determining who can best provide that leadership.
Hoyt Purvis is a journalism and international relations professor and served as press secretary to Sen. J. William Fulbright, foreign / defense policy adviser to Senate Majority Leader Robert Byrd, and as chairman of the Fulbright Foreign Scholarship Board. His column appears on Sundays.
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