Governance Loses to Ideology

Because I am recovering from some surgery, I was home today to watch the vote in the House on the bailout. I watched expecting a close but successful vote. I thought the warnings of dire consequences would force enough ideological voters on both sides to swallow hard and muster the votes needed from both parties.

I was wrong.

Instead, ideology triumphed over governance. Two-thirds of House Republicans refused to vote for the bill and the Democrats refused to force the needed votes from their side alone. The Democrats had supplied 140 votes for the bill. They asked the Republicans for something close to 80. They could only muster 65. Republicans in the House and the McCain campaign would later blame Speaker Nancy Pelosi's speech which included criticisms of Bush economic policies for being "too partisan" and driving votes away from the bill.

That's bull. The most conservative members of the House Republican conference didn't want to pass it. They wanted a "market solution." I have no idea what that means when the credit market is failing, banks are collapsing and the Federal Reserve is using hundreds of millions of dollars to add some liquidity to the markets. The House Republicans by a 2/3 majority choose their ideology over anything else. They may have hoped the Democrats would step in to save the day and then they could spend the rest of the campaign railing against the "socialist Democrats." Never mind that the plan come to Congress from George W. Bush's White House. This time the Democrats would not play along.

I agree with the variety of voices who refer to this as a wide failure of leadership. W is weaker and more disconnected by the day. He couldn't even muster more than a vapid expression during his prime time speech last Thursday night. His fellow Republicans have abandoned him to save themselves. The leadership in both parties in the Congress had to balance electoral needs and governing needs. The Democrats mustered just what they promised and no more. The Republicans could not hold their votes. Neither wanted to take the blame for what has been labeled as "socialism for the rich." No one appeared capable of explaining why this does matter to the average voter. The drop in the stock market and the increasingly tight credit may soon provide the lesson.

The last quarter of the year is vital to retailers in this consumer driven economy. If credit continues to contract and consumers fear for the economy. Spending will not meet the needs of businesses and the result will be a further weakening of the economy. No one in Congress seems prepared to make this point and take the hit alone. Neither presidential candidate wants to take responsibility for the economy before being elected. (Though McCain strangely tried to take credit for the bailout passage before the vote. He later blamed the Democrats for its failure. This is what a failing campaign looks like.)

We are left with failing credit markets and a failing government. The latter can only deepen the problems with the former.

What will happen?

My best guess tonight is some sort of "mini-bailout." A smaller version of the bill to bid time at least through the election and perhaps until the new President and Congress hit Washington in January. Maybe only $350 billion for the markets to be reviewed by oversight committees before any more money can be spent. The only thing I am sure of is that the more the stock market falls, the more likely a bill passing becomes. Voters may not understand credit markets, but they know how to watch their mutual funds decline. When action is demanded, perhaps governance can trump ideology.