The bailout bill didn’t happen. I’m stressed. So is Megan. She writes, "Democrats voted for it pretty narrowly — 140 to 95. The Republicans
shot it down 65 to 133. I find it hard to believe that they’re voting
their conscience; they’re voting their electoral interest in November.
I hope their constituencies enjoy the bank panic."
50 thoughts on “House Votes Down the Recovery Bill”
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Apt. 11d 
Me too (i.e. stressed).
But, I think the experts have done a really bad job of explaining to folks like Amy what they fear is going to happen. All her questions on your previous thread are reasonable ones, and no one has been answering them (and they have to be answered by people who she trusts, and might consider voting for). I think there are lots of people who are not near wall street who think that their way of life is immune to the shenanigans of the rich folks on wall street. I know mine isn’t. But, I’m not them.
I think perhaps Bush & Paulson (and maybe McCain, who has to take a stand) have to be visiting Georgia and Alabama and rural Texas and explaining to those folks why banks going bust in NYC will affect them. And they need to start today. (Why am I sending the Republicans out? ’cause this bill really needs to pass with a majority of both parties. The Dems have brought out their majority (70% of the yes votes). If the Rep leadership wants this bill to pass, they have to find the votes on their side of the aisle.
If they can’t, I guess we need to sit tight and buckle in for the wild ride ahead, delay anything everthing until we have a Democratic administration & a Democratic legislature, and the Dems can pass the bill for their president. The Democrats should not pass this bill for Bush.
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Megan’s remark doesn’t make a lot of sense–the short-term partisan thing for Republicans to do would be to stick the economy together with used bandaids and toothpicks (i.e. the bailout) and pray that it holds until Nov. 4.
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The White House and Congressional leadership are all behind this bailout. I think that makes it like EU treaty voting. You vote as many times as is required to get the right answer.
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I agree with Amy, if the Reps cared about the Reps in general, rather than their own personal seats. But, I also think that there’s a substantial portion who are really voting their ideology, and blaming it on voting their personal electoral seats is committing the “elite” sin of imagining that if people disagree with you, they must be lying.
But, hence my plan — a new administration. The economy in chaos will help Obama, and it might also help the Dems in senate races. All the more reason why the Dems cannot, and should not pass this bill on their own for this administration. I guess they could pass it after the election, without waiting until January. Since I’m not actually willing to drive the world into a depression in order to elect my preferred candidate, I can only hope that a month delay will not end the world.
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Amy P–the majority of Americans are against the bailout. Megan is suggesting that some of those who voted against the bill are doing so to placate their constituents.
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Of course, this will give us the standard Democratic task of cleaning up messes left by the Republicans. I thought it was *just* going to be the war. But, I guess we get the economy, too.
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Lisa SG,
If no bailout passes and the economy blows up as promised before Nov. 4, it’s not going to matter what public opinion was on Sept. 29.
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So Amy, is there anything they could say (pick who ever you want to say it — Paulson, Bush, or whoever your favorite Republican economist is) that might convince you that a bailout is better than the alternative impact on the economy? I don’t mind if those answers are unlikely — that is, that they are unlikely to be able to say them. Just wondering if there is a fact pattern, a set of data, that if you had access to it, and could understand it, would convince you of the need for a government intervention.
(same to MH & Dave, and the others).
I know there are progressive opponents as well (DailyKos is against the bailout). But, I think I understand them,’cause they want a bailout that is much more punitive (that is, they’re not opposed to a bailout in general, just against one that doesn’t make the financial companies suffer and help out the little guy who made bad choices).
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I know there are progressive opponents as well (DailyKos is against the bailout). But, I think I understand them,’cause they want a bailout that is much more punitive (that is, they’re not opposed to a bailout in general, just against one that doesn’t make the financial companies suffer and help out the little guy who made bad choices).
Or, to put in another way, they don’t believe that a socialist economic move that refuses to name itself as social democracy, and refuses to submit itself to the sort of legislative oversight which social democracy requires, isn’t giving us the upsides of socialism along with the downsides; aside from saving everyone’s ass on Wall St. (which, admittedly, is probably necessary, and maybe worth doing even considering everything else), it’s just another huge executive power grab.
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BJ,
I’m not doubting that we need government intervention. I’m concerned about the terms. I wouldn’t say that I want a more progressive bailout, but I am reluctant to support the bailout for some of the same reasons as its lefty opponents. I think that a bailout plan that shields banks from too much pain might leave things in worse shape than before with banks lending recklessly because, hey, they got a bailout last time they got into trouble. Not to mention the fact that other industries (hello GM, Ford, Chrysler) will be looking at the bailout.
While bailing out the borrowers seems more palatable to me, even then, anything broad enough to do any good is going to involve giving a great deal of money to people who have earned more than me and/or lived in much nicer houses than me. If there has to be a bailout, I want to see provisions to stop future re-occurrences in with the bailout. As of last week, several members of Congress are trying to revive zero down-payment loans, which does not give me any confidence that the bailout will result in a healthier mortgage market.
As for the House Reps fishing for a capital gains tax cut, nothing could be further from my mind. I haven’t seen a capital gain in a long time and don’t expect to see one soon.
Which brings me to my final point. How do we know this is going to work? Losing my retirement accounts is bad, but losing my retirement accounts and having more taxes to pay-off my part of the $700 billion is worse.
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bj,
I honestly don’t know what is the right thing to do right now, and I am skeptical that anyone else knows either. I am very suspicious of anybody who wants us to agree to a plan “right now” without understanding exactly what the details of the plan will be.
“But, I think I understand them,’cause they want a bailout that is much more punitive (that is, they’re not opposed to a bailout in general, just against one that doesn’t make the financial companies suffer and help out the little guy who made bad choices).”
The little guy is guilty in the same way as the big guys, just on a much smaller scale. There were lots of little guys involved (homeowners, mortgage brokers, real estate agents, appraisers): falsifying income, falsifying comps, changing loan terms at the last moment, doing illegal cash payments to buyers when selling them a home with an inflated price, creating real estate mini-empires with home equity, etc.
I’m concerned about how bailouts will affect homeowner behavior, and concerned that if things are set up badly (which they will be if this stuff is done too quickly), it will motivate non-distressed or mildly distressed homeowners to become distressed in order to score favorable mortgage deals. If that sort of chain reaction were to happen, we’d go through the $700 billion in no time and still have lots of problems to fix with little money to fix them with. I also keep hearing about the Japanese recession that started in the early 90s after a disastrous real estate budget. That recession (if that is the word) lasted 15 years, they say. Whatever we do, let’s not do whatever the Japanese did.
I’m also noticing the following troubling phenomenon: people starting to argue that if we can afford the $700 billion bailout, we should be able to afford XYZ. US automakers have already stepped forward calling for $25 billion in loans for their industry. The illogic of the argument just kills me–in normal life, the fact that you just spent $10,000 on A, it doesn’t mean that you have $100 for B.
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Sorry, typo. I wanted to write “disastrous real estate BUBBLE” not budget.
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MH & Amy. I think I understand all your concerns. But, assuming intervention is actually necessary (think of it as a thought experiment, like going faster than the speed of light, if need be), how could someone convince you of it. What kinds of information?
I think all of your concerns are real (for example, I had the same reaction to an op ed in the NYtimes, suggesting that we give people money for downpayments). I agree that it’s hard to intervene in a way that doesn’t have unintended effects. The same, incidentally, was true in spades for the Iraq war, which I opposed (and it would have been reasonable for someone to ask me what I needed to hear–or believe– to support it). I think we’re seeing the same worries from republicans in this crisis. Not believing or understanding the threat, not trusting (in this case their own administration) about it’s severity, being ideologically opposed to the proposed solutions, and not believing they will work anyway.
All those same things would have been true about the war for me. I’m ideologically opposed to war. I didn’t believe that Iraq was a threat, didn’t trust the Bush administration, and didn’t believe a war would work.
So, I think I can understand how the opponents feel. But (as with the war) if there really is a crisis, we need to figure out how to deal with it. Krugman said “So what we now have is non-functional government in the face of a major crisis, because Congress includes a quorum of crazies and nobody trusts the White House an inch.
As a friend said last night, we’ve become a banana republic with nukes.” (if you believed in the war, peaceniks like me would have been the quorum of crazies, of course).
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bj,
By the way, on economic issues, it’s not at all rare for there to be agreement between members of the far left and libertarians, particularly on corporate welfare programs. I remember a while back how opposed an anarchist colleague of my husband’s was to the DC stadium project. A libertarian would amen that sentiment. Meanwhile, a Chamber of Commerce type would eat it up with a spoon.
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I saw that Krugman piece also (I’ve been reading Calculated Risk like mad and Krugman is in his sidebar). To me, the failure to pass a $700 billion bill in a week hardly proves that the government is broken or that Congress is crazy. Especially given how high-handed that first proposal was (the all the money up front, no oversight, etc.) and how all of the smaller bailouts apparently didn’t even delay the collapse by a week. $700 billion is a lot of money and it would be pretty much impossible to convince me that a delay until Thursday is a bad idea. If things fall about that quickly, I doubt that the bailout would work.
I guess what I’d need is an outsider put in charge. By outsider, I don’t mean somebody who isn’t versed in finance and economics, but somebody who wasn’t on watch when things got so bad (i.e. not Paulson) and who isn’t running (or recently running) one of the companies that expects to get a large portion of the bailout. The plan would also have to limit the compensation for the higher-ups in the bailout companies. I don’t normally like that type of provision, but I have no way of knowing if we really are in a crisis. It seems to me that if we are in a crisis, none of the execs would care about the limits since the alternative is nothing. And lastly, there has to be a way for the taxpayers to get back the cost of the bailout (both from the banks and any bailed-out borrowers) if things recover well enough.
On the last two points, each new proposal seems a little better than the last. Which is why I’ve become more supportive of the idea of a bailout.
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How about this for a plan (I’m only joking a little bit)? If Bush et al think that this bailout is absolutely necessary, Bush/Cheney resign. Pelosi becomes president. The Democrats then have to pass this thing on their own. I think they can do that. And, then we have an outsider in charge (Paulson gets replaced). The ideologues who really oppose the plan on fundamental grounds (the road to socialism! free markets! !!!) don’t have to be involved. And, if things still fall apart, they can blame the Democrats.
(But, I think it might be possible to put someone else in charge, other than Paulson. They did that with the Resolution Trust Corporation. It will be more expensive, to build an agency to do it. But, if it would increase trust it would be worth it).
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Yes, bj, but the problem with that is, Pelosi would be President.
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I have a few (mostly negative) suggestions for bail-out plan writers:
1. No zero-down loan enabling
2. No promises to hold up home prices. In late 2005, the average US home price was $264k, while the median was $214k. Meanwhile, the median household income was $50k. This ratio of income to home price is unsustainable.
3. No “affordable housing” programs. It’s going to be plenty affordable before this thing is over, particularly in the poorer areas where prices rose most sharply.
4. No bailouts of local government pension plans.
Anybody else?
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The median household income was 50k in 2007 (I forgot to include the year).
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Local government pension plans are killing Pittsburgh. The underfunding was awful even during the height of the boom. I’m not sure I want to know what is it now. The last I heard, Pittsburgh total debt + unfunded pension liabilities was something like $1.5 billion (for a city of under 300,000). The state won’t let Pittsburgh file for bankruptcy though there have been long periods when the city was technically insolvent.
Also, the bus drivers have been working without a contract since August because they want to keep their retirement deal (full pension after 25 years with full, free health care until 65 — regardless of age at retirement). The county is refusing to pay its share of transit bill unless there is a new contract, which means that state won’t pay its share, which means the transit authority will be broke by the start of 2009. Which means I’ll have to pay the 45% parking tax that they instituted in 2003 when the city ran out of money after trying to make a dent in its pension shortfall.
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” problem with that is, Pelosi would be President.”
What, that’s a downside? I’ve loved her since I heard that she unfurled a “Free Tibet” banner in TianMin Square.
When the Reps were complaining that she gave a partisan speech, I thought: “they probably think, “hi everyone” is a partisan speech,” if Pelosi utters the words.
How about Steny Hoyer? I’m willing to give up my dream of a woman president to get something done.
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Amy:
I don’t have a problem with any of your preconditions — but, I do think that the government/banks should be able to re-negotiate foreclosures. I think that might make economic sense in some places, to allow people to stay in their homes, paying less money than whatever mortgage they originally got themselves into. It requires the homeowner to have an actual income, though, and I’m not enthusiastic about offering it if there’s a buyer for the home.
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How’s Pelosi doing on marshalling her troops and getting bills passed?
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Ah, but Pelosi shouldn’t do it if Bush is the one who will be controlling the plan. She delivered 70% of the Yes votes for the plan, It’s not going to be passed for the Republican administration, which will administer it without the help of Republicans. Hence the plan that Bush resign. Then, Pelosi can rally her troops in favor of the plan (As I said, I think she can, if she’ll be in charge of it).
Democrats do not trust Bush. The leadership does just enough to pass the plan, but not the rank and file progressives (of which Kucinich would be an example).
Also, Pelosi cannot pass a plan that Bush would sign, with solely democratic support. She might be able to pass another plan (with just Dems), but it would look quite different. ‘
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“I don’t have a problem with any of your preconditions — but, I do think that the government/banks should be able to re-negotiate foreclosures. I think that might make economic sense in some places, to allow people to stay in their homes, paying less money than whatever mortgage they originally got themselves into. It requires the homeowner to have an actual income, though, and I’m not enthusiastic about offering it if there’s a buyer for the home.”
That’s probably the only way out in much of Michigan, or other similar places. A week or so ago I was posting on $0 and $1 houses in the rustbelt, and during my research, I was struck by the beauty of some of the facades in Cleveland (or maybe some other Ohio z). There are large expanses of the country where houses are worth literally less than nothing.
On the other hand, given the huge volume of homes that will have to be processed, there are going to be unprecedented opportunities for fraud and self-dealing. It’s going to be a huge combined gold rush/land rush/oil rush situation.
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I’m not happy with this whole situation, neither Pelosi or Bush is very high in my books right now. I’m not big on third parties either. I’m too big of a believer in the primacy of politics over economics to be a libertarian (and too socially conservative). Communitarianism sounds nice until I remember just how annoying communities actually are. (There is nothing like being on a homeowners association board to damage your assessment of human nature.) As for the green party, I’m more skeptical of their solutions for global warming (not of global warming) than I am of the bailout.
I guess I’m just saying, aren’t we overdue for a realignment?
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That was fast. A Rasmussen phone poll says that
33% of likely voters now favor the bailout plan while 32% are opposed and 35% are not sure. Public opinion is going to be very volatile on the bailout.
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Communitarianism sounds nice until I remember just how annoying communities actually are. (There is nothing like being on a homeowners association board to damage your assessment of human nature.)
As a defender of communitarianism–as an ideology, not necessarily as a political movement–I would argue that homeowners associations are often lousy sites for communitarian assessments of one’s fellow human beings. The people there have bought into a neighborhood; hence, their primary motivation for getting involved will usually center around protecting or privileging what they’ve bought into, and that means trying to resist any collective action unless it can be tied directly to the value of their home, etc.
Of course, every community has its problems. It’s just a matter of finding the community to be an important enough value so as to justify putting up with the problems.
I guess I’m just saying, aren’t we overdue for a realignment?
We can only pray.
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“Communitarianism sounds nice until I remember just how annoying communities actually are.” (There is nothing like being on a homeowners association board to damage your assessment of human nature.)
How about churches? are they examples of good communitarianism?
(As an athiest, I’ve always fantasized about the community I imagine a church could be).
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BJ, there are churches for atheists–the Unitarians!
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“The people there have bought into a neighborhood; hence, their primary motivation for getting involved will usually center around protecting or privileging what they’ve bought into, and that means trying to resist any collective action unless it can be tied directly to the value of their home, etc.”
In my experience, only the people who just bought or are about to sell are even worried about the value of the house. The biggest problem is the 20% who want to live as if they weren’t attached to one or two other people’s houses. Much of it is just junior high except that people keep threatening to sue me. There are some fights that have been going on since the first Bush was president. One person did get a lawyer, but without filing suit. What they were doing was actually illegal (and potentially dangerous), not just against association rules. The lawyer clearly didn’t know health or fire codes.
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bj,
As I’ve argued before, community means repression, and the more “supportive” a community is, the more repressive. I’m not saying that either community or repression or entirely bad things, or that the two are synonymous, but that as a matter of practice, the more community there is, the less individual freedom there is in at least some area. Among the upper-middle class of a major metropolitan area, it’s not kosher to announce that you have guns in your home, or that you spank your kids, or that you think that most recycling is a waste of time and precious petroleum. Likewise, down here I’ve heard that traditional Baptist strictures on alcohol create social discomfort among Baptists who are unsure as to the beliefs and personal practices of fellow Baptists. (How do you take a Baptist fishing and keep him from drinking all your beer? Bring along another Baptist.) The society of fellow mothers is a necessary mental support, but I’m sure you’ve noticed that generally speaking, female society is very consensus-based and doesn’t tolerate heretics and oddballs.
That’s the dark side of any sort of community. The flip side is that the higher the price of conformity, the greater the payoff in terms of emotional and material support. When you’ve got cancer (as my mom did when I was in my last year of high school) casseroles do appear as if by magic. When you need a car, a Blue Bomber is put at your service. Etc.
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I don’t know. Even this atheist can’t get myself to join a Unitarian church. Still feels wrong.
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How about the Episcopalians?
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Not to turn this into a seminar on communitarianism and community politics, but…
As I’ve argued before, community means repression…the more community there is, the less individual freedom there is in at least some area.
Not the right word there, Amy P.; you start talking about relative amounts of “freedom,” and you’ve got to define what kind(s) of “freedom” you’re talking about. Negative or postitive? Individual or collective? Any argument that suggests that a community necessarily involves the repression of individual variety/choices has to explain why that freedom is preferred to the expansion of comfort and trust–and hence, freedom of action–which comes from being part of a group of like-minded individuals who share something in common.
A better term, I think, is “exclusion.” Communities draw lines, they exclude people, they define (literally or socially or psychologically) who is in and who is out. Exclusion certainly often involves “repression” (that is, repressing certain options for the sake of or in the name of belonging), but the original impulse isn’t repression per se.
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It’s the whole god thing — the belief in the supernatural (spirits and souls and dualism). It pretty much eliminates all religions, even Unitarianism and Bhuddism.
If the IRS decides that pastors can advocate from the pulpit, though, I’m planning on making the ACLU into my religion. And, then, my donations can become tax deductible.
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How about college football and/or the Committee for the Scientific Investigation of Claims of the Paranormal?
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“Any argument that suggests that a community necessarily involves the repression of individual variety/choices has to explain why that freedom is preferred to the expansion of comfort and trust–and hence, freedom of action–which comes from being part of a group of like-minded individuals who share something in common.”
“A better term, I think, is “exclusion.””
You’re right semantically. I say “repression” in order to highlight the phenomenon and problematize it through “otstranenie” (estrangement or defamiliarization).
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I’m completely with you, BJ. I don’t believe in any of that stuff. Many Unitarian churches and ministers don’t believe in any of that stuff, either. (It depends on the congregation). Our church did an exercise in which we went to different corners depending on our beliefs–whether in some sort of God, some kind of spirit, agnosticism, and atheism/materialism, and the vast majority went to the atheist/materialist corner.
Only if you consider belief in ethical principles to be dualistic would the stated beliefs of the Unitarian Church have to be called dualistic in nature. The current list of common Unitarian beliefs consists only of ethical principles, and it is that which the church is about for me. Just because I don’t believe in God does not mean that I don’t want my children to have a strong ethical foundation, and a sense of common ethical purpose with other children their age–an ethical community, if not a religious one.
Okay, I’ll stop now.
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I’ll put it this way. My model of good communitarianism is churches. I’ve seen more examples of amazingly good behavior from my people than I can easily believe.
On the other hand, when a Plain church has problems, they do a HUGE amount of damage–and nearly everyone in the Plain world has some scars.
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Sorry, but “Plain church”? What is that?
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Hmmm–it’s a bit of a confusing explanation, but I’ll try.
The Plain churches are Anabaptist and have church standards. So most of the Amish, some of the Mennonites, all the groups in between who get called Amish-Mennonite, the Hutterites, the River Brethren, the German Baptists, the Russian Mennonites, and probably some other groups that I’m not thinking of right now.
Some terminology: Anabaptist is a doctrinal label–confusingly, it doesn’t mean (except to historians) “rebaptizer”, but “rebaptizer who holds to some other stuff such as non-resistance”. Amish, Mennonite, Hutterite–those are basically ethnic labels–same basic beliefs, but different histories. Plain vs non-Plain is a practical distinction–does your church have enforced rules on things like clothing?
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On the other question–what would it take for me to be happy about a bailout plan.
John Allison thinking it was a wisely designed plan and was necessary would help a lot. (Retiring after 20 years CEO of BB&T, a risk-averse regional bank.)
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Thanks, SamChevre. It’s good for me to know more about that being so close to Lancaster and all.
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MH,
Deportation procedures for your expulsion from Southwestern Pennsylvania are already underway.
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If I have to sell my house right now, can I change my mind on the bailout?
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Putting tax-cuts into a bill that was $700 billion to start with? Granted one of the cuts was for the AMT thing they do every year, but still. I think I’m going to write-in “Barack McCain” and hope the PA vote is close enough that both parties pay for lawyers to argue over my true intent.
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House passed it just now.
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I read the postings re: the savings and loan disaster untill I gave up on seeing a single one that showed any understanding of what caused it. THE DEMOCRATS CAUSED IT!!!! They are the party that claims to be on the side of the disadvantaged and they get support by creating a large class of same. McCain and the republicans saw it coming and tried to stop it but the fools Barney Frank and Cris Dodd blocked them.
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What the hell is this site anyway. Looks like a bunch of absolute fools to me.
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