This is a Big Deal

Maybe I’m not getting it, so I’d probably be well served by a bit of a clarification on Digby’s point here:

The argument over this bailout is going to be with us for a long time to come and unless Democrats play this right, they are going to wind up holding the bag. The “populist Republican” meme is alredy out there and starting to take hold. They’ve bet on this economy getting very bad and being able to blame the hated Bush and Clinton for causing it and then blame the Democrats for throwing money at the problem and failing to solve it.

Why would the Democrats let them do that?

Right now I’m watching Pelosi and Reid, Frank and Dodd stand there all by themselves taking “credit” for this bill. They are handing out plaudits to all the others who “helped” them get it done like members of “the Hills” at the MTV awards.

The optics are all wrong. If they really feel they have to do this thing each one of them should have a Republican under each arm every time they make an announcement.

So the Democrats are going to get a bailout that every major economist and pundit on TV are saying must be done in some fashion or another, but we need to worry because it might not work and then Congressional Republicans will tie the Democrats to the failed response and lash them to George W. Bush? And when people go to vote they’re going to associate everything they hate about Bush with Democrats, and vote for Republican candidates because they don’t like George Bush?

This is a bit reminiscent of the prevailing idea in the progressive blogosphere that McCain was going to kill the package in the first place and then both distance himself from Bush and become some sort of populist champion, when in reality he was just looking to take credit for whatever came out. It’s just too clever by half. If we’re assuming that voters are thinking about they’re votes to the degree that they’d actually counter intuitively link Bush with Democrats in Congress, instead of Republicans, why are we assuming that they’re not paying attention to know the details of the circumstances around the negotiations? I mean, isn’t it a bit disconnected to think, on the one hand, that voters are basically just rubes who aren’t sophisticated enough to understand even a rough outline of the package but, on the other hand, put so much thought into politics that they can come away seeing Nancy Pelosi as George Bush’s closest ally?

More broadly though, there’s a sentiment here that seems to be pervading the blogosphere that’s akin to, for lack of a better cliche, cutting off your nose to spite your face. Look, I don’t like that we have to spend $700 billion bailing out gigantic firms run by rich people and enabled by dumb policy over the past decade either, but we do. This really is an instance where inaction isn’t an option. Paulson and Bernanke made a run at stinginess when they decided to let Lehman collapse, and most people now seem to agree that that was a disaster. And yes, this is about Main Street too. Collapsing financial institutions and toxic assets plugging up the system means a bottleneck in credit. That means declining economic investment, which translates into fewer jobs. When the bank hurts, we all hurt.

But, that said, there has been some very good work done on this bill. Without knowing all of the details yet, we do know that there will be limits on executive compensation attached to government dollars. Firms won’t be handed a blank check that can be pocketed by their board of directors. More is going to be done to help struggling homeowners, and the government will get an equity stake in some of the participating firms, which should drastically reduce the cost of the package in the long run. This is important stuff that makes the bill much more tolerable. It’s still not perfect, to be sure, but to paraphrase Paul Krugman, just because it’s not very good doesn’t mean we ought to scuttle a package that’s good enough.

On another level though, I wonder if we aren’t getting a certain partisan blowback here. A certain part of me has always wondered if there wasn’t an antipathy to the package in large part because it was drawn up in large part by Bush’s Treasury Secretary. Not that that isn’t understandable on some level, but this isn’t the time for those sort of childish reactions. Leave that kind of childish reactionism to the movement conservatives. This really is a time when something has to be done to protect the financial backbone of the economy, in order to prevent a truly catastrophic economic decline. Republicans still occupy the White House, and the Senate is basically split 50-50 if you assume that Liebermann is going to vote with John McCain’s interests at heart. That means Democrats are going to have to work with Republicans here, whether we like it or not. And Bush and Paulson have, to their credit, apparently negotiated with Congressional Democrats in good faith on this matter, and have conceded many areas that Democrats held crucial to the package.

And if the American people really are dumb enough to associate Nancy Pelosi, and not John McCain, with George W. Bush in November, well, in that case, we’re already screwed no matter what.