Friday, September 26, 2008

The Dark Knight and the Bailout

In the summer’s box office smash “The Dark Knight,” the Joker, played by Heath Ledger, does not run around Gotham spreading evil per se. He spreads chaos. And then watches good people choose evil in the midst of the chaos. Yesterday, for a variety of reasons, the discussion of what government should do in response to the economic meltdown on Wall Street turned into chaos. It is not a good sign.

Part of the problem was the histrionic role John McCain crafted for himself. There appeared to be no good reason for the White House meeting between congressional leaders, the President and the two candidates. And, most times, a meeting without an achievable agenda turns into a nightmare. So far from rising above politics by “suspending” his campaign, McCain brought presidential politics into the delicate negotiations.

Why are the negotiations delicate? Because what is required in this situation is a bit of courage. Congressional offices were flooded with calls opposing the bailout. Most people would like to see Wall Street financiers get their comeuppance. But, if Wall Street fails, Americans who rely on credit – small businesses with seasonal fluctuations, farmers, banks – all will find their access to credit restricted making it more difficult to conduct business, creating conditions for more economic decline. So, Congress must do what is right not what is popular, that is, they must act with political courage. Alas, if one is looking for cowardice in the halls of power, the environment is target rich, but the instances of courage are few and far between,

House Republican members staged a revolt of sorts yesterday, refusing to sign onto to the President’s plan, even as it has been modified by negotiations all week. They promoted an alternative that, among other things, called for more deregulation. This is crazy talk. The lack of regulation got us into this mess. (Democrats should be ashamed for signing on to deregulation of the financial markets in 1999!) The idea that somehow the invisible hand of the market will solve the mess that the invisible hand created is absurd.

Why did the GOP members rally to an ideologically pure, laissez-faire alternative? Because they can. While the bailout may have a huge impact on the presidential race, it won’t on most House races. 98 percent of House members routinely win re-election. Re-districting has allowed politicians to draw the boundaries of their districts in ways that virtually ensure their re-election with computer-generated voting analyses. The greatest threat to re-election is not from the opposing party but from a primary challenger who plays more effectively to the party’s base. In primary elections, fewer people vote, so appealing to the more extreme elements of the base helps. Isolated from any electoral accountability, House members of both parties stay clear of moderation.

So, the economic crisis on Wall Street is coupled with a systemic political problem and the nation waits for the government to act. The president is hobbled both by his abysmal approval ratings and his previous record of using fear to whip up support only to have the object of his fears prove less than compelling over time. The Democrats have to fess up that they have done little in the one and one-half years they have been in charge of Congress to create the regulations that would have prevented these kinds of problems. And almost everybody is not likely to have a real electoral challenge in November so they have no real accountability to the electorate. That is not a recipe for a bold program to re-order the nation’s financial structure.

McCain and Obama have until 9 p.m. tonight to decide where they stand on the bailout. If they come down on opposite sides of this issue, then the chaos will deepen. If they come down on the same side, they can give cover for their congressional allies to do the right thing. If you like high drama, this is it. Unlike “The Dark Knight” however, this is not fiction. The Joker wrote, "Why So Serious?" after perpetrating his crimes. In Washington, today is a time for everyone to be serious.

Michael Sean Winters

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