Money | 09/30/2008 9:40 am

Lawmakers Blame Each Other for Bailout Breakdown

By The Staff at wowOwow.com

After setting up a vote to pass the $700 bailout package much-needed by Wall Street and the markets to help get the economy – and investor confidence – back on track, the U.S. House of Representatives not only failed to do so, but failed miserably.

And lawmakers are blaming each other for the shocking failure. The vote was 228-205, and it sent the stock market plunging 777 points; 140 Democrats voted yes and 95 voted no, while 133 Republicans opposed the measure, and 65 approved. The markets lost $1.2 trillion Monday alone — much of that being Americans’ retirement accounts.

President Bush said Tuesday morning that we’re at a “critical moment for our economy,” adding, “for the financial security of every American, Congress must act.”

USA Today reports that Bush’s weak political standing even in his own party and sharp partisan divisions in the House may have contributed to the plan’s demise, but it was old-fashioned politics that killed the bill. Basically, too many lawmakers weren’t willing to risk losing their jobs in an election year.

"It’s mainly political fear, the reaction back home," said Rep. Jim Cooper, D-TN, who backed the bill. "It’s the most difficult time for people to be statesmen, 37 days before an election" in which all of the 435 House seats are on the ballot.

The Washington Post reports that as the finger-pointing continues, the predicted collapse of the world’s financial markets is building steam.

Politico.com reports that both the right and left wings of the House, feeling marginalized after a week of invitation-only negotiations, ganged up on their respective leaders in a shocking act of legislative defiance. Some members would barely look at House Speaker Nancy Pelosi, D-CA, when she asked them to change their ‘nay’ to ‘yea.’ House Republican Leader John Boehner of Ohio faced similar responses from members of his own party.

"You can’t break their arms, you can’t put your whole relationship on the line, ask them to do something that they do not want to do and have that member regret that vote for the rest of their life," Boehner told Politico.com. "Twenty years from now, nobody will care how anyone voted except those members. You can’t do that. You just can’t."

Top congressional and White House officials are scrambling to structure a new bailout proposal that would attract reluctant lawmakers and still soothe the unnerved financial markets. But the House won’t meet again until Thursday because of the Jewish holiday.

The tanking of the bill came despite frantic lobbying by Bush and support from House leaders of both parties. Even pressure to pass the bill from some of the biggest special interests in Washington, including the U.S. Chamber of Commerce and the National Association of Realtors, could not sway enough votes.

"We need to work as quickly as possible," said Treasury Secretary Henry Paulson, warning of a credit crunch that will affect Main Street soon. "We need to get something done."

Appearing on MSNBC Tuesday morning, Sen. John McCain, R-AZ, also warned of forthcoming Main Street affects.

"We’ve got to do a better job of convincing them [lawmakers] of the effect this will have on Main Street – the ability to buy a car, the ability of small businesses to get credit to continue working – the whole spectrum of Main Street America’s economy is going to be jeopardized unless we pass this legislation. We didn’t do a good enough job selling it."

McCain said he would leave the campaign trail and "come back again [to Washington] if it’s necessary" to help push a package through.

"Americans out there are very frightened about their ability to maintain their jobs, their home, their future,” the Republican presidential hopeful added. “We have to provide the American people the confidence to move forward.”

Meanwhile, a new Washington Post-ABC News poll shows that most Americans see the current financial system as a "crisis" and nine in ten are worried the failure of Congress to pass a recovery package will only make the problem worse. But few voters said the current package did enough to protect "ordinary Americans," while nearly half said it did not go far enough to shore up the nation’s economy.

The Boston Globe reports that the public is angry and anxious over the bailout blunder.

"Congress is acting like children," said Joel Miller, an industrial real-estate broker in Boston. "I don’t have an easy answer now. But fighting back and forth and grandstanding isn’t solving anything."

John Chambers of Canton, MA, said it was "scary" to watch the bailout fall apart.

"The market thought it was a done deal," said Chambers, a project manager for John Hancock insurance company. "And when they found it wasn’t happening, they started selling."

Read more about: Bailout, congress, Economy, Federal Reserve, News, Treasury, U.S.

12 Reader Comments (so far…) Sign In or Register to comment

LAWMAKER be very aware! You will not be Elected if you vote for what ever name they call it. You have been put on notice! Do not pass the Bailout or today’s name the Rescue Bill! The people will vote you out of office!

By Jennifer Dooley on 09/30/2008 9:51 am

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Yes the partisanship is disgusting and the republican response that they changed their vote because Speaker Pelosi told the truth about what got us here was juvenile, but the blatant politicizing is the only thing transparent about this fiasco of a plan. Given the lack of ethics not to mention down right corruption within the current administration I’d be more concerned if the entire congress did fall into formation on this like sheep being led to slaughter. I want them to question this plan and to listen to their constituents. I want them to take as much time as needed regardless of the pressure being applied by Bush. Paulson and Wall Street. I want them to look at alternatives to handing what now counts as our economy over to the very people who caused this pathetic economic circumstance we’re in. And I don’t mean just this current “crisis”. I mean the state of our economy as a whole. If we’re going to pay for something why not those homes that are in foreclosure. - That helps the people have spendable money to put back into the real economy that should be driving the stock market rather than the Wall Street hocus-pocus wheeling-dealing. - That helps the banks recover their losses. - It helps the economy by starting from the bottom and working it’s way up like the economy is supposed to do. - I want NO compensation for any banking CEO or executive. - If more money needs to be put into their businesses to keep them going then they should put it there themselves out of their personal billions, or appeal to the corporate CEOs who have profited so outrageously from the same republican economic policies that allowed the financial industry to wreak havoc upon itself.

By Sherrie Crews on 09/30/2008 9:54 am

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Bravo!

By Jennifer Dooley on 09/30/2008 11:04 am

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Both sides have a share in the blame, so let’s move on.

By Marjorie C. on 09/30/2008 11:03 am

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MARJORIE………….. “Both sides has a share in the blame — let’s move on” People from both sides of the aisle voted NO. Was listening to one of the Senators from Florida last evening — he was talking about the phone calls, faxes, letters and E-Mails that have been bombbarting all Senators from both sides of the aisle against this bill. Could it be that the people in Washington are finally listening to their constitutents? My word, what is this country coming to? LOL

By Lady Gator on 09/30/2008 11:36 am

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Lady Gator, I hate to admit it, but I don’t know if the bailout is a good idea or not, being that I’m political-ecnomics challenged. However, if about 66% of the Repubs and 40% of the Dems voted against the damn thing, I guess it was no good. Back to the drawing board — no earmarks and no golden parachutes this time. Could it be that the people in Washington are finally listening to their constitutents? Could be that we’re lucky that Congress is up for re-election this year, or else it would be business as usual.

By Marjorie C. on 09/30/2008 4:46 pm

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“…….so let’s move on.” By Marjorie C. on 09/30/2008 11:03 am To what?

By Sherrie Crews on 09/30/2008 11:31 am

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“…….so let’s move on.” To discussing how to fix this problem. Our elected officials need to quite taking care of their party (both sides) and start taking care of this country. And now they leave town? OK, I understand for a religious holiday, but not all of them will be celebrating the holiday. They need to be in Washington working out a plan, all talking together, forget the blame game. It does no good. Instead of just giving these companies money; what about the government giving them a loan. Then the companies have to fix the problem or fail.

By Barbara Taylor on 09/30/2008 12:11 pm

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Sherrie: To what? Whatever’s next. Come back with a new version of the bill at the end of the week. If the folks don’t like it, they’ll let Congress know. If the folks want Dodd and Barney Frank’s heads, they’ll let them know that, also. Meanwhile, the market’s recovered somewhat, so we have a little breathing space.

By Marjorie C. on 09/30/2008 4:51 pm

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“Instead of just giving these companies money; what about the government giving them a loan. Then the companies have to fix the problem or fail.” By Barbara Taylor on 09/30/2008 12:11 pm We’d just end up right back where we’re at right now. If they can be allowed to fail why not let it happen now? If we can afford to hand out $700 billion dollars it needs to be distributed from the bottom up, not from the top down. No Wall Street exec should be allowed to profit from the failure of their business. They deserve no compensation. They’re not losing their homes. The people who are doing that are down here on Main Street.

By Sherrie Crews on 09/30/2008 12:32 pm

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Speaker Pelosi: Leadership Tested By Fire by Peggy Simpson September 30, 2008 The financial meltdown is testing the leadership abilities of House Speaker Nancy Pelosi, and then some. The high-voltage attempt to amend and pass the administration’s Wall Street rescue package didn’t turn out the way she had hoped. The House defeated the bill, 228-205, causing the Dow Jones index to plummet 770 points, with Wall Street losses put at $1.2 trillion and with global markets reeling in the hours that followed. Despite that, Pelosi remains firmly in charge of House Democrats. That’s more than can be said for her counterpart, Republican Minority Leader John Boehner. As global credit markets began to freeze up last week, Treasury Secretary Henry Paulson (and President Bush) pushed for a $700 billion rescue plan. Pelosi reluctantly went along and put her full leadership team behind the effort. Time seemed of the essence. The voters couldn’t see that credit freeze. And both Democrats and Republicans found fault with the Paulson plan. They praised Paulson’s knowledge of markets but faulted him for not enough political savvy, for not realizing he needed to alert congressional leaders at the outset, not shape a rescue plan on his own, with the Fed chairman, and then deliver a three-page bill to Congress and order them to pass it. As congressional leaders fleshed out the Paulson proposal, the firestorm over the $700 billion package began to inflame rank and file voters. Soon it became a “bailout” for bankers, with little to do with their own lives. There wasn’t much time to explain the difference. Pelosi gets much credit for keeping bipartisan negotiations going around the clock during the past week and through the weekend, working with Democratic Senator Chris Dodd as well as Boehner and his top deputy Roy Blunt and other key GOP senators. She worked in Democratic initiatives as she could. She worked in Republican suggestions as possible, including one on insurance. One significant bump in the road came when GOP presidential nominee John McCain said he was suspending his campaign in order to shore up GOP House conservative support for the bill. What he did, in retrospect, was give them time to organize against it even more. A White House meeting of all parties erupted in vitriol and disarray. Boehner at first appeared to join the anti-Paulson conservatives, later rejoined the bipartisan negotiations. Pelosi not only had to work for the Paulson plan, she had to immunize her own folks against a potential campaign crusade by GOP ideologues that this was “socialism, socialism, socialism,” foisted off on the public by Democrats now in charge of both houses of Congress. Voters, meanwhile, had been persuaded this was indeed a taxpayer bailout for the rich, not a rescue plan for the very financial structure of the country. Their calls to congressional members ranged from 100-1 against to 300-1 against. Despite the outside static, Pelosi and Senate Majority Leader Harry Reid and their GOP counterparts reached a compromise bill Sunday. It was put on the internet immediately and a House vote was set for Monday. The nose-counting began in earnest on both sides. Pelosi said from the outset that many liberal Democrats would not budge from the opposition. She also continued the tradition of the late House Speaker Thomas “Tip” O’Neill of understanding that “all politics is local” and that if a vote would mean sure defeat back home, the member could get a pass. Pelosi and her team told Boehner they could get between 125 and 140 Democrats and that Boehner and Blunt would need to find between 80 and 100 Republicans. That seemed feasible Sunday. On Monday, Pelosi delivered, Boehner fell short. When the dust settled, 140 Democrats favored it, 95 opposed it. Only 65 Republicans voted for it, with 133 against. A switch of 12 votes could have made the difference. Republicans’ immediate reaction after the unexpected defeat was to blame Pelosi. That prompted Democrats to rally around her. Boehner said Pelosi had chased away a dozen wavering Republicans when she gave a speech saying the vote on this unpalatable $700 billion rescue plan had been made necessary by eight years of Bush policies, including lax oversight on Wall Street. The blame-Pelosi mantra got much play on TV and radio shows. That may stick. Pelosi certainly couldn’t claim victory as the fruit of her frenetic around-the-clock bipartisan negotiations – any more than McCain could claim he had provided the winning edge of House conservatives. Pelosi could have skipped the partisan speech on the eve of the vote – but she was still trying to rally reluctant Democrats to swallow the bitter medicine. Few Republicans had been on the House floor to hear Pelosi’s speech and none reacted when they heard it. It was later, after the shocking setback of the vote itself, that GOP leaders seized on the Pelosi speech to rationalize their own failure. Ultimately, however, the blame-Pelosi excuse didn’t help against Boehner. It made him look even weaker. He had gotten only a third of his House Republicans to back the bill, far short of what he had promised. And saying that a Pelosi speech swayed a critical mass of his members only diminished his stature, leaving him open to mockery. It turns out that Boehner knew hours before the vote – and well before the Pelosi speech – that Republicans would be far shy of their goal, which could spell defeat for the overall bill. If Pelosi had known that, she might have delayed the vote. That might have alarmed the markets but probably wouldn’t have spooked them the way the actual defeat did. Those watching the drama unfold saw Pelosi at the center of a beehive of activity, Boehner almost a solitary figure. The Democrats kept on strategizing how to turn it around. The Washington Post said that as the bad news sunk it, top Pelosi aides told Boehner that if he or his top deputy Blunt could round up a few votes, the Democrats could do the rest. “But Boehner couldn’t find enough and he said it wasn’t his style to ‘break arms.’”

By Tee Zee on 09/30/2008 9:39 pm