Bailout Fail

September 22, 2008

The Bush/Paulson bailout plan is getting more or less the reception it deserves. Pundits from the left and right hate it. More significantly, McCain has expressed unhappiness with it. Democrats are proposing an alternative plan.

Though there are a number of substantive points at issue, the deal-breaker is the explicit rejection of any sort of oversight over Paulson’s use of the $700 billion. Democrats are unhappy with this for obvious reasons; for McCain – and any other Republican up for election – making trouble over this is an obvious opportunity to be seen as independent of Bush, man of the 19% approval rating. That the Democrats are likely to be filling Paulson’s job with their own man in a few months doesn’t help sell the idea to conservatives. Beyond the obvious foolishness of giving this much money to the Bush administration without strings, it’s in just about everyone’s self-interest to oppose it.

So, though Bush will continue pushing the notion that dissenters are delaying vital aid, it’s hard to imagine him getting his way on this issue. But it’s probable that something along more or less the same lines will pass. Oversight will be added, but the size of the package shouldn’t change much. The major details to watch are whether the government takes an equity stake in the banks it bails out, whether aid is tied to limits on CEO compensation, and what sorts of general stimulus measures the Democrats are able to bundle in to the bailout.

Whatever the eventual package, expect nearly everyone to be extremely unhappy with it. This is partly because of the pressure to get something done quickly, but mostly a function of the massive scale of the situation. Most government spending comes with provisions that no reasonable person could honestly justify, because a democracy is not a few reasonable people sitting down and figuring out the most sensible way to behave. Whenever a farm bill is passed, a lot of money is spent, and somewhere in the neighborhood of 100% of it is going towards indefensible graft. Here, at least, the money will be thrown at something that almost everyone agrees needs to be addressed. Because we are creeping towards the $1 trillion mark, people from all sides of the spectrum will no doubt say that the bill contains unprecedented amounts of pork, and they’ll be right. But that won’t necessarily reflect any unusual degree of legislative wickedness, but rather the fact that $1 trillion is a shitload of money.

One Response to “Bailout Fail”

  1. […] chances of getting exactly what he wanted – or getting anything quite as quickly as he wanted – were already pretty negligible. This should shift the timing and the nature of any bailout away from what Bush and company were […]

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