Monday, September 29, 2008

Bailout plan fails

The House failed to pass the bailout plan today. There's a lot of finger pointing going on, but the political problem is pretty simple. This plan is massively, massively unpopular with the public. No one wants to take the blame for passing it, for fear that the number "$700 billion" will appear prominently in their opponent's campaign ads. At the same time, no one wants to take the blame for killing the economy by doing nothing. The only way this measure can pass is if it's a bipartisan effort, so neither side can use it as a weapon against the other in future campaigns.

Now, the Democrats are in absolutely no mood to stick their necks out for a plan originated by the Bush administration, so they will not pass this unless a majority of Republicans will vote for it. The Republican party, however, is deeply divided; the conservative wing thinks this plan smells like socialism and has no stomach for it. So while both sides are taking some hits over the failure of this plan, ultimately it's up to the Republicans to get their act together if they want to see it pass.

While the failure to quickly pass this bill sent stock traders running for their fainting couches, it's not entirely a bad thing. The original bill was hastily drafted and no doubt deeply flawed. Panic is never a good state of mind to be in when passing legislation. Whatever does end up passing is quite likely to be a better bill overall.

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