Commentary Magazine


What’s The Matter With Harry?

One of the more curious — but not unprecedented — incidents in the last couple of weeks involved Harry Reid. The Wall Street Journal explains:

Just as U.S. credit markets this week were close to the edge of the cliff, threatening capital-starved businesses large and small, Senate Majority Leader Harry Reid stepped in front of reporters and offhandedly announced:
“One of the individuals in the caucus today talked about a major insurance company. A major insurance company — one with a name that everyone knows that’s on the verge of going bankrupt. That’s what this is all about.” The next day, share prices fell sharply across the insurance industry. Let us stipulate we do not think it necessary for even U.S. Senators to understand the internal mechanics of credit default swaps and collateralized debt obligations. But if we have learned anything amid the panic over Bear, Lehman, Merrill and adventures in naked short-selling, it is that rumors can obliterate economic value, instantly.

But this wasn’t the only such incident:

It calls to mind Senator Chuck Schumer’s public suggestion in July that troubled IndyMac Bank “could face collapse.” It did, after a deposit run. Senator Schumer said criticizing his action was akin to blaming “the fire on the guy who called 911.” The nation’s shareholders would sleep better at night if some Members of Congress enrolled in Arsonists Anonymous.

All of this raises the question: are they trying to make things worse in the hopes of furthering their party’s election prospects? Similar suspicions were raised when Nancy Pelosi seemed to inflame her partisan opponents and resist any effort to whip her own caucus on the first failed bailout bill vote. Certainly as the financial crisis has intensified their electoral prospects have brightened.

But if we assume that they “meant no harm” we are left with an equally troubling conclusion: they are reckless and ignorant about the ways in which their words and actions may impact a fragile economy. Or to put it differently, their first consideration is invariably “How do we maximize the public’s perception that things are rotten?” rather than “What can we do to contain the conflagration?”

It does remind one of their attitude on the Iraq war: every set back was gleefully trumpeted and every minor advance was dismissed. They never much cared how their rhetoric or votes might embolden the enemy or unnerve our ally. The sole consideration was domestic political gain. If they didn’t want to lose they certainly gave every indication it was low on their list of priorities. Bashing the President, rallying their base and positioning themselves for the next election was clearly more critical.

Well, at least they are consistent.