As the days pass, more and more people on the Right are voicing concerns about the Paulson bailout plan. One political operative, Patrick Ruffini, has even said:
Republican incumbents in close races have the easiest vote of their lives coming up this week: No on the Bush-Pelosi Wall Street bailout. God Himself couldn’t have given rank-and-file Republicans a better opportunity to create political space between themselves and the Administration. That’s why I want to see 40 Republican No votes in the Senate, and 150+ in the House.
In 1990, the Elder Bush administration and a Democratic Congress came together to pass a budget deal that imposed spending caps and tax increases. The response by Republicans on Capitol Hill was unprecedented; the insurgent Newt Gingrich, who had just become a member of the GOP Congressional leadership, actually led more than 100 of his colleagues in outright opposition to the legislation being championed by the president, the titular head of his own party.
That fight, it might be said, was the foundational battle for the turnaround in Republican fortunes in Congress; the stand on principle against tax increases helped contain Republican losses in the midst of an economic downturn in the 1990 election and was essential to the change in strategy and philosophy that led to the tsunami of 1994.
So is this a parallel situation?
No. It’s not, because the budget deal was entirely optional — a piece of ideological theater in which Democrats got a Republican president to violate his core pledge on taxes in exchange for a nice piece of goo-goo policy in which their spending goals would theoretically be restrained. The 1990 deal raised taxes during a recession, which goes against every bit of sound thinking on economics we know about (even Barack Obama, schooled by the moderate economist Austan Goolsbee, is speaking cautiously about this now).
Everyone who is now talking about the potential horror of this new deal — we need to slow it down, how can Congress give the administration a $700 billion blank check, etc. — is kibitzing. By which I mean, they are complaining about it without offering much in the way of alternative options. Nobody thinks a bailout is avoidable. The question is whether there’s time to ruminate about it without causing a massive crisis of market confidence that simultaneously kills the credit market off entirely even as it drains liquidity from the world economy.
This is, of course, the worst conceivable time to be conducting a debate on the assumptions contained in the budget plan, five weeks before a election in which a third of the Senate and the entire House are up, not to mention the presidency.
There is one thing for certain: A piece of legislation, passed now to deal with the crisis, can be cleaned up and revisited early in the next Congress, in early February. Indeed, the officials who want it right now may themselves need such a clean-up because there will be technical reasons for one — drafting errors in the legislation and the like. There will have been four months to consider the longer-term effects of the bill. That is probably the best to be hoped for, and is, perhaps, the only responsible way to deal with the question of what needs to be done this week.