Everybody says this country is in the middle of an economic crisis. I’m not an expert, but I think the economic crisis can be boiled down to this: A lot of investors on Wall Street gambled that housing prices would keep going up — and when the housing values started dropping and these investors lost a ton of money, it created a set of conditions such that the whole economy could now come crashing down, causing millions of hard-working, tax-paying, law-abiding Americans to lose their jobs and more.
We are also apparently facing a political crisis, which can be described this way: Although our top-tier political leaders — including the President, the Speaker of the House, the Senate Majority Leader, and Republican leaders in both houses of Congress, as well as both major party presidential candidates and the vast majority of the U.S. Senate – say it’s necessary for the government to spend $700 billion in taxpayer money to avert an economic catastrophe, a slim majority of Congresspeople (mostly Republicans) recently rejected that idea, largely because the American people are overwhelmingly against it.
There is also a crisis of trust: The American people do not trust President George W. Bush — and many Americans wish they could take a swing at him. So when George Bush went on television last week and told the American people that a $700 billion bailout was necessary to save the economy, most Americans were tempted to reject the idea for that very reason. Americans also do not trust Congress. They do not trust government.
This crisis is also a crisis of ideas. Over the past week or so, as I’ve discussed the economic situation and the proposed bailout plan with fellow news watchers, I heard the same complaint over and over again: It’s unfair — morally repugnant, even – that the government would spend $700 billion “bailing out” investors who made stupid, irresponsible decisions with their own money. And many people react with nearly equal disgust to the idea that the government should bail out irresponsible borrowers who took out a mortgage they couldn’t afford. People say, “We have to live with the consequences of our choices in life – so why do these Wall Street fat cats get a free pass?”
In an effort to support a bailout, I’ve responded this way. “We have two problems. We have an economic problem, and we have a moral problem. Let’s deal with the economic problem first, and then we can deal with the moral problem later.”
In other words, let’s pass this $700 bailout now to keep our economy from falling to pieces — and then we can do something to make life fairer and better for the hard-working, tax-paying, law-abiding Americans who will foot the bill. It may be a bitter pill to swallow, but we’ve got to pass this $700 plan for the sake of the hard-working, tax-paying, law-abiding citizens who will suffer if the economy goes down in flames.
Of course, I think I’m pretty persuasive. (I always think that about myself.) But I don’t seem to win over many converts to my way of thinking among the hard-working, tax-paying, law-abiding folks I talk to. I have a theory about why many of them don’t see things my way: The premise of the bailout plan – that we have to save the fat cats on Wall Street or else the little guys will suffer — is just too hard for many of us to fully accept. The idea that our personal, individual fates would be determined by factors so far outside of our control or understanding is a radical leap from what many political leaders — especially conservatives — have been telling us our whole lives.
For an especially blatant and obnoxious example, consider this rant I recently heard on Jay Severin’s right-wing radio program here in New England. Severin introduced his rant by first playing an excerpt from an interview with a woman who had just witnessed Sen. Hillary Clinton’s speech at the Democratic National Convention.
INTERVIEWER: What does this moment mean to you?
CLINTON SUPPORTER: Hillary Clinton proved to me tonight that she would have made an excellent president. She was presidential tonight. She’s evidence that women have come so far, and to let gender be a hindrance, to let a phenomenal and intelligent, a powerful, a moving, a motivating person not move us into the next generation, not move us into the future that that we deserve, not move us into the great economy that we deserve, not to be able to address the concerns that we deserve. And now everybody just wants us to (inaudible). I saw in Hillary what my potential future could be. I saw more than just dreams. I saw things that could be realities. In her eyes and in her words, I could envision the reality of knowing that we could actually have green jobs instead of (inaudible), that we could have the image that we once had of a United States that was respected … I saw the country that we strive to be and wanted to be. And she could have made it happen.
JAY SEVERIN: The woman you heard is at best an unfortunate. And, in fact, an old fat loser. I haven’t seen her but I’ll bet you she’s fat. I don’t have to see her to know she’s a loser. So getting back to my point, “You know, Uncle Jay, what’s the difference, at least in theory, between a Republican and a Democrat, a conservative and a liberal?” Here it is: the words of this fat loser you just heard. She, she — two things. She sees her own personal potential, her life, is not merely related to, but inexorably tied, to what a politician says and does. And two: Her life is going to be better or worse based on whether a Democrat or a Republican is elected president. And by the way, on that second count, I’m not sure that’s entirely untrue, because a Democrat president is going to take your stuff and mine and give it to fat losers. Now the difference, kids, between a liberal and a conservative, a Republican and a Democrat, is that when I wake up in the morning, from the moment I open my eyes til the moment later on I close them again, the only thing I want to be is … left alone! I don’t want government to touch me, tell me, take my stuff. Just leave me alone! The notion, to me, that the government and who it is or what it is would have a daily impact on the quality of my life, is so humiliating and embarassing that, by definition, makes you one of life’s losers.
As I’m sure you can guess, Severin is against the bailout plan — as are most right-wing radio blowhards, and I believe their influence extends far beyond the relatively small number of Americans who listen to them and take them seriously. Severin’s words are powerful because they tap into a way of thinking that many people consider fundamentally American — although I personally don’t believe these ideas are any more “American” than racism or hating homosexuals. (The truly “American” ideas are in the U.S. Constitution and other founding documents, in my opinion.)
So when I try to convince people that their own futures are somehow contingent upon the federal government spending a vast sum of money saving banks in New York City, many just can’t fully accept it. They may understand it at an intellectual level — but they don’t accept it in their gut. It’s too … unfair.
This is a crisis. And it’s hard to see how this will all end.
I think many Republican Congresspeople are stuck between a rock and a hard place. On the one hand, they can oppose a bailout and risk economic catastrophe for which they may be blamed. On the other hand, they can support a bailout which (a) contradicts everything they believe about the proper role of government, and (b) is hugely unpopular. Clearly, most would rather risk economic catastrophe.
Democrats are similarly stuck: They have the votes to pass their own version of the bill — but any partisan bill they pass will be hugely unpopular and will probably lead to their defeat, if not in 2008 then later, in 2010. Or, Democrats can do nothing and risk economic catastrophe. If Congress does nothing and catastrophe ensues, Democrats will probably be able to blame Bush and the Republicans for it, since the catastrophe came at the tail end of a Republican president’s second term. So Democrats also have an incentive to do nothing. (The only person with a clear incentive to get something done is Bush, who knows his legacy will be worse than the worst if he leaves America fighting two wars and facing an economic disaster not seen in this country since the Great Depression.)
So here’s my question: Instead of spending $700 billion now, why not let the catastrophe happen — and then spend $700 billion — or more if necessary — providing a safety net and a recovery plan?
Allowing the economy to collapse will address the crisis of trust, because the catastrophe will effectively indicate that Paulson, Bush (oh, the irony) and the other political leaders who told us the crisis was coming weren’t just pulling our chains. It will also resolve the political crisis: People may oppose action now to prevent the pain, but once the pain is upon us, the American people will support politicians who help the country recover. It will also resolve the crisis of ideas: When millions of hard-working, tax-paying, law-abiding Americans lose their jobs, their homes, etc — they will be compelled to acknowledge that their own fates are determined by more than just their own hard work and good sense.
Allowing a catastrophe to occur would be painful — and as readers of this blog know, I’ve spent the last week arguing that the government needs to act and act fast, even at the risk of passing an ill-considered bill — but if the American people aren’t willing to endorse the logic behind this bailout, doesn’t it make sense to let the economy play itself out, at least for now? (With Obama in the White House, there’s a good chance the recovery would be swift and effective, I think.)
Am I being irresponsible to even suggest that we allow the economy to play itself out without government intervention?