McCain Should Oppose The Bailout

by John Hawkins | September 29, 2008 6:11 am

Dick Morris can be a little hit or miss with his political advice, but his latest words of wisdom[1] for the Republicans in Congress in general and John McCain in particular should be heeded,

During Friday’s debate, John McCain assiduously and inexplicably avoided using the issue that might have won him the debate and the presidency: opposition to a taxpayer-funded bailout of the financial crisis.

Congress is about to pass – and the president is about to sign – a bill that the American people detest by 2:1 margins. When Americans realize that there is, indeed, an alternative to handing over $700 billion to financial institutions as a reward for their failure, opposition to the idea will swell even further.

The bailout ideas proposed by the House Republicans and trumpeted by former Speaker Newt Gingrich make eminent sense. Indeed, they make so much sense that it is as if the roles of the parties have been reversed. It is the Republicans who are demanding that the banks and financial institutions pay for their own bailout, granting them only a mixture of loans and premium-paid insurance, while the Democrats want to pass the hat among the taxpayers to buy their dirty paper.

In an unusual act of political foresight and skill, the normally dead-headed House Republican leadership has crafted a platform that can carry the party to victory in November. All that remains is for the Party’s candidate – and perhaps even its president and Treasury Secretary – to get on board. McCain can recover at the negotiating table the economy issue he lost in Friday’s debate. He needs to have the courage of his convictions and insist on a bailout without requiring taxpayer-funded purchase of defunct mortgages from failing institutions.

…If McCain stands firm, the Democrats will either have to pass the bailout package on their own, without Republican votes, and rely on Bush’s signature on the bill to provide a fig leaf of bipartisanship – or they will have to cave in and pass the Republican package.

Either way, McCain comes out ahead.

If he gets his way, he gets credit for the bailout. If he doesn’t, he can spend the campaign attacking Obama and the Democrats for spending $700 billion of taxpayer money.

If the Democrats don’t adopt either course and play a game of chicken with the Republicans, their Congressional status as the majority party dooms them to taking the blame for any ensuing collapse.

Voters can count.”

Ok, folks, let’s look at the situation. We have a bill that is extremely unpopular with the American people and even more unpopular with conservative activists and the new media. Inexplicably, House Republican Leader John Boehner[2] is calling this bailout a “crap sandwich” even as he tries to talk the rank and file into voting for it. To the best of my knowledge, not one of the Republican “A-listers” on issues of fiscal conservatism (Mike Pence, John Shadegg, Jeff Flake, Tom Coburn, or Jim DeMint) is supporting this bill. But, with a month to go before the election, the Republicans are going to sign onto it even though they have a much better plan?

In a nutshell, that’s why the GOP keeps getting their *sses handed to them over and over; they don’t have the courage of their convictions, so they’re continually explaining to the people who sent them to Washington why they’re going to have to eat yet another “crap sandwich.” Meanwhile, they never seem to figure out that these politically motivated half-measures that they keep taking aren’t helping them one iota.

PS: Although the House GOP deserves some credit for getting the bill improved immeasurably, I’m particularly disappointed to see them starting to buckle (and, yes, judging by the releases they’re sending out promoting the bailout, they’re about to buckle). Unlike the GOP in the Senate, the House Republicans have done a pretty good job over the last couple of years. To see them throw it away now is a real shame.

PS #2: I think whether McCain wins the election or not will likely hinge on whether he supports the bailout. If he supports it, I think Obama wins. If he breaks with Bush and lives up to his fiscally conservative reputation by demanding that the House solution be implemented in full to protect the taxpayers, I think he can ride that to victory.

Update #1: Add Jeb Hensarling[3], yet another guy who conservatives can usually trust on these issues, to the ranks of of those opposed to this bill,

“My top responsibility as an elected official is to protect the families and people who trusted me to represent their interests in Washington. I do not take lightly the critical nature of the credit crisis that our capital markets face today and the grave situation that every American will face should our credit markets freeze and remain frozen. Inaction has never been an option, but the Paulson plan should have never been the only option.

“In my heart and in my mind, I believe that this plan is fraught with unintended consequences, would force generations of taxpayers to pick up the tab for Wall Street losses, and could permanently and fundamentally change the role of government in the American free enterprise system. Once the government socializes losses, it will soon socialize profits. If we lose our ability to fail, we will soon lose our ability to succeed. If we bail out risky behavior, we will soon see even riskier behavior.

“I also believe that this Congress, in a rushed effort to provide stability to a troubled credit market, did not adequately discuss or investigate potential alternatives that would have constituted a work out and not a bail out. Even at this moment, it still remains more important for Congress to do it right than to do it fast. I stand ready, as do many of my colleagues, to stay here for as many days as it takes to do this right.

“For the last week, House conservatives have fought to protect innocent taxpayers from an unprecedented government raid on their wallets to bail out Wall Street from their bad decisions and financial losses. Principled Republicans like Paul Ryan and Eric Cantor helped improve the legislation before us by adding increased taxpayer protections and additional Wall Street accountability. But mere improvement is not the test for support. The test is whether, after weighing both the good and the bad, you believe that the plan ultimately leads America in the right direction. Using that test, I cannot in good conscience support this legislation.”

Let’s say this bill passes, with George Bush, John McCain, and at least half of the Republicans in the Senate and the House on board. What do you think the next couple of weeks are going to look like? I’m guessing you’re going to have conservative pundits kicking the hell out of those Republicans for lacking spines and for selling out conservative principles while the people with the most credibility on this issue, like Hensarling, DeMint, Coburn, explain what a lousy deal this was as they justify their decisions to vote “no.

What do you think the effect of that is going to be? Granted, the far left doesn’t like this bill either, but they care more about winning at any cost than conservatives do and they’re not fiscally conservative. In other words, this is going to hurt us much, much, more than it hurts them — even though the Democrats created this problem initially and refused to fix it when Bush, McCain, Greenspan, and others warned it was going to be a big problem.

Let me make a simple prediction; John McCain backs the bailout, he loses the election. The Republicans in Congress back this bailout and they lose 5 seats in the Senate and 20 in the House — minimum. Don’t blame the messenger, folks, I’m just telling you what is probably going to happen.

  1. latest words of wisdom:
  2. House Republican Leader John Boehner:
  3. Jeb Hensarling:

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