Tuesday, September 23, 2008
People with good memories will recall that Republicans, not Democrats, expressed alarm about the risks being assumed by Fannie Mae and Freddie Mac over the years. Now, Republicans in close congressional races are being advised to vote against the bailout as so as to distinguish themselves from Bush and the Democrats in Congress.
On Saturday morning, I noted -- quoting Atrios -- the almost complete lack of debate over the ever-changing dictates issued by Treasury Secretary Hank Paulson. Last week, whatever Paulson said on any given day -- no bailouts; only selected bailouts; massive $700 billion bailout plan -- immediately became the unchallenged conventional wisdom.
That has all changed. Prominent economists, who had previously been defending Paulson for the most part, began voicing serious doubts about his plan. As the AP put it yesterday: "Many of the same economists and opinion-makers who'd provided a bipartisan sheen of consensus to Treasury Secretary Henry Paulson's previous moves have quickly begun casting doubts on the wisdom of a policy that would allow Treasury to purchase without oversight hundreds of billions of dollars of difficult-to-price assets from financial institutions." Not only Paul Krugman, who was a skeptic from the start, but conservative economic experts have also now expressed opposition, including former Bush and Romney advisor Greg Mankiw and -- in an excellent column on Saturday -- Sebastian Mallaby, who described the rapid move to embrace Paulson's plan as "extremely dangerous."
And now, some of the most rabid ideologues on the Right are voicing increasingly strident opposition as well. At National Review last night, Newt Gingrich wrote that "watching Washington rush to throw taxpayer money at Wall Street has been sobering and a little frightening" and said he "hopes Congress will slow down and have an open debate." Thereafter, NR's Yuval Levin proclaimed that nobody could read through the Paulson proposal "without concluding that everyone in Washington has lost their minds." In The New York Times today, Bill Kristol said he's "doubtful that the only thing standing between us and a financial panic is for Congress to sign this week, on behalf of the American taxpayer, a $700 billion check over to the Treasury," while Michelle Malkin posted a lengthy alarmist screed warning that "Hank Paulson must be contained."
Right wing Republican opposition is critical to the formation of a majority to delay, and even potentially kill, this bailout. Without it, the Democrats are free to do what they always do, collaborate with the Bush Administration. With it, the Democrats face the prospect of paying a severe political price at the polls. Today, Republican senators like Dole, Bunning and Shelby were especially ascerbic in their condemnations of the plan during an appearance by Treasury Secretary Paulson and Federal Reserve Chairman Barnacke before the Senate Banking Committee.
Hat tip to Gaius at Undemocracy in America.