No Backbone, No Bailout

Cornered lawmakers knew the plan needed to pass; they just hoped the other guy would float it through.

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John Boehner wept. Roy Blunt fiddled. Nancy Pelosi lamented.

And on a day when the stakes could not have been higher, or the situation graver, nothing worked in Washington.

On one of the most chaotic and stunning days on Capitol Hill in recent memory, the 110th Congress rejected the $700 billion proposed bailout of troubled financial institutions stuck with billions of dollars in illiquid assets. Stern warnings had been pouring in from all sides for the past week. Prominent economists and Treasury Secretary Henry Paulson cautioned that failure to act would lead to economic Armageddon. President Bush said of the economy, that without a deal, "this sucker could go down." Democrats left the vote open for an additional half hour, hoping to persuade fence-sitting representatives to get behind the proposal. The bill failed in the House by 23 votes.

High expectations surrounding the bailout calmed the markets last Friday. But at around 2 pm. Monday, after the sale of Wachovia to Citigroup became final, and as the wheels began to fall off the rescue package, the Dow Jones Industrial Index began spiraling downward to its biggest single-day drop in history, closing down 777 points. The NASDAQ lost more than ten percent of its value. Homeowners, small businesses, and other credit seekers face an extraordinarily tough credit environment in the weeks and months ahead.

House Minority leader John Boehner actually began weeping on the House floor as he urged his colleagues to support the bill. The roll call was unusually political. Only 66 of 199 Republicans voted in favor of the bill, while 140 of 235 Democrats climbed aboard. It was a game of chicken to see who would provide less support for a bill that everyone thought had to pass.

A better, less political, measure of the proposal's importance was provided by a particularly courageous faction in the House: those members not running for reelection. These 26 retiring lawmakers, of both parties, were heavily supportive—all but three decided to bite the bullet and authorize the massive drain on the Treasury.

As it shook out, Democrats put a respectable number of votes on the table—votes whipped on the assurance that they would have Republican cover on the rescue of a Bush administration albatross. "[House Speaker Nancy] Pelosi went in saying she'd deliver 150 votes, and she did deliver them," says Robert Borosage, co-director of the progressive Campaign for America's Future. "If you were just going to do it in Democratic votes, you'd do a very different bill."

After the proposal collapsed, House Republicans tried to blame Pelosi, saying that the Bush-bashing speech she delivered just before the bailout vote was too partisan and cost votes. Rep. Eric Cantor of Virginia, one of the GOP young guns, said the speech demonstrated Pelosi's "failure to listen, failure to lead."

Yet, in the moments before the vote, House Minority Whip Roy Blunt -- the man responsible for rounding up GOP votes for the measure -- was seen just milling about, clearly not eager to produce the 80 to 90 votes that had been promised during last weekend's fevered negotiations.

Of course, there was no small amount of gamesmanship on both sides during the negotiations. On one hand, the nation, according to the administration, faced an economic doomsday if the bailout was not approved. But there was also intense public outrage over the "blank check" for Paulson and Wall Street on the other. Calls and emails bashing the bailout have flooded congressional offices since the plan was floated ten days ago. And though over 50 million Americans watched Bush's prime-time entreaty for the deal, only 24 percent of the public is reported to be in favor of the bill.