Time for a redo; the House did not pass the bailout.
I admit to some relief. Paul Krugman was in favor of it, but just barely (like pretty much everyone who was in favor of it, I think). He was tolerant of the policy, and recognized the politcal reality; this was the best the Democrats could do and expect any kind of Republican support at all.
Kos didn't like it, although he recognizes the need to do SOMETHING.
I'm torn between Krugman and Kos; I don't always agree with either, but I trust Krugman on economics, and I respect Kos on the politics.
All of that, of course, is irrelevant right now. The thing is dead. It won't come back up for at least a couple of days. I don't expect opinions to soften in the interim. The people back home are not going to discover a new love for Wall Street.
It's becoming clear that, for all his ability to manage the crisis day-to-day, Henry Paulson didn't play the politics of this well. That's not really his fault; he's not a politician. But his initial power grab didn't go over well, and springing the "$700 billion" figure out of the blue, immediately after the Merrill Lynch-Lehman-AIG few days of terror, didn't help. That's a huge chunk of change to start talking about all of a sudden.
I'm sure Paulson didn't calculate the politics of how the House and Senate would react; first, he didn't really have time, second, it's not his background. SOMEONE in the Bush White House should have realized that this was not going to play in Peoria. Of course, that would be assuming that someone in the White House would have a clue how this is going to play in Peoria. Which, obviously, no one, least of all Bush, does.
I've said it before, I'll say it again: George Bush's biggest problem isn't that he isn't very bright or isn't intellectually curious or even that he's a stubborn SOB. George W. Bush's problem - and now, our problem - is that he simply isn't a very good politician. He just doesn't know how to read other people very well, particularly when they potentially disagree with him. Which means that he does not anticipate problems like the House Republicans not going all with him. Which means that he has no idea how to GET them to go along with him. He just does not have the empathetic imagination: he cannot imagine another person's perspective very well.
Bill Clinton, of course, was an absolute genius at that. And I mean genius in the literal sense: he was not brilliant at it, he was a genius at it. He could imagine how all the other parties in a particular situation would react, not merely to a policy proposal, but to each other. Bush has no idea that that is even an important thing to try to do.
So now we're stuck with a broken deal and a financial system in crisis. We know what the minuses are: an incompetent, powerless president; a furious electorate; raging uncertainty in the financial markets; a fractured GOP, with open revolt among members.
Are there any pluses? The Democratic leadership seems to be united. Henry Paulson presumably now has a better sense of how to play the politics; he seems to learn fast. The rank and file Republicans in the House have now had their chance to make themselves heard; maybe that was enough for some of them.
Maybe Congress will come up with a better bill. It will come up with a different one, that's for sure. Maybe it will be dramatically different; maybe it will just be tweaked.
One variable I can't predict is how John Boehner and the rest of the House leadership will react. They may very well be furious at Bush for not playing this well; at the very least, they can't be happy with Bush. But if this goes down again, Wall Street is going to hold them accountable.
There's one wild variable: the VP debate is on Thursday. Ain't no way in hell this is going to be postponed. If Sarah Palin holds her own, maybe Republicans will be more confident of victory for McCain in November. But if, as seems more likely, she tanks, they may be ever-closer to panic mode. How that will play is anyone's guess.