First, we delegate analysis of Monday's debacle to the formidable David Brooks, whom we quote at some length for understanding of matters political and economic:
We add that House Republicans will indeed get most of the blame, not because Democrats did nothing blameworthy but because the public intuitively expects so little from Andrew Jackson's heirs.
House Republicans led the way and will get most of the blame. It has been interesting to watch them on their single-minded mission to destroy the Republican Party. Not long ago, they led an anti-immigration crusade that drove away Hispanic support. Then, too, they listened to the loudest and angriest voices in their party, oblivious to the complicated anxieties that lurk in most American minds.
Now they have once again confused talk radio with reality. If this economy slides, they will go down in history as the Smoot-Hawleys of the 21st century. With this vote, they’ve taken responsibility for this economy, and they will be held accountable. The short-term blows will fall on John McCain, the long-term stress on the existence of the G.O.P. as we know it.
I’ve spoken with several House Republicans over the past few days and most admirably believe in free-market principles. What’s sad is that they still think it’s 1984. They still think the biggest threat comes from socialism and Walter Mondale liberalism. They seem not to have noticed how global capital flows have transformed our political economy.
We’re living in an age when a vast excess of capital sloshes around the world fueling cycles of bubble and bust. When the capital floods into a sector or economy, it washes away sober business practices, and habits of discipline and self-denial. Then the money managers panic and it sloshes out, punishing the just and unjust alike.
What we need in this situation is authority. Not heavy-handed government regulation, but the steady and powerful hand of some public institutions that can guard against the corrupting influences of sloppy money and then prevent destructive contagions when the credit dries up.
Second, the Senate, where cooler heads sometimes prevail thanks to that body's now-somewhat-diluted-constitutional differences with the House, will vote shortly on a revised bailout bill. the Gray Lady, quoting its usual courageous band of anonymous sources, says that the bill will contain: "tax breaks for businesses and alternative energy and higher government insurance for bank deposits."
We SWNIDishly observe that this is the way our federal legislature works: when something needed doesn't get votes, like a Christmas tree it gets decorated with colorful geegaws that will induce our lawmakers to do the right thing. Hence . . .
- Tax breaks for businesses are generally a good thing these days, especially in a global economy in which American business taxes are higher than everyone's save the Japan's. This issue, however has nothing to do in the short term with the financial crisis, which requires getting enough confidence back in the banking system that banks will lend to each other. Deeper in the article, the Times notes that individual tax breaks are included as well. These are also welcome but just as irrelevant to the crisis. Given their placement in the article, they're apparently not of much interest to the Times's reporters and editors.
- Alternative energy is so stylish and gives its advocates such a strong sense of their moral superiority and foresightedness. But it couldn't have less to do with the present issue if it were a statement about the likelihood of life on other planets. Claims that these measures will create "tens of thousands of jobs" don't even deserve comment.
- Higher government insurance for bank deposits actually makes sense, as this is a measure that will convince nervous depositors not to withdraw their money from commercial banks in what could become a disastrous run on banks like the one that FDR had to fix. The FDIC's $100,000 limit hasn't been revised upward in as long as most self-conscious life forms can remember.
- Notably missing in this list, but thanks to the Times's crack reporting perhaps a part of the bill, is revision of mark-to-market accounting rules that put the (highly regulated, by the way) banking industry in a precarious capital situation that has precipitated banks' lack of confidence in each other, freezing inter-bank lending and drying up credit liquidity. That would be the most helpful addition to the House's failed bill, but either the Senate doesn't have the wherewithal to realize that or the Times doesn't have the wherewithal to recognize its significance.
OK, three observations. We are LOL* over Harry Reid's rhetoric, as quoted by our Newspaper of Record:
It has been determined, in our judgment, this is the best thing to move forward.
It has been SWNIDishly determined, in our judgment that when a politician combines the divine passive and the royal plural in the same sentence, that politician proves simultaneously his enthusiasm for his own importance and his unwillingness to accept blame.
*This is our first and last use of the popular acronym-cliche. Reid deserves such contempt.