By all accounts, it’s the House Republicans who stand in the way of a bailout deal. And you know what? I think I’m glad they’re doing it. Now, I don’t give them an ounce of credit for their intentions, but I’m quite happy to let them drag this thing out while we figure out what it is we really need to do.
And just what is it we need to do? I still feel like I don’t know. This has been a rather difficult issue to wrap my head around. That difficulty doesn’t come from an inability to understand what the various parties are saying – it’s just that I don’t know who to believe about the extent of the problem. And of that group that I should believe, how do I account for their motivations in the proposed fix? There are things that are easy to dismiss – Paulson’s opaque “trust me”, House Republicans’ reflexive “tax cuts!”, and Democrats’ populist compensation caps. But after those broad brush issues, the important questions are still unanswered. Buy what? At what cost? For how long? What if? *Why?* There *are* answers to these questions, but until we get them, I’m not interested in a deal going forward.
And what are the consequences of not acting-right-now-this-very-moment? That’s another unanswered question, as far as I’m concerned. And while it may well have grave consequence, people much smarter than me think we ought to stop and ask that question, too:
A funny thing happened in the drafting of the largest-ever U.S. government intervention in the financial system. Lawmakers of all stripes mostly fell in line, but many of the nation’s brightest economic minds are warning that the Wall Street bailout’s a dangerous rush job.
President Bush and his Treasury secretary, former Goldman Sachs chief executive Henry Paulson, have warned of imminent economic collapse and another Great Depression if their rescue plan isn’t passed immediately.
Is that true?
“It’s more hype than real risk,” said James K. Galbraith, a University of Texas economist and son of the late economic historian John Kenneth Galbraith. “A nasty recession is possible, but the bailout will not cure that. So it’s mainly relevant to the financial industry.”
[ . . . ]
Coming out of the White House on Thursday, the ranking Republican on the Senate Banking Committee, Alabama’s Richard Shelby, held up what he said was a five-page list of economists opposing the rescue plan.
“This is not me. This is economists at Harvard, Yale, MIT, University of Chicago, our leading universities,” an exasperated Shelby told reporters. He called the administration plan “flawed from the beginning.”
So what do to? Answer the questions before any bailout gets passed. To the extent that the House Republicans are playing a part in creating the circumstances for that to happen, I’ll be cheering them on.