The grassroots rebellion that led to the House’s rejection of the Bush Administration’s Wall Street bailout bill on Monday flamed out on Friday, overwhelmed by a massive lobbying campaign by Wall Street and by a propaganda push in the corporate media in favor of passage.
The House, which had voted 228 to 205 against a bailout at the beginning of the week, voted 283-171 in favor of an even more expensive plan only four days later, after the Senate passed a bill containing over $100 billion in tax breaks (mostly for the wealthy), and after House leaders added a bunch of those infamous “earmarks” to buy the votes of reluctant House members.
Interestingly, one of the things that was used to frighten members of Congress into passing this unprecedented bill was a plunging stock market, which plunged into record low territory for the year on Monday and Thursday. Yet after rising modestly during the morning, reportedly on “anticipation” that Congress would pass a bailout, once the vote was in, the equities markets all started heading south. Clearly investors weren’t particularly optimistic that throwing almost $1 trillion in borrowed money from taxpayers at banks and investment houses would do much for the nation’s struggling “real” economy.
One reason for investor pessimism is no doubt news that car sales and housing prices in September slumped to record lows, and that the September jump in unemployment was the highest since the 9/11 crisis in 2001. Another was probably the inclusion of a provision in the bill as passed by both House and Senate that allows the Treasury to buy bad debt not just from US banks, but from foreign banks as well. As several critics of the plan have observed (but as the corporate media have failed to report, to their undying shame), this means that American tax dollars will be flowing out of the country to shore up the balance sheets of foreign institutions, in the name of keeping overseas investors in the market for US treasury securities.
There may have been no other option for a country that is having its economy run into the ground by a voracious war machine that absorbs close to $1 trillion a year in revenues, and by economic policies that have, particularly over the last eight years, encouraged the wholesale flight abroad of the nation’s manufacturing base.
Numerous critics of this record giveaway to Wall Street note that the whole scheme is unlikely to do anything to shore up the economy, which seems headed into a long and deep recession. It is not even likely to do anything much to ease the frozen credit markets, since there are no constraints to prevent the banks that collect all the money from investing it in more speculative areas that offer the lure of higher returns than simply lending to corporate America or to homeowners. There’s nothing either in the measure to prevent the recipients of the money from investing or lending the money abroad. And given that lack of constraints, why wouldn’t they? If the US economy is going into the dumps, why lend money here at relatively low rates of return, when it can be lent more profitably and at higher rates in growing economies like China, Brazil or Russia?
Democrats in the House, and Barack Obama, the Democratic candidate for president, were rolled by Wall Street and by Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke, who, along with President Bush, sketched out scare stories of a 1930s-like Depression if taxpayers’ money wasn’t handed over in short order. “No time for hearings,” they cried. “This has to be done immediately or America is doomed.”
Where had we heard that kind of nonsense before? Oh yeah, in October 2001, when Congress was similarly rolled into passing first a bill launching an unending and borderless “War” on Terror and into passing a Constitution-wrecking USA PATRIOT Act. And then again in 2002 when Congress was again rolled, this time into authorizing a war against Iraq, which was presented as not a war authorization, but just a “diplomatic hand-strengthening” measure designed to get Iraq to stop developing alleged weapons of mass destruction (which, it should have been obvious at the time, he wasn’t actually developing).
No matter. So weakened, leaderless and ideologically rudderless is the Democratic Party under House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid that it let itself be rolled again. So anxious is candidate Obama to appear in step with the imagined centrist zeitgeist that he actually joined Republican opponent John McCain in helping to pass this ripoff legislative boondoggle, thus assuring that if he manages to win the White House, he will inherit a bankrupt government incapable of doing anything significant of a progressive nature.
Americans who were scared by the media and the Administration into fearing that their retirement savings were going into the toilet unless the bailout passed can watch their already deflated portfolios languish there, now that it has passed.
The lesson is clear. No grassroots rebellion that focuses on Congress as its battleground, or that counts Republican or Democratic elected officials as its troops, will go anywhere. The government party will hew to the people with the money.
A wiser course of action would be the wholesale rejection this Election Day of all incumbents who voted for the bailout bill in both House and Senate. Do that once, and watch how much better Congress responds to citizen pressure the next time around.
Dave Lindorff is a Philadelphia-based journalist and columnist. His latest book is “The Case for Impeachment” (St. Martin’s Press, 2008 and now available in paperback edition). He can be reached at firstname.lastname@example.org