There was something touching about phase two of the $700 billion bailout drama in the United States When it got past the Senate, leaders of both parties in that body stepped up to take a bow and admit to “some pride” in their vote. The pride was limited to the warm glow of bipartisanship. Yet, no one who voted for it called it a good bill. They voted for it because “doing nothing could have far worse consequences.” Some economists, like Paul Krugman, have written bluntly that “the plan on offer is a stinker – and inexcusably so.” He too, though, believes “another no vote would make the panic even worse.” All those responsible for the crisis now hold the public to ransom: give us even more money than you did earlier – or we’ll hurt you even more. The Bill that finally got through is a worse one than the version the House of Representatives rejected just days ago.
There is a healthy cynicism amongst the American public about who this deal is for, really. But at another level, there is breath-taking optimism. For over a week the media, though a tad more critical than usual, have driven the idea that solving the crisis is about sensible bipartisanship. Sit down and work it out together. And soon. Well, that’s more or less happened.
The problem is: this is a government and a bunch of guys who could not find a solution to a war they have waged for nearly seven years against Afghanistan, possibly the poorest nation in the world today; aleadership that waged a war in Iraq in which Iran – their most hated adversary – has emerged winner; a presidency that, according to CBS News, increased the national debt by 71.9 per cent, or by roughly $ 4.1 trillion, during Mr. Bush’s eight years. The same bunch of leaders in White House and Congress sit down to fashion a strategy in seven days to deal with the most complex economic crisis they have ever seen. That’s optimism.
Both Presidential candidates, however, failed to make any impact on that process. Barring spectacular political disasters, the economic crisis should torpedo John McCain’s bid for the White House. McCain sensed that when he dashed off to Washington to take leadership of the bailout process. He failed and ended up accepting the deal. Obama missed a great opportunity to force the Bush Administration to make serious changes to the bailout plan. This was a chance for the United States to reshape a degenerate financial system. An arrogant administration was on the mat, Wall Street on its knees, and Obama could have used that to push through badly needed changes to the Bill. He didn’t. It was a time for intervention that gave the state more regulatory power over, or even part ownership of that system. Those misses will come back to haunt Obama if and when he occupies the White House. (‘If’ — for there is still the lurking Race card to be played out in this contest. ‘When’ — because the economic crisis has derailed the McCain campaign with less than a month to go for the election.) Finally, the bailout gets the burden off Wall Street’s back and shifts it to the Treasury — and via them the public.
It’s not as if there was no crisis prior to Wall Street’s collapse. In official reckoning, the US economy lost 760,000 jobs in just nine months this year. About half a million of those before September, which itself saw 159,000 jobs vanish — the worst for any month in five years. In all, well over nine million Americans are out of work. These figures do not reflect the job losses wrought by the meltdown. Those numbers will show up later. In a striking essay in 2002, Paul Krugman wrote that America had never been more unequal since the Great Depression, also arguing that this was very dangerous for both economy and democracy. The poor and the less privileged have faced a crisis for quite some time. This year, it worked its way to the top.
Meanwhile, the Big Boys are back — wielding power again, and making money out of it too. Guess who the Secretary of Treasury is hiring to help carry the Great Rescue forward? The New York Times reports that “Mr. Paulson has recruited several former colleagues from Goldman Sachs to advise him.” (It does soften that by citing sources saying there were others, Treasury officials, also playing major roles in the rescue.) It gets more entertaining. Most of the bailout work is to be outsourced. A clutch of “selected asset management firms will receive a chunk of the $250 billion that Congress is allowing the Treasury to spend in the first phase of the bailout.” But, the Times implies, there is a bright side to this: “These firms will receive fees that are likely to be lower than the industry standard of one per cent of assets or $ 1 for every $100 under management.” Gee, they’ll accept less than standard fees on this deal. Oh, how could they be so noble?
Meanwhile, the economic crisis continues to redraw the political landscape. Barring dramatic and damaging developments, the crisis undermines the importance of the presidential debates. In the Vice-Presidential one, Sarah Palin fared better than anybody was willing to believe she could. Yet, it didn’t help. Her Reaganite clichés of “getting the government off our backs,” or on cutting spending – all these might have had greater resonance before the meltdown (or, more likely, eight years ago). Coming after Hurricanes Fanny and Freddie, they fell flat.
The condescension, though, continues. The media revel in pouring scorn on a candidate they see as intellectually challenged. This is the same media that supported and helped re-elect a President who probably couldn’t locate on a map any of the countries bombed on his orders. Palin’s role was never to bring gravitas to the debates. It was to draw in and consolidate the Christian evangelical base of the Republicans that otherwise abhorred McCain. She has done that. In the debate itself, her background as TV Sports reporter and former beauty queen meant she knew how to face the camera and thus the TV audiences direct. (Joe Biden kept looking at the moderator, not at the tens of millions watching the debate.) As for the ‘searching questions’ she has faced for weeks on foreign policy, the George W. would have a hard time explaining what “the Bush doctrine” means even though his own name adorns it.
That’s as far as it goes, though. The economy turned things around for the Democrats. But it’s not over till its over. This is where the DDT (Departments of Dirty Tricks) gets sprayed. The month of the “October Surprise(s)” which have hit campaigns in the past. The McCain campaign will now get shrilly negative and personal. The attacks on Obama’s character will intensify. The Republicans have made that much clear. Their aim is to “turn the page” on the economic crisis (since the bailout bill has been passed). And to shift focus to Obama’s “association and links” with ‘ex-radicals of the ’60s and ’70s like Bill Ayers.
It won’t be too easy to “turn the page” on the economy, though. More than a million Americans have lost their homes in these past two years, with foreclosures mounting relentlessly. This has given rise to a new danger. Since voter registration is linked to residential addresses, there’s potential for mischief up ahead. Some Republicans in areas of high foreclosures might move to get those who have lost their homes nudged off the rolls.
If you think that unlikely – remember that rich Indians have already played this game. In 2004.11 pr ominent Maharashtrians moved the Bombay High Court to bar slum dwellers from voting. The next year, after the Maharashtra government demolished 84,000 homes of poor people in Mumbai, the city’s Municipal Corporation itself requested the Chief Electoral officer to drop the now homeless slum dwellers from the voting lists. (A curious move for a society wanting to extend voting rights to People of Indian Origin overseas and Non-Resident Indians.) The slum folks now had no homes. Aha! No addresses. How could they vote? Such a situation has not arisen here yet. And it would work (or not work) very differently if it did. But the attitudes are repulsively similar.
The only curious thing about the economic crisis is that it has not given Obama the kind of lead it should have. Not as yet, anyway. And that’s where the McCain campaign takes heart. While there is life, there is hope. And then there is always Race.
P. Sainath is the rural affairs editor of The Hindu, where this piece appears, and is the author of Everybody Loves a Good Drought. This fall he is giving a course at UC Berkeley. He can be reached at: firstname.lastname@example.org.