The financial sector has contributed more than $300 million to federal candidates in this election cycle – split evenly between Democrats and Republicans – but it apparently was not enough. Today a motley coalition of free-market-loving right-wingers, fiscally conservative Blue Dog Democrats and anti-corporate left-wingers came together to deliver a stunning rebuke to the Wall Street bailout plan concocted by the Bush Administration and the leadership of both major parties.
The House’s defeat of the $700 billion plan represents (for now, at least) a breakdown in the tradition of acceding to the wishes of Big Business and Big Finance, especially at times when those monied interests need to be saved from their own excesses. It has taken a financial crisis of monumental proportions to expose as never before the rift between the needs of the corporate elite and those of the rest of us.
It has been fascinating to watch this play out across the political spectrum. Conservatives clinging to the ideology of market supremacy find themselves in a clash with corporate elites who have jettisoned their laissez-faire sentiments in favor of unprecedented government intervention. Joining the die-hard conservatives are progressives who oppose the Paulson plan but see the crisis as an opportunity to push for even more aggressive intervention, on behalf of working families.
In between are corporate-friendly Democrats and Republicans who were forced to lash themselves to the mast of the Bush Administration’s wildly unpopular plan. They were proud to have forced Paulson to abandon his original power-grabbing proposal in favor of a bill that included an abundance of oversight and disclosure as well as some safeguards for taxpayers. Yet by retaining same basic bailout concept, they were seen as doing little more than putting lipstick and various other cosmetics on a giant pig of a plan.
By taking Bush and Paulson at their word on the necessity of the bailout, mainstream Democrats, who made up most of the losing side in today’s House vote, have put themselves in a precarious position. This was captured in a vignette in today’s Washington Post account of the marathon weekend negotiations on the ill-fated bill. After the conclusion of a post-midnight press conference, Secretary Paulson, who had been showing signs of exhaustion during the talks, locked arms with Democratic Sen. Chuck Schumer of New York “and leaned heavily on the senator for support as they walked away.”
By trying to act responsibly in this extraordinary situation, the Democratic leadership may be literally and figuratively taking on the albatross of the Bush Administration and its Wall Street supplicants. Whether this is a trap that was deliberately set for them is hard to determine at this point, but the result is that Democrats find themselves out of step with the new anti-corporate zeitgeist.
The apparent sea change in attitudes toward Big Business may have repercussions far beyond the current credit crisis. It may also be felt, for example, at the state and local level. Here at the Corporate Research Project and Good Jobs First, we deal all the time with another sort of corporate giveaway – the often huge economic development subsidy packages given to companies ranging from Wal-Mart and Cabela’s to Dell and Toyota.
While we tend to critique those subsidies because they lack job quality standards and take funds away from public schools, there are libertarians who oppose them as an unwarranted intrusion in the market. Perhaps the right-left uprising against the bailout can help us form more effective strange-bedfellows alliances in our work as well. Look out, Corporate America, you may get outflanked from both sides.
This piece is being posted simultaneously on the Corporate Research Project’s Dirt Diggers Digest blog.