WASHINGTON -- Monday's House vote to kill the bipartisan economic rescue plan was a stunning profile in cowardice, disregarding a mountain of evidence that the U.S. economy is teetering on the brink of the worst calamity since the 1930s.
Credit markets were drying up as businesses found it harder than ever to get loans. Housing values continued to plummet and mortgage debts deepened, threatening to drive more banking institutions into insolvency. Home sales fell to new lows. Mortgage rates moved higher. The economy was shrinking -- fast.
When 95 Democrats and 133 Republicans in the House voted to reject the $700 billion rescue package, Wall Street sent stocks into a nose dive, with the Dow Jones plunging nearly 778 points, the biggest one-day decline in its history.
The U.S. economy was growing progressively weaker and, worse, the virus was spreading into European, Asian and Latin American markets, as banks were failing in Great Britain, Spain and elsewhere. U.S. exports in the global economy were weakening. Imports were down, undermining our trading partners.
And it isn't just the bears that have lost confidence in this financial crisis. Once-bullish Wall Street economists like David Malpass have grown much more pessimistic about our economy -- even if the plan had passed. "We now expect a sharp slowdown that could well be the start of a recession," he told clients last week.
This is the environment in which petulant, economically ignorant House members denied the country's economic problems were really as bad as Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke said they were.
The ideological and fiscal arguments against the plan on both sides of the aisle were preposterous on their face.
Free-market advocates said that America's free-enterprise capitalist system rewards success and punishes failure, and government has no business intervening in the marketplace to pick the winners and losers. That is unarguable when the economy is working as it should, but when entire economic sectors are failing as a result of a credit collapse or a loss of confidence in the nation's banking and other financial institutions, then it is sometimes necessary for government to step in to restore them. This is one of those times.
Democrats, ever playing class warfare, are portraying this plan as a bailout of rich Wall Street tycoons, when in fact it is aimed at unclogging the blocked credit markets on which Main Street America depends for its survival.