Will 2008 be the year of the Chicken Little Congress? Or can the House of Representatives show the panic-driven Senate what it really means to be a deliberative body?
On Sept. 19, Treasury Secretary Hank Paulson put a gun to America's head: Pass his $700 billion bailout of the banking industry and give him unfettered new powers to buy up an ocean of privately held toxic assets, or all hell would break loose. Treasury officials warned that the market would lose a third of its value if the bill were not passed immediately.
"We could see falls of 3,000 or 4,000 points on the Dow," a Republican official heaved. "We may not have another day," Democratic Senate Majority Leader Harry Reid hyperventilated. "We can't afford to do nothing," echoed all the other Democratic Henny Pennys and Republican Goosey Looseys in Paulson's sway. It's a "crap sandwich," House GOP leader John Boehner sighed, but the costs of inaction would be worse.
On Sept. 29, the House refused to bite. The Dow dropped nearly 7 percent -- a "record fall" in points (778), but nowhere near the apocalyptic levels predicted by Paulson's fear-mongers. Half of that drop occurred before the bailout rejection. The skies, however gray, did not fall. The world did not end. The dire predictions of Paulson and company did not come to pass. The next day, stocks (their barometer, mind you, not necessarily mine) rebounded. We're about where we were in 2006. Stock market Armageddon? I think not.
Paulson's monumental misjudgment is no surprise to those who have paid attention to him over the last year. This is the man who proclaimed the subprime crisis "largely contained" in April 2007; "near the bottom" in May 2007; and "largely contained" again in August 2007. This is the man who pledged that he had "no interest in bailing out lenders or property speculators" in October 2007 and couldn't "think of any situation where the backdrop of the global economy was as healthy as it is today."
This is the man who patted himself on the back for refusing to "put taxpayer money on the line" to rescue Lehman Brothers on Sept. 15 -- and then turned around the next day and engineered the $85 billion taxpayer-funded bailout of AIG. This is the man who vowed he had "no plans to insert money" into Fannie Mae and Freddie Mac -- and then turned around and committed $200 billion in capital and credit lines to those corrupt, bloated, crumbling institutions.