Public anger against the federal bailout that rescued the nation’s financial system from collapse, prevented the bankruptcies of the nation’s auto companies and salvaged the insurance industry — preventing a second Great Depression, according to most economists — has turned the 2010 mid-term elections upside down. The lack of understanding from Tea Party supporters and like-minded conservatives is appalling, but so is the two-faced political response from both parties.
For those who don’t remember, the $700 billion bailout package that President George W. Bush pushed to passage at the peak of the financial crisis in October 2008 was critical in propping up a financial industry that had abused its fiscal responsibility. The federal government’s lax regulation under the Bush administration, and their penchant for turning a blind eye to unethical practices within the industry, set the stage for abuse — leaving taxpayers to either pay for the bailout or suffer the consequences of a failed financial system in other ways: massive bank failures that would cost the federal government billions of dollars to cover the FDIC protected savings; the certain loss of hundreds of thousands of additional jobs, adding to the burden on government unemployment funds and setting the recovery further behind, the potential loss of the nation’s auto industry; and the dislocation of hundreds of thousands of people from those jobs and communities.
The Tea Party folks are venting steam without any understanding of the lack of options available, or of the benefit the bailouts have had. Of the $700 billion spent on the bailout package, for instance, taxpayers have already been repaid the vast majority. Current estimates suggest the total cost to taxpayers, at the end of the day, will be around $50 billion. That’s not chicken feed, but it beats a repeat of the Great Depression and the trillions of dollars that would have cost taxpayers.
Odd, isn’t it, that Glenn Beck, Sarah Palin and the other leaders of those groups don’t mention such essential parts of the story.
But here’s the kicker, both political parties — and interest groups — are using the public anger over the bailout to defeat incumbents who voted for what has proved to be a bitter (but ultimately successful) pill to swallow. Consider these political anomalies:
• The U.S. Chamber of Commerce, the nation’s most powerful business lobby (and increasingly conservative in the past decade) has been spending millions in advertising campaigns to defeat candidates who supported the bailouts and the $814 billion stimulus package — even though the Chamber supported both programs at the time they were passed, and lauded the passage as the right thing to do to get the country’s economy moving again. Appalling.
• In Ohio, Democratic Rep. Mary Jo Kilroy is trumpeting her opposition to the legislation as a freshman member, saying she took on Wall Street to protect the little guy. That’s demonstrably misguided thinking, but she’s using the line anyway.
• Even worse, in Missouri, Democratic Senate candidate Robin Carnahan has been savaging Republican Rep. Roy Blunt, a moderate, for helping push TARP through Congress, calling him “Mister Bailout” in ads. Another ad, paid for by the Democratic Senatorial Campaign, also attacks him for his support of the bailout, even though the bailout was pushed by Senate Democrats and Republicans as the right thing to do at the time.
How does any of this make sense? It doesn’t. People are angry for misguided reasons based on false information spread by false prophets, and both parties are seizing whatever opportunity they can find in the confusion. Unfortunately, that too is the American way.
Angelo S. Lynn