News & Observer | newsobserver.com | Bailout confirms 'democracy is messy'

Published: Oct 05, 2008 12:30 AM
Modified: Oct 05, 2008 01:40 PM

Bailout confirms 'democracy is messy'

 

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TAR HEEL TALLY

Here's how N.C. House members voted on a bailout of the financial markets, a bill that passed the House on Friday with a 263-171 vote.

FOR: Democrats Mel Watt, Bob Etheridge, David Price and Brad Miller; Republicans Howard Coble and Sue Myrick

AGAINST: Republicans Robin Hayes, Virginia Foxx, Patrick McHenry and Walter Jones; Democrats G.K. Butterfield, Heath Shuler and Mike McIntyre

Coble and Myrick switched their votes Friday to support the bailout bill.

ABOUT THE BAILOUT

THE BASICS

The underlying legislation:

* Authorizes $700 billion for the government to purchase troubled assets and buy equity in distressed financial firms.

* Requires the Treasury Department to make rules to prevent excessive compensation for executives whose companies benefit from the rescue and cap deductibility of executives' pay packages at $500,000 for firms that get $300 million or more from the program.

* Establishes an oversight board for the program, a special inspector general to monitor it and regular government audits.

* Requires that the president establish a plan to recoup the cost from the financial industry if, after five years, there are any losses.

* Phases in the money for buying troubled assets, with $250 billion available immediately, $100 billion to be released if the president certifies it is needed, and the last $350 billion available with another certification, but subject to a congressional vote.

THE EXTRAS

Among the sweeteners added to the bill are measures that:

* Provide business tax breaks, including for production of, investment in and use of renewable fuels.

* Extend tax breaks for motor-sports racing tracks, for makers of wooden arrows for children and for the rum excise tax for Puerto Rico and the Virgin Islands.

* Require group health plans that include mental health or addiction treatment to provide coverage for those conditions that is equitable to other types of medical coverage.

* Increase personal credits against the AMT, shielding more than 20 million taxpayers from the tax.

* Grant tax relief to victims of natural disasters in the Midwest and elsewhere.

* Extend through 2011 a program that funds rural schools and local governments that have low property-tax bases because they lie within or are adjacent to federal lands.

* Extend until end of 2009 the deduction for state and local general sales taxes.

* Extend until end of 2009 individual tax breaks, including deductions for higher education costs and teachers' personal expenses.

* Increase, from $100,000 to $250,000, the limit on federal bank deposit insurance.

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WASHINGTON - Everything America hates about Congress was on vivid display these past few weeks as members struggled to pass the $700 billion financial rescue plan.

Yet experts argue that in the end the system worked, as members acted rapidly to try to ease what may be the most serious economic crisis since the Great Depression.

"Democracy is messy," explained Carl Pinkele, professor of politics and government at Ohio Wesleyan University.

But has it become too messy? How did a three-page Bush administration request balloon into a 450-page goodie bag brimming with tax breaks for NASCAR racetracks and children's wooden arrow makers, among others? Why did 58 House members who voted against the bill Monday vote yes Friday, after those sweeteners were added?

Congress clearly has an image problem, one that drove its already tiny approval rating down to 15 percent in a CBS News poll taken Sept. 27-30, in the midst of the bailout battle.

Will the bailout bill chaos prod the system to function more smoothly?

Probably not, said Jack Pitney, professor of American politics at Claremont McKenna College in California.

"This is how Congress usually works, and whenever people have the opportunity to watch it, they think less of the institution," he said.

Crafting legislation, especially a month before an election, is a delicate give-and-take process, one that requires doing what is necessary to win a House majority and 60 Senate votes, the number needed to stop a filibuster.

"You just have to keep giving things to people to get enough votes," explained Pinkele.

Still, the question lingers among constituents: Was this process uglier and seamier than usual?

Angry partisans

Yes, in one sense, because Congress in recent years has become more of a cauldron of partisan ire, where each side is highly suspicious of the other.

Veteran consensus-builders such as the two banking committee chairmen, Sen. Christopher Dodd, D-Conn., and Rep. Barney Frank, D-Mass., and friendly Republicans, including Treasury Secretary Henry Paulson, were able to work smoothly behind closed doors.

But once their carefully crafted plans were offered to the rank-and-file Sunday, the partisan wrath surfaced. Republicans have long disliked House Speaker Nancy Pelosi, saying she often shuts them out of decision-making, and Democrats -- many still stung by Bill Clinton's 1998 impeachment and the Bush White House's misleading claims about weapons of mass destruction in Iraq -- tend to view Republicans as ideologues unwilling to compromise.

Pelosi knew weeks ago that she needed 100 GOP votes for the bailout to pass. Too many urban and progressive Democrats could not back the bill; too many were concerned Wall Street fat cats were being saved while their constituents were being tossed out of their homes.

But when the partisan Pelosi emerged anew Monday, just before the House bailout vote, and blasted the "right-wing ideology of anything goes, no supervision, no discipline, no regulation," many GOP lawmakers were reminded of the speaker they despised.

Pelosi's speech "was hardly statesmanlike," said James Hoefler, coordinator of the Dickinson College Policy Studies Program in Carlisle, Pa. The stunning House rejection of the plan left each side accusing the other of playing politics.

Republicans blamed Pelosi for the defeat. House GOP leader John Boehner charged her words "caused a number of members we thought we could get to go south."

Hoefler's analysis: "It was all pretty juvenile."

Divided Republicans

Adding to the ugliness was a Republican schism that has been building for years.


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