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What’s the Hurry?

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The current President is urging Congress to act immediately. A crisis of catastrophic proportion can be averted if we are united in quick and decisive action. Essentially everyone in Congress has reviewed the available facts, and agrees with a dour assessment.

The President has consulted with his top advisors. There is a plan to avert the crisis. It will be hugely expensive. We do not know how long the US forces must remain involved. Details are sketchy, but the measure before Congress can be fairly described as a “blank check”.

Iraq? Nope.

Wall Street.

When the matter came to a vote, the Democrats did not use their majority to pass the “bailout”. Representatives in contested districts were the slice most opposed to issuing this blank check. They seem to have listened to their constituents, who are opposed the bailout by an overwhelming majority (80+% against).

Now, a couple of days later, they sky has not fallen. But the President and Congressional leaders still insist on immediate action. Both Presidential candidates insist on immediate action. The nabobs report on which Representatives might yield to pressure and change their vote. The Senate added more handouts to their bill, and is set to vote tonight.

In the interim, several non-bailout options have surfaced. Some think that a series of major bankruptcies would be bad, but not catastrophic. Others think the $700 billion should go to those with failing to make their mortgage payments. And some even suggest that market agents can work it out, and government should just relax “mark-to-market” accounting rules, to allow liquidity while asset prices find their natural levels.

There’s no evil madman with his finger on the button. In the worst scenario, this is only economic loss, not loss of life and limb.

So, what’s the hurry? Why does must this measure happen now? And if swift action is so important, why aren't the Congressional Democrats using their majority power to save the country?

Here’s my speculation.

The President believes there is a crisis. He has access to the best info. He has shown his nature as a “decider”. He also has faith in the people under him to execute the plan conscientiously, without abusing the blank check. One may not agree with the current President’s judgment, but he does act on what he believes without regard for political consequences.

Of the Senators and Representatives, I cannot fabricate a single mind. Some agree with every perspective I've listed, and more. With an imminent election, they must appear decisive. The election adds urgency where it may not be supported by economic reasoning. The need to present to the electorate as a decisive leader is best shown by the rhetoric of the two major-party Presidential candidates.

The Democrat Congressional leadership let the vote fail to add turmoil. They believe economic uncertainty will help them on November 4th. Remember, their own seats are safe. This is the most calculating politics. When the measure comes up for a re-vote, the Congressional leadership can say they listened and made prudent modifications to the bill. They can position themselves as agents of wise and effective government intervention.

Until election day.

If the bill passes, it will be the next President who executes it. If conditions improve, that new President can take credit. If conditions do not improve, the new President will take the blame. Just like Iraq. With McCain in office, Congress will accuse him of poor judgment and abuse of power. With Obama in office, the friendly Congressional majority will not make the President’s action an issue. They’ll just use it as justification to grab more power.

If the bill fails to pass, it will still be the next President on the hot seat. Here, those who think the crisis is largely one of confidence, rather than a fundamental failing of the system, have the most useful view. The talking heads and leaders can do a few small real things to manipulate markets. But they can do huge things to influence confidence and trust in the markets.

With a failed bill and actual catastrophe, everybody loses. But the timing might be influenced enough to sway the elections. With a failed bill and no catastrophe, the only losers are those who have been telling us this is doomsday.

Whoever is in the White House benefits, as the President is seen as the nation’s CEO. Congressional leaders, however, will have another blot on their record.