All eyes were on the House of Representatives today, as the leadership in both parties tried to rally enough votes to pass the $700 billion bailout of the banking sector, but in the end, the bill failed by a vote of 228-205 against, thus possibily dooming both Wall St. and the presidential campaign of John McCain.
Before the vote, Minority Leader Rep. John Boehner emphasized that he did come to Washington to vote for these kinds of bill, but he urged his membership to do what needs done, and vote for the bill. The Democratic chairman of the House Financial Services Committee, Rep. Barney Frank said, “Many of us feel that the national interest requires us to do something which is, in many ways, unpopular. It is hard to get political credit for avoiding something that has not yet happened.”
Frank hit the nail on the head. Opposition to this bill was based on ideology and self-preservation. The House Republican ideologues were opposed to this bill because it violates their ideology, but also because they are up for reelection this year, and they are terrified that they will go home to campaign, and find that their opponents are running ads against them, and their vote for this bill.
The bill was expected to fly though the Senate, and be signed by President Bush by mid-week. Politically speaking, this crisis could not have come at a worse time. The Congress is about to adjourn for the fall to go home and campaign, and the House is even more infused with election year politics than usual. I think what many people don’t understand about this crisis is that it started out as a banking and lending crisis, but quickly morphed into an entire market wide crisis of confidence.
Earlier today, John McCain was in Ohio taking credit for making the bailout agreement happen, only to see 133 House Republicans vote against the deal. Apparently, Sen. McCain isn’t the leader that he claims to be as in the end, he could not get enough House Republicans on board with the plan. This is a stinging defeat for McCain who painted himself as riding to the rescue of the bailout last week.
The three big losers here are John McCain, Wall Street, and the economy as a whole, because without passage of this bill, nobody knows where the economy is going to go next. Only 66 Republicans crossed over to join with Democrats and vote for the bill, while 94 Democrats joined with Republicans in voting against it. Republican House election year politics won out, over both an economic crisis, and the urging of their own presidential nominee. In one swoop, House Republicans may have doomed both Wall Street and the presidential campaign of John McCain.