The Stock Market posted strong gains today following yesterdays collapse brought on the failure of the economic rescue bill proposed by the White House. The House of Representatives voted 228-205 against the bill despite reassurance from both parties that the necessary support was there. Following the failed vote, both Democrats and Republicans pointed fingers, but nonetheless legislators are at this moment working to cement a new deal and bill.
A number of the Democratic opponents of the bill came from right here in Massachusetts. Although local Congressmen John Olver and Richard Neal votes for the bill, Congressmen John Tierney of Salem, Bill Delahunt of Quincy, and Stephen Lynch of Boston voted against it. In today's Boston Globe, the Congressmen's position was portrayed along class lines. They objected to American taxpayers being left holding the bag over the bad investments and lending of Wall Streets super-rich. Perhaps, the article intimates, had more foreclosure help been offered, a yea vote may have been more tenable to the dissenting Democrats.
Although Tierney, Delahunt, and Lynch might be praised on the one hand for principled opposition to a bad, but necessarily bill, the wider economy remains at stake. Drawing this economic situation along class lines does not contribute well to the argument in this situation. It straddles the fine line between damning demagoguery and productive populism. Although the safeness of their seats reduces the sense that cynicism played a role in their decisions, safe seats also provide Congressmen with flexibility to vote for what is right even if unpopular. Admittedly it is a tough decision, even tougher for the idealist. If concerns were about how to help everyday Americans, then not only should this bill be passed, but on the condition that a separate bill to stem the tide be passed later.
In all the ups and downs of the market and on Capitol Hill, there exists a growing fright that America may be headed for another Depression. It is hard enough to define a recession, so depression may be more so. What does exist now that didn't exist then is a proactive Federal Reserve, the FDIC to minimize bank runs, an SEC to watch the market, and better social safety net.
Finally, what may be the larger problem remains with credit. Easy credit, particularly in the form of sub prime mortgages, has become a problem. Like in 1929, the idea that not having the money now to buy things (then it was stocks) should not be an impediment to getting them. Sometimes this came at the expense of high interests rates, sometimes not. Either way, credit abounded and further fueled consumer culture. It played right into Bush's "Ownership Society" as Peter Canellos described in his Globe column today. You can own plenty without affording plenty was the theory. Of course, many owned houses, overvalued as they were, only to find they could not afford them, but also couldn't sell them. This essentially crushed the Bush answer to another fabled "Society." There is enough blame to go around to politicians, including the President, the money men, and individuals alike.
At the moment, hope remains. The DOW jumped 485 today, erasing half of yesterday's losses there. The NASDAQ and S&P also gained. Hopefully a new bill will get through the House and quickly. Understandably, Congressmen were worried about re-election. If this were being passed in an odd year, then we would be telling a different story. But it is difficult to make decisions like these in an election year. Even with the bailout, things will be tough. Unemployment numbers, not expected to be good, are due Friday. No matter what, Americans will need to hunker down and draw off of that long-dormant spirit and fortitude if we are to weather this crisis as in the days of old.
*Wall St. photo from Wikipedia, Cong. Stephen Lynch photo from Boston Globe/boston.com