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Politics Plays Role In Failed Bailout

Politics Plays Role In Failed Bailout

By Reid Wilson - September 30, 2008

While a stunned Wall Street looked on, a bipartisan majority of Congress sent a $700 billion financial stabilization bill crashing down to defeat. The unexpected result left the Dow Jones with a 777-point loss on the day.

For political strategists, it is not the market downturn they are focused on. Instead of those who voted against the bill, it is those who voted in favor of the financial bailout proposal who will find themselves with a target on their back, strategists for both parties said.

Neither Democrats nor Republicans denied the political danger in voting for the financial equivalent of almost a year and a half of the war in Iraq. It is little surprise that so many members of Congress running for re-election in tight races voted against the measure, especially given anecdotal tales of congressional offices receiving constituent phone calls at a rate of 100 to 1 and higher in opposition.

The consensus among members of Congress was clear: Being on the wrong side of the emergency legislation -- in this case, the side in favor of the bill -- is tantamount to handing your opponents an issue come November. The numbers are striking. Of the thirty-four members on the Democratic Congressional Campaign Committee's Frontline Program for endangered incumbents, nineteen voted against the bill. Among the eighteen or so in truly competitive races, only five voted in favor.

On the Republican side of the aisle, members facing tough races were more in agreement. Just three of the twenty-four members of the National Republican Congressional Committee's Regain Our Majority Program voted in favor of the bill. In an effort to find votes to pass the bill, House Republicans relied heavily on retirees; eighteen of the twenty-three Republicans stepping down at the end of this term voted for the bill, while one abstained.

Any attempt to use a yes vote against either party could easily backfire. Top leaders in both parties voted for the bill even while expressing distaste (Minority Leader John Boehner called the measure a "crap sandwich" before voting in favor), making contrasts between Democrats and Republicans difficult.

But another approach might be more successful. Challengers on both sides of the aisle were quick to join the bipartisan majority in condemning the bill, using it as the latest reason to run as hard against Washington as possible, a strategy Democratic and Republican leaders have urged their candidates to adopt.

"Congress has been asleep at the switch in overseeing the financial services industry, while soliciting hundreds of thousands of dollars from these firms," said David Cappiello, a Republican state senator running against Connecticut Democrat Chris Murphy. Murphy voted in favor of the measure.

"I've spent the last 24 hours reviewing the final bill, and I agree with the 228 Democrats and Republicans who rejected it," said Walt Minnick, a businessman running against Idaho Republican Bill Sali. "We need action, but this was the wrong bill to save the American economy." Sali voted against the bill.

Some strategists running campaigns against incumbents who voted yes told Real Clear Politics that they can use the vote to their advantage. "I'm planning on using it," one Republican said. "Being in charge means being responsible." None would disclose just how they intend to communicate with voters for fear of tipping their hands.

Without doubt, the early bipartisanship that marked the effort to solve the financial crisis is over. Explaining his party's votes, Republican Rep. Eric Cantor pointed to a floor speech just moments before voting commenced in which House Speaker Nancy Pelosi demanded GOP participation, a move many observers said forced several members on the fence to vote no. Democrats have pinned the bill on the Bush Administration and harshly criticized Republicans for not doing their part to deliver the votes.

While both parties will cast blame on the other before heading back to the negotiating table, most members of Congress agree something has to be done to provide stability to the shaky financial markets. With just five weeks left before Election Day, it is more likely than not that a rushed bill will once again raise the same hackles as today's failed measure.

In voters' minds, that may be enough to send Congressional approval ratings to new, even deeper depths. If that becomes the case, it will be challengers, not one party or the other, who will benefit.

Reid Wilson is an associate editor and writer for RealClearPolitics. He can be reached at reid@realclearpolitics.com

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