Yesterday's White House meeting didn't go according to plan. Senator Richard Shelby (R-AL), the ranking Republican on Senate Banking, emerged a little after 5 p.m. to declare "There is no agreement." and that the Paulson Plan wouldn't work. He waived objections signed by 192 porminent economists. Later, Democrats who attended described how House Minority Leader John Boehner (R-OH) diverted the meeting with an alternative in which the government would insure the remaining half of mortgage backed securities that aren't already insured and in which tax incentives and regulatory reforms would be used to attract private capital back in financial institutions. I can't print what one of my clients said about how effective this plan might be.
What to do in light of the House GOP's stance on the Paulson plan? Congressional Democrats should call their bluff and bring the plan the GOP revealed suddenly last night to the House and Senate floors for a vote.
Here's my thinking. Draft their plan into legislative language immediately and bring the bill directly to the House and Senate today. No Democrat speaks on the bill, the debate is expedited, and all Democrats vote present. The bill passes or fails in both houses on Republican votes only. It might very well die in the Senate where GOP senators seem less enthusiastic about it than their House counterparts.
If it passes in both houses (which I doubt), Republican President George Bush will have to decide whether he will sign or veto legislation that his Treasury secretary has already said won't work and he opposes. Signing it could force his Treasury secretary to resign in the midst of a huge financial crisis. Vetoing it would make the GOP look like the legislative gang that can't shoot straight four weeks or so before the election.
Earlier this week I said that President Bush had failed to make the direct and personal appeal needed to convince the folks at home that they should support the Paulson plan. In light of last night's activities, where the talks on the plan at the White House with the president in attendance ended in acrimony with nothing being decided, it's clear that I gave the president too much credit.
Let's state this as directly as possible: the president of the United States was dissed last night by the House GOP. If this were a parliamentary system of government, what happpened last night might have been considered the equivalent of a no confidence vote, or Bush would have been forced to resign as head of his party and been replaced by someone else.
But the GOp's nominal leader at the moment, John McCain, was also dissed. After all, he was coming to Washington to make a deal happen...and the House GOP didn't just say no; it said Hell No!
How does a lame duck president with little or no credibility on economic issues and overall very low job approval ratings make a nationwide speech that dramatically changes public opinion on the Paulson Plan?
How does a president with few rhetorical skills find the words and delivery to be convincing to a skeptical nation?
How does a president with little credibilty on economic issues rescue the plan proposed by the one person in his administration who has some credibility on economic issues?
How does a Republican president get GOP members of Congress to validate what he says after the speech even though they are the ones who appear to be the most skeptical about the plan?
Update: After The Speech
Just before noon yesterday, CNN posted Treasury Secretary Hank Paulson's draft bill for bailing out impaired mortgage assets from our faltering ship of state. Enactment with two weeks is almost certain. The bill would give Paulson and his successor complete authority to purchase assets as he sees fit up to $700 b. That's probably a conservative estimate, and Senator Richard Shelby (R-AL), the Ranking Republican on the Senate Banking Committee, said on CBS's Face the Nation this morning that "It's going to be $1 trillion, at least."