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Newspaper Article

    Lawmakers Weigh Political Risks of Stance on Bailout Plan

    BY Sarah Lueck
    09/26/2008
    by Sarah Lueck on 9/26/08.

    With leaders in Congress working on a controversial financial-rescue plan, rank-and-file lawmakers face a crucial election-year question: If they back the proposal, will they pay at the polls?

    Populist outrage has been spilling out across the country from people of all political stripes. Lawmakers say they have received hundreds of calls and emails in recent days, almost uniformly against the idea of giving the government the power to buy billions of dollars in distressed assets to keep the financial system afloat.

    A coalition of left-leaning groups like US Action and Democracy for America held a "National Day of Action," organizing protests from Hollywood, Calif., to Midlothian, Va. They were set to march from the Treasury Department to the U.S. Capitol on Thursday to deliver petitions opposing the rescue plan to congressional leaders.

    A Web site called "Buy my s-pile, Henry," urged people to bring their junk to Wall Street Thursday to seek government purchase of "regular" people's stuff. (Actual garbage was discouraged.) The site posts photos of items people say are junk, with suggested prices (hot dog toaster, $78.32, the Constitution, $7,109.00).

    In Merrillville, Ind., the Porter County Conservative Republicans were planning an antibailout protest in front of the office of Democratic Rep. Peter Visclosky's office on Thursday. Ten people under the banner of conservative group FreedomWorks appeared in an online video protesting the bailout at Democratic Rep. Heath Shuler's Asheville, N.C., office.

    "It's ridiculous that you have struggling homeowners and the country is going to help the rich as usual," says Willie Carter of Atlanta, who works in the security department at SunTrust Banks Inc. "They make the rules. They break the rules. They do whatever they want to do."

    Lawmakers acknowledge the public upset and say the only way they will support a plan is if it includes sufficient taxpayer protections. On their minds are the looming election and the possibility that they could be punished for picking the wrong side. Even for lawmakers in safe districts, this monumental government action has the potential to bring future challenges in primaries or drum up anti-incumbent sentiment.

    Complicating the calculus: Lawmakers could be blamed for tanking markets in the unlikely event they vote down the legislation. But if they vote yes and it doesn't work, they could face similar opprobrium down the line.

    Republican pollster David Winston calls this a "defining moment" for Republicans and Democrats. If lawmakers are able to argue convincingly that the rescue plan will prevent average people from being seriously harmed, Mr. Winston says, it can be sold -- even to a skeptical public. "It can turn around, but I think it takes some work," he said.

    Many Democratic lawmakers have called for spending measures aimed at helping the low-income people they say are bearing the brunt of the ailing economy. Republicans, meanwhile, fear support of the plan might undermine their attempts to restore their reputation for fiscal conservatism.

    "The American people are furious," House Minority Leader John Boehner (R.,Ohio) acknowledged Wednesday. By Thursday, lawmakers said protections they had added to the Bush administration's plan were turning the tide.

    "We are moving to a place where we can say...that protecting the taxpayer and stabilizing the markets are two goals, and they are on par with each other," said House Speaker Nancy Pelosi (D., Calif.). "The taxpayers are well-served by the stabilization of the market."

    It is likely that challengers in congressional races will try to direct outrage over the bailout plan at incumbents they want to topple. That strategy could be weakened if the presidential candidates from both parties back the plan.

    In a heavily Republican district in Florida, Republican Tom Rooney is charging that Democratic Rep. Tim Mahoney didn't do enough in the past two years to crack down on Fannie Mae and Freddie Mac, the mortgage giants now effectively under government control. Mr. Rooney has been picking away at Mr. Mahoney over campaign contributions from financial-sector executives.

    For much of the week, Mr. Mahoney was undecided over the bailout, arguing that he had to see whether the final plan ensured that Wall Street doesn't profit at the expense of the general public. By Thursday afternoon, as party leaders and the president were conferring at the White House, he was leaning toward supporting the rescue.

    "In the past eight years, the administration has relaxed regulatory oversight of the financial markets and let Wall Street run wild selling the American people risky products," Mr. Mahoney said. "Now Main Street no longer has confidence in Wall Street and Congress finds that it must take action to protect Americans' investment in their homes, their savings and their businesses."