Everyone LosesThe "serious" finance/econ press (ranging from liberal Krugman to conservative Rich Lowry) agrees that the House Republican plan—insurance??—is a joke. McCain lending his ostensible support to it (though he won't come out for it, his intervention pushed the rebelling Repubs to the forefront of the debate) is designed either to scuttle a compromise he had no part in (vanity) or to provide Republicans the opportunity to avoid supporting an unpopular but arguably necessary bill (sabotage). If Dems were smart, they'd recast their compromise bill as a liberal response to the Bush/Paulson plan. Hopefully it is that, too! I.e. play up the laregly symbolic golden parachute bullshit, etc. Most likely, some version of the Dodd/Frank bill will pass this weekend, with Republican support (and probably with some minor concessions John McCain can crow about). Right? Unless McCain makes good on his threat to travel back to DC after the debate and, you know, win this war on banks. Here's John Carney on what House negotiations will look like now:
Washington insiders were divided on what the decision to send [GOP whip Roy] Blunt to the negotiating table meant. One former House leadership staffer believes it signals a surrender of Republican resistance. Another longtime observer of Capitol Hill politics disagreed, saying the Blunt could be sent to give the impression that Republicans were cooperating and trying to reach a solution without actually committing the Republicans to action on the bailout. The editor of National Review, Rich Lowry, reports that the collapse of Washington Mutual and the "swoon" of Wachovia may have Republicans fearing they could be blamed for a broad financial collapse.
So. Either stalemate or the Dodd/Frank plan is alive, again. What is sort of alarming is that the news hasn't shifted an inch since this morning. No word from Congress. Once again, either stalemate or secret backroom negotiations are leading us to the unprecedented massive bailout that we still don't know a damn thing about except that Bush tricked us into doing it by presenting it in an even more awful form earlier this week so Democrats could make a slightly more palatable version that is still political poison, probably. Sheesh. We're sympathetic to the idea that something huge is necessary (we're also sympathetic—quite sympathetic!—to the "fuck them all and let it burn" argument but we honestly don't know what the consequences of inaction might be, and we wouldn't survive a post-apocalyptic future, what with not even owning a car), but until the problem can framed coherently and the Democratic solution can be framed palatably, no one gains any advantage in the ongoing horse race. (Except god bless McCain for making his economic idiocy the narrative, instead of just general "oh noes what will we do.") Update: Eric Cantor, the Serious Republican responsible for their Serious Response, caved. Caved in the goofiest way, too, by saying the most alarming bit of the Paulson plan—the government buys the most "toxic" of the mortgage-backed securities with money we won't be seeing back—is the part he'll compromise on.