If there's one thing Democrats are good at, it's snatching defeat from the jaws of victory. 2006 was a welcome change from that pattern, but Democrats are poised to revert to form by unwittingly falling right into a GOP trap with their support of a speedy, massive bailout plan for Wall Street. Except that in this case, the electoral repercussions from failing to avoid this trap will last not only this election, but for at least a decade.
Absent a substantial change in conventional wisdom and current courses of action, Democrats are going to spend the next two weeks or so losing this and upcoming elections in ten easy steps.
1. Begin with a massive economic crisis. Allow the Bush Administration to propose the first major plan--a plan so outrageous that "compromise" still involves insane giveaways to the corporatist Right.
2. Fail to acknowledge that a massive bailout of any kind is massively unpopular.
3. Allow your sense of economic responsibility and adulthood to compel you to give in to the blackmail, and constrain you into taking swift action on a deeply unpopular bailout plan.
4. Sit idly by and watch in disbelief as Republicans begin to pin the blame on "lazy minorities" for the entire crisis.
5. Strike up tough negotiations demanding bail-outs for Main Street as well as for Wall Street, including permitting judges to lower mortgage payments to those who are underwater at the moment.
6. Watch with an admixture of bemusement and horror as congressional Republicans oppose the bill en masse. Assume that the public will applaud the Democrats for swift action to avert the crisis and help them stay in their homes, even as Republicans demagogue about the massive tax giveaways to Wall Street and to irresponsible Main Street borrowers.
7. Pass the bill, giving the banksters and fat cats most of what they wanted--but feel proud of all the wonderful regulatory and middle-class-friendly concessions you extracted.
8. Watch in abject horror as the bailout plan fails to curb the market downfall. This is eminently predictable, since we're in an asset devaluation, not a liquidity crisis. In other words, the problem with the economy isn't that banks need $1 trillion to feel confident about making more loans. The problem is that banks leveraged more than the entire world's GDP in mortgage-backed securities and credit default swaps alone--and that paper is barely worth a fraction of its former outrageously inflated value. There isn't enough money to throw at this problem and still make a dent. And even if you print the money, the rest of the world is likely to call in their chips.
9. Watch as Republicans tell America that we we would have weathered the economic crisis had there been no bailout or just a straight-up giveaway to the banks, but that Democrats killed the economy by allowing irresponsible minority borrowers to pay off their mortgages at a lower rate, thereby killing the value of those mortgages and sending home prices into steeper decline and lowering the value of the mortgage-based leverage held by the banks.
10. Fume impotently as Republicans spend the next ten years in victory as the party of the Middle Class, while Democrats somehow become the party of "irresponsible, lazy minorities" and "Wall Street fat cats and big donors."
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For God's sakes, people, this is too goddamn obvious. Don't take the bait. Tell the Bush Administration that any bailout plan needs to be carefully considered, especially given popular unrest and anger at the idea. Stall it out until either the market falls to the levels it's going to fall to in any case, or until a bailout plan is created that a large majority of Republicans will fall in line with. And do not be afraid of ire at a "do-nothing" Congress: if Republicans stand just as firmly in opposition to the bill as Democrats, neither party will take the blame for inaction. It must pass with either full bipartisan support, or not at all.
Please--just this once--don't snatch defeat from the jaws of victory yet again. We need progressives in charge to rebuild what the Republicans have destroyed. To fall into this trap and allow Republicans to control the government for even two of the next ten years would be political malpractice.
Get smart, Dems.