A political crisis in Washington

congress.jpgAs if a global financial crisis wasn’t enough, we now have a political crisis in the USA. Leaving aside the question of whether the ‘bailout’ would have worked, last night’s rejection of the proposal means that we are in uncharted territory on how to move forward. The blog cannot remember a time when a sitting US President was voted down by his own party on a critical issue by a 2 – 1 majority. 133 Republicans voted against, with only 65 in favour.
An analysis in the Wall Street Journal suggests that the main opposition to the bailout came from lawmakers facing a tough re-election fight in November. It notes that ’18 of the 21 most vulnerable Republicans up for re-election, and 10 of the 15 Democrats in the closest races voted against the $700 billion financial rescue’. And it adds that this illustrated ‘the political hazards of bailing out Wall Street, without offering an equally generous hand to taxpayers’.

1 thought on “A political crisis in Washington”

  1. It’s amazing this $700bn bailout bill could not pass cleanly. And the markets’ reaction was swift and severe with the Dow Jones Industrial Average down 778 points, or 7%, last Monday before recovering through mid-week, while credit markets continued to seize up.
    Now Congress will come back to the table to revise the bailout package with a slew of add-ons like $100bn in tax breaks, disaster aid for hurricane-hit states and money for rural schools.
    Leave it to Congress to load up a critical bill with unrelated items. But if this is what it takes, so be it.

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