The vote in 2008 to bail out Wall Street was framed as the only way to avert an economic meltdown and relieve financial institutions of their most toxic holdings. For many in Congress, it turns out that the vote itself was poisonous.
Nearly two years after Congress approved the Troubled Asset Relief Program, the Bush administration’s $700 billion program to rescue the banking system at a moment when it appeared close to collapse, lawmakers from both parties who backed it remain haunted by the vote.
Republicans for months predicted that a public backlash against the Democrats’ big health care law would be the defining issue in this year’s congressional campaigns. But the bipartisan TARP vote has become a more resonant issue in a year when anti-incumbent, anti-Washington sentiment is running strong.
Democrats who voted for the bailout — which was championed by their own leaders, along with President George W. Bush and Sen. John McCain, then the Republican presidential nominee — are now facing attacks from GOP challengers on the campaign trail. Republicans who voted for it are being accused of promoting big government and fiscal irresponsibility by tea party candidates and other conservatives.
“It became a litmus test of fidelity to free enterprise principles,” said Rep. Bob Inglis, R-S.C., who was crushed in a primary last month partly because of his vote in favor of the plan.
While banks have paid back most of the money, and the bailout is widely credited with having helped to prevent a financial calamity, support for the bailout has become among the biggest issues in the 2010 midterm elections, a powerful if simplistic way to attack what some see as government excess, misplaced priorities and a loss of trust between voters and elected officials.
Sen. Charles Grassley, R-Iowa, is facing a Democratic challenger who is trying to link Grassley’s vote for the bailout to a pattern of support for bigger budget deficits. Sen. Arlen Specter’s support for the plan was one of the issues that helped drive him out of the Republican Party and into a Democratic primary in Pennsylvania that he lost this spring to Rep. Joe Sestak — whose own vote for TARP is now under attack from the Republican candidate, Pat Toomey.
And in his own primary, McCain has been pilloried over his support for TARP by his conservative challenger, former Rep. J.D. Hayworth.
“It is part of a bigger narrative,” said Nathan Gonzales, a nonpartisan analyst for the Rothenberg Political Report. “I don’t think a general election is going to be won or lost based on that one vote, but I think it will be part of a bigger argument that candidates are going to make against those incumbents who voted for it. It has had more staying power than most votes.”
Support of the bailout is a thread running through the campaigns of Republican congressional incumbents who have lost in primaries so far this election cycle. It was also a factor in the defeats of three members of Congress in primaries for governor, including that of Texas Sen. Kay Bailey Hutchison.
Across the country, House and Senate challengers are hammering incumbents in both parties who voted for the bailout, in many cases lumping it together with the $787 billion economic stimulus plan passed months later under President Barack Obama, as well as federal aid to automakers.
In Utah, Republican Sen. Robert Bennett, who was denied his party’s nomination in his bid for a fourth term, was branded “Bailout Bob.”
“People would walk by my booth and say ‘TARP, TARP, TARP, TARP!’ But when you tried to talk to them about it, they did not know any of the details,” Bennett said in an interview. “They confused TARP and the stimulus plan. They confused TARP and the omnibus bill. They confused TARP and the president’s budget.”
Bennett said he had had little luck trying to explain the details: that economists generally agreed that the rescue plan worked; that he voted only for the first $350 billion installment and not for the second half; that just $475 billion was disbursed and that most of that has already been repaid, with interest.
The Senate approved the bailout measure on Oct. 1, 2008, on a bipartisan vote of 74-25. The House initially rejected the proposal, but under prodding from the White House and leading members of both parties, House members ultimately voted 263-171 for the bill, with 91 Republicans joining 172 Democrats in backing it, while 108 Republicans and 63 Democrats voted no.
Several of the House Democrats considered most vulnerable this year opposed the plan, sparing them from attacks over the bailout though they are still criticized for being part of the Congress that approved it.
In Iowa, the Democratic Senate challenger, Roxanne Conlin, said that voters resented the government aid to big banks. She said she was working to portray Grassley as having supported big increases in the deficit, including the Bush tax cuts and the Medicare prescription drug benefit as well as TARP.
“I did a 99-county tour, and in every single county the bailout came up,” Conlin said.
Liberals’ patience withers over Afghan war
WASHINGTON — The moment has been long in coming, but it may finally have arrived.
Last week, President Barack Obama asked his allies on Capitol Hill to approve more money for his troop buildup in an Afghanistan war that many Democrats oppose.
On the eve of the vote last week, Democratic leaders compiled a complicated $82 billion package of war funding, disaster aid and domestic spending that achieved the seemingly impossible — meeting the president’s request while accommodating the needs of its politically diverse members. Obama responded with a one-word message that sent shudders through his party on the Hill: veto.
In that exchange, the tension between the White House and its allies spilled over. Obama has led what historians have called the most productive Congress since President Lyndon Johnson, but he may have a much harder time extracting difficult compromises in the future.
In recent weeks, the president has expressed growing interest in the remaining items on his legislative agenda, including energy and immigration policy. Both are initiatives whose only hope at passage would require another legislative squeeze from the lawmakers who have already yielded to some of the president’s toughest requests.
Perhaps no issue illustrates the divide between the president and his party as the troop increase in the Afghanistan war, an escalated military campaign that many Democrats opposed. Liberals fought George W. Bush on the war in Iraq. Some won their seats in the 2006 and 2008 elections doing so. But while many Democrats believe Afghanistan is the right war to fight, Obama’s decision to add 30,000 more troops last winter gave pause to the worried.
Rep. David Obey, D-Wis., the powerful — and antiwar — chairman of the House Appropriations Committee, seized on the administration’s interest in saving 140,000 teachers’ jobs nationwide as a way to tack onto the war bill a legislative accomplishment that hews more closely to his caucus’s agenda. Obey devised a complicated legislative strategy that appeased liberal lawmakers by allowing antiwar amendments and pleased moderates by paying for the $10 billion teachers’ initiative without adding to the national debt.
But the White House was not pleased with the arrangement, threatening late last week to veto the package if it contained any antiwar provisions — which ultimately failed.
House Democrats were furious at an administration many see as tone deaf to the political realities facing lawmakers in a November electoral climate that is not expected to be friendly to incumbents. “The White House needs to be more engaged with the House’s agenda,” said Rep. Steve Cohen, an antiwar Tennessee Democrat. “The House is where its friends are.”
As Obama turns to these friends in the weeks ahead, he may find it increasingly difficult to persuade them to yield to his remaining legislative priorities.
— Lisa Mascaro, McClatchy-Tribune News Service