So, there's been an awful lot of good political fortune for Barack Obama today. The polls continue to move in his direction. Democrats on the Hill show unity they haven't had...well...in my 34 years on this Earth. Republicans are now the Cheneys who couldn't shoot straight, and are (correctly, IMHO) being assigned the blame for both the meltdown and the bailout failure by voters.
John McCain looks angrier, more confused and more petty every time he opens his mouth. (Today's gem, from his economic roundtable: "...ensuring that America is secure, and not dependent on oil from people like Hugo Chavez or other parts of the Middle East which is, we know, could be destabilized under certain sets of circumstances." President Chavez will be surprised to find out that Venezuela has been relocated.)
And, best of all, it looks as though any bailout that gets passed is likely to be attributed more to Obama than John McCain, further sealing the lid on the Sedona Sarcophagus. Wait...what? How'd THAT happen?
Let's review the salient facts and reactions to yesterday's developments concerning the Bush Administration's bailout proposal. Then, I am going to propose that some of today's good fortune is actually the product of some devious - and, frankly, excellent - political maneuvering, by someone who definitely had the motive, means, and opportunity to do it.
NOTE: The analysis and hypothesis below are strictly my own opinions. I do think they're worth considering as an explanation for yesterday's extraordinary turn of events, for the reasons I lay out below.
The facts:
Yesterday, Speaker Nancy Pelosi delivered a speech on the House floor imploring bipartisan support to pass a compromise package that would allow the federal government to ultimately buy up about $700 billion in bad debt, thus freeing the flow of credit in the marketplace and lessening the strain on banks and borrowers.
The bill, taken to a vote shortly after Pelosi's remarks, failed the House by a 228-206 margin. The Republicans voted 133-66 against.
The spin:
In the inevitable finger-pointing that followed, Republicans pointed at Pelosi's speech as being too partisan and driving away Republicans who were leaning toward supporting the bill. Each party said the other didn't do enough to get the necessary votes.
The reaction:
Upon hearing the news that lawmakers weren't passing a financial-relief measure, and staring at Congress being out of session until Thurday due to the Jewish holidays, Wall Street promptly plummeted the Dow by 777.68 points in Monday's trading. It marked the largest number of points ever lost in one day's trading (and the 17th greatest drop ever in percentage of market points).
Today, there seems to be more unity than ever among top politicos to get a measure passed. Starting with President Bush's 7:45 a.m. ET (!!!) address to the country, and continuing with McCain and Obama, the focus appears to be on getting a deal done, period. The markets, encouraged by this, have pushed the Dow up about 300 points as of now in today's trading.
The recap:
Let's evaluate the situation, starting at the beginning. Democrats know they can get more than half of their members to go for the bailout package. They know the politics of the package are terrible, which is why they're insisting on healthy Republican support.
Pelosi knows the voting is close. She's got members like Bobby Rush, who will stand with her if needed, but don't want to vote for it. She also knows that House Republicans are in a standoff with the Bush Administration.
John McCain is caught square in the middle of this, hoisted by his own wrinkly, aging petard. Rushing back to Washington to broker a deal and "save the economy" only works if a deal actually happens. The only stumbling block? Chris Dodd's "fourth leg" - House Republicans.
So, what does Pelosi do? She goes to the floor of the House, and throws a number of (soft) jabs at the Bush Administration in particular, and Republicans in general. Those fence-sitters on the right jump off the unity bandwagon, and the measure fails.
The questions:
"Why would Pelosi give anything but the most bipartisan of talking points, knowing that the deal is in trouble? Why give Republicans any cover to vote 'nay' with her speech?"
My answer:
Pelosi intentionally agonized House Republicans to get them to vote against the bill.
Follow-up question:
"Why the hell would she do THAT, moron? She wants the bill to pass!"
My answer:
Nancy Pelosi is NOT stupid, regardless of how many characterize her as such. She grew up in Baltimore's first family of politics, she made her way to Congress, she climbed the ladder, and has forged her own way to become the highest-ranking woman to ever serve in American government. You don't do half of what Pelosi's done without knowing how the game is played at the highest levels of federal government.
She knows that one Presidential candidate took personal responsibility for forcing a deal through by Monday. She also knows that one Presidential candidate had his surrogates out on the morning talk shows yesterday, giving said candidate credit for a deal before the votes were ever in place. She further knows that this credit grab would boomerang if no deal is done by that "mavericky" deadline.
She can't actively whip Democrats to vote "nay", as that would reflect poorly upon her own leadership. At the same time, she knows that a "nay" vote would hurt McCain much, much more than it would hurt Obama.
So, what's a Speaker with a Presidential agenda to do? Drum up "nay" votes from Republicans! How to do it? Speech!
What's the political advantage if the bill passes anyway? Pelosi's speech disappears into the Congressional Record, probably never to be seen again. McCain gets some credit, and the campaign continues.
What's the political fallout if the bill fails? McCain's credit-grabbing goes the way of WaMu, and he's left with a lot of bad credibility debt. Meanwhile, Obama gets the chance to step in with a measured, bi-partisan approach, claiming that the market drop is more than ample evidence that something needs to happen, and soon. If the bill passes on its next vote after Obama's more active role, suddenly HE gets the credit for being a calm, steady hand. Dare I say, even presidential?
What's the downside for Pelosi? Virtually none. She's a stone lock to be re-elected to the House, and she's about as big a lock to remain Speaker. Almnost all of the Dems who voted against the bailout are vulnerable for re-election, and this bill is toxic for many people right now. So their votes are completely understandable, and likely made out of political necessity. She can claim to have delivered 140 votes, while the Republicans only needed another 12.
What's the downside for McCain? In a word, massive. His campaign "suspension", brutally exposed as a farce by David Letterman, did absolutely nothing except throw a monkey wrench into the evolving deal. He couldn't even deliver a single House GOPer from his own state of Arizona!
McCain now looks like a politicizing sidekick instead of a reforming maverick. This immediately calls all of McCain's decisions and thought processes into question.
The conclusion:
Some of this will require a willing suspension of disbelief that Pelosi is capable of gaming something out to this extent. I submit to you, though, that Pelosi is a career politician, as tough as they come. Don't let that chic Hermes scarf and motherly mien deceive you, as it has so many of her rivals.
Also, I firmly believe that nothing in Washington ever happens by accident. Pelosi wrote those remarks; they weren't off the cuff. And her impromptu press conferences during this financial crisis were all decidedly dripping with hail-fellow-well-met bonhomie. So she certainly knows from bipartisanship.
Finally, it's pretty common knowledge that a deal of some sort is going to get done, whether we like it or not. (Full disclosure: I am personally opposed to the bailout, in large part because I feel the money will simply disappear into the pockets of the same people who got us into this mishigoss and never be seen again.)
More evidence that a deal is coming: Warren Buffett has plunked a cool $5 billion into Goldman Sachs - and has frankly admitted he did so because he fully expects a bailout. The number of people in the world more plugged in to money and economic policy than Buffett can probably be counted on the fingers of a mutilated right hand, so I tend to take what the "Oracle of Omaha" says about finance as gospel.
Add all this up, and it's hardly inconceivable that the Democratic Speaker of the House played what chess observers might call a "sham sacrifice" - a temporary material (or political) sacrifice that will more than repay its investment a few moves (or days) down the road, with no serious danger of losing (or poll damage) during the intervening time.
It should also be noted that sticking the shiv to the Maverick is likely to pay rewards by influencing down-ballot House races, especially for the vulnerable red incumbents. This should help swell the Dem margins in the House.
Again, I'm just theorizing here. All of this, though, seems like a logical explanation for Pelosi giving a speech that, while not a classic red-meat hatchet job, was certainly not the most politic given the sensitive negotiations for GOP votes. And if you find yourself scoffing at Pelosi having the requisite political skillz for this, remember: that same underestimation of Pelosi's skills is a big reason why she wields the Speaker's gavel right now.
(Originally posted at Talking Points Memo.)
UPDATE: Corrected a mistake in original diary. Buffett has invested $5 billion in Goldman, not $500 million as I originally wrote.