SCAN0131 - When Washington tried to spend $700 billion to...

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Unformatted text preview: When Washington tried to spend $700 billion to rescue Wall Street, voters revolted—then watched the markets plunge. Why the public’s trust has vanished*and why it may not be coming back BY MICHAEL GRUNWALD/WASHINGTON RUST US, SAID THE VOICES or Washington. First the Bush Administra— . tion: Trust us! We’ll end grid- * lock in Washington. We have surpluses as far as the eye can see. We’ll find the weapons of mass destruction; we’ll be welcomed as liberators; the insurgency is in its last throes. We don’t torture. Nobody thought the levees would break; FEMA is doing a heckuva job; we’ll do what it takes to rebuild. The economy is fundamentally strong, and more tax cuts will make it stron— ger. And we can save Social Security by let» ting you invest your benefits in the market. Then the Democrats: Trust us! N 0w that we’ve taken back Congress, Washington is going to change. We’ll end the war, get the lobbyists out of the back rooms, show the country we know how to govern. As crisis has gripped the American economy, with equity markets roiling and credit markets seizing up, Washington went to the well once more, as a lame—duck President joined Democratic and Repub- lican congressional leaders to ask Ameri— cans to trust them with a $700 billion Wall Street rescue package. But the well of trust had long run dry. Outraged calls over- whelmed Capitol Hill switchboards, and on Sept. 29 the bailout failed in the House, panicking the markets anew. Washington is still likely to find a fix for the credit cri— sis, but after a series of corruption scandals and a longer series of gaps between deeds and words, its own credibility crisis might take longer to repair. Americans are always skeptical of politi— cians, but the financial meltdown has made it clear they no longer believe much of any— thing Washington’s current batch of news— cycle—obsessed, responsibility—dodging wolf criers have to say. After eight years of George W. Bush’s supremely confident but Power outage A complex issue, a looming deadline, weak party leadership and excessive partisanship all fed Washington’s failure frequently wrong statements about every— thing from WMD to the inherent goodness of Vladimir Putin—and after former Bush press secretary Scott McClellan confessed the irrelevance of truth to his p.r. strategy— his television appearances are now widely ignored, and his approval ratings have touched an all—time low of 23%, accord— ing to a new TIME poll. His Treasury Sec— retary, former Goldman Sachs CEO Henry Paulson It, wasn’t amuch more compelling pitchman for near absolute power to help his former Wall Street colleagues; his pub lic warnings that disaster was imminent but that the evidence had to remain secret were reminiscent of antiterrorism officials who raised the threat level to orange but refused to tell us Why. Even the 01d claim of arare bipartisan agreement didn’t move the needle, chiefly because the approval rating of Congress has drooped to the teens. The two presidential nominees have cultivated reputations as change agents and truth tellers, but their tepid, hedged support for the emergency package didn’t look reassuring either. Obama has taken a cautious and detached approach, articulate ing principles—transparency, oversight, limits on golden parachutes, protections for taxpayers and homeowners—but mostly staying out of the way. He didn’t really act like aleader, but he doesn’t hold a leadership position, and so far voters seem to appreciate his cool response. While Washington Mutual and Wachovia were ‘They never explained why they needed all this money in a simple way to the guy with the 401(k).’ “REPRESENTATIVE STEVE LATOURETTE, OHIO REPUBLICAN disappearing and investment banks were going extinct overnight, Obama was pull- ing ahead in the polls. That may be because McCain took a frenetic, borderline erratic approach to the crisis, thrusting himself into the negotiations to very little effect. First he announced that he would suspend his campaign to salvage the bailout talks and would skip the first presidential debate unless negotiators hammered out a deal— although he didn’t seem to suspend much, and the talks had been going pretty well without him. They blew up only after he dragged the circus of presidential politics back to Washington and left the impres- sion that he agreed with House Republi- cans who opposed the deal. Then McCain announced he would debate after all be— cause the stalled negotiations were back on track, although in fact the on»track negotiations had stalled. They unstalled after he left, and McCain quickly claimed credit—only to see a majority of House Re— publicans crater the deal on the floor. The Credibility Gap MCCAIN HAS PROCLAIMED THIS CRISIS TOO important for partisan politics—at the same time he was releasing an ad blaming it on Democrats in general and Obama in particular—but in modern Washington nothing is too important for partisan poli— tics, especially a month before an election. Members in tight races don’t think a lot about statesmanship; they think about sur— vival. Even if House Speaker Nancy Pelosi and House minority leader Iohn Boehner wanted to unite their caucuses behind a bill they thought the country needed, they don’t have the power of a Sam Rayburn or a Tom DeLay to ramrod their members into line. In fact, with dozens of Republicans facing stiffer—than—normal challenges this year and House Democrats enjoying a $40 mil— lion financial advantage, Boehner publicly refused to stiff~arm his backbenchers, and two-thirds of his caucus voted against the 43 ...
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