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Rupert Cornwell: Stunning defeat of bill exposes failures of the US political system

Tuesday, 30 September 2008

Yesterday was not only a black Monday for markets. It was the blackest of Mondays too for the US political system, saddled with a discredited president who has completely lost control of his own party and a Congress that responds to a national emergency with little except snarling partisanship.

The stunning defeat of the financial bailout bill has exposed the weakness of the system at its moment of maximum vulnerability, in the quasi-interregnum of the weeks immediately before and after a presidential election. Even so, had a similar crisis erupted at the same stage of the second term of Bill Clinton or Ronald Reagan it is hard to imagine Congress staging a similar rebellion. For George W Bush, alas, it is a different story.

His lack of clout was first exposed last Thursday when the bailout summit he convened at the White House degenerated into a blazing row. But that humiliation paled beside yesterday's. The President went on TV at 7.30am to plead for the measure that had been thrashed out over the weekend, to no avail. Then he called two dozen recalcitrant House Republicans, begging them to hold their noses and do their patriotic duty – but again to no avail.

When the vote came, his own party voted almost two to one against the bill, more than cancelling out the 140-95 majority of Democrats who did hold their noses to support the wishes of a President most of them despise.

Thus did US politics enter the world of Alice Through the Looking Glass. A president who prided himself on being a champion of free markets was urging the biggest state intervention in the economy in more than 50 years.

Then not only did a majority of Republicans disown their own president. After they sent the bailout compromise down in flames, those same Republicans then blamed the Democrats for their own disloyalty, accusing Speaker Nancy Pelosi of being too harsh in her criticism of their president. This despite the fact her Democrats, instinctively far less inclined to come to Wall Street's aid, had in fact done so.

Maybe Ms Pelosi should have been more restrained in her language. Maybe the head counters on both sides can be blamed for misjudging the balance of forces. More than a dozen Republicans were assumed to be in favour when they were not.

But in a deeper sense this is a crisis of the political system. The stately and endless process of electing a new president has produced a power vacuum at the worst possible moment.

Mr Bush's power, it has been conclusively demonstrated, is exhausted. Yet more than five weeks remain until election day – when either John McCain or Barack Obama morally takes power – and three and a half months until Inauguration Day, when one of them actually moves into the Oval Office. On the campaign trail, they can make uplifting speeches and put forward ingenious proposals. But speeches and policy papers will not make banks lend again.

However, yesterday already looks like Black Monday for Mr McCain. He returned to Washington last week as the self-styled statesman who would knock heads together for the country. But he, like Mr Bush, could not bring his Republicans into line. The tumultuous events of yesterday have only strengthened the feeling that America's worst financial crisis since the 1930s has doomed his bid for the presidency – just as the crash of 1929 doomed Herbert Hoover.

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61 Comments

Thus did US politics enter the world of Alice Through the Looking Glass.

It`s been living and partying there since The Saga of The Hanging
Chads

This Has been The Wonderland Presidency...
Where The Planet has been coping with The Insanity of
American Century Logic:
Entering The Looking Glass???
The Mirror has just shattered, what we are seeing is
The Cold Light of Day
Welcome to Reality

Posted by Schol49 | 02.10.08, 14:19 GMT

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To be clear, more House Democrats voted against the bill than did Republicans. Moreover, as unpopular as Bush is, the Democratically controlled House consistently gets lower approval ratings by the American public than Bush.

Nonetheless, before the European media opines about "the crises of the [U.S] political system", let's see how the UK and the rest of Europe deals with its own--and mostly unacknowledged--fiscal problems.

Posted by Stephen | 01.10.08, 07:50 GMT

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One further thing, I am aware of what the consequences of no government intervention will be. At best, nearly all the major Wall Street banks will collapse, the Dow will collapse, and it's a New Great Depression of the 21th underway.

That's the best to hope for.

At worst, it's the complete collapse of the dollar and it's Wiemar Republic time, cept it'll be anarchy and food riots within short notice, followed by what would make a Depression seem like a good thing.

Frankly, it's not a matter of if, but when the dollar does collapse. A small minority of Americans are aware of that subconsiously, even fewer could atriculate it as such. But the complete opposition of the bailout by the 80% of the population could be a concious decision to accelerate along the process

Posted by Jeremy Cooper | 01.10.08, 03:54 GMT

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One further thing, I am aware of what the consequences of no government intervention will be. At best, nearly all the major Wall Street banks will collapse, the Dow will collapse, and it's a New Great Depression of the 21th underway.

That's the best to hope for.

At worst, it's the complete collapse of the dollar and it's Wiemar Republic time, cept it'll be anarchy and food riots within short notice, followed by what would make a Depression seem like a good thing.

Frankly, it's not a matter of if, but when the dollar does collapse. A small minority of Americans are aware of that subconsiously, even fewer could atriculate it as such. But the complete opposition of the bailout by the 80% of the population could be a concious decision to accelerate along the process

Posted by Jeremy Cooper | 01.10.08, 03:54 GMT

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Something I caught on another website, but many of those reps that voted no got bombarded with emails, phone calls, and letters firmly against that bill. Almost everyone I've spoken to in passing (some 60 or so) has been deadset against the bailout passing ( I work at a hospital in the Midwest region in maintnenance, solid blue collar income and outlook).

With elections for all those reps coming up and with their own party weakened, the Republican reps would have commited political suicide in voting for that bill.

In retrospect, the bailout not passing is a failing of the American political system, but one of the very few success in how it's supposed to work

Posted by Jeremy Cooper | 01.10.08, 03:40 GMT

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@J.J Rambo

Sorry mate, but I don't need to subscribe to conspiracy theories to mask my own impotency.

You started this with a ridiculous and factually incorrect statement about the symbology of the fasces that you presumably saw on some nut-job website. If the rest of your 'facts' are as easily refutable as your opening salvo, then you're right - it doesn't take many 'sheeple' grey cells to blow each one out of the water.

I agree the US has gotten itself into a bad place, but come on, to suggest that hidden symbols on bank notes designed many years ago explain it all is a little bit childish, isn't it?

Posted by Conor | 01.10.08, 00:58 GMT

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Maybe it was defeated because it was a poor idea? Maybe banks are currently being bought by Goldman Sachs and others and we don't think they need to bailed out. Maybe the political system worked rather well and the American taxpayer actually won.

Posted by Shane | 01.10.08, 00:08 GMT

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To the author: Don't be so quick. McCain could very well be the next president. You are forgetting the voter system & how it will inevitably be hacked/tampered with/rigged..take your pick, call it what you want but it is flawed & vulnerable. I believe it has already been decided who the next president will be & his name doesn't begin with 'O'.
I hope I'm wrong.

Posted by Sharon | 30.09.08, 23:51 GMT

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If a similar rebellion is inconceivable at the same stage of the presidency of the Clinton or Regan presidency, then the"quasi-interregnum of the weeks immediately before and after a presidential election" is surely not prima facie evidence of the structural failure of the U.S. political system.

Posted by Emlyn Norman | 30.09.08, 20:15 GMT

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The American political system was defeated because the "Greed, Plunder, and Brazenness Act of 2008" was defeated? Good grief! Then black must be white.

Posted by P. | 30.09.08, 19:11 GMT

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61 Comments

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