Since it's obvious that the Republican meltdown isn't playing too well, the Democrats should at least beef up the progressive positions -- I'll take personal bankruptcy protection at the very least, thanks -- since the pressure will now be on the GOP to vote the thing anyway.

I know the Democrats aren't used to holding the cards, but now they do. Play them.

or, they could try an entirely different approach toward solving the problem.

i mentioned this before, and will quickly mention it again. instead of using $700 billion to buy these institutions' bad debts, why not use the $700 billion to invest (inject additional capital) in these institutions? this would give them the capital they need to continue to make loans, it would give them the time to deal with their bad debts in the regular course of business, and it would give the american taxpayers a stake in the institutions and enable them to get their money back, likely with some income as well.

orange

You'll see none of these.

The (political) cost of doing nothing is now less than the (political) cost of doing anything.

Cost outside the cloakrooms -- as they say on the VISA ads: priceless.

A safe seat in the ruins of the world's largest economy is their idea of a good deal.

The RNC is running a bailout-and-Obama-bashing ad; Gingrich reportedly worked behind the scenes to help torpedo the bailout despite his public lip service.

The bad faith of the Republicans is extreme and is out there for all to see. Time for the adults in the Democratic Party to ignore them and come up with a better, Democratic plan. Then let's see if Bush has the cojones to veto it after his own party has flipped him the bird.

A slight variation on the fourth option is really the best idea: put together the best (in policy terms) bill possible, and make the best public case for it, as well as working hard to pass it.

First, this ought to be more about policy than politics, so clearly focussing on what's best for the nation rather than what letter is beside people's names is the right thing to do. But also, the whole purpose of seeking a "bipartisan solution" is to limit the potential political blowback, because everyone knows that even with the most effective policy response possible, we've reached the point where considerable economic pain is inevitable and the idea of "bipartisanship" is not some kind of noble unity, but to limit the opportunity for that pain to be used as a partisan cudget by whichever party didn't support the policy; if you spend the effort that you would have spent convincing that party to accept a compromise bill convincing the public to get behind the bill that really is the best policy you can put together, you serve the same purpose.

A truly progressive plan (as long as we refrain from calling it that) would have widespread support. I sure wish Pelosi had the f-word guts to put it on the floor. I am not holding my breath.

Free market advice.

The market has opened up strong.

Use the current market strength to sell.

The reason the market is up is because it thinks they will get a bill tomorrow.

The Republicans will screw it up again.

The Dow will be close to 9000 on Thursday afternoon.

Of course, I could be wrong

Pass Bailout in Senate First

I thought all spending bill had to originate in the House.

why not use the $700 billion to invest (inject additional capital) in these institutions? just bill

My understanding is that any company getting 100M in assistance would need to give either warranties or equity. While that number seems huge, it is relatively small considering the sizes of the companies we're talking about.

The RNC is running a bailout-and-Obama-bashing ad

Because Republicans would rather destroy our economy than lose an election: and Democrats should be saying that, as they pass the best possible bill to respond to the crisis. (Scrap the Paulson plan as a starting point: it was a bad basis for action to start with, its only notional utility was that, being offered by the Republican White House, it seemed like it might be a starting point for a bipartisan plan, but that clearly didn't work, and that shouldn't have been the goal, anyway.)

Seems to me Republicans have gone so far off track they've forgot High Priest Norquist's rule number one; Never look like a "pussy".

All over the dial Republicans look like a pack wimps getting their feelings hurt or crying about liberal bias.

The brand is dead my friends.

I like #4, but there is no way in hell it would pass the Senate. You know not not even one Republican would vote for it, and it would only take is a single Dem defector to kill it.

I really really hope the campaign realizes that right now they have a chance to put the campaign out of reach. You have the perfect storm of events. The news is being harsh on McCain's counterproductive grandstanding. It is being disappointed that Obama hasn't stepped fully into the leadership vacuum and force the contours of the bailout package and pull the Dem caucus totally behind him.

Steve suggested: "The Democratic leadership could scrap yesterday's bill, put together a truly progressive package, and pass it with or without Republican support. The Senate might be trickier, but if Dems could overcome a filibuster, the president might, under these circumstances, not want to risk a veto. (Robert Kuttner even has a few ideas about what a new-and-improved Democratic package might look like.)"

Obama could step up right now and make this happen. It would be the right thing to do, and it would demonstrate real presidential level leadership for a nation in crisis.

If it needs to be done quickly, scrapping the current bill and starting over is a daunting option.

i mentioned this before, and will quickly mention it again. instead of using $700 billion to buy these institutions' bad debts, why not use the $700 billion to invest (inject additional capital) in these institutions? this would give them the capital they need to continue to make loans

Why invest in "these institutions" at all? If the point is that the institutions have made bad investment decisions and thus wiped out their own capital, why should the government give them more capital (whether by investing in them or buying their assets at above market value) and expect better decisions?

Why not have the government set aside the $700 billion to invest directly in the good investments that these institutions no longer have the capital to make. The idea isn't to reward the failure of the banks, but to mitigate the effects of the failure on the rest of the US economy.

On the other hand, I could probably get behind a mortgage buyout plan where the government would by mortgages and the securities they back that are distressed (valued at less than the actual balance of the mortgages in the package) if, say, they were purchased at market value (this still helps the banks, as it cushions them against further decline in the value of those assets) and half the difference between the balance and the market value for which they were purchased were applied to reduce the balance on the mortgages, and an opportunity was provided for the borrower to switch to a reasonable fixed interest rate was provided once the government purchased them (provide instant relief for the borrowers that are likely to need it the most, without requiring them to go into bankruptcy to get relief). This would stabilize the position of the banks and provide direct relief for some of the most at-risk consumers, stopping the bleeding in the financial institutions while bailing out Main St. more directly. Since you wouldn't be buying these at above-market rates to bailout the banks, (though you'd be sacrificing some of the potential upside to provide the Main St. bailout), you could still have some money left for the kind of direct (bypassing the financial institutions) capital injection discussed previously; this provides direct aid on both the consumer side of the economy (which is hurting) and the capital availability side (both by stemming the bleeding at the financial firms and by directly investment), which would make it a more balanced response.

The Republicans are crazy, and the Democrats are craven. Pelosi could credibly say that Republican leadership has shown itself to be ineffective and the Republican rank-and-file unserious. Therefore, the Democrats will take a page from Dennis Hastert's playbook by crafting its own bill and concerning itself only with getting 435/2 + 1 from its own caucus. Then dare McConnell to filibuster or Bush to veto.

But that's not what's going to happen. Pelosi as the Democratic standard bearer in the House has been a collosal disappointment for 2 years and shows no signs of changing her ways. Ugh.

"it's committed to finding a bipartisan solution" Its always a "challenge," to use the trendy term, to negotiate anything with the insane, let alone a complicated rescue package for the economy. Did you hear Rep. Darrel Isasha (sp.?), for example?

Obama stepping in right now is the wrong move. Keep a cool head. They'll have another shot at this on thursday and the only drag on Obama would be McCain pretending he helped corral house Rs. It seems they've screwed that up though by whining about partisanship. The only way that narrative works is if people pretend McCain is a moderate. After Palin's giant urine stain on the set of CBS and McCain's firebreathing call to suspend first hi campaign and then spending on everything but the military that hope went out the window. People will see it for what it is.

Obama needs to stay calm and let the market and the house and Senate deal with this. He's not the president, pretending to be right now in a time of crisis would only hurt him.

danp, it's only tax bills that must originate in the House. The Senate can originate a spending bill.

jim h - thanks.

I wrote to Peter Welch, my Rep., who voted nay yesterday and suggested that the Dems introduce a progressive bill and pass the damn thing. Why the hell have they not done this? The lack of leadership is scary. The Democrats didn't want to own the sucky bill. Fine. Write the GOOD bill and own the thing!!! What is so difficult about this? C'mon - I'm sitting here in my pj's and I can figure this out.

I still don't see how voting against this thing has to be attributed solely to being "stark raving mad". This bailout is not popular amongst much of the public for some very good reasons, not the least of which is the engrained resistence to hand-outs to wall st. Thats the reality and I don't think folks should get too carried away in the aftermath of yesterday.

Why do we believe Bush wouldn't veto a DFL bill? That's his MO. Is it because public approval might raise his rating from 25% to 27%?

Option B would be eliminating the mark-to-market rule

Noooooooooo!!!!!

What Wall Street needs is discipline. If they won't take the lash of regulation, then they need at least need the butt plug of reality.

That's a really bad idea.

Unless of course, it applies to all of us. I would love to use my own models to value my assets.

Did you know I was a billionaire?

Can someone explain something to me (and I'm being serious -- if anyone can explain it, please do. Hell, if Benen has a line to Maddow, Olberman or even Krugman, maybe he could ask):

Why are they not focusing on re-structuring mortgage loans?!

Think about it -- the main reason banks are hemorrhaging cash is because they overextended themselves on securities backed by mortgages.

So if we re-do the mortgages, won't that help to stave off foreclosures, keep payments coming in and, thus, make those currently-worthless assets worth something?

Won't getting all those ridiculous ARMs fixed help stabilize all that debt and keep it from going completely into the toilet?

I realize there are other issue going on here, but it seems that this would make sense.

The current plans are like telling people whose houses are flooding that, instead of stopping the water from coming in -- even though it could be done -- we'll just let everything be destroyed and cut you a check to start over.

It makes zero sense to me. Why not save as much as you can to reduce the damage?

So again, can someone explain why this isn't a key -- nay, a mandatory -- part of the plan?

(And no, "Because it doesn't help enough rich white people" isn't an answer ... even though that may be somewhat true.)

Thanks.

Democrats need to write and pass a progressive bill with REAL protections for the taxpayers.

Do Pelosi and Reid even have a clue?

#4 won't work - Democrats are at risk in tight races of losing seats, if they are seen as passing large government packages, regardless of any attached food stamps.

I'm sure the crybaby Republicans will look at their portfolios & hear from donors, and will come around.

Democrats have to frame it better though, as something that will affect all Americans.

I wrote to Peter Welch, my Rep., who voted nay yesterday and suggested that the Dems introduce a progressive bill and pass the damn thing. Why the hell have they not done this?

Why? Because

1. Forcing a 700 billion dollar bill down the other party's throat will have serious negative repercussions on their ability to govern in many other contexts.

2. Owning a 700 Billion dollar bill that is not particularly popular is politically stupid and this is not a trivial matter. If Democrats wish to push for a more progressive agenda in the near future, they absolutely cannot risk looking like the bad guys in the context of our country's largest ever one time expenditure.

3. Because it ultimately wouldn't work. It wouldn't get through the Senate and so the Democratic caucus will have to bear the brunt of the blame for passing an unpopular measure that has the added feature of also failing to address the problem.

No, stark raving mad is giving anybody in the Bush administration a 700 billion dollar blank check.

As a Yellow Dog Democrat, I will find it hard to vote my (Democratic) rep back in office if she votes for this.

The only way I would support this bailout is if the Democrats appointed somebody independent of the white house to oversee it.

Forcing a 700 billion dollar bill
Owning a 700 Billion dollar bill that is not particularly popular

Brent, you are probably right on #3 - but I didn't say anything about $700 billion. The new bill clears the slate and starts from scratch with something besides what Paulson is on his knees begging for.

How about:

#5. Do simple things first. For example, raise the FDIC limits.

#6. Bring in the folks who were correct (Roubini/Galbraith/Baker.)

These sorts of things should always be the first step when the problem is too big to grasp. Panicking and sticking with the advice of the guys without a clue do not inspire confidence. Even if the Paulson plan was the best no one would believe it given the process.

Why do we believe Bush wouldn't veto a DFL bill?

He might. He might not. That's why Dems have to take whatever they pass to the public, and sell it there, to put pressure on Republicans. Democrats need to fight for good policy, and not forget that the public is part of that fight. If we do that, it may turn out that there is need to compromise with the Republicans in Congress or the White House, because we can't get the votes to override a veto and can't avoid a veto, but if it is done well, the public will be on the Democrats side which gives them more power in negotiations, and means you get a better deal.

If we let the batshit-insane wing of the Republican party own the public debate on what should be done, we lose, and America loses.

Brent, you are probably right on #3 - but I didn't say anything about $700 billion. The new bill clears the slate and starts from scratch with something besides what Paulson is on his knees begging for.

Fair enough. Although I think any major bill that doesn't have at least the appearance of consensus will be risky and unlikely to work, I can see as where they have some room to maneuver on the more progressive side.

Option 5: stop the panic, and wait until after the election. McCain is stumbling badly, and things are looking brighter for Obama and the Democrats. Give the public time to absorb the fact that Reaganomics has failed us.

Take the time to study the situation, then pass legislation that will deal with the mess supply side economics and unfettered capitalism have left us.

Right now the bill is awful. Option 4 sounds fine on paper, but it would never get through the Senate filibuster. Never. So why bother? Why not go to Option 5?

This bill bails out the guys who caused the mess in the first place. Why do we keep doing that? We're all dancing on the grave of Reaganomics, and demanding passage of the bill that extends it, at the same time. It's crazy out there, and getting crazier.

Thr fourth plan looks like a budget-busting disaster to me. And a political one as well. You say "progressive," their opponents say "there go the out-of-control liberal spenders again. This is what got us into trouble in the first place!" Is that a crock? Yes. Is it a crock most voters would believe? Probably. The Democrats have done a pretty good job portraying themselves as the grown-ups in this situation; reverting to stereotype is the last thing they should do.

If they can't pass a responsible un-Christmas-tree like bill now, then hang it on the Republicans--both for getting us into this mess with limitless deregulation and for refusing to help get us out of it--and wait it out until the new Congress, then opt for the Swedish solution.

At this point, the Democrats can honestly say they made a good-faith effort to save Republicans from their own bad decisions, and to save the economy from Republicans. Now they should reap the political rewards of that, wait until the new Congress comes in, and try again with something that gives the taxpayers a greater financial stake.

oh and while we were all agog about the bailout- 600 billion was voted on and passed, along with some other small change stuff...

Renewable Energy and Job Creation Act of 2008 - Vote Passed (93-2, 5 Not Voting)

The Senate passed this bill to extend tax incentives for “green” energy and exempt 21 million people from paying the Alternative Minimum Tax for 2008.

Sen. Charles Schumer voted YES......send e-mail or see bio
Sen. Hillary Clinton voted YES......send e-mail or see bio

Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009 - Vote Agreed to (78-12, 1 Present, 9 Not Voting)

The Senate passed this $600 billion bill over the weekend to fund the federal government through March 6, 2009.

Sen. Charles Schumer voted YES......send e-mail or see bio
Sen. Hillary Clinton voted Not Voting......send e-mail or see bio

**Why do we believe Bush wouldn't veto a DFL bill?**

*He might. He might not. That's why Dems have to take whatever they pass to the public, and sell it there, to put pressure on Republicans.*

There was a time, back when Bush's ratings might rise or fall 10%, when Bush did bow to pressure.

I feel those days are long gone. His stubbornness is now rewarded with almost no change in his approval rating up or down, no matter what action he takes. I see him vetoing a progressive bill within seconds - popular or not.

I can see as where they have some room to maneuver on the more progressive side.

I think that's true, because saying the bill is unpopular looks right past WHY it is unpopular. Regular folks don't like this bill because it appears to reward those who screwed up to begin with. I like Bernie Sanders' idea that we fund the bill by increasing taxes on the rich. But that would be unpopular for different reasons.

Look. The Democrats have to make a decision here. Write a good, unilateral bill and dare the Republicans to pass it, or hitch their cart to the Republican horses and watch the whole thing go over a cliff. I think they need their own horse and cart, going the other direction. Given the chance, I am betting the American people would not disagree. The idea of doing something has polled as very popular; people get the idea that we have to save the economy. They just don't like the idea that we save it by saving Wall Street and screwing our neighbors.

"Option B would be eliminating the mark-to-market rule that many Republicans and conservatives complain about, which ensures financial decision-makers must show their losses in real time."

Conservatives are pushing this change, the goal being to reduce transparency (Republicans call it deregulation) in the financial statements of institutions that hold mortgage backed securities. The idea is to solve the problem of reduced assets on balance sheets by hiding the problem, thereby temporarily pushing it off to another day.

Eliminating the mark-to-market accounting rule would be like ripping out the smoke alarm to stop the fire in the kitchen. Sooner or later, the smoke's gonna reach the bedroom anyway. It's a seriously stupid idea that Republicans are pushing hard for on talk radio, and we absolutely, positively cannot afford to let them do it (as we see, what talk radio wants...talk radio gets).

There was a time, back when Bush's ratings might rise or fall 10%, when Bush did bow to pressure.

Bush isn't the only pressure point. Every Republican in the House and lots in the Senate are up for reelection; the point of going public is to use those as your pressure points. OTOH, I am entirely unconvinced that Bush is invulnerable to pressure: given the magnitude of the crisis, even with the Iraq War, this is going to be a big factor in how Bush is remembered.

Nat: #5. Do simple things first. For example, raise the FDIC limits.

You got it. Obama, today: “I am proposing that we also raise the FDIC limit to $250,000 as part of the economic rescue package – a step that would boost small businesses, make our banking system more secure, and help restore public confidence in our financial system."

Nat: #6. Bring in the folks who were correct (Roubini/Galbraith/Baker.)

Sounds like a plan.

In the meantime, the Repubs are so busy playing politics, they don't know how to govern:

http://www.politico.com/blogs/bensmith/0908/RNC_ad_was_cut_sent_out_before_package_failed.html?showall

Actually, I think that option #4 does have a decent chance, especially combined with #2. The Senate GOPers have seen the public wax wroth over the spinelessness and fecklessness of the House GOP. They know that they can't be seen as attempting to scuttle the deal. Therefore, they've little option but to vote for whatever comes up that offers any decent economic hope. Coleman, Collins, Dole, Gordon Smith and Sununu would all hate to have a failing Wall St. hanging around their necks right now, and voting against something that offered both some economic hope, and had some serious provisions to leash Wall St. and reckless CEO's, that would be a hard choice for them to vote against it. The attack ads write themselves. "When Main street needed help, Libby Dole backed her Wall Street pals who gut us into this mess." 4 won't happen, but it's not as much of a long shot as you might think.

Eliminating mark-to-market (Option B) is an unquestionably bad idea that reduces financial transparency — which is why some Republicans are in favor of it. That is the route to making a bad bill even crappier — don't do it. An FDIC increase is a good idea; a promise to cover all accounts is a bad idea, though.

C'mon, Dems, you know how to make is better: put increased regulatory measures in the bill, add more stipulations about how and when the money is released (not all at once), pursue equity stakes in companies rather than eating toxic securities. Give Paul Krugman a call, he'll baby step you through it.

That Kuttner link is real good and as a DFH, i like #4, but could it be a hell of a lot smaller than 700B? i can't find the link, but robert reich said something about an initial expenditure of $150B (see, it's only bush that wants to spend 700B!)

much as a stimulus package would help in the real world, it might be better just to get the government to buy equity, take over foreclosures (which will scare off most republicans), and create real regulation (which will scare off the rest.)

A group of House Dems may have a bailout alternative, but it has problems of its own.

Meanwhile, as if today’s stock bounceback isn’t enough to put yesterday in more perspective, comparing Monday’s tempest in a teapot to Black Monday of 1987 offers much more perspective.

Dems have to take whatever they pass to the public, and sell it there, to put pressure on Republicans. Democrats need to fight for good policy, and not forget that the public is part of that fight.

It just occurred to me that the Congressional Democrats may have bought Bush's fantastic claim that he doesn't pay attention to polls.