Monday, Monday, Can’t Trust That Day…

In this Post:

• Wall Street bailout

What a difference five days makes! On Monday, the House of Representatives voted 228-205 not to approve the Bush administration’s $700 billion Wall Street bailout bill. Today, the House voted 263-171 to pass it. T.G.I.F! The measure, which President Bush signed promptly, picked up 32 more Democratic votes and 26 more Republican votes, passing with ease—the final tally was 263-171. So what changed their minds? Let us the count the ways:

(1)   On Monday, after the House defeated the bill and spent the balance of the day in bitter, partisan recriminations, the Dow Jones Industrial Average plummeted 778 points—the largest drop in U.S. history. House members who voted no realized that they were fixin’ to get blamed if the stock market tanked any more. Yes, the market dive had a “chilling” effect on the naysayers, noted John Boehner of Ohio, a member of the Republican leadership.

(2)   The Senate acted. With its bipartisan 74-25 vote for the Wall Street stabilization package, including “aye” votes on the part of both presidential nominees, the upper chamber showed the lower chamber that, even in an election year, it doesn’t have to be all finger-pointing and name-calling. Sometimes you just have to act.

(3)   The $700 billion bailout became an $800-plus billion bailout by the time it left the Senate. Was some of this pork? Obviously. But the Senate version also gave cover to House members who had voted no. One key change was raising the amount the government will insure from $100,000 per bank account to $250,000.

(4)   President Bush, embarrassed by House Republicans on Monday, made private phone calls to those who voted no. In those conversations, several GOP members admitted to the president that they were having second thoughts. Rep. Sue Myrick, a North Carolina Republican, was one of them. Myrick, who changed her vote, explained finding economic religion thusly: “We’re on the cusp of a complete catastrophic credit meltdown. There is no liquidity in the market. We are out of time. Either you believe that fact, or you don’t. I do.”

(5)   The market did tank some more, declining another 348 points on Thursday, further turning up the heat on Monday’s no-voters. “We are facing an abyss!” Representative Paul Kanjorski, a Pennsylvania Democrat, who chairs a House subcommittee on capital markets, told his colleagues.

(6)   There was other bad economic news, too: The economy lost 159,000 jobs in September, it was announced this morning, twice the losses of a month earlier, and the ninth straight month of losses. “Washington, the labor market has a problem,” said Joel Naroff, president of Naroff Economic Advisors.

Washington got the message. “By coming together on this legislation, we have acted boldly to prevent the crisis on Wall Street from becoming a crisis in communities across our country,” said President Bush. Perhaps he’s right, but one thing seems certain. President Obama or President McCain is going to inherit a challenging economic environment.

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