At Reader’s Digest, we have a standing feature in our magazine; “Four Ways of Looking at…” Some months we look at a hat, some months, a map. In that spirit, Loose Cannon presents four ways of looking at today’s stunning legislative defeat of a $700 billion plan to bolster Wall Street’s failing financial institutions.

First, the news of the day. By a vote of 228 to 205, the Treasury Department’s rescue plan went down to defeat. It was a bipartisan rejection of President Bush’s attempt to shore up the nation’s reeling banks and lending institutions. House Republicans, particularly, did not rally to the side of an incumbent Republican president, as only 65 Republicans voted for the bill. When coupled with the 140 Democrats who voted yes, the administration came up two dozen votes short. The financial markets wasted no time in posting its reviews of this type of governance: the Dow Jones Industrial Average began plummeting even as the House voting was taking place. By the close of trading today, the Dow was down 778-points, the greatest single-day decrease in market history. Not the largest percentage drop—but close. Will the nation’s credit markets now seize up, the very thing President Bush and Treasury Secretary Henry Paulson have warned about? That's the big question. And what are the lessons so far? Here are four possibilities.

Number One: Partisanship is Poisonous.

President Bush took the high road; during a South Lawn talk yesterday at about 7:30 a.m. He praised leaders of both parties several times, intending to convey, as Matt Lauer noted on The Today Show, that “we are all in this together.” Unfortunately, that example was not followed when the action moved 16 blocks up Pennsylvania Avenue to the U.S. Capitol. Coming just five weeks before Election Day, there was a certain amount of holding one’s nose required to support a bill like this, especially on the part of Democrats not in the habit of helping Bush. House Speaker Nancy Pelosi, apparently attempting to acknowledge those impulses on her side of the aisle, asked during her floor speech: “When was the last time someone asked you for seven hundred billion dollars?” She then veered inexplicably into partisan waters: “It is a number that is staggering, but tells us only the costs of the Bush administration’s failed economic policies—policies built on budgetary recklessness, on an anything-goes mentality, with no regulation, no supervision and no discipline in the system.”

Number Two: The Center did Not Hold.

To vote against this bill, those 95 arch-liberals thumbed their nose at the Democratic leadership in both the Senate and the House, as well as their own banking committee chairman and their party’s presidential nominee. Meanwhile, the arch-conservatives who voted nay chose to ignore congressional leaders of their own party, along with the Secretary of the Treasury—and their own president. How is such a thing possible? The answer lies in the makeup of the House itself. We now know how many right-wing Republicans and left-wing Democrats, more or less, inhabit the halls of Congress: 228. That's their right, but here’s the problem: There are only 435 members of Congress.

This means that the extremist wings of each party, which together constitute probably no more than 20 percent of the American electorate, control a majority in the House of Representatives. These wingers are so far out on the fringes that they merge together, figuratively at least, on the dark side of the moon. So the question isn’t: “Why didn’t centrists have more sway today?” The question is: “Why aren’t there more centrists?” The short answer to that question is that members of Congress hail from 435 gerrymandered districts that have been carefully tailored (by incumbents) to elect a person from only one party. There aren’t many competitive districts, nor are there many moderates left in the House. This is a sad development, and its fruits were on display on Monday, September 29, 2008 when the nation needed people to put country first and ideology second.

Number Three: No way to run a railroad.

Although this crisis was years in the making, the Bush administration didn’t anticipate it very well. They especially didn’t appreciate the politics of the bailout—or the rhythms of Congress. Treasury Secretary Henry Paulson got high marks in the media for his decisive action in taking over the ailing and mismanaged Fannie Mae and Freddie Mac three weeks ago, but what was little-mentioned at the time was that he’d assured congressional leaders earlier that he wouldn’t have to take that step. Then, 10 days ago, Paulson approached Congress with his $700 billion bailout plan—and, apparently, did so in a manner suggesting that he expected only one possible answer, which was, “Yes, sir.”

As the administration learned yesterday, there was always another potential response: No. President Bush clearly sensed from the start that this was a tough sell, but Paulson seemed to reflect the attitudes on Wall Street, where it was considered inconceivable that official Washington wouldn’t recognize the gravity of the problem, and act accordingly. While Paulson was trying to educate members of Congress—never an easy task—Barney Frank, the smart and often caustic chairman of the House Financial Services Committee, was trying to school Paulson in a subject just as arcane as economics: Election Year Politics.  

“There is some tension between the needs of the members and the needs of the markets,” Frank explained dryly in reference to Paulson. “He thinks neurosis on the part of the markets deserves more credibility than neurosis on the part of elected officials and getting a bill passed.”

Number Four: The People Know Best

The House of Representatives is called the “people’s House” for a reason—for several reasons, actually. For one thing, it’s comprised of everyday folks who listen to the angry passions of right-wing talk radio or the left-wing blogosphere—as well as the fears and concerns of normal, non-political everyday Americans who may not be mad at anybody, but who are deeply afraid about what’s happening in the economy. Many of these “Main Street” Americans do not want Wall Street bailed out for its transgressions; they want those on Wall Street who made others suffer to pay for their own mistakes. As for the assurances from everyone from George W. Bush to Barney Frank that there is no way to accomplish that goal without crippling the economy, well, guess what? Main Streeters aren’t convinced. They say: What’s the big rush? Why should we listen to a rich Wall Street guy like Henry Paulson anyway?

Former House Speaker Newt Gingrich put it this way. “Having a former chairman of Goldman Sachs preside over disbursing hundreds of billions of dollars to Wall Street is a terrible concept and inevitably will lead to crony capitalism and the appearance of—if not the actual existence of—corruption.” Today, before the vote, Gingrich asserted that he would reluctantly support the bailout if he were still in Congress. But it was his earlier words, and those of liberals such as Jim Dean, brother of Democratic Party chairman Howard Dean, that carried the day.(“The Bush Bailout is still a new tax on every American that would amount to a $700 billion check to bail out Wall Street,” Dean said. “(It) would be the largest giveaway of public money in American history.”)

This classic populist attitude found a home among both small government conservatives and anti-corporate liberals. That certainly doesn’t make it wrong. What it does is make it  potent—especially just five weeks before November 4. That is the day every member of the House stands for re-election. In other words, the fourth way of looking at today's unsettling events is that elective democracy operated the way it was supposed to. Politics worked. As Chuck Todd, NBC’s insightful commentator, said today: “Every member (of Congress) who is in a tough race voted ‘No.’” Excellent young journalist Kyle Trygstad, blogging on Real Clear Politics, parsed it even more closely and found that of the 30 incumbents in the 50 tossup House races, 22 of them voted against the bailout bill. Maybe, just maybe, those members knew what they were doing.