Bailout: power brokers 1, constituents 0.(THE LAST WORD)

"Madame Speaker, only in Washington could a bill demonstrably worse than its predecessor be brought back for another vote and actually expect to gain votes," Congressman Ron Paul lamented on the floor of the House on Friday, October 3, the day the gargantuan financial bailout package was passed by the House, completing congressional action. "That this bailout was initially defeated was a welcome surprise, but the power brokers in Washington and on Wall Street could not allow that defeat to be permanent. It was most unfortunate that this monstrosity of a bill, loaded up with even more pork, was able to pass."

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The passage of the bailout bill was the result of strong lobbying by the congressional leadership of both the Democrat and Republican Parties, as well as by the White House and Wall Street. The initial defeat of the bill was the result of the groundswell of opposition from angry constituents. The intensity of the public pressure on lawmakers to vote against the bill took the power brokers by surprise, but in the end the pressure applied by the power brokers proved to be the more powerful force.

The House initially voted on the bill just one day after congressional leaders and the White House announced that they had agreed on a plan, to authorize the Treasury Department to spend up to $700 billion to purchase troubled mortgage-related securities from banks and other financial-related institutions. At the time, congressional leaders expected the bill to pass. "Leaders on both sides of the Capitol openly expressed confidence that they had the votes, and House leaders scheduled a vote for the next day," reported Congressional Quarterly. "But what leaders did not take into account was the level of constituent anger over the perception that Washington wanted to spend taxpayer dollars to bail out Wall Street."

And so the bipartisan congressional accord that was announced shortly after midnight on Sunday, September 28, was defeated 205-228 on Monday, September 29. But the power brokers, unwilling to accept defeat, next focused on the Senate, whose membership is not so susceptible to constituent pressure as the House since only a third of the Senate is up for reelection every two years. Also, the bill was expanded in the Senate to make it more palatable to lawmakers.

The Senate version of the bill not only authorized the $700 billion bailout plan but also expanded FDIC protection from $100,000 to $250,000 per bank account, extended dozens of expiring tax provisions, expanded incentives for ...