Published: October 03, 2008 04:21 pm            

Mark Bennett: As America deals with a money crisis, the country needs to hear the message

TERRE HAUTE — Sometimes, Washington and Wall Street treat average Americans like those unsuspecting guys in “America’s Funniest Videos.”

They hold the whiffle ball bats. We take the groin shots.

When President Bush and congressional leaders pitched a plan to spend $700 billion to rescue a screwed-up financial system, Americans appeared ready to yank the bat out of their hands and hit them with their own line drive up the middle.

As the U.S. House of Representatives prepared its first vote on that package Monday, people called lawmakers, e-mailed them, and wrote letters to the editor to vent their displeasure. It wasn’t that folks didn’t believe the warnings by economists and analysts that worse things could happen without a bailout. It wasn’t that they didn’t think their government should do something to prevent a prolonged, costly recession.

Instead, lots of Americans felt taken for granted. PO’d, if you will.

That’s understandable given what happened two years ago. That’s when the country expressed its displeasure with an unending war in Iraq by overturning Congress in the midterm election. The result? President Bush disregarded that mandate and did the opposite, increasing troop levels there. The administration knew better, reasoning that Americans did not, and could not, understand the complexities of Middle Eastern conflict. (Never mind that these same people chose to invade the wrong country.) So the deficit-financed war continues, and the monetary cost is, ironically, nearing $700 billion.

The populace is struggling to comprehend today’s Wall Street mess. Still, average folks see that the financial and political power brokers possess no clairvoyance in these matters, either. That’s why America wondered, “Why should we trust you — again?”

The reason Washington listened so intently to this feverish outcry is because the bailout decision comes just one month before the election. That’s the inconvenient truth. The shell-shocked legislators realized the voting public wanted more than a “trust us” before writing the check to fill a $700-billion financial prescription.

But two significant sentiments, beyond outrage, also emerged last week.

Yes, people are mad about this. Six out of 10 Americans felt angry about funding the “Emergency Economic Stabilization Act of 2008,” according to a Pew Research Center survey. Nonetheless, more folks (45 percent) thought the action was the right thing to do, than those who thought it was unwise (38 percent). (The other 17 percent were confused or unwilling to answer.) In a nutshell, lots of Americans remained rational, despite their anger.

The Pew survey also revealed that 51 percent of people are scared.

In an economic crisis, rationality offers the best chance for recovery. Fears must be eased.

Along with the public fury, lawmakers heard advice, too. While non-activist economists suggested Congress let the financial giants fail and the market right itself over time, others warned of what could happen in the meantime. Letting the high-rollers feel our pain, unfortunately, also could cause great pain for people who’ve never bought or sold a junk security. Millions of jobs, businesses, retirement savings and college loans could evaporate.

The senators and reps heard Ben Bernanke, the Federal Reserve chairman, paint a bleak picture. They had to choose whether to trust his words.

Some, such as Evan Bayh, did.

“Chairman Bernanke is an economist, not a politician. He is a man not known for overstatement,” the Indiana senator said. “Could he be wrong? Yes. Is ignoring his advice a risk worth running at this precarious time for our nation? I don’t believe so. As distasteful as it is for Congress to take this action, doing nothing would likely make things much worse.”

The public frustration that shook Congress and prompted the House’s initial rejection of the plan sent a clearly heard message. Since then, people have gradually accepted the need to do something, and they’ve hesitantly extended some, yes, trust. That admirable outburst that rattled House members on that first vote bought America valuable time to get some meaningful explanations. By the time the Senate got a reworked version of the Bush plan, some measures had been added to prevent this collapse from recurring — limits on profits by CEOs of rescued firms, additional oversight of corrupt practices, and guarantees that those companies will fully repay the nation. Sadly, it also contained earmark tax breaks. On Wednesday, the Senate passed it 74-25, with Bayh and fellow Hoosier Sen. Dick Lugar voting yes. On Friday, the House reversed and OK’d it 263-171.

One of the many lessons to be learned must extend from the skyscrapers of New York to the Capitol, to the hills of southern California and to Indiana and the heartland. Living within our means shouldn’t become some dusty old idea from the 1930s. Bush, Wall Street titans and Congress earned their blame in this dilemma, but it’s also the perfect time for all of us to, honestly, ask ourselves whether we’re pursuing far more than we need far too fast, from the price of our mortgages to our cars, clothes and iPods.

As we’re seeing right now, that practice can have maddening consequences.

Mark Bennett can be reached at mark.bennett@tribstar.com or (812) 231-4377.

        

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