There is no possible good outcome of the House GOP’s decision to torpedo the financial bailout package this afternoon. In every scenario going forward the decision hurts the party politically – the only question is how badly. A couple of key rules of public opinion virtually guarantee this.
Rule #1 – In a genuinely confusing situation, experts usually win. When voters know they don’t understand something, they’re generally inclined to listen to experts if enough experts speak with a clear voice. Ask yourself what the “common sense solution to the financial crisis” is. Guess what, there isn't one - and average people are smart enough to know that.
Rule #2 – In a crisis, you never get blamed for doing something unless it can be proved beyond a shadow of a doubt that your actions made things worse. Libertarians hate this but it’s basic human nature to equate action with boldness and inaction with weakness. Deal with it.
With Bernanke and an overwhelming chorus of normally somber economists are all screaming that the sky is falling unless something is done, opponents of doing something (aka House Republicans, thanks geniuses), face an impossible dilemma:
-If the bill fails and nothing happens, no one gains anything. This is the best possible outcome for House Republicans.
-If the bill fails and the economy tanks, they’ve wrecked the GOP economic stewardship reputation for a generation. Not that it’s all that good right now.
-If the bill passes and the economy tanks, on one cares about the guys who voted no because the yes votes took a decisive action that had a huge amount of institutional support. No one gets blamed in those situations. Especially since “I told you so” rarely wins votes and the electorate will be more worried about fixing things at that point.
-If the bill passes and the economy doesn’t tank, then everyone who voted yes claims victory and every economist screaming for the bailout today is right there backing them up.
The basic flaw in the House GOP’s logic is they’re mistaking a bunch of phone calls to their offices for an accurate barometer of public opinion (congressional office calls skew heavily towards the nutcase demographic) and they’re failing to anticipate how public opinion will evolve moving forward. As a result, they're stuck in a no win high stakes situation and they’d better pray that an alternate package passes very soon.