A Crisis Too Far: the Financial Crisis and the Bush Administration's Credit Deficit

Do you remember this administration's first crisis? It was energy, right? That was back when chants of "drill, baby, drill" were confined to the hallways of oil executives and top Bush officials (no distinction there, in some cases) rather than convention halls and national TV.

Then it was the genuine crisis precipitated by 9/11, which was adeptly transformed into the looming shadow of Saddam Hussein, how the Iraqi dictator and his al Qaeda allies would be piloting anthrax-spitting drones over America cities (at least the ones that weren't rubble under a mushroom cloud).

Then there was the Social Security "crisis." If we didn't hurry up and privatize, baby, privatize, the great New Deal program was doomed to failure—only the wonders of the market could save it. (A real pity that one flopped, eh?)

There were other crises, right? This administration has wandered from crisis to crisis—some real, many invented—using urgency and fear as cudgels to jam through its policies: This is no time for debate; we're in a crisis; give us extraordinary powers or policies. Is it any wonder, then, that so many people react with skepticism when the administration yells "crisis!" again?

There really is a crisis at the moment, and lo and behold the administration wants action now. What action? A $700 billion check and a promise to stay out of the way while the pros of the Bush administration deal with the crisis. These would be the same pros who brought you previous hits like Iraq and Katrina.

As is noted in today's New York Times:

The common denominator to many reactions is a visceral discomfort with giving Treasury Secretary Henry Paulson Jr.—himself a product of Wall Street—carte blanche to relieve major financial institutions of bad loans choking their balance sheets, all on the taxpayer's bill.

There are substantive reasons for this discomfort, not least concerns that Mr. Paulson will pay too much, thus subsidizing giant financial institutions. Many economists argue that taxpayers ought to get more than avoidance of the apocalypse for their dollars: they ought to get an ownership stake in the companies on the receiving end.

But an underlying source of doubt about the bailout stems from who is asking for it. The rescue is being sold as a must-have emergency measure by an administration with a controversial record when it comes to asking Congress for special authority in time of duress.

Sen. Sherrod Brown, an Ohio Democrat, said on MSNBC this morning that the administration's push was "not too different from the Iraq war." They want something big, quick, and wholly on their terms, he said.

This is beyond Bush and his cronies as the boys who cried wolf. They are reaping in terms of bipartisan distrust and anger what they have spent seven years sowing. The only problem is that the rest of us might suffer from this breakdown in trust.