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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

Progressive Fears About the Bank Rescue Plan

After a slow rollout over the last few days, the administration’s bank rescue plan has been released, to very mixed reviews. And this time, skepticism if not hostility has spread pretty deeply into the progressive ranks.
Brad DeLong offers a pretty clear explanation, and a relatively positive take. Paul Krugman expresses “despair,” and says it’s just another rehash of the Paulson Plan.
(Meanwhile, international markets responded positively to advance reports over the weekend, and stocks–particularly for banks–rose sharply on Wall Street this morning.)
There’s an important anomaly to note in the freetings over progressives over this plan. Most of those reacting negatively favor a “temporary takeover” or “nationalization” of financial institutions. But even in this camp, there’s a widespread assumption that a failure of the current plan will drive Congress in the opposite direction, towards a neo-Hooverian obsession with deficit reduction and suspension of any further public investments. Since Republicans are already pretty much down with the Herbert Hoover approach, that means a significant faction of congressional Democrats would move not towards a more aggressive approach to freeing up credit, but towards the Republicans.
Indeed, some nationalization proponents seem to think the public will move that way too, out of anger towards never-ending public subsidies of banks and other failed enterprises. In other words, one highly influential progressive point of view is that the administration must move sharply “left” or its policies will likely produce a sharp move to the “right” in Congress and around the country–led by enough congressional Democrats to thwart the administration’s designs.
If nothing else, it seems to be clear that Democrats as a whole control their own destiny. The question is which Democrats will be in a position to lead one way or another once the dust has settled.
UPCATEGORY: Democratic Strategist

3 comments on “Progressive Fears About the Bank Rescue Plan

  1. R Howe on

    ‘Ah, there’s the rub.’ “It does, of course, actually need to work.”
    The thing that galls we rubes the most is the “retention” of even one individual that helped to generate this debacle.
    The pitchfork/French Revolution evocation has been a bit overdone, but we do wants some heads to roll. Count me among those favoring nationalization.

  2. edkilgore on

    I’m sure you’re referring to the mispelling of “rescue” in this item as originally posted. My blogging software does not include spellcheck, and I have chosen not to write these things in Word and then transpose them, to save time and boost the frequency of posting. So sometimes I screw up on spelling and grammar, but always correct mistakes when I realize them (usually before readers have the time to notice them). I moved on to something else this time too quickly, and appreciate the heads-up.
    Ed Kilgore


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