Once again, Washington was at its worst Monday when it needed to be at its best. In a remarkable repudiation of President Bush by members of his own party, the House rejected the administration's bailout and sent more shudders through the fragile economy. Now it is the responsibility of members of both parties who rejected the proposal to be constructive rather than destructive, because doing nothing is not an option.
Look at the immediate fallout. The Dow dropped nearly 780 points, the largest single-day drop ever. Do you have a 401(k) retirement account or an IRA with mutual funds tied to the Standard & Poor's 500 index? It dropped more than 8 percent. There were indications the tight credit markets were becoming even tighter, making it harder for businesses and financial institutions to borrow money.
This is a crisis that extends beyond Wall Street to Main Street companies that need to make payrolls, homeowners who can't buy or sell their houses and parents who need to borrow money to pay for college for their kids. Even before the House vote, the Federal Reserve and central banks in other countries made billions available to banks having trouble raising money. Federal regulators forced the sale of Wachovia, the largest bank in Florida and hard-hit by the mortgage crisis, to Citigroup. This is not a situation that will correct itself.
The Bush administration's $700-billion plan is nothing to celebrate. Nobody wants to see such a stunning amount of public money allocated to propping up private banks and investment firms by purchasing bad mortgages and other troubled assets. No one wants to see taxpayers suffer for the lack of regulatory oversight by the federal government and the greed of investment firms whose executives made unimaginable amounts of money. But now is the time to calm the financial system and avoid an economic collapse that would affect every American.
Florida's U.S. House members were divided on the bailout — and not entirely along partisan or ideological lines. In the Tampa Bay area, only Rep. Adam Putnam, R-Bartow, a member of Republican leadership, voted for the bill. Rep. Kathy Castor, D-Tampa, voted against it and argued it did not do enough for middle-class families. Rep. Ginny Brown-Waite, R-Brooksville, called it "extortion'' in her usual unhelpful, over-the-top rhetoric. Even the measured Rep. C.W. Bill Young, R-Indian Shores, hardly a hard-line conservative, voted against it. He believed the proposal was rushed and other solutions were not considered beyond Treasury Secretary Henry Paulson's outline. When a Republican administration loses a moderate like Young on a defining economic vote, it needs a better plan or a better sales pitch.
Monday's vote was a colossal defeat for Bush, as 133 House Republicans deserted him. Sen. John McCain, the Republican presidential nominee who made a show of rushing back to Washington to help negotiate a plan, does not look so good, either. He took credit Monday morning for helping seal the deal, although he had little input. By Monday afternoon, he was blaming Sen. Barack Obama and House Democrats for derailing the bill with partisan comments. That's not leadership; that's covering up his own ineffectiveness with members of his own party.
Bush and his economic advisers labeled this a historic crisis and offered a historic solution. They did not close the sale with most Americans, and fellow Republicans in the House embarrassed them. Now it is up to the president to craft a plan that will win broader support — and do it quickly.