How They Failed Us

A complex issue, a looming deadline, weak party leadership and excessive partisanship all fed Washington’s failure.

J. Scott Applewhite / AP

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Part of the problem was the lousy job Bush and Paulson did selling their plan to relieve banks of their toxic loans. They failed to brand it as an economic recovery plan instead of a bailout, a surprising mistake for an Administration renowned for giving initiatives perfumed names like Healthy Forests and Clear Skies. They began by demanding almost Napoleonic levels of authority, although they later compromised on that. They released the $700 billion figure without making it clear that the Treasury can eventually get most of the money back or even turn a profit if the economy rebounds and those loans become less toxic. And while they keep repeating that the plan will help Main Street as well as Wall Street, they didn't make the case until all was nearly lost that the credit crunch endangers loans for cars, homes, farms and businesses--which in turn endangers millions of jobs and pensions. "I begged them to explain this to the guy on his couch, and they never did," says Congressman Steve LaTourette, an Ohio Republican in a swing district who voted against the bailout. "They never explained why they needed all this money in a simple way to the guy with the 401(k), the guy with a small business who already pays a lot in taxes." In an interview with TIME, Paulson agreed that "we just haven't communicated as well as we need to."

But the credibility problems are more about the messengers than the message. Paulson is not a political veteran, and he was asking for the authority to do things he's been insisting for months were unnecessary. "I cannot ignore that many of the people sounding the alarm are the same ones who recently said things were under control ... that stronger government oversight was unnecessary and counterproductive," Democratic Congressman Mark Udall, now a Senate candidate in Colorado, said after voting no.

After the Sept. 29 House vote, the Administration found a new and much more effective spokesman for its case that Wall Street chaos was bad for everyone: the Dow Jones industrial average. It plunged 778 points, and suddenly calls and e-mails to LaTourette's office that had been running 200 to 1 against the bailout leveled out. He said half the callers were thrilled with his no vote but "the other half are looking at their 401(k)s drop[ping] $50,000 in a day, and they call and scream at me and say, You rat bastard, I'm never voting for you again!" Representative Elton Gallegly, a 64-year-old California Republican who voted no, said his hostile-call ratio went virtually overnight from 40 to 1 to a mixed bag--and he can understand why, because he lost $50,000 in savings on Monday. "And I'm getting to the point in my life where I can't start over," he says.

If that message begins to get through over the next few weeks, this low point in finance and politics could be a starting point for national renewal. The plan's supporters hope that a swift injection of capital into the financial system will help Wall Street start over so it can once again lubricate the wheels of the national economy. And come November, Washington will get its own chance to start over.