A question of credibililty

I don’t know how the current financial crisis will work out after yesterday’s House vote. I suspect, as I mentioned yesterday, that nothing will happen until the level of pain from the credit market meltdown is apparent on Main Street. Right now, the connection between the bailout and daily life is not seen by most Americans. Until that connection is made (which, of course, will be after the pain becomes intense and possibly far too late to prevent the worst of the pain), the plan will be see as an unfair reward to economic greed.
Compounding the problem is the complete lack of credibility on the part of the Administration. The ugly truth is that American people (and even members of the President’s own party) simply don’t believe what the President and the Treasury Secretary are saying. And, sad to say, Secretary Paulson did himself no favors by starting out with a proposal that screamed of the Imperial Executive. I recognize that sometimes our legislation is far more complicated than it needs to be. But it was not the starkness of the 3 page Treasury position that got it into trouble. It was the explicit exemptions from any sort of oversight and accountability that grated so much.
One must be careful of drawing to much from historical analogies. But, as the saying goes, while history may not repeat, it often rhymes. In this case, that analogy is with 1932. I believe we may be in a similar situation as then — not for the economic parallel but for the political. By 1932, the Hoover Administration had lost all credibility in fighting the economic downturn we would later call the Great Depression. But that did not stop President Hoover from advocating his policies, even after the election. Arthur Schlesinger, Jr.’s great work The Crisis of the Old Order: The Age of Roosevelt describes the moment. For five months (back then the Inauguration was not until March), outgoing President Hoover tried to get incoming President Roosevelt to commit to some of his (Hoover’s) policies. Roosevelt steadfastly resisted until he had the reigns of government firmly in his grasp — thereby insuring the his response was his and his alone, not compromised by have to have the previous Administration either craft parts of it or completely implement it. Part of what Roosevelt understood was the necessity of creating a strong foundation of credibility to address the problem untainted by the past. A new beginning, as it were.
Such will be the task of the next Administration — either Obama or McCain. So I fear that the situation of governance, not simply the exigencies of politics, will prolong this crisis into January.
Things have changed since the days of FDR. In part, the Inauguration has been moved up two months. There is more of a sense that the incoming President can claim power (and is seen as responsible) immediately after the election. But it will still be a lame-duck President and a lame-duck Congress during those two months. And the credibility of a lame-duck is very weak.
Thus, I see no quick resolve to the underlying crisis of credibility. Until that crisis is resolved, we can’t even begin to approach the financial and economic crisis confronting our nation. While this may not be a repeat of 1932, the rhymes are pretty strong.

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