Politifact Deems McConnell Bailout Rhetoric “False”

Well before Senate Democrats had actually unveiled what their banking regulation bill was going to say, top Republican leaders were already huddling with Frank Luntz to get advice on how to block it (yes, really). Luntz’s advice to them was to assert that the bill, irrespective of what it actually said (yes, really), was a permanent bailout bill. That’s good framing advice, and so even though Chris Dodd’s legislation (a) has prudential regulation to make it less likely that firms go bust, (b) has resolution authority to dispose of the corpse of broke financial institutions without bailing out the management or the shareholders, and (c) puts legal constraints on the government’s ability to conduct bailouts, Mitch McConnell has been arguing that it “actually guarantees future bailouts of Wall Street banks” (yes, really).

Politifact has an item on this in which they point out that McConnell is a giant liar:

In ruling on McConnell’s statement, that financial reform “actually guarantees future bailouts of Wall Street banks,” we base our ruling primarily on the legislation. It clearly states that the intention is to liquidate failing companies, not bail them out. To do that, it creates a fund with contributions from financial firms, not from taxpayer funds. We do not see any element of the bill that expressly permits ongoing, “endless” outlays from the federal treasury. Is it possible that liquidation may cost the government money, potentially more money than is allowed for in the bill? Yes. But even so, McConnell is using seriously overheated rhetoric. Nothing in the bill “guarantees” future bailouts of Wall Street banks. We rate his statement False.

I’m a cynic, but my prediction is that events will vindicate McConnell’s strategy. The overwhelming evidence is that the media gets bored with these fact checks very quickly and that if you just put your head down and charge forward, you come out a couple of weeks later back into “he said, she said” territory. The only real test for whether or not lying works is whether or not you can bring your ideological fellow-travelers along. Will Rush Limbaugh and Sean Hannity and Glenn Beck echo your line? Will the Weekly Standard and National Review? Will the bulk of your legislative caucus? The answers are yes, yes, and yes. I bet this is too absurd a lie to get David Brooks to endorse it, but like any large complicated piece of legislation there are bound to some wonky some not-so-hot elements to the bill and the handful of conservative pundits who’ve branded themselves as non-dittoheads will focus on those and the party will go on.