David Colker and Tom Hamburger have a great reported piece in the Los Angeles Times looking at how Bush, Paulson, and Bernanke screwed up the initial pitch for a rescue plan:
Leaders of some of Washington’s most powerful political interest groups — including business, labor and civil rights organizations — said that instead of starting out by organizing a broad-based coalition to build bipartisan support and mounting a grass-roots campaign to explain the crisis to Main Street, administration and congressional leaders focused on reassuring Wall Street. […]
AFL-CIO President John Sweeney, for example, was never consulted by the administration, according to labor union officials. Sweeney knows Secretary Paulson and has been called by him in the past. […]
“That would have been important,” said the lobbyist, who asked not to be identified because making such comments publicly could be bad for business. “Among other things it would provide a great photo op: Bush could have stood there with labor leaders, workers from leading corporations, members of the Black Chamber of Commerce, the Hispanic Chamber of Commerce.”
Last time I posted on this some folks replied that, well, things had reached such a point after the Lehman breakdown that Paulson had to just throw his proposal down on the table. But that seems wrong to me. The markets needed reassuring, but Paulson could have simply announced that he’d decided that a comprehensive solution was needed and that he was calling congressional leaders to spend the weekend meeting with him and Bernanke to discuss a solution. Then other administration folks could have, as the article suggests, called business and labor leaders to explain the situation to them and had them and state and local officials talk to the public about the nature of the problem.
Instead, well, we got what we got — a poorly designed initial plan that was unacceptable to congressional leaders from both parties, silence from non-governmental actors, and a rising public backlash against a mysterious and seemingly under-motivated plan.