In my estimation, this is one hundred percent correct. The only way to avert disaster is for a substantial block of progressive lawmakers to say — as soon as possible — that they will note vote for any bailout that does not:
- Preserve substantial financial upside for taxpayers in the event that the bailout works (I think in practice this requires an equity stake in the bailed out firms, but I’m not sure).
- Meaningful steps to restructure mortgages and keep most people in their houses.
- A real second stimulus package.
- Controls on executive pay for bailed out firms.
If such a block of legislators emerges, it’s conceivable that a bad bailout plan will nonetheless pass with the votes of conservative lawmakers and on the insistence of the Bush administration. And if that’s what happens, that’s what happens. But at all costs the scenario to avoid is a situation in which the lame duck administration, with the assent of progressive lawmakers, passes a bad bailout with only fig leaf protections that conservatives are then able to disavow. Progressives need to make clear that our top priorities are (a) relief for middle class families, and (b) protecting the interests of the taxpayers. If the finance class needs progressive votes for a bailout, they should only be able to get them by agreeing to (a) and (b). To concede in advance that “something” must be done, and then start dickering with the lobbyists over how many scraps ordinary people get tossed would be crazy.