Compared to the deals Paulson had forced on AIG and Bear Stearns, this was a kindler, gentler, bailout. The sort of bailout you could have taken to the Goldman-Sachs office Christmas Party.

Where the rubber really met the road on the Paulson plan as written was how much Treasury was going to pay for the securities that the banks wanted to get rid of. That's where the hard bargaining would be done (and that's still true under the current revision).

Actually the analogy works quite well. There were few politicians during the Iraq War debate willing to say there were no weapons of mass destruction. There are, in fact, non-politicians who are saying there is no financial crisis, or at least that the financial crisis is not as bad as Paulson says.

Ezra, you're also forgetting one important detail: there are an awful lot of people, including respected experts, who say that the Paulson bailout will make whatever financial crisis we have worse. There are many experts comparing this plan to the failed strategy the Japanese government followed in the early 1990s, a strategy from which Japan still has not recovered. (In fact, Japan is now entering a deeper recession.) And that also fits with the Iraq War analogy, because many people were arguing (correctly) that going to war with Iraq would make the problem of radical Islamic terrorism worse.

What bothers me the most is that, unlike Iraq, there's been almost no open debate and no public hearings. Washington pols are trying to shove this turd through Congress with as little transparency as possible. This despite overwhelming public opposition.

The analogy is more
credit crisis = 911

No false pretext, just authorization to deal with it as they please.

The further analogy is
Paulson = Wolfowitz
He wants to deal with liquidity (Iraq) instead of solvency (Afghanistan)

I say again, the political calculus changes in five weeks. No more jitters about re-election, and with the composition of the next Congress made clear, and most importantly the identity of the next President.

You don't have to wait 4 months, only just over 1 month. And then there'll be a looming bigger Dem majority, probably a President-elect Obama to twist arms, and no short-term political penalty for voting yes.

And would Bush really be prepared to stall and veto a rescue package and leave a legacy of a crashed economy and slumping stock market ?

The election is a big enough turning point.

i was thinking about this last night and the comments here already validate the presumption: people feel like comparing the "rush to bailout" to the "rush to war" is a deep insight and have been acting on it.

it is not a deep insight and isn't helping us at all. i've said all along a good bill beats no bill, while no bill beats a bad bill. what we've got now is just good enough: people who want to do nothing are obliged to explain why that's better, and not because they are reminded of the disaster in iraq.

But here's the other side of that coin: at this point, will a bailout bill actually unfreeze the credit markets? Krugman et al have been very good at pointing out that a lot of firms may not escape bankruptcy even with the bailout, unless their sh*tpile holdings are purchased at well above market, and maybe not even then. Furthermore, unless Paulson neglects the oversight part of any bill (which he might -- who would stop him?) it's going to take into the next administration to even buy up significant chunks of the bad debt in any principled fashion. (Equity infusions would be faster.) That means the $700 billion is going to le laid out in a pretty much arbitrary and capricious fashion, which means that the credit markets may unfreeze only for particular favored players.

So are we getting set for the worst of both worlds?

Your attempt at refuting the analogy (bailout = Iraq war) actually shows how correct the analogy is. Your argument rests on the claim that everybody agrees that the bailout is necessary, which 1. is a lie, just as it was a lie that everyone agreed Saddam needed to be taken down, and 2. to the extent that it is true (the media, the administration and most of the political class DO agree on the bailout, just as they did agree on the Iraq war), it serves as a reminder that the "experts" cannot be trusted.

One of those who keeps disagreeing with your doomsday propaganda is your colleague Dean Baker. How about you and dean sit down and have a real discussion on that one? No reference to higher authorities, just the arguments and the data. Who will win the debate?

"Could the bill be better? Sure could. But it's not clear that it could be much better given the current composition of Congress and the administration. And that's what we have to work with."

Honestly, if you don't understand how self-defeating that argument is then you shouldn't bother us with your half-baked inconsistent opinions on how to save the sky from falling. Your last couple of rantings have been devoid of any recognizable rational argument. They have been interesting from a sociological perspective: how long does a circle of self-anointed experts have to repeat the same empty propaganda to each other all over again until they are all absolutely certain it is truth? Turns out, it takes only a few days.

http://votenobailout.org/

Tell your legislator to vote no!

Why don't you believe that Paulson can run through $700 billion in three months? With AIG, he showed that he could spend $85 billion virtually overnight.

Seems as though the analogy still holds.

A rush to a solution (for a crisis that is misunderstood by most Americans) solved by the Paulsons (Goldman Sachs) of the world is like having had the head of Haliburton spearhead our response to 9/11...oh, wait a minute.

I don't get what you don't get about this.

I still don't understand how equity warrants and ceo compensation requirements will positively impact the taxpayer. I understand why they are included from a justice angle but I tend to think their inclusion will ultimately be damaging. I think this will keep healthy companies from participating, who have the greatest likelihood or incentive to price their assets pessimistically. The lower price of the assets bought, the more protection afforded the taxpayer. I tend to think the whole bailout is stupid. I would much prefer we expand the authority of the FDIC, maybe make a notional contribution of $100-$250 billion to their insurance fund as a show piece, and spend another $250 billion split between traditional simuli (rebates, building roads, mass transit, local government assistance, job retraining, etc.).

The best I can tell, the current plan is to borrow $700B, give it to failed Wall Street firms, and then borrow it back by selling them Treasury issues. Everyone wins except the taxpayer who is now on the hook for the interest payments and anyone who needs credit, because Wall Street figures that if continues not to lend money it will just get even more money and interest from the government.

As best I can tell, there is no credit crunch yet. Look at the municipal bond market. Rates are 5-6% these days. Most banks want to borrow at 1-2%, and they will do anything but pay higher interest rates. It's like those businesses that hire illegal aliens and complain that they've tried everything to recruit Americans, except raising wages.