The state of the bailout debate

I have to hand it to James Pethokoukis. He reported Newt Gingrich’s latest broadside against the Paulson Plan, and he played it fairly straight (quite a feat give his own view).

I liked this line the most (US News):

(Gingrich) recently chatted with economic historian Alan Meltzer who advocated doing nothing rather than implanting the Paulson Plan. Meltzer apparently joked to Gingrich that this was about the third time he had seen Wall Street scream “the apocalypse was nigh” only to have the economy keep right on chugging along.

That actually reminded me of the 1987 “crash.”  October 19, 1987 was “Black Monday.”  Doom and gloom were everywhere.  Time magazine (I think) actually claimed that the 1980s were ending early.

President Reagan, however, kept his cool and reminded the country that the stock market had predicted nine out of the last six recessions (Eighties Club) - I loved that line.  Contrary to conventional wisdom, the economy grew for another three years, until the 1990 Bush tax increase knocked it into recession.

Compare that level-headedness with what we have now, as Rich Lowry described watching Treasury Secretary Herny Paulson in NRO - The Corner:

It became clear a couple of times that even Paulson doesn’t know how this thing is going to work exactly. Essentially, he wants maximum authority and flexibility and then he’ll get a bunch of smart people in a room and try to figure it out.

How encouraging.

There are things that can be done to improve the financial credit situation and the economy, but they involve getting the government out of Wall Street, not deeper in.

So far, the only people who have acquitted themselves well on this are Gingrich, Senator Jim DeMint (R-South Carolina – The Hill), Senator Jim Bunning (R-Kentucky – CNN), and Congressman Paul (R-Texas – CNN), with an honorable mention to Senator Richard Shelby (R-Alabama).

Gingrich puts the odds of passage at 80%.  Let’s hope reality sets in and drives that down.