Perhaps the most fascinating political conundrum of the 2010 election is one faced by GOP senators, almost all of whom voted for TARP and supported some of the other bailouts in the thick of the financial crisis. The good news is that, for all their shortcomings, the bailouts did the trick, preventing a deeper economic crisis. The bad news is those bailouts are now considered political poison by the tea partying conservative base.
That puts Republicans in a strange position: unable to say the legislation failed, but at pains to distance themselves from their vote nonetheless. Over the past couple days, I’ve asked a number of GOP senators whether, nearly two years later, they think the bailout bill was effective. Their answers were revealing.
Sen. Judd Gregg (R-NH), who’s retiring at the end of the year and is therefore unencumbered by the need to defend himself from the GOP base, has nothing to run away from.
“It was extremely effective,” Gregg told me. “Not only was it effective and stabilized the financial industry, it also returned to the taxpayers almost $20 billion in interest and dividends that they would have otherwise not have.”
Compare that to John McCain, who will face a primary of his own this summer. He says he and the rest of the country were lied to.
“It’s not been effective because they deceived the American people,” McCain said. “They said it would go to address the housing issue instead they gave it to the financial institutions. It’s been well documented that it was sold to the American people as going to address what caused the crisis—that was the housing market—we gave $10 billion to Goldman Sachs. Goldman Sachs doesn’t have anything to do with the housing market…. They lied to the American people.”
Who lied, exactly?
“The former administration,” McCain said. “Paulson and all of them…Geithner, whoever else was in charge. Primarily it was Paulson.”
Of course, by late September 2008, everyone was calling the TARP legislation “the bailout bill” and McCain himself referred to it as a “financial rescue.”
Other Republicans aren’t so conspiratorial, though. Regrettable as the circumstances were, bailing out the financial sector was ineluctable—“a necessary evil,” according to NRSC Chairman John Cornyn.
“We were all told by Ben Bernanke and Hank Paulson that the financial system would collapse,” Cornyn said. “What I’m so upset about is that the previous administration and this administration have used the TARP for purposes never contemplated by Congress.”
Sen. Lamar Alexander (R-TN) had a similar take. The bill was necessary, and indeed effective, but the executive branch abused it and we’d all be better off if the entire episode—from the collapse of the economy to the ensuing political fallout—had never happened.
“I can explain it,” Alexander said. “I wish we didn’t have to deal with it.”
And they really don’t want to deal with it, politically. After primary voters in Utah ousted Sen. Bob Bennett (R) this past weekend, likely ending his career, Republicans in Washington did whatever they could not to find meaning in it. Though reports overwhelmingly indicate that it was Bennett’s positions on a handful of issues—particularly the bailout—that cost him the election, his colleagues on the Hill have been wishfully pretending otherwise. At the very least, they’ve been trying to beat back the obvious conclusion that the GOP base has gone so far off the deep end that even a truly conservative senator like Bennett can get scalped.
With his fate is written in stone, Bennett says he’d do it all over again, even if he knew it would cost him his career. He just wishes he got more of a fair shake.
“There was a widespread misinterpretation, because I voted for the first tranche of TARP, the assumption was that I voted for the second tranche of TARP and the stimulus package and the auto bailout and the omnibus bill, none of which was true,” Bennett told me. “They put it all together with a lot of help and encouragement from the Club for Growth.”
The Republicans I spoke with said it’s simply a matter of communicating with voters, and explaining the nuances.
“If you can get above all the hyperbolization and misrepresentation and get the facts out, I think you can be very effective,” Gregg said.
Cornyn—whose job it is to protect Republican senators from political backlash—had a similar take. “The facts are what they are, I think it depends on the ability of each person to articulate the rationale for their vote.”
For that to work, though, Republicans will need their voters to be willing to listen. For the time being, they’re not.
“It was not hard at all if I could get the voters to listen,” Bennett said. “My challenge was that the delegates chosen at the precinct caucuses would not come to my meetings to give me an opportunity to explain.”
Brian Beutler is TPM's senior congressional reporter. Since 2009, he's led coverage of health care reform, Wall Street reform, taxes, the GOP budget, the government shutdown fight, and the debt limit fight. He can be reached at firstname.lastname@example.org.