The Bailout Plan: Welcome to Economic Shock and Awe

See if this sounds familiar:

There is a gathering threat to the safety of the United States. We must take immediate action. Congress must quickly grant the President and the Secretary what they want and also give them full and unfettered authority to execute the plan.

Welcome to Economic Shock and Awe (or as some have dubbed it, according to Paul Krugman, "the Authorization for Use of Financial Force").

Even the amount of taxpayer money being bandied about -- $1 trillion -- is similar. Think you got your money's worth for the Iraq war? Congratulations -- you're about to buy another pricey debacle.

We've seen how negligent the Bush administration is with our money -- flushing billions on wasteful, mismanaged Iraq reconstruction and Katrina recovery projects.

Now the same folks who brought us those no-bid, profit-guaranteed, crony-friendly, war-and-disaster-profiteering boondoggles want us to hand them control of a $700 billion Wall Street slush fund -- with no strings attached. How dumb -- or frightened -- do they think we are?

This is, as Matt Yglesias calls it, "a crisis point for American liberalism." The battle lines are already clear: Paulson and Bush and the Republican Party want a license to reward the worst actors in the financial industry and do nothing for American families suffering the consequences.

Remember a few years ago when lawmaker after lawmaker -- mostly Democrats, but a few Republicans -- said of Iraq, "If I'd known then what I know now, I'd have voted differently."

Well, this time at least some lawmakers -- mostly Democrats, but a few Republicans -- are not being so easily bamboozled. Congressional Democrats, led by Chris Dodd in the Senate and Barney Frank in the House, have put forth proposals doing away with the Paulson's demand for unprecedented authoritarian power and adding a requirement that the government do more to help troubled borrowers refinance their mortgages.

The Treasury appears willing to bend on those elements but sticking points remain, including efforts to limit the pay of executives and Dodd's proposal that taxpayers get a share of the profits if the bad debt being bought rises in value.

Let's hope Democratic resolve holds up against the inevitable charges by the Bush administration that demands for oversight, limits on executive compensation, profit sharing for taxpayers, and aid for struggling homeowners will lead to an economic Armageddon.

There is no question that the need to address this crisis is urgent and that the issues involved are complex. But urgency and complexity cannot be allowed to become excuses for lawmakers, the media, and the public to throw up their hands and allow themselves to be bull-rushed into disastrous public policy.

Over the past 30 years, Americans have been bombarded with sermons evangelizing for the free market religion of the Right, and the supposed correlation between unregulated markets and progress. In the process, the American people have been demoted from citizens to consumers, and sold a bill of goods (rather than a Bill of Rights) about how the almighty market was the essential foundation of democracy.

In the course of selling us on buying, the market-worshippers shredded the modern social contract, the hard-fought consensus that had emerged since the New Deal, which ordered our political priorities, and expressed both our communal concern for the most vulnerable members of society and our disapproval of huge inequalities. We were now supposed to believe that all could be left up to the soulless, self-correcting calculus of supply and demand. Government involvement was an anachronism, regulatory oversight an impediment.

The last few weeks have demolished that notion. In the battle over the proper role of government, the forces of the Right, the high priests of the church of the Free Market -- including Bush, Paulson, and the Masters of Wall Street -- have suffered a monumental defeat. So why are we allowing them to dictate the terms of their surrender?