Bank Bailout Is Potent Issue for Both Parties in Fall Races -- I didn't like it then (2008); I don't like it now.
The vote in 2008 to bail out Wall Street was framed as the only way to avert an economic meltdown and relieve financial institutions of their most poisonous holdings. For many members of Congress, it turns out that the vote itself was toxic.
Nearly two years after Congress approved the Troubled Asset Relief Program, the Bush administration’s $700 billion program to rescue the banking system at a moment when it appeared close to collapse, lawmakers from both parties who backed it remain haunted by the vote.
Republicans for months predicted that a backlash against the Democrats’ big health care law would be the defining issue in this year’s Congressional campaigns. But the bipartisan TARP vote has become a more resonant issue in a year when anti-incumbent, anti-Washington sentiment is running strong.
Democrats who voted for the bailout — which was championed by their own leaders along with President George W. Bush and Senator John McCain of Arizona, then the Republican presidential nominee — are now facing attacks from Republican challengers on the campaign trail. Republicans who voted for it are being accused of promoting big government and fiscal irresponsibility by Tea Party candidates and other conservatives.
“It became a litmus test of fidelity to free enterprise principles,” said Representative Bob Inglis, a South Carolina Republican who was crushed in a primary last month partly because of his vote in favor of the plan.
While banks have paid back most of the money, and the bailout is widely credited with having helped to prevent a financial calamity, support for it has become among the biggest issues in the 2010 midterm elections, a powerful if simplistic way to attack what some see as government excess, misplaced priorities and a loss of trust between voters and elected officials.
Senator Charles E. Grassley, Republican of Iowa, is facing a Democratic challenger who is trying to link Mr. Grassley’s vote for the bailout to a pattern of support for bigger budget deficits. Senator Arlen Specter’s support for the plan was one of the issues that helped drive him out of the Republican Party and into a Democratic primary in Pennsylvania that he lost this spring to Representative Joe Sestak — whose own vote for the rescue is now under attack from the Republican candidate, Pat Toomey.
And in his own primary, Mr. McCain has been pilloried over his support for TARP by his conservative challenger, former Representative J. D. Hayworth.
“It is part of a bigger narrative,” said Nathan L. Gonzales, a nonpartisan analyst for the Rothenberg Political Report. “I don’t think a general election is going to be won or lost based on that one vote, but I think it will be part of a bigger argument that candidates are going to make against those incumbents who voted for it. It has had more staying power than most votes.”
Across the country, House and Senate challengers are hammering incumbents in both parties who voted for the bailout, in many cases lumping it together with the $787 billion economic stimulus plan passed months later under President Obama, as well as federal aid to automakers.
The Senate approved the bailout measure on Oct. 1, 2008, on a bipartisan vote of 74 to 25. The House initially rejected the proposal, but under prodding from the White House and leading members of both parties, House members ultimately voted 263 to 171 for the bill, with 91 Republicans joining 172 Democrats in backing it; 108 Republicans and 63 Democrats voted no.