Congresscritters and market jitters

As the House debates the bailout package (Politico has a liveblog here), and as Michelle Malkin's head asplodes, the Dow Jones Industrial Average is down 300 points or so in early trading.

It's going to be an interesting week.

As an aside, one of the most remarkable aspects of this whole debate is the utter political malpractice committed by the Bush Administration, and other proponents of this bill, in allowing it to be framed as a "Wall Street bailout." They needed to fight back aggressively against that terminology, as it was inevitable that large portions of the public, ever susceptible to populist demagoguery, would be bitterly opposed to something with a loaded name like that. (Note: I'm not saying I think the bill is good, necessarily. I'm just saying that, even if it were the greatest bill on the planet, based on the soundest financial policy imaginable, and totally necessary, nevertheless many, many people would still be bitterly opposed, because anything that "gives taxpayer money to rich bankers and traders" is easily demagogued -- especially when it's called a "bailout bill," for heaven's sake.)

Despite this obvious reality, supporters of the bill not only failed to consistently argue against the term "bailout" -- they actually used it themselves at first! It's as if the proponents of "comprehensive immigration reform" had come right out and called their proposal an "amnesty bill." So politically stupid!

Now we're hearing terms like "economic rescue package," which is obviously much better politically -- but it's too late. The die is cast: the media is still calling it a "bailout," because that's what everyone called it at first. It's amazing how politically tonedeaf the supposed "evil geniuses" in the Bush White House have repeatedly proved themselves to be with some of this stuff.

UPDATE: In comments, Andrew makes a good point: "the problem is this all came up via Fed and Treasury channels, bypassing the White House political communication managers (i.e. Karl Rove, his staff, and their successors). There's almost no way Bush could've gotten in front of this quickly enough to alter the perceptions and nomenclature."

They still could have tried more aggressively, and sooner, to change the perceptions, but it may have been a losing battle. So perhaps I'm being too harsh on the administration's political apparatus in this instance.

UPDATE 2: Ron Bonjean, former press spokesman for Lott, Hastert and Kyl, writes:

How did anyone think that using a number close to one trillion dollars and use the words “bailout” would be effective marketing? ...

[T]he communications strategy on such a radical transformation of national economic policy must be clearly defined from the start. When you fail to communicate these policies effectively, you allow the other side to demagogue the issue. ...

The White House focused on only one audience, Wall Street, and used the $700 billion as the message itself in order to impress industry executives and large investors to keep the stock market steady. It was successful in keeping panic at a minimum while Washington Mutual became the largest bank failure in American history.

In the process of broadcasting this number to New York, the administration ignored the other audiences that were crucial to ensure passage of the plan. They forgot that the American people and Congress were watching, too. The “$700 billion bailout package” became the piñata and centralized focus by Congress and the media. NBC “Tonight Show” host Jay Leno quipped last week, “A failed President and a failed Congress invest 700 billion of your money into failed businesses. Believe me, this can’t fail!” House Republicans quickly revolted and bashed the Paulson plan in order to rebuild their fiscal responsibility brand.

There wasn’t a comprehensive communications initiative designed to reach out to every audience that would ensure passage by Congress. The president should have addressed the nation first to set the stage for tackling the problem. It would have been extremely effective to describe how the crisis on Wall Street would impact every American at all income levels. ... [Instead,] only after the $700 billion bailout package was introduced and thrashed in the public relations arena, the president reluctantly decided to address the country last Wednesday with even weaker credibility.

UPDATE 3: Five Thirty Eight takes a skeptical look at the conventional wisdom that bailout is "hugely unpopular," noting that poll results vary drastically depending on how the question is worded. For instance: when asked, "Do you favor or oppose the economic rescue plan now being negotiated by Congress and the Bush Administration?," 50 percent said no, and just 24 percent said yes. But when asked, "As you may know, the government is potentially investing billions to try and keep financial institutions and markets secure. Do you think this is the right thing or the wrong thing for the government to be doing?," 57 percent said it's the right thing to do!

The post concludes:

[T]he proposal has been referred to colloquially as the "bailout" or very commonly the "Wall Street bailout" (the latter term brings up more than 7,000 hits in Google News). Where is Frank Luntz when you need him? If the proposal had instead been framed as, say, an "economic recovery" plan, it would probably be far less politically toxic.

There is a very weird sort of prisoner's dilemna here. Namely, anyone who tries to frame the plan -- although framing the plan properly would probably make it more popular -- risks taking ownership of the plan, a plan which even if framed properly, probably remains unpopular enough to constitute a political liability. So no parties have an incentive to "spin" the plan as a positive, and as such, it continues to become more unpopular as the default narrative ("Wall Street bailout") is left unchallenged. The bailout, whether it ultimately passes or not, will likely be studied by game theorists for years to come, as there are conflicting and somewhat self-contradictory incentives (everyone wants the package to pass but nobody wants to vote for it) between no fewer than a half-dozen different parties.