Responding to my post from yesterday that attempted to discuss the apparently non-newsworthy topic of what Christine O'Donnell actually campaigned on in her successful Senate primary run in Delaware, Andrew Sullivan lasers in on my description of the defeated Mike Castle as "just another TARP supporter":
Does even the most devoted libertarian really believe that any responsible president of any party would not have tried to save the economy from a total financial meltdown? Do they recall that the Congress initially did turn it down and then changed its mind? And would it be possible for them to acknowledge that the bank bailout seems to have been far more successful than almost anyone believed at the time?
As readers know, the Dish is very libertarian-friendly. But sometimes they drive us nuts with their utter disengagement with, you know, political reality.
Taking those in order, with the caveat that I'm hardly "the most devoted libertarian":
1) When you assume as axiomatic both a looming "total financial meltdown" and a presidential ability to "save the economy," the only drama left is the final number of digits on the blank check. From inarticulate fears and unrealistic savior-dreams come panicky, incoherent, power-aggrandizing policies whose detailsdon't matter to their biggest supporters, as we learned the hard way twice under George W. Bush. Let's recall the nightmare scenario that the 43rd president said would rain down on our heads unless Congress took "immediate action" to pass TARP:
More banks could fail, including some in your community. The stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet. Foreclosures would rise dramatically. And if you own a business or a farm, you would find it harder and more expensive to get credit. More businesses would close their doors, and millions of Americans could lose their jobs. Even if you have good credit history, it would be more difficult for you to get the loans you need to buy a car or send your children to college. And ultimately, our country could experience a long and painful recession.
Anything on that list not happen after Bush got his way? Yet the people who were warning about the dire long-term consquences of nationalizing downside risk, of granting vague yet colossal and open-ended powers to the executive branch and Federal Reserve, of continuing to artificially prop up housing prices and kick difficult decisions down the road, it is these people who the Andrew Sullivans of the world want to portray as blind devotees of an unworkable faith, impervious to reality. I invite anyone who thinks that way to read our coverage at the time, including this Sept. 25, 2008 roundtable of free-market economists discussing TARP and other potential government interventions. There you will find people scrambling in real time to put hard numbers and economic principles on fuzzy notions like "total financial meltdown," and concluding frequently that some things needed to be done by the federal government, just maybe not an Iraq War-sized toxic assets fund that never got around to buying up toxic assets.
2) Yes, we are more than aware that Congress changed its mind on TARP, after arm-twisting from the president and authoritarian hysterics from the likes of David Brooks. I have no idea what that's supposed to add to a debate about TARP's effectiveness two years later.
3) It is not remotely true that "the bank bailout seems to have been far more successful than almost anyone believed at the time." You don't need to take my word for it; just re-read that Bush quote above about what the bailout was designed to avert. That was safely mainstream opinion in the fall of 2008. Meanwhile, as Tim Cavanaugh pointed out yesterday, ongoing skepticism of TARP's effectiveness probably has something to do with the fact that "performance of the economy has been even worse than interventionists claimed it would have been without any intervention."
While I don't begrudge Sullivan or anyone else adapting their political and economic views to changing circumstances (or even just for the hell of it), I'd find the arguments a lot more persuasive if he (and they) dropped the pretense that it's only their opponents who are being ideological in any given debate. Do-something mentality, "pragmatism," and deference to power can all be just as ideological as libertarianism, even if they don't have their own seven-syllable descriptors and bad taste in prog-rock. More pressing to the matter at hand, they can be wrong, and they usually hold the power. It's gonna take more than the absence of bread lines to make me believe this particular P.R. campaign.
