The collapse of legislation to bail out the U.S. auto industry is a fitting end to this year in Congress -- and a warning to President-elect Barack Obama that even larger Democratic majorities next year won’t guarantee smooth sailing for his ambitious agenda on economics and other issues.
Polarized, beset by crises, and preoccupied with ideological and regional politics, this Congress followed a pattern all too familiar in the past decade. It railed and wrangled over the nation’s toughest problems, but in the end failed to advance solutions.
From healthcare and costly dependence on foreign oil to the greatest economic crisis in more than half a century, the House and Senate have floundered into stalemate. Meanwhile, the economic woes have gone international.
The House and Senate this year did pass major legislation in response to the nation’s economic problems -- but for the most part, they waited to act until a crisis could hardly be ignored. Each time, lawmakers had to struggle to reach agreement. Sometimes, as in the auto bailout, the legislation was not even approved.
Economists reviewing congressional efforts have not raved. The federal fund to subsidize affordable housing has had few takers. The $700-billion effort to shore up the financial services industry took a dramatic change in course -- without congressional input and after about half of the money was spent. Skepticism about those efforts contributed mightily to the Senate’s rejection of the auto bailout bill.
“They have really been behind the curve,” Dean Baker, co-director of the Center on Economic and Policy Research, said of Congress. “But they have been better than Bush.”
Analysts such as Baker blame President Bush for failing to exercise stronger leadership on the economy. They are hopeful that the federal government will be more proactive when Obama is sworn in with a larger Democratic majority in the House and Senate.
But Obama inherits a political and economic legacy that could make it hard for him as well to extract timely, effective policies from Congress.
“The real question is: Will Congress be Congress and slow things down . . . and muck things up with too much local politics?” said Robert D. Reischauer, head of the Urban Institute and former director of the Congressional Budget Office.
The challenges Obama and the next Congress face are great. The sheer magnitude of the nation’s economic turmoil confounds experts in both political parties.
Congress’ response will surely have to be bipartisan, analysts say, but there is no consensus about what the federal government should do. And Congress will continue to be driven by many of the political dynamics that Obama campaigned against: reflexive partisanship and parochialism that make it hard to solve fundamental problems.
Democrats next year will have a larger but still narrow majority in the Senate. There is no guarantee that Republicans cannot block Obama’s initiatives with filibusters.
The political fundamentals of how Congress works are timeless and bipartisan. Most lawmakers are driven first by their instinct for electoral survival. They lard urgent legislation -- like the economic stimulus bill Obama wants to pass early next year -- with local projects that help them win support back home rather than advance long-term needs.
Congress also tends to be reactive, rather than anticipate problems. That is why Capitol Hill fiddled until the country’s economic problems burned like Rome -- for people who lost their homes in foreclosure, workers who lost their jobs in record numbers, and Wall Street firms on the brink of bankruptcy.
To be sure, the Bush administration -- with its commitment to reducing the role of government and letting the market deal with problems -- was slow to react too, and when it did, it offered less than perfect solutions.
What suggests problems for the new, more activist administration, however, is that even when Bush acted, both Democrats and Republicans fell into partisan, sometimes parochial, conflicts that got in the way of careful legislating -- a tendency that’s unlikely to vanish next year just because Democrats have a few more seats.
So far, the results of Congress’ response have been mixed. The Hill passed an economic stimulus package early this year that gave middle-income taxpayers quick rebates. That was an unusual show of bipartisan determination and speed in response to the economic downturn.
As the housing market crumbled in a wave of foreclosures on subprime loans, Congress passed a mortgage-relief program. But few people have taken advantage of it -- some experts say because it was poorly designed.
After Wall Street giant Lehman Bros. Holdings Inc. went under, Congress passed a $700-billion rescue package for the financial services industry. Under pressure to act quickly on a baffling problem, Congress wrote a bill that gave Treasury Secretary Henry M. Paulson wide latitude to use the money as he saw fit.
Just months later, however, Paulson said he would dramatically change his strategy for the program -- his focus shifting from buying troubled assets to shoring up institutions that offer consumer credit.
More recently, faced with the likely bankruptcy of one or more of the Big Three domestic automakers, congressional Democrats and the White House reached agreement on a bailout plan -- but it ran aground on the shoals of Republican opposition. Conservatives recoiled at more government intervention into private markets. Anti-union sentiment proved powerful among Republicans who fought the deal.
Parochial concerns had their place as well: Most Republicans opposing the bill came from right-to-work states in which many voters felt they would have gained little from the auto bailout.
In the wake of the stalemate, the stock market tumbled -- as it has before when Congress has tried to address the economy’s problems.
The question lingers for Obama: Is it better or worse when Congress tries to fix the economy?
“Congress has not been anticipating crisis, but at least they have been reacting to it,” said Sarah Binder, a political scientist at George Washington University. “But every time Congress acts, you can watch the markets tumble.”