This morning I considered the bailout to only be a formality. Not a perfect solution, but eh, it sort of had to happen. Some disagreed. But most people I know who know a thing or two about this stuff i.e. markets and capitalism—not to mention an economist I like to call Gary Becker—saw the bailout as a necessity. I agreed.
So when I found out this afternoon that the bailout was voted down by the House, I was shocked. Now what? I didn't get it... why was it voted down? Why would a member of Congress vote it down? Sure there is going to be opposition, but this thing kind of sort of has to be passed in some way shape of form. Is/was it perfect? Of course not. But it had to be passed just too keep the economy afloat... and then it wasn't.
I called my father and at some point in the discussion, my mind went back to 6:35 this morning when on the train three people were talking about the bailout and all three agreed that the guys who were going to get the money from the government didn't need it. It was their fault after all. I stood there thinking, 'if only it was that easy'. I sort of wanted to launch into full Mr. Know-It-All mode, but it was 6:35 in the morning.
As my father and my conversation progressed, the reason for the failure of the bailout became more and more obvious—it was a poorly framed issue. When I say 'poorly framed' what I mean is that a policy like this has to be sold to the people, and the sellers of the bailout did a horrible job at marketing the plan. Framing is simple, it's pretty much taking something complicated and explaining it in a sentence or two. The details are for later in the conversation. Framing the issue is simply putting the policy in the best light and making it easy to understand. Catch-phrases work "Ending welfare as we know it"; however poorly framed issues are almost always deemed to failure, privatizing social security anyone? How about the Clinton heath care plan... but back to the bailout, it was a poorly framed issue:
1) The name, bailout sounds too reckless, like a thrown together plan from a Western, a 'it will never work, but if it does, it will be cool!' sort of idea from a bad action movie. The plan should have been called something else—a life jacket/life saver (sorry I'm tired as hell) or 'government investment' both might have worked—in order for the policy to succeed. And Nate Silver over at 538 backs me up on this.
2) The real problem is that the bailout was never explained in an easy way for people to understand. People see the "D.C. wants to give Wall Street $700 billion" headline and they think, 'Why? The Wall Street guys are the ones who made the bad deals!'. And they're right.
But we're way beyond that at this point. This isn't about being over leveraged, giving out mortgages to people who didn't deserve one, or even executive pay any more. But no one in the Bush Administration, the Fed, Congress, or even economists themselves are saying this. Instead they're talking about how we need this and then saying things no one understands (as NPR pointed out today).
So what is needed in order for this to pass, is for someone, anyone, to explain what Hank Paulson wants Congress to do in order to help the U.S. economy. In other words, someone has to frame the issue and sell it to the American public, or else you 'll get what happened today—any member of the House in a close race voting against the plan.
So how do you sell it? That's tomorrow, I'm tired and need Hines Ward to catch one more pass to put my fantasy game away.
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