One era died today, but the shape of the new one remains completely unknown. The House's failure to pass the bail-out signals the utter bankruptcy of our political system--a drama in which two generations have certainly acted entirely in character. Boomer Henry Paulsen, a former Wall Street titan, took charge of the situation--as Donald Rumsfeld had taken charge of foreign policy for George W. Bush after 9/11--and announced he needed total powers. The Silent Democratic leadership of the House of Representatives, led by Nancy Pelosi and my old friend Barney Frank, felt it essential to try to keep some cooperative spirit alive and give the Administration some version of what it wanted to avoid an economic class. But the Republican Boomers who dominated the House of Representatives from 1994 until last year, riding roughshod over all opposition in pursuit of their agenda, would not be stampeded. Lurking behind them were the American people, who probably have no idea what is in store for them--any more than northerners and southerners in late 1860 knew what the Civil War would be like--but who see no reason to reward irresponsibility and greed on Wall Street with $700 billion of their money. The plan failed, the market fell 600 points, and no one has the slightest idea what might happen next.
We shall probably never know, but in the long run the plan's failure might not be a bad thing. I strongly suspect Wall Street would have used the money to try to hang on to as much of their gains over the last 16 years as they could, without addressing many underlying problems. We were certain to have a major recession in any event, and the problem now is to find another engine--something very unlike subprime mortgages or new derivatives--to fuel a recovery. Hundreds of billions may well be needed, but they should in my judgment go into a new institution that can lend directly to the businesses and regular banks who need liquidity--and, perhaps, buy up and renegotiate some subprimes. Meanwhile, the recession may lead to a New Deal type of public works program to rebuild infrastructure, while greener power may play the role of TVA. All that, however, is at least a year away, and probably more, and the country will suffer economically for some time..
The old order is, for the moment, played out. Market idolatry has failed catastrophically but no new ideas have emerged to take its place. While Democrats (including Barack Obama) understand that Wall Street's days of running wild must come to an end, I don't think any of them have many ideas about restructuring our economy. That is both frightening and challenging. Many new politicians, economists, writers, and even journalists will make their names over the next ten years--largely by focusing on real events, rather than spin. That is the beauty, in every sense, of the crisis, the Fourth Turning, that the late Bill Strauss and Neil Howe first predicted 15 years ago. Their ideas have never won mainstream acceptance, but it is becoming more and more difficult to pooh-pooh them now--even though some posters here continue to try. The crisis is both death and rebirth, and thus a time to look forward more than back.
John McCain is in every sense quite an old face; Barack Obama is a new one. That alone has proven a big advantage this year, but Obama also has shown the kind of curious, flexible, clear-headed intelligence that we are going to need.
A colleague yesterday reminded me of another vote at another moment of national crisis, the extension (after only one year) of the draft in the late summer of 1941 that passed the House of Representatives by a single vote. I have suspected for a long time that that vote--like the Senate vote for war with Iraq in 1991--reflected political realities more than sincere opinions. A significant majority of the House knew the draft had to continue in 1941, but they also knew that it was unpopular, and the Democratic leadership (which predicted the outcome exactly) probably arranged things to allow the maximum possible number of popular "no" votes while doing what the country needed. That, for various reasons--including the weaknesses of the plan--was what the House leadership--and especially the Republican House leadership--could not do yesterday. That's an interesting sign of where we are.
I spent the weekend in New York, watching Act II of another drama in Shea Stadium with my son (a devoted Mets fan) on Saturday. On Sunday he returned and I had a few hours to kill. Scanning the movies, I discovered one dealing with the subject of one of my books: Virtual JFK: Vietnam if Kennedy had Lived. I had no idea what to expect, but as it turned out, the movie, narrated by political scientist James Blight, used archival footage and tapes to show JFK at his level-headed best, refusing again and again to lose his cool when reporters baited him with argumentative questions, and facing down the Joint Chiefs in October 1962 when they bluntly told him that war was his only alternative. The movie, which acknowledged no specific secondary sources, actually seemed to draw on American Tragedy while discussing the Laotian and Vietnamese crises of 1961, in which Kennedy twice rejected the near-unanimous recommendations of his advisers and refused to begin large-scale war in Southeast Asia then and there. I am very glad that it was made and I hope it gets some good television exposure. Few viewers, I think, could watch the film without being reminded of Barack Obama--and those of us over 60 can remember how Kennedy, too,was frequently criticized for being too cool, too unemotional, and too cautious during his Presidency. Those were in fact the qualities we needed then, and those we have now been lacking for so long. Obama looks like he can provide them.
p.s. From time to time those posting comments ask me questions. I don't think some people realize that comments do not reveal your email address and that I have no way to respond privately unless you give it. Please do.