WASHINGTON — The vote in 2008 to bail out Wall Street was framed as the only way to avert an economic meltdown and relieve financial institutions of their most poisonous holdings.
But nearly two years after Congress approved the Troubled Asset Relief Program, the Bush administration’s $700 billion program to rescue the banking system when it appeared close to collapse, lawmakers from both parties who backed it face political attacks as midterm elections approach.
Republicans for months predicted that a public backlash against the Democrats’ big health-care law would be the defining issue in this year’s congressional campaigns. But the bipartisan Troubled Asset Relief Program vote has become a more resonant issue in a year when anti-incumbent, anti-Washington sentiment is running strong.
“It is part of a bigger narrative,” said Nathan Gonzales, a nonpartisan analyst for the Rothenberg Political Report. “I don’t think a general election is going to be won or lost based on that one vote, but I think it will be part of a big-ger argument that candidates are going to make against those incumbents who voted for it. It has had more staying power than most votes.”
Democrats who voted for the bailout, which was championed by their own leaders along with President George W. Bush and Sen. John McCain of Arizona, then the Republican presidential nominee, are now facing attacks from Republican challengers on the campaign trail. Republicans who voted for it are being accused of promoting big government and fiscal irresponsibility by Tea Party candidates and other conservatives.
“It became a litmus test of fidelity to free enterprise principles,” said Rep. Bob Inglis, R-S.C., who was crushed in a primary election last month partly because of his vote in favor of the banking rescue.
While banks have paid back most of the money, support for the bailout has become among the biggest issues in the 2010 midterm elections, a way to attack what some see as government excess, misplaced priorities and a loss of trust between voters and elected officials.
Before being denied his party’s nomination in his bid for re-election, Sen. Robert Bennett, R-Utah, was taunted at a Republican convention with chants of “TARP, TARP, TARP.”
Sen. Charles Grassley, R Iowa, is facing a Democratic challenger who is trying tolink Grassley’s vote for the bailout to a pattern of support for bigger budget deficits. Sen. Arlen Specter’s support for the Troubled Asset Relief Program was one of the issues that helped drive him out of the Republican Party and into a Democratic primary in Pennsylvania that he lost this spring to Rep. Joe Sestak, whose own vote for the financial bailout is now under attack from the Republican candidate, Pat Toomey.
And in a primary, Mc-Cain has been criticized over his support for the banking rescue by his conservative challenger, former Rep. J.D. Hayworth.
Support of the bailout is a thread running through the campaigns of Republican congressional incumbents who have lost in primaries so far this election cycle and was a factor in the defeats of three members of Congress in primaries for governor, including that of Sen. Kay Bailey Hutchison of Texas.
Across the country, House and Senate challengers are hammering incumbents in both parties who voted for the bailout, in many cases lumping it together with the $787 billion economic stimulus plan passed months later under President Barack Obama, as well as federal aid to automakers.
In Texas, Rep. Chet Edwards, a 10-term Democrat, is facing a stiff challenge by Bill Flores, the former chief executive of an oil and gas company, who has assailed Edwards for his support of the bailout and also the continuing taxpayer subsidies for the mortgage giants the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp., also known as Fannie Mae and Freddie Mac.
“Chet Edwards votes for every bailout and against ending any bailout!” Flores wrote in an e-mail to supporters, saying Edwards’ position runs counter to his efforts to convince voters that he is “really a fiscal conservative.”
Megan Jacobs, a spokesman for Edwards, dismissed the attacks. Referring to the Federal Reserve chairman, she said,“Given Ben Bernanke’s recent statement that TARP helped prevent our country from falling into a second Great Depression, if Flores wants to put sound-bite politics above the good of our country, that’s a bad choice that will not work in Texas.”
But the Troubled Asset Relief Program is not a weapon just for Republicans taking on Democrats. On Thursday, Robin Carnahan, the Democratic Senate hopeful in Missouri, criticized her Republican rival, Rep. Roy Blunt, a former member of the House leadership, for his vote for the program, calling him “Mr. Bailout.”
She took the swipe at Blunt during her introduction of Obama at a fundraiser, not mentioning that Obama also backed the plan when he was a senator and presidential candidate, as did her brother, Russ, a Democratic House member.
In Utah, Bennett, who wanted a fourth term, was branded “Bailout Bob.”
“People would walk by my booth and say ‘TARP, TARP, TARP, TARP!’ But when you tried to talk to them about it, they did not know any of the details,” Bennett said in an interview. “They confused TARP and the stimulus plan. They confused TARP and the omnibus bill. They confused TARP and the president’s budget.”
Bennett said he had had little luck trying to explain the details: that economists generally agreed that the rescue plan worked; that he voted only for the first $350 billion installment and not for the second half; that $475 billion was disbursed; and that most of that has already been repaid, plus interest.
The Senate approved the bailout measure Oct. 1, 2008, on a bipartisan vote of 74-25. The House initially rejected the proposal, but under prodding from the White House and leading members of both parties, House members ultimately voted 263-171 for the bill, with 91 Republicans joining 172 Democrats in backing it, while 108 Republicans and 63 Democrats voted no. Arkansas’ entire congressional delegation - two Democratic senators, three Democratic representatives and one Republican representative - backed the bailout.
Several of the House Democrats considered most vulnerable this year opposed the plan, sparing them from attacks over the bailout though they are still criticized for being part of the Congress that approved it.
In Iowa, the Democratic Senate challenger, Roxanne Conlin, said voters resented the government aid to big banks and that she was working to portray Grassley as having supported big increases in the deficit, including the Bush tax cuts and the Medicare prescription-drug benefit as well as the Troubled Asset Relief Program.
“I did a 99-county tour, and in every single county the bailout came up,” Conlin said.
Eric Woolson, a spokesman for the Grassley campaign, said Conlin’s criticism was falling flat because the rescue plan proved successful and Iowa voters knew Grassley to be a fierce guardian of taxpayer money.
Looking back, Bennett of Utah said he had no regrets. “Knowing what I know now, absolutely I would vote for it again, even if I knew it was going to end my political career,” he said.
Inglis said he realized it was a dangerous vote.
“I knew when I was voting for TARP that it could cost me the seat,” he said, “but you have to be willing to die on some political hill.”
Front Section, Pages 1 on 07/11/2010