A close look at the roll call on which the House of Representatives voted down the Administration’s financial bailout plan reveals a lot about the state of contemporary American politics and provides some clues as to how the financial crisis and the economy will play in the presidential and congressional elections. Here are some of the factors that led to the bill's defeat on the House floor.
As my colleagues, Keith Poole and Howard Rosenthal, and I have argued elsewhere, ideological differences have increasingly structured voting coalitions in Congress over the past 35 years. On the face of it, this vote appears to be an exception. The Treasury plan had support and opposition across the ideological spectrum. But on closer examination, ideology was an important determinant of opposition among Republicans but not of Democrats. Using my preferred measure of the ideological orientation of legislators, DW-NOMINATE
, I can divide the Democratic party into liberal and moderate halves and the Republicans into conservative and moderate halves. Almost 80% of the conservative Republicans voted against the bill while only 55% of the moderates did so, a statistically significant difference. On the other hand, 55% of Democratic liberals and 61% of Democratic moderates supported the bill. This difference is not statistically significant. These results hold up in a multivariate analysis
that includes a host of other variables described below.
The Financial Services Committee
Because of the urgency with which the bailout plan was presented, its major provisions were negotiated by the administration and congressional leaders, circumventing the standard practice of committee hearings and markup. While Chairman Barney Frank was involved in the negotiations, most rank-and-file members of the Financial Services committee were cut out of the formulation of the most important piece of legislation to appear in its jurisdiction in many years. Perhaps this explains why the bill faired so poorly among the members of Financial Services. Of the Democrats on the committee, 66% supported the bill, not a much higher percentage than the caucus as a whole. On the Republican side, the committee members were 12% more likely than their fellow Republicans to oppose it. The difference is even larger (22%) in a multivariate analysis that accounts for member ideology and campaign contributions from the financial sector. Consequently, the committee as a whole voted against the bill. It is disappointing that the committee with direct oversight responsibility for the financial sector was not able to provide the leadership necessary to get the bill passed. Had all the Democrats on the committee voted in favor it would have passed.
Few industries have been more active than financial services in supporting Congress’s need for campaign funds. According to data from the Center for Responsive Politics, the finance, insurance, and real estate sectors gave an average of $157,000 to each House member in 2007 (the median was about $100k). Those who received more than the median amount supported the bill by 52-48% margin while those who received less than that voted about 60-40% against. In the multivariate analysis, an extra $100k is associated with a 7% increase in the probability of support among Democrats and a 9% increase among Republicans. Although association is not causation, it is certainly troubling to see such a strong association between the cash and the vote. It is worth noting, however, that a large number of Republicans on the gravy train voted against the bill. Sixteen Republicans who received more that $300k voted against the bill (only three such Democrats did). It appears that the industry had spent a lot of money supporting deregulating Republicans who turned around and bit them when government intervention was what they wanted.
Even in a global financial crisis, politics is local. An important predictor of whether a member supported the bailout is whether his/her district is located in New York, the home of much of the financial industry. Twenty-five of 29 New York House members supported the Treasury bill. The only member from NYC, Long Island or Westchester to vote against was Jose Serrano from the Bronx. The multivariate analysis suggests that Democrats representing high income districts were somewhat more supportive of the bill, but there is no such relationship among Republican members.
Perhaps the biggest factor in the failure of the bill in the House was that its hard to do something unpopular a month before the election. Based on a list available on RealClearPolitics, 25 of the 31 incumbents most at risk of losing in November voted against the bill. Even more strikingly, of those members who retired and are not on the ballot, 83% voted in favor. The failure of party leaders and presidential candidates to keep electoral calculation out of the mix may well have led to the bill’s failure on Monday.