Who in Congress Voted for the (First) Bailout and Why?
(posted by dain)
The word on the street - both Wall and Main, I think - is that those up for re-election voted against it because they had much to lose, seeing as the grassroots wasn’t at all smitten with the most visible taxpayer funded handout to corporate interests in some time. (The dull and routine farm bill doesn’t receive as much media attention - partly because it’s dull and routine - but also, I suspect, because [big agribusiness] farmers don’t draw the same level of suspicion as those uppity paper pushers in Manhattan.)
There is truth in this, as Ian Ayres shows in his post at the Freakonomics blog:
We found that at-risk candidates were 16 percent more likely to vote against the bill than safer seats (and that Republicans were 33 percent more likely to vote “no” than Democrats).
But apparently there is more truth in the ideological factor: The two tails of the ideological bell curve in Congress were more likely to vote against the bailout, albeit for quite different reasons. (Though viewed through an applied democratic lens, it is those who supported the bailout that occupy the tails.) This according to Sarah Binder and Mark Spindel at the popular political science blog The Monkey Cage, who claim that ideology drove vote patterns in the House even after controlling for possible threats to incumbents’ prospects for re-election:
…on both the left and right legislators were guided by their ideological commitments. Within the GOP conference, the more conservative the Republican, the more likely she voted against the bill. Nearly three quarters of Republican conservatives voted against the bill, joined by more than half of their moderate brethren. Ideological effects are visible even after we take into account the state of play for November. Conservatives running in safe seats were far more likely to vote against the bill than moderates in a similar boat.
[...]
Democrats’ votes were also shaped by their ideological inclinations. The more liberal the House Democrat, the more likely she was to vote against the bill, even among those running in the most competitive seats. Arguing that the package bailed out financial firms while doing little to help homeowners on the verge of foreclosure to stay in their homes, liberal votes against the plan are not surprising. Democrats from states with high subprime foreclosure rates were just as likely as Democrats untouched by the subprime crisis to vote for the bill.
There is also this intriguing and economically reductionist finding, showing that those who voted for the bailout disproportionately received campaign contributions from AIG and the like:
Overall, bailout supporters received an average of 54 percent more in campaign contributions from banks and securities than bailout opponents over the last five years. The disparity also held true if you look at individual parties. In fact, the 140 Democrats who voted for the bailout received almost twice as much money from banks and securities as the 95 Democrats who voted against it. (The difference was closer to 50 percent for Republicans.)
As prima facie evidence for straight up corruption it’s tempting to misdirect the flow of causation. More likely than funding making politics, it’s the other way around. Because those who voted for the bill are more “moderate”, they find big, mainstream institutions more to their minimally ideological liking. Binder and Spindel note that those representatives from higher income jurisdictions were also more likely to vote for the bailout. Now these higher income folks can’t all be beneficiaries of AIG largess, but they can believe that AIG, the Fed, the Chicago School and Keynesianism are all more or less laudable institutions and economic perspectives…respectively.
Hat Tip: Organizations and Markets.
October 3rd, 2008 at 5:07 pm
But are politicians really motivated by ideology or by pressure placed on them by constituents? Ultra-liberals tend to represent either districts with a lot of leftward leaning educated professionals and/or low income people who would be suspicious of something like the bailout. Ultra-conservatives represent small towns and rural areas and some conservative suburbs with similar sentiments on issues like this. Someone like Ron Paul or Barbara Lee may be motivated by ideology, but is that really the norm?
October 3rd, 2008 at 7:58 pm
I think those constituents are the result of self selection by the politician. Budding legislators choose parties based on their own ideological persuasion. Increasingly so with the “Big Sort” effect, which probably goes further to explain liberals than conservatives, because as I understand it is progressives and educated professionals who are more likely to intentionally cluster. Red counties are sort of red by default.
October 4th, 2008 at 8:34 am
Some politicians may seek out certain constituencies based on ideological conviction, but others are likely simply looking for opportunities.