The party leaders will probably try again. I doubt they have the energy or courage to renegotiate the terms in any serious way. A majority of Democrats voted for the measure, but most Republicans took a walk. They will be scolded -- and pounded by captains of industry and finance -- for being "irresponsible." But I doubt the public will agree.
In all of elected Washington, representatives are closest to the people, and they know a vote for this outrageous measure is going to end the careers of some colleagues -- maybe many of them. This time, the dissenters can claim principle and say they are voting with the folks, while also voting to save their own hides.
It adds another deep shock to the system, both in politics and economics, but what an invigorating moment for democracy.
The financial bloodbath will continue, but unless the deal on the table changes significantly, Henry Paulson gets to decide who lives and who dies. The former investment banker from Goldman Sachs would be empowered as Treasury Secretary to play savior or grim reaper, the liquidator who essentially pulls the plug on some banks and financial firms or the man who rescues them from ruin. Of course, Paulson would consult with other government officials. But you can be sure that, behind closed doors, he will ask former brethren on Wall Street to help decide which club members are worthy of saving. This power to pick winners and losers would remain in Paulson's hands until a new president arrives in January.
This is the essence of "the deal" Congress worked out over the weekend and was stymied Monday. Some bells and whistles were added to make the transaction less obnoxious to public opinion, voters and taxpayers. They are not meaningless, but both parties lacked the nerve to tamper with Paulson's basic proposal. This is still a massive bailout of imploding Wall Street, financed with the public's money. And it is still a massive crapshoot for the American people.
If the billions from Washington somehow restore temporary calm and balance to global financial institutions and markets, then the usual cheerleaders will proclaim the "system" has worked. Most Americans, I predict, will not join the cheering. Too much destruction lies ahead, both in the financial system and in the real economy where people live and work. Too much bitterness and rage will be attached to the White Knight at Treasury when he dooms one pension fund or bank, but rescues others. Too much deceptive sleight-of-hand is already embedded in Paulson's approach for ordinary mortals to even recognize what Paulson intends to accomplish. The bailout will belong to the club, and the club will manage it.
Democrats are the majority party and insisted on some qualifying terms on behalf of the populace -- better than nothing, but weak half-steps. The government can claim warrants or equity ownership from firms in exchange for the public aid. It can put a lid on bloated executive salaries at the rescued banks or brokerages. It can demand more up-close oversight of how the Treasury Secretary performs. Paulson can do them if he chooses. Or, if he likes, he can wiggle around them in the fine print.
Republicans, as usual, are playing their own political game -- trying to evade the blame, now and later. Their proposal for an insurance program that financial firms must pay for is ludicrous. It's like trying to buy hurricane insurance on your house after the storm has already blown it away. But the GOP already is in ruin, so its members are thinking long-term survival and creating a predicate for revival. Blame the government, blame Wall Street, blame the go-along Democrats -- maybe people will start liking Republicans again.
Democrats are still in recovery from 25 years of deferring impotently to the wise men of Wall Street and retreating tactically from conservative initiatives. I see this crisis as the Democrats' hesitant first step toward rediscovering their nerve and abandoned convictions. They're not there yet. But this crisis is not over. I predict they will get another opportunity to stand up for something.
In the nature of this crisis, the next president will be compelled to clean up Paulson's irregular mess. He will be forced to act, not only because of the rising popular anger and enveloping recession but because the Paulson approach is founded on private deal making and his deceptive statements of purpose.
By January -- whoever wins the White House -- it will be clear that Washington cannot cure the disease by relying on one smart guy from Wall Street. A new federal agency will be needed to supervise the bailout and restore defined public purposes and enforce them on the system. The government will have to assert its powers forcefully, because by then it will be obvious the "voluntary" approach helped some losers to become winners, but it neglected to save the country.
William Greider is The Nation's national affairs correspondent.