Why Representatives Voted Against the Bailout — and a Suggestion on How to Change Their Minds

There have already been a number of good newspaper articles providing descriptive statistics that members with at-risk seats are more likely to vote against the House bill on Monday. Of the 19 most vulnerable house members, 13 voted against the bill. A Washington Post blog said, “The list of the 228 nays reads like a virtual target list for the two parties.”

Congressional Quarterly provides these charts making the same point:

INSERT DESCRIPTION

Alice Shih and I ran a simple (logistic) regression which confirms this result. 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 there were a few surprises. After we controlled for the foreclosure rate and the other variables, black representatives were 18 percent more likely to vote against the bill than white representatives. Representatives who were not running for re-election were 60 percent more likely to vote in favor of the bill.

This seems like further evidence that representatives freed from the constraints of being re-elected were more likely to follow their party leaders and support the bill. All of these results are statistically significant (p. < .05). We also found that representatives in states with higher foreclosure rates were estimated to be more likely to vote against the bill, but we were a bit surprised that this result was not even close to being statistically significant. The median voter in the polls doesn’t seem to support the bill, but the level of disapproval doesn’t seem to be statistically related to the local level of foreclosure. Here is the raw output from the regression:

INSERT DESCRIPTION

(At-risk data are taken from Cook Political Report. State foreclosure rate data are taken from RealtyTrac.)

So as we quickly move toward another House vote, how can McCain or Obama turn some of these nays to yeas?

It’s hard to offer a representative who’s fighting for his or her political life an incentive to flip-flop — especially when “challengers and open-seat candidates were the quickest to denounce the package.”

At the end of the day, it may be necessary to get the at-risk incumbents and their challengers to agree to take this issue off the table. If McCain and Obama jointly reached out to both sides in these close races, it might be possible for both contenders for a House seat to simultaneously agree to support the package. This will not be easy. Adversaries in tight races are loathe to cooperate when there is political advantage to be had in clinging to the popular position. But the alternative is to ask some incumbent members to engage in probabilistic political suicide.


Franklin Pierce

I have to agree with those that give us Americans more credence as having at least the ability to think with common sense rather than react as an uninformed and unaware mob.

As for our astute Congressmen, well, they weren’t elected to office based upon their economic prowess. Heck, they all can’t be intellectual and lettered Harvard MBAs like our president!

I like the idea that someone spell the bill out to us, no matter how complex rather than spooking us to stampede.

AV

Sadly, this bill will pass eventually, despite the fact that most Americans don't want to suffer a long, drawn-out recession in order to prop up failed banks, home prices and retirement accounts. Congrats to all of you old fogeys who invested poorly: it looks like you'll be able to push this massive recession off a while and let us younger people deal with the economy when all this bad debt catches up to us.

Liudvikas Bukys

It's wonderful to find the actual statistics (SE, R^2, AdjR^2, t, P, and confidence intervals) stated in the article. It would be an excellent trend to start -- every statistics-based article should include a sidebar with actual facts.

Don Collins

I've been thinking about this a lot (as we all have) and it just occurred to me tonight... I'm be more than happy to agree with the "rescue" plan if Congress will do two things...

1. Hold themselves accountable (by name... not House or Senate but by individual names) if this thing doesn't work. I want to know who screwed up!

2. Agree to some punishment if their plan doesn't do what they are promising it will do. Punishment and an agreement that they will resign their post... Immediately!

I want to see some accountability before I will agree to this approach.

Derick

You mean congressmen are considering the intent of their constituents when voting on bills? Blasphemy! What is this, a democracy or something?

Of course I believe sometimes specialists (whether on Wall Street or capitol hill) often know better than the masses investing in them. But when the long-term records show those specialists failing, it's time for the masses to take their money out.

I think this all shows the beauty of the market. These irresponsible firms *should* be failing. Once firms start showing more integrity and less near-sited greed, and inject some enlightened long-term greed, private citizens can spend their money and reinvest voluntarily.

Too big to fail is too big to bail.

RR

If only we could get this kind of response from our politicians on other wasteful spending.

Sarah B.

This is a great start at modeling the House vote. I offer an alternative analysis on The Monkey Cage blog (http://www.themonkeycage.org/2008/10/the_bailout_vote_take_2.html) that may interest Freakonomics readers.

Derick

@#33:

Actually, because the government controls the money supply and lots of their spending involves printing more money, which causes inflation, everyone who uses money, including kids with allowance, is paying for this.

PedroCMS

In response to #10 & 12.

If reconsidered and approved, the bailout plan will work.

First of all, we need to understand the main intention of the bailout plan:

1. Provides security in the market.

2. Helps Banks liquidate foreclosures.

The bailout plan, 700 Billion US dollars to be exact, will ensure security in the market thus promote a re-establishment of consumption hence consumerism. The U.S population is facing a erratical market, all they need now is reassurance that the market will balance itself out and adjust, after this is done, if everything goes well, it won't be long before we see the U.S economy blooming once again.

Allroads

What is scary about this is that people would rather save their jobs than their country, but before I suggest that we boot these people out for economic treason I have a few questions

1) Is this 700 billion actually the right path to take for the country as a whole, or is this bill actually a shame being sold to the public and it really should not be passed?

Consider the fact that initially the reports were all saying that it was not the best way to fix the situation, and that later it was because the administration did not "Sell" it to the public properly, an the recent headline was that it now involved sweeteners to entice the republicans back to the table... I am starting to think that while it is clear something needs to be done, we are headed down the wrong path and an entirely new package needs to be developed. It needs to be specific, it needs to be targeted, and it needs to sell itself

2) If it is, and these "at risk" republicans are voting against it, then aren't they then risking their jobs anyway?

If they vote no, and the economy tanks before November, they will be the ones blamed.. and thus their jobs will be on the line anyway. going back to the first point, perhaps they know that by voting for it there will be little impact on the economy, that the money would be wasted, and that by voting no they are actually doing their job.

Perhaps instead of looking to villainize the people who didn't vote for the bill, we should be spending more time understanding the bill and figuring out why it met so much resistance to begin with. Maybe all those economists are right when they say this 700 billion is the wrong number, the wrong approach, or would only impact the wrong market.

This is a time where open and honest dialogue should be happening, and the scariest part of this entire process is that we are not seeing it. We are seeing polarized discussions that neither educate the public on the core issues, discuss the long term, or debate the solutions.

Read more...

Larry Sheldon

So.

It appears that they way to getr what we want is to get off our *sses quickly and get recall petitions fired up for every "not at risk" pol?

That's not a half-bad idea.

mfs

Post 10 is correct. This $700B plan just does not pass the smell test to those of us in the trenches. Several other more reasonable and rational plans are out there, from the WSJ (Chile's banking crisis)to this blog which certainly appear to create less heartburn than what is proposed. Why not a simple plan similar to what Warren Buffett has done with Goldman and GE.

Bill

However that still means there are 81 'No' Democrats and 45 'No' Republicans in non competitive races who could change their votes (or not).

hibob

I think the way to get a rescue plan passed is to switch to Krugman's plan (buy the banks) and away from Paulson's (buy the banks' most toxic assets).

Bobo

Rather than strong-arming representatives to vote for a crappy bailout, why not come up with a better one? How about a plan that actually recapitalizes the banks, protects taxpayers and does something to help homeowners. The Paulson plan is absurd. The amendments the Dems are crowing about are weak and many are non-binding.

At the very least, how about holding some hearings with testimony from economists and not just Bernanke and Paulson.

Travis Ormsby

The state level seems too coarse a level of analysis to determine if there is a forclosure rate effect on votes, especially for large and diverse states such as California, Texas, or Florida.

It would be interesting if the results continued to not be statistically significant if we refined the level of analysis to the representative's district, not just the state the district is in.

Joe

The most sobering statistic is that there are only 41 "competitive" races out of 435. With an approval rating of 15%, one would expect more of Congress to be in play this year.

Ben

Our government has used fearmongering too much already to convince us to do things it wants but we don't. Now when there really is a potential for doom and gloom we're all just to tired of hearing them cry wolf to care.

RebelRenegade

Were black representatives in tight races 18% more likely to vote no compared to white representatives in tight races?

I'm unclear on that.

Riggs Connell

Since my representative voted no-the only solution seems to be to vote no on his continuing to be able to vote against his constiuents best interests