Speaker Pelosi: Leadership Tested By Fire

The financial meltdown is testing the leadership abilities of House Speaker Nancy Pelosi, and then some.

The high-voltage attempt to amend and pass the administration’s Wall Street rescue package didn’t turn out the way she had hoped.

The House defeated the bill, 228-205, causing the Dow Jones index to plummet 770 points, with Wall Street losses put at $1.2 trillion and with global markets reeling in the hours that followed.

Despite that, Pelosi remains firmly in charge of House Democrats. That’s more than can be said for her counterpart, Republican Minority Leader John Boehner.

As global credit markets began to freeze up last week, Treasury Secretary Henry Paulson (and President Bush) pushed for a $700 billion rescue plan. Pelosi reluctantly went along and put her full leadership team behind the effort. Time seemed of the essence.

The voters couldn’t see that credit freeze. And both Democrats and Republicans found fault with the Paulson plan. They praised Paulson’s knowledge of markets but faulted him for not enough political savvy, for not realizing he needed to alert congressional leaders at the outset, not shape a rescue plan on his own, with the Fed chairman, and then deliver a three-page bill to Congress and order them to pass it.

As congressional leaders fleshed out the Paulson proposal, the firestorm over the $700 billion package began to inflame rank and file voters. Soon it became a “bailout” for bankers, with little to do with their own lives.

There wasn’t much time to explain the difference.

Pelosi gets much credit for keeping bipartisan negotiations going around the clock during the past week and through the weekend, working with Democratic Senator Chris Dodd as well as Boehner and his top deputy Roy Blunt and other key GOP senators. She worked in Democratic initiatives as she could.

She worked in Republican suggestions as possible, including one on insurance.

One significant bump in the road came when GOP presidential nominee John McCain said he was suspending his campaign in order to shore up GOP House conservative support for the bill. What he did, in retrospect, was give them time to organize against it even more. A White House meeting of all parties erupted in vitriol and disarray. Boehner at first appeared to join the anti-Paulson conservatives, later rejoined the bipartisan negotiations.

Pelosi not only had to work for the Paulson plan, she had to immunize her own folks against a potential campaign crusade by GOP ideologues that this was “socialism, socialism, socialism,” foisted off on the public by Democrats now in charge of both houses of Congress.

Voters, meanwhile, had been persuaded this was indeed a taxpayer bailout for the rich, not a rescue plan for the very financial structure of the country. Their calls to congressional members ranged from 100-1 against to 300-1 against.

Despite the outside static, Pelosi and Senate Majority Leader Harry Reid and their GOP counterparts reached a compromise bill Sunday.

It was put on the internet immediately and a House vote was set for Monday.

The nose-counting began in earnest on both sides.

Pelosi said from the outset that many liberal Democrats would not budge from the opposition. She also continued the tradition of the late House Speaker Thomas “Tip” O’Neill of understanding that “all politics is local” and that if a vote would mean sure defeat back home, the member could get a pass.

Pelosi and her team told Boehner they could get between 125 and 140 Democrats and that Boehner and Blunt would need to find between 80 and 100 Republicans. That seemed feasible Sunday.

On Monday, Pelosi delivered, Boehner fell short.

When the dust settled, 140 Democrats favored it, 95 opposed it. Only 65 Republicans voted for it, with 133 against. A switch of 12 votes could have made the difference.

Republicans’ immediate reaction after the unexpected defeat was to blame Pelosi. That prompted Democrats to rally around her.

Boehner said Pelosi had chased away a dozen wavering Republicans when she gave a speech saying the vote on this unpalatable $700 billion rescue plan had been made necessary by eight years of Bush policies, including lax oversight on Wall Street.

The blame-Pelosi mantra got much play on TV and radio shows.

That may stick. Pelosi certainly couldn’t claim victory as the fruit of her frenetic around-the-clock bipartisan negotiations– any more than McCain could claim he had provided the  winning edge of House conservatives.

Pelosi could have skipped the partisan speech on the eve of the vote – but she was still trying to rally reluctant Democrats to swallow the bitter medicine.

Few Republicans had been on the House floor to hear Pelosi’s speech and none reacted when they heard it. It was later, after the shocking setback of the vote itself, that GOP leaders seized on the Pelosi speech to rationalize their own failure.

Ultimately, however, the blame-Pelosi excuse didn’t help against Boehner.

It made him look even weaker. He had gotten only a third of his House Republicans to back the bill, far short of what he had promised.

And saying that a Pelosi speech swayed a critical mass of his members only diminished his stature, leaving him open to mockery.

It turns out that Boehner knew hours before the vote – and well before the Pelosi speech – that Republicans would be far shy of their goal, which could spell defeat for the overall bill.

If Pelosi had known that, she might have delayed the vote. That might have alarmed the markets but probably wouldn’t have spooked them the way the actual defeat did.

Those watching the drama unfold saw Pelosi at the center of a beehive of activity, Boehner almost a solitary figure. The Democrats kept on strategizing how to turn it around. The Washington Post said that as the bad news sunk in, top Pelosi aides told Boehner that if he or his top deputy Blunt could round up a few votes, the Democrats could do the rest. “But Boehner couldn’t find enough and he said it wasn’t his style to ‘break arms.’”