I saw fear that day.
It was September 18, 2008. House Speaker Nancy Pelosi (D-CA) famously dialed Treasury Secretary Hank Paulson, asking for an update on precipitous drops in the financial markets. IndyMac Bank failed. The federal government seized Fannie Mae and Freddie Mac. Lehman Brothers tanked. Bank of America bought Merrill Lynch. The Fed took over AIG. Questions lingered about overall liquidity.
Pelosi wanted an update, having not heard from the Treasury Secretary for several days. Pelosi later said the reason Paulson hadn’t briefed Congressional leaders “was because they did not want us to know” how bad things were as the global economy clutched the ledge by its fingernails.
When Pelosi reached Paulson in the mid-afternoon, she suggested they meet the next morning.
But that wouldn’t work for Paulson.
“Madam Speaker, tomorrow morning will be too late,” Paulson told the Speaker.
“Then why am I calling you?” asked an incredulous Pelosi.
The Speaker later recounted that Paulson impressed upon her that if they didn’t huddle that evening, “we wouldn’t have an economy by Monday.”
By nightfall, Paulson, Federal Reserve Chairman Ben Bernanke and Securities and Exchange Commission Chairman Chris Cox arrived at the Capitol for a rare, evening meeting with the Speaker. Other top, bipartisan Congressional leaders and almost two dozen committee and subcommittee chairs, along with ranking minority members, crammed into the Speaker’s conference room. Paulson told the assembly he needed several hundred billion dollars “urgently” to stave off a financial collapse not seen since 1929. Bernanke told lawmakers that GM could tank. The market could crater by 30 percent. Unemployment could skyrocket.
Lawmakers are loquacious. They can barely contain the logorrhea when things are going well. But after 90 minutes of the worst possible news since 9/11, the lawmakers emptied out, unwilling to say much of anything. You could tell the members were processing things. Digesting things. Wrapping their heads around the consequences of what Messrs. Paulson, Bernanke and Cox told them behind closed doors.
But, there was fear. The facial complexions of lawmakers weren’t flushed. Their voices didn’t crack. They didn’t tremble when they ambled back to the House and Senate wings of the Capitol, pursued by a throng of reporters through the Rotunda. They simply spoke in hushed voices. They stared at their shoes as they walked across the marble floors. And when they did look up, you saw it. Right in their eyes.
The lawmakers didn’t know if Paulson’s plan would work. They didn’t know how they would even pass it. The measure ultimately failed once in the House, gutting 777 points off the Dow – then, the biggest single-day point drop in history. Lawmakers didn’t know what to do. And that’s why they were afraid.
They couldn’t control the financial meltdown. They couldn’t control the markets. They couldn’t control unemployment.
Politicians are used to being in control. And that’s why, when they glanced up from their shoelaces, there was fear.
We’ve not detected fear, per se, on Capitol Hill amid the coronavirus outbreak. But lawmakers know coronavirus isn’t something they can fully control. They can only respond – and hope they respond in the best way possible with money and resources.
On Monday night, Senate Appropriations Committee Chairman Richard Shelby (R-AL), in charge of deciding what money the government should spend to combat coronavirus, spoke in stark terms.
“Staring the administration and all of us in the face is a possible pandemic,” said Shelby. “Something we haven’t seen in my lifetime.”
Shelby is now 85-years-old.
“This is no ordinary crisis coming up,” observed Shelby. “I would call this a dire emergency.”
At the time, Shelby said it was hard to estimate how much money was needed to fight coronavirus. But the Alabama Republican was clear it was best to get the dollar figure right the first time. After all, it’s easier to pass one big bill than two or three. Even if the grand total turns out to be less.
The administration sent a formal spending request to Capitol Hill later that night: $2.5 billion for coronavirus. Only $1.2 billion was new money.
“If you lowball something like this, you’ll pay for it later,” said Shelby.
“More funding is normally what people will say solves all the problems. I don’t think it does,” said Senate Armed Services Committee Chairman Jim Inhofe (R-OK) about the fiscal response to coronavirus. “It needs a lot of attention. But not necessarily more funding.”
Shelby didn’t offer a specific dollar figure. But by Tuesday morning, one administration source derided the Appropriations Committee Chairman as a “big spender.”
On Wednesday morning, Senate Minority Leader Chuck Schumer (D-NY) floated a proposal totaling $8.5 billion for coronavirus.
By Wednesday afternoon, House Minority Leader Kevin McCarthy (R-CA) called the administration plan “a little low.” He suggested around $4 billion. On Wednesday night, President Trump conceded he was game to spend more on coronavirus.
“If they want to give us more money, that’s ok. We’ll take more money. Some Republicans think we should have more money,” said Mr. Trump.
Come Thursday afternoon, Fox was told lawmakers were developing a package of around $7 billion for coronavirus. Keep in mind that Paulson told lawmakers on that fateful night in September 2008 he required hundreds of billions of dollars. They settled on a $700 billion tourniquet to stem the bleeding and rescue troubled financial assets.
All lawmakers of Congress can do in a crisis is try to exude confidence and develop the right legislation to grapple with the issue.
Rep. Donna Shalala (D-FL) served eight years as President Clinton’s Health and Human Services Secretary. She concedes it’s a balance of giving the public information it needs – yet not scaring people to death. So, when a public health crisis unfolded on her watch at HHS, the Congresswoman enforced what she called “the Shalala rule.”
“I always insisted on the people who spoke were docs that had coats on. They were world-class scientist-physicians. But they had white coats on because that would reassure,” said Shalala. “The last thing you want is the President of the United States talking about science.”
Both Senate Majority Leader Mitch McConnell (R-KY) and McCarthy criticized Democrats for what they considered a politicization of coronavirus.
“The coronavirus does not care about partisan bickering or political news cycles. This new disease is not going to press pause so that members can engage in performative outrages that gets us farther from results, rather than closer,” said McConnell.
“Diseases don’t know party lines,” said McCarthy. “But Democrats can’t help put politics over country.”
When asked if it was President Trump who politicized coronavirus by declaring that Pelosi was “incompetent” – and describing Schumer as “Cryin’ Chuck” as his Wednesday night press conference, McCarthy replied, “I don’t believe so.”
Capitol Hill is awash in concern about coronavirus. But there’s not fear – yet.
“It’s going to disappear,” said the President Thursday night. “One day, it’s like a miracle. It will disappear.”
But what if the carnage continues on Wall Street or if there’s a spike in infections?
In 2008, Hank Paulson delivered sobering news to lawmakers. He told them matter-of-factly what would happen if Congress didn’t take action. That’s when fear set in.
Today, we don’t know how bad coronavirus could be. But if someone of authority delivers bad news like Paulson did 12 years ago, brace yourselves.