Republicans who supported bailout of banks in 2008 find votes come back to haunt them

Republicans suffering for 2008 bank bailout vote

LITTLE ROCK, Ark. — Some of Congress’ staunchest conservatives voted two years ago to prop up the nation’s banking industry. At the time, they saw a threat to American business. Now the emergency is their own political survival.

In dozens of races around the country, challengers are hammering away at the bank bailout and deriding Republican lawmakers they claim spent billions to rescue Wall Street, not Main Street.

Rep. John Boozman of Arkansas is facing seven opponents for the Republican nomination for Senate. All are talking about his bailout vote, and one brings a blue plastic tarp to his events to symbolize the TARP, or Troubled Asset Relief Program.

Three-term Sen. Robert Bennett, who won re-election handily in 2004, says he’s in the fight of his life in Utah. Four-term Rep. Gresham Barrett of South Carolina was booed at a political rally last April because of his bailout vote.

The lawmakers are grappling to explain something that didn’t seem unusual for conservatives at the time.

“I called businesses and banks in Utah, and I was told unanimously by Utah businesses and banks, ‘You have to vote for this or we will fail,’” Bennett said.

Even in politics, which is notorious for its mood swings, the change in perceptions about the economic rescue is striking. It is now part of the especially dark cloud hanging over many incumbents. And it shows the presence of the ultra-conservative tea party movement, which hasn’t proven yet it can help candidates but has shown it can hurt some.

Though the bailout is an issue in Democratic races, it has become more damaging for Republicans, for whom government spending is more controversial. In March, the issue contributed to veteran Sen. Kay Bailey Hutchison’s resounding defeat in the Republican gubernatorial primary in Texas, where Gov. Rick Perry dubbed her “Kay ‘Bailout’ Hutchison.”

Opinion polls show a sharp decline in public support for the government’s role in stabilizing financial institutions. A survey conducted by the Pew Center for the People and the Press in February showed that only 40 percent of Americans now support the effort, and only 26 percent of Republicans.

Among Republicans, “It’s come to be seen as a bailout of these firms, rather than a rescue package,” said Carroll Doherty, Pew Center associate director.

Oddly, the perception has worsened as the program’s balance sheet has improved. The Treasury Department now estimates the government will earn a profit from dividends, interest, early repayments and other income.

When President George W. Bush unveiled his $700 billion package in 2008 to buy bad mortgage debt to thaw lending, he portrayed it as “a pivotal moment for America’s economy.” A majority of Senate Republicans voted for the measure. A fragile bipartisan coalition passed it in the House.

Public opinion soured amid reports of bonuses and high salaries paid to officials of bailed out institutions.

Now, in Arkansas, Boozman finds himself defending his vote at nearly every forum, saying that letting banks fail didn’t seem like a good conservative option. He said his concern for Arkansans was to “protect their savings and their jobs.”

State Sen. Gilbert Baker, Boozman’s chief rival for the Republican Senate nomination, says Boozman’s explanations come too late. “He’s the only federal Republican official in the state, and he voted for the program.” Baker’s campaign has set up a bailoutsarebad.com website to press the point and he holds up a blue plastic tarp at stump speeches. Boozman is still considered the front-runner, but he acknowledged his rivals are exploiting the issue.

The GOP’s presidential nominee in 2008, John McCain, is among the chief targets of the bailout attacks.

In Utah, Bennett faces seven challengers in his race. In 2004, he had no opponent in the primary. The conservative Club for Growth has spent more than $120,000 on television ads, mailings and a website opposing his re-election bid.

Bennett says he’s trying to explain himself. “I find that if I can go through the details of the condition of the economy of the time,” along with the analysis of conservative economists, “that I can usually turn people around,” he said.

In South Carolina, the booing at a rally last year was a stinging rebuke to Barrett as he runs for governor after a career as a reliable conservative vote in the House. Greenville political consultant Chip Felkel says Barrett appears to be weathering the criticism but adds, “If he has an Achilles heal in his campaign, it is that vote.”

Associated Press writers Brock Vergakis and Joseph Freeman in Salt Lake City, Jim Davenport in Columbia, S.C., and Jonathan J. Cooper in Phoenix contributed to this report.