In some ways, the primary divide over the Geithner plan seems to be a question of political prediction: Do you believe, as Paul Krugman and Martin Wolf do, that if the Geithner plan fails, it will make the American people less likely to support a more aggressive recapitalization policy down the road? Or do you think, as the administration appears to, that if the Geithner plan fails, it will prove they have exhausted all possible options and convince the market that private measures cannot solve this crisis, thus easing the way for more aggressive interventions? It also implies a debate that I don't think has emerged quite so clearly: What will Congress allow right now? The choice might not be between Geithner and nationalization, but Geithner and a different, and similarly insufficient, compromise. One of Laura Tyson's interesting remarks last night came in reply to a questioner who faulted the White House for insufficient ambition. Her response had nothing to do with policy or economics. It was abut Congress. "They accomplish what they can accomplish within the realities of the Congress," she shot back. "And the Democratic coalition is breaking already." Critics, she said, need to stop focusing on the White House and begin focusing on Congress. Tyson is pretty plugged in. It's a safe bet that if congressional obstruction has colonized her thinking on this matter, and Brad DeLong's thinking on this matter, then it's probably what's obsessing the administration, too.
