Uh oh. I’m almost feeling sorry for Treasury Secretary Henry Paulson. He was beaten up in Congress yesterday for not turning the economy around with the $700 billion (or was it $850 billion?) slush fund Congress gave him last month with which to buy “toxic” mortgage-based securities from financial institutions. He later decided to use some of the money to buy stock in big and small banks, but apparently the banks aren’t ‘t using the money to make loans. Paulson was about to start putting money into the consumer-credit market, but changed his mind and decided to hold onto the money so he can hand it over to the incoming Obama administration.”You seem to be flying a $700 billion plane by the seat of your pants,” said Rep. Gary L. Ackerman (D-N.Y.), one of the angry congressmen.”There’s a lack of confidence, it seems to me, both in this body and in the general population,” said another, Rep. Paul E. Kanjorski (D-Pa.). “Do we have a plan? Where are we going?”Well, excuse me. Did these and other members of Congress actually think one man, no matter how many “expert” advisers he had at his side, could know how to spend $700 billion of other people’s money in order to plan the restoration of a $15 trillion economy that is integrated into a global marketplace? Maybe if these congressmen knew something about economics they wouldn’t have had such idiotic expectations.I don’t really feel bad for Paulson. He led Congress to believe he could do the impossible. So he has no one to blame but himself.P.S.: Did Paulson tell Congress the truth back in September-October? From a Nov. 14 Treasury news release:

During the two weeks that Congress considered the [bailout] legislation, market conditions worsened considerably. It was clear to me by the time the bill was signed on October 3rd that we needed to act quickly and forcefully, and that purchasing troubled assets – our initial focus – would take time to implement and would not be sufficient given the severity of the problem. In consultation with the Federal Reserve, I determined that the most timely, effective step to improve credit market conditions was to strengthen bank balance sheets quickly through direct purchases of equity in banks. [Emphasis added.]

In other words, Paulson asked for and allowed something to become law that he knew would not work and apparently had no intention of following.Throw away your civics texbooks. That’s how government works. Whether he knew it or not, L. Frank Baum was a darn good political theorist.Hat tip: Bob Murphy and commenter.