Yesterday before the Joint Economic Committee, Federal Reserve Chairman Ben Bernanke made a clear case as to why federal action is needed: home mortgages and car loans had become harder to get, commercial credit was becoming scarce for many businesses and consumer spending had already declined. Leaders in both parties know that inaction will hit Main Street hard. According to The Washington Post, public utility companies will have to raise rates to cover the increased costs of short-term borrowing, two-thirds of National Small Business Association members report feeling pressure from the credit crunch, and 65% of banks report tightening lending standards for small firms.

Following Bernanke’s presentation, Sen. Chuck Schumer (D-NY) told The New York Times: “There is a clear recognition among members of both parties that we must act, and act soon.” Unfortunately, leaders in both the House and Senate are insisting on playing politics instead of focusing on the problem at hand. On Tuesday, Senate Majority Leader Harry Reid (D-NV) told the White House it must guarantee John McCain supports a bailout package if it hoped to pass the Senate. But then when McCain announced he would come to Washington to participate in negotiations, Reid flip flopped, issuing the following statement: “It would not be helpful at this time to have them come back during these negotiations and risk injecting presidential politics into this process or distract important talks about the future of our nation’s economy.” Reid can’t have it both ways. He can’t both demand McCain support the plan and then bar him from participating in its formation.

The House leaders are even more open about their political machinations. Speaker Nancy Pelosi (D-CA) told Democrats early this week she refuses to bring any plan to the floor unless a majority of the minority support it. The brazen refusal to offer any political leadership is stunning. Pelosi told the Wall Street Journal: “We are not taking ownership of this.”

The left’s complete abdication of legislative responsibility would not be so galling if lawmakers also were not insisting on larding up Treasury Secretary Hank Paulson’s plan with unnecessary government interference in the market. The left is still pushing for expanded government power to rewrite mortgage contracts and diverting taxpayer revenue from the sale of distressed assets into a housing slush fund. At least Warren Buffet still has faith Congress will eventually do the right thing. He told the Wall Street Journal: “I really do think Congress will do the right thing, when it’s terribly important, and they will do it fast. They will haggle but they have the national interest at heart.” Let’s hope he’s right.

Quick Hits: