Fortune magazine published an online article yesterday (which will appear in the magazine’s July 25 issue) stating that the bailout is going to be a winner–a big winner–for taxpayers and the federal government. An abridged version appears in last Friday’s Washington Post in partnership with Bloomberg News. The bailout is important in recent Texas political history because its unpopularity in the state, particularly with the Tea Party, was the foundation of Perry’s wipeout of Kay Bailey Hutchison in the 2010 Republican primary. Unaccountably, Hutchison never once defended her vote for the bailout or questioned the wisdom of Perry’s opposition to it. In retrospect, I think Perry would have defeated Hutchison no matter what the issues were. She was too out of touch with the Republican Party of Texas and the sharp movement to the right that it had taken. Perry’s ability to fan the flames of Texas exceptionalism left her without a constituency. Perry’s stance on the bailout takes on added importance because Perry is going to run for president–indeed, I wrote a 7,000 words article in 2010 about how he was preparing to do so–and the bailout was a crucial moment in his evolution as a national figure. That he is already running second to Romney (in the latest Fox News poll, by 18% to 13%) is an indication that this is going to be a two-person race, and Perry brings an enthusiasm to the race that the current field has not been able to provide. Obviously there are still plenty of caveats: Can he raise the money? Can he stand up to the scrutiny of the national media? But he gets more attention as an unannounced candidate than most of his announced rivals can generate. From the Post’s version of the story:

The bailout of the financial system is roughly as popular as Wall Street bonuses, the federal budget deficit or LeBron James in a Cleveland sports bar. You hear over and over that the bailout was a disaster, it cost taxpayers a fortune, we didn’t really need it, it didn’t work, it was a failure. It has become politically toxic, which inhibits reasoned public discussion about it. But you know what? The bailout, by the numbers, clearly did work. Not only did it forestall a worldwide financial meltdown, but a Fortune analysis shows that U.S. taxpayers are also coming out ahead on it — by at least $40 billion, and possibly by as much as $100 billion eventually. This is our count for the entire bailout, not just the 3 percent represented by the massively unpopular Troubled Assets Relief Program. Yes, that’s right — TARP is only 3 percent of the bailout, even though it gets 97 percent of the attention. The Fortune article has an excellent summary of the financial crisis, including why the bailout was necessary. Here are outtakes from that summary: * We’ll get to the detailed numbers in a bit. But for now, we’d like to remind you why the bailout exists. The revisionist idea that the bailout is the problem — rather than excesses in the financial system — is simply stunning to those of us who watched the financial crisis surface in 2007, when two Bear Stearns hedge funds speculating in mortage securities collapsed, and reached a crescendo in September 2008, when Lehman Brothers went bankrupt.  Many in the financial world applauded Washington’s decision to let Lehman go under — but that applause was quickly replaced by fear as unanticipated consequences of the bankruptcy surfaced. * Lehman’s collapse touched off a terrifying run on money market mutual funds when the Reserve Primary Fund announced it could pay holders only 97 cents on the dollar because of Lehman-related losses. Savers who’d considered money funds as safe as federally insured bank deposits stampeded for the exits, pulling out hundreds of billions of dollars. It took federal guarantees of more than $3 trillion of money market fund balances — bailout! — to stop this modern-day bank run. * Some hedge funds that used Lehman’s London office as their “prime broker” had their assets frozen, setting off a run on prime brokers Goldman Sachs (GS) and Morgan Stanley (MS) as U.S. hedge funds pulled out their assets to avoid getting frozen if either firm failed. Goldman and Morgan were close to running out of cash when the government saved them by making them bank companies with access to the Fed’s lending facilities. Bailout! Bailout! GE Capital (GE) was having trouble rolling over its borrowings, and was rescued by a government guarantee program. Bailout! Then there was American International Group, the now infamous AIG (AIG), which required a 12-figure rescue. * Had Goldman, Morgan Stanley, GE Capital, AIG, and several giant European banks not gotten bailouts and instead failed, even capital-rich J.P. Morgan Chase (JPM) would have gone under, because it wouldn’t have been able to collect what these and other players owed it. There would have been trillions in losses, worldwide panic, missed payrolls, and quite likely the onset of Great Depression II. That’s why we needed a bailout. And why we got it. My biggest concern about Rick Perry is that he has a tendency to draw ideological lines in the dirt–e.g., his steadfast refusal to use the Rainy Day fund, which, had he said yes, would have provided enough money to fund public education. Furthermore, the drawing of such lines is done to curry favor with his constituency, rather than to achieve policy outcomes. It works at the state level, but what would he have done in George W. Bush’s position in 2008? I think the Rick Perry we know would have said: no bailout, just as he said no Rainy Day fund. He would not have risked angering his political base on the right wing of the Republican party. And the world financial system could have collapsed. That’s what worries me about “President Perry.” Is he Herbert Hoover, willing to go down with the good ship Ideology rather than break out the life boats? If his performance in Texas is any guide, the answer is, Yes. Perry did attempt to engage Congress on the issue of the bailout. As chairman of the Republican Governors Association, he joined with his Democratic opposite number to send Congress a letter just before the vote. It read: There is a time for partisanship and there is a time for getting things done. No one likes the hand they’ve been dealt, and now is not the time to assign blame. It is time for Washington, D.C. to step up, be responsible and do what’s in the best interest of American taxpayers and our economy. This economic crisis is not just impacting Wall Street; it is also making life harder for everyday Americans. Americans across the country and in every demographic are feeling the pinch. If Congress does not act soon, the situation will grow appreciably worse. It’s time for leadership. Congress needs to act now. Sincerely, Rick Perry and Joe Manchin What is missing from this letter is HOW Perry thinks Congress should act. Hutchison tried to use the letter to show that Perry was “for” the bailout before he was “against” it, but the ambiguity of the letter undercut her ability to make her point.

The bottom line is this: On the biggest economic issue of this generation, Perry was 100% wrong on the merits. But he was 100% right on the politics: He pandered to his constituency. He governs for his constituency, not for the public as a whole. That has worked well in Texas, but can it work for the nation?