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The House bill may be deflated, but other parachutes have descended on the Hill. In a Wall Street Journal commentary, Nobel Prize-winning economist Edmund Phelps recommends directly recapitalizing banks while reforming the sector to prevent future recklessness. Another Nobel winner, Joseph Stiglitz, advocates more direct aid to households stuck in the foreclosure quagmire.

Blasting the original bill as a free pass for a corrupt sector, progressives are pushing for "trickle-up" approach, based on heavy on ground-level economic stimulus and government regulation, as a counterpoint to the Treasury's kitchen-sink approach for Wall Street.

But the Senate leadership is content to settle for a more pragmatic route: a richly sweetened version of the House proposal, featuring an expansion of banking insurance and a slew of tax breaks.

Still, the uncertainty--about the scope of the problem, and about whether Congress will help or hurt--is feeding into another crisis of confidence... in our government.

As former GOP aide John Feehery put it:

"You've got constituents out there that are angry about this deal on both sides... They don't believe anybody -- the leadership, the president, the secretary of the Treasury. They go on the Internet and find economists saying the situation isn't really a crisis, it's no big deal. That complicates it even further."

So how big a deal is it? Liberal economist Dean Baker cautions against succumbing to a self-fulfilling fear of fear itself:

"The moral of this story is that financial markets should not be viewed as the embodiments of wisdom about the economy. The big actors in the financial markets are subjects to bouts of fear and panic just like the rest of us. In fact, they might even be more subject to irrational mood swings because they sit around talking to each other all day...."

From a conservative standpoint, Rich Lowry of the National Review says Americans aren't aware enough of the connection between the banking sector and economic realities at home:

"McCain talks of the honest laboring man as the strength of America. No doubt he is, but he wants to buy a house (which requires a mortgage), not pay for everything with cash (which requires credit cards), have a job (which requires a business that is very likely dependent on loans) and buy big-ticket consumer items he can’t pay for upfront (which requires car loans, etc.). Freeze up all those sources of credit, and economic life as we know it ends."

Walter Schapiro at Salon warns that "the nation is locked into politics dictated by the Dow-Jones average":

"If the markets remain upbeat or, at least, calm, Wednesday and Thursday, Congress will presumably interpret this financial respite as an invitation to dither. But a further collapse on Wall Street may give rise to renewed cries that the bailout is too little, too late or, conversely, too lavish. In short, this is what happens when that messy thing called democracy collides with the fearsome force of the financial markets in full panic."

Glenn Greenwald veers away from the economics of the bailout to hail a momentary populist shake-up of the political establishment:

"...regardless of whether yesterday's bailout was a good idea on the merits, the defeat -- for now -- of those who have enjoyed an unbroken (and ill-deserved) line of victories is something that ought to be cheered."

Political symbolism aside, though, the country will have to confront the basic question of what officials can and should be doing to the economy, if anything. The American Prospect's Ezra Klein thinks the circus surrounding the bailout suggests a broader malaise in our democracy:

"No one quite knows how to harness our political system in opposition to major problems. No one knows how to get real health reform through, or pass a global warming bill that could actually avert catastrophe, or shepherd a capital infusion that will avert possible economic collapse. Those problems are all different, to be sure, with different coalitions and different messaging strategies, but much of what blocks action is structurally similar. When it comes to the American political system, you can almost never believe in change."

With the economy doing tailspins and elected officials flip-flopping just as wildly, it seems like some kind of change is on its way, whether we like it or not.