It's certainly an example of very short-sighted thinking on the Congressional side, especially in an election year.
Maybe Hastert was simply wearing the wrong glasses when he examined the problem (Teddy Kennedy's?)
I will leave to your own unpleasant speculation how Denny might have inadvertently exchanged glasses with Teddy.
I think part of the problem is that Bush is a poor negotiator. He doesn't play the game the way Congressmen and Senators are used to playing the game.
The President doesn't take an extreme position as his initial bargaining point. He always starts with a compromise. The Democrats can't fall in and support the compromise position because that would be agreeing with their arch enemy, and their base would hate them for it. The Republicans can't accept the compromise because they weren't given a chance to posture and take advantage of a more extreme right wing position first, so giving into the compromise would upset the conservative base. The President can't accept anything but his compromise proposal because it already contains the most he's willing to give up and the least he's willing to accept.
What he needs is a master negotiator. That should please the right, and sucker the left, while succeeding in obtaining moderate results.