September 26, 2008


Selfless or Reckless? McCain Gambles On Voters' Verdict (Dan Balz, 9/25/08, Washington Post)

John McCain is a gambler by nature, and the bet he placed Wednesday may be among the biggest of his political life.

The Republican presidential nominee is hoping that his abrupt decision to suspend campaigning, seek a delay of Friday's debate with Democrat Barack Obama, and return to Washington to help prod negotiations over a financial rescue package will be seen as the kind of country-first, bipartisan leadership he believes Americans want.

What he risks, if things don't go as he hopes, is a judgment by voters that his move was a reckless act by an impetuous and struggling politician that hardened partisan lines in Washington at just the wrong moment and complicated efforts to deal with the biggest financial crisis in more than half a century.

Markets in turmoil as US financial bail-out stalls (Julia Kollewe, 9/26/08,
Stockmarkets were plunged into turmoil today after talks on a $700bn (£380bn) rescue for the US financial sector descended into chaos and the country's largest savings and loans company Washington Mutual collapsed in America's biggest banking failure.

The FTSE 100 index in London dropped 90.2 points in early trading, a fall of 1.74%, and traded down 60.2 points at 5136.8 points mid-morning, a decline of 1.16%. All Asian stockmarkets slid, with Japan's Nikkei closing down nearly 1%. Oil prices were also hit by the uncertainty over the bail-out package, with US crude falling $3 to $105 a barrel. The yen jumped by more than 1% against the dollar as investors rushed to buy the safe haven currency. The dollar fell to ¥105.26.

Spread-betting firm GFT Global Markets predicted the Dow Jones industrial average would fall 147 points and the Nasdaq 29.5 points when the US markets open.

On debate day, uncertainty looms (ALEXANDER BURNS, 9/26/08, Politico)
Since Wednesday, when McCain unexpectedly announced he would suspend his campaign to focus on the economic crisis, it has been unclear whether McCain would join Obama at the debate. And it remained that way after negotiations over a $700 billion Wall Street bailout plan broke down Thursday and late-night talks ended inconclusively.

McCain senior adviser Steve Schmidt said Thursday night that the Arizona senator was focused on passing a compromise bailout bill and would be on the phone, cajoling colleagues and trying to get closer to a deal.

“He’s working very, very hard to try to get majority votes,” Schmidt said.

Wall Street bailout plan proves elusive: After White House talks collapse, further negotiations falter amid partisan wrangling. Sunday is seen as a crucial deadline. (Richard Simon, Maura Reynolds and Nicole Gaouette, 9/26/08, Los Angeles Times)
There were signs that, behind the scenes, skeptical Democrats and Republicans were beginning to move toward a compromise version of Treasury Secretary Henry M. Paulson's original plan, but it remained to be seen whether there would be enough votes to pass legislation.

"I'm seeing both Republicans and Democrats start to move toward voting for it," Rep. John Campbell (R-Irvine) said. "I can't tell you that there's a majority at this point, but there's movement."

The working proposal contained most of the features that critics of the administration's original plan had been demanding: limits on compensation for executives of companies that take part in the bailout, a provision for taxpayers to share in any profits from the sale of distressed assets, and payout of the $700 billion in three stages instead of one. The final $350-billion tranche would require a congressional vote.

Bailout Negotiations in Disarray (GREG HITT, DAMIAN PALETTA and DEBORAH SOLOMON, 9/26/08, WSJ)
Negotiators broke off talks Thursday night with no agreement and with plans to reconvene in the morning, without House Republicans. It was the Republicans' surprise championing of a competing plan late Thursday that derailed a carefully crafted compromise previously taking shape.

Folks have already started comparing the House GOP's performance to the government shutdown. It may not be precise but it is instructive. In that case the shutdown itself mattered less than holding out until Bill Clinton folded before they re-opened it. Instead, Republicans blinked and so failed to get what they wanted in a deal and got all the blame for the impasse. They had all the leverage but used it poorly.

Here, all that matters (because of the narrative of the McCain and Obama candidacies) is that Maverick be seen to have helped broker a deal. The shape of the deal isn't significant. House Republicans have no leverage because passage of a deal that they voted against would be so harmful to their own presidential candidate as to inflict grave losses in November.

The main similarity would thus end up being that the GOP leadership was inept in both showdowns.

Ironically though, the GOP's best hope of being saved comes from the Democrats and the possibility that they are so reactionary and anti-business that they'll squander the gift they've been handed. After all, consider how easyt it would be for them to salt away the election this weekend:

Friday Morning: Barack Obama press conference in which he says: "Look, I don't agree with George Bush on a lot of things but I agree with him--and Henry Paulson, Ben Bernanke, Warren Buffet, Paul Volcker, and Robert Rubin--on the importance of this deal to the economy. I, therefore, urge all my colleagues t set aside partisan differences and pass the Paulson Plan.

Friday evening: House passes plan--ideally without many GOP votes--every Democrat announcing that despite his own reservations he's following the example of his party leader.

Saturday: Senate passes plan -- with enough Republicans to avoid a filibuster -- forcing John McCain to either follow the Unicorn Rider or side with House Republicans who are so partisan they wouldn't even vote with W.

That's ballgame, folks. The narrative of both candidacies is that: "I'm the post-partisan agent of change who can get things done in Washington." John Boehner is trying his best to prove that it is Barack Obama's narrative that is true.

Talks Implode During a Day of Chaos; Fate of Bailout Plan Remains Unresolved (DAVID M. HERSZENHORN, CARL HULSE and SHERYL GAY STOLBERG, 9/26/08, NY Times)

When Congressional leaders and Senators John McCain and Barack Obama, the two major party presidential candidates, trooped to the White House on Thursday afternoon, most signs pointed toward a bipartisan agreement on a grand compromise that could be accepted by all sides and signed into law by the weekend. It was intended to pump billions of dollars into the financial system, restoring liquidity and keeping credit flowing to businesses and consumers.

“We’re in a serious economic crisis,” Mr. Bush told reporters as the meeting began shortly before 4 p.m. in the Cabinet Room, adding, “My hope is we can reach an agreement very shortly.”

But once the doors closed, the smooth-talking House Republican leader, John A. Boehner of Ohio, surprised many in the room by declaring that his caucus could not support the plan to allow the government to buy distressed mortgage assets from ailing financial companies.

Mr. Boehner pressed an alternative that involved a smaller role for the government, and Mr. McCain, whose support of the deal is critical if fellow Republicans are to sign on, declined to take a stand.

Which is why congressmen don't become president--he's acting like a legislator instead of a leader.
Political Wisdom: A Wild Day Spawns Questions About McCain: Here’s a summary of the smartest new political analysis on the Web: (Gerald F. Seib and Sara Murray, 9/26/08, WSJ: Washington Wire)
Is McCain's Gamble Paying Off? (Toby Harnden, 9/26/08, Real Clear Politics)
Having been firmly in control of the campaign narrative for more than a week and surging in the polls, Senator Obama has been knocked off his stride. Senator McCain stumbled in addressing the Wall Street crisis from the outset with his "fundamentals are strong" statement and then lurched first one way and then the other. Then, suddenly, he seized the initiative.

Obama was put on the defensive immediately after McCain's shock announcement when President George W. Bush - in a move that appeared to bee coordinated with the Arizona senator - called to invite him to Thursday's White House summit. The Democratic nominee could hardly refuse and it looked like he was following McCain's lead.

Polls show that Obama's biggest vulnerability is on whether he can be commander-in-chief and whether he's ready to lead. McCain's Achilles heel is his links to Bush. The acrimonious White House summit boosted McCain on both fronts.

Bush's lack of political capital - he's as bankrupt as Lehman Brothers - meant that he lost control of the meeting and of his own rescue package. Inside the room, McCain largely kept his own counsel but he ended up in the driving seat.

Strangely, rather than McCain being the one supporting Bush, it was Obama. Having based his campaign on running against Washington, it was the Illinois senator who found himself defending the package fashioned and championed by the Washington insiders at either end of Pennsylvania Avenue.

McCain, Obama square off on whether to square off (Scott Helman, September 26, 2008, Boston Globe)
With no done deal on the $700 billion Wall Street bailout, John McCain and Barack Obama last night intensified their extraordinary staredown over whether to hold their first presidential debate tonight.

McCain, who is insisting that a bailout agreement be in place first, said only that he was "very hopeful" the debate would go ahead. Obama said that voters deserved to hear the candidates, that he planned to be there, and that "I hope he will be there as well."

Both candidates returned to Washington yesterday for a private meeting with President Bush and congressional leaders on the bailout, but Obama's camp disputed whether McCain had truly suspended his campaign as he had promised.

Shelby Plays Role of Contrarian: Alabama Senator Calls Plan 'Flawed From the Beginning' (Christopher Lee, 9/26/08, Washington Post)
Everything seemed to be headed toward a deal -- and then Sen. Richard C. Shelby emerged from the White House with a bit of bad news.

"We hadn't got an agreement," said Shelby (Ala.), the ranking Republican on the Senate banking committee. "There's still a lot of different opinions. Mine is: It's flawed from the beginning."

Shelby has made no secret of his distaste for the plan all week. His strong opposition was a primary reason that Sen. Robert F. Bennett (Utah), a close friend and political ally of Senate Minority Leader Mitch McConnell (Ky.), was leading talks on the package for Senate Republicans.

But it is also what made Shelby's inclusion in White House talks, which were designed to reach agreement on a $700 billion recovery plan, something of a surprise. Inviting a lawmaker completely opposed to a plan to a negotiation usually is not a recipe for reaching a deal.

-Talks Falter on Bailout Deal : White House Summit Fails to Yield Accord as House GOP Floats New Plan (Paul Kane and Lori Montgomery, 9/26/08, Washington Post)
A renegade bloc of Republicans moved to reshape a massive bailout of the U.S. financial system yesterday, surprising and angering Bush administration and congressional leaders who hours earlier announced agreement on the "fundamentals" of a deal.

At a meeting at the White House that included President Bush, top lawmakers and both presidential candidates, House Minority Leader John A. Boehner (R-Ohio) floated a new plan for addressing the crisis that has hobbled global markets.

Democrats accused Boehner of acting on behalf of GOP presidential candidate Sen. John McCain (Ariz.) in trying to disrupt a developing consensus. The new proposal also displeased White House officials, including Treasury Secretary Henry M. Paulson Jr., who chased after Democrats leaving the meeting and -- half-jokingly -- dropped to one knee and pleaded with them not to "blow up" the $700 billion deal, according to people present at the meeting.

The Photo McCain Wanted (E. J. Dionne Jr., September 26, 2008, Washington Post)
The simple truth is that Washington is petrified about this crisis and will pass something. There are dark fears floating through the city that foreign investors, particularly the Chinese, might begin to pull their billions out of our system.

Scarier than the bad mortgages are those unregulated credit default swaps that financier George Soros has been warning about. There are $45 trillion of those esoteric instruments sloshing around the global financial system. They were invented as a hedge against debt defaults, but even the financial smart guys don't fully understand their impact or how to price their real value.

Fear is a terrible motivator for careful legislating, but it's a heck of a way to bring about a lot of bipartisanship. McCain jumped into this game in the fourth quarter. Many of the players on the field, caked in mud and exhausted but determined as they approach the goal line, wonder why this new would-be quarterback has suddenly appeared in their midst.

McCain could yet play a constructive role by rounding up votes from restive Republicans. Oddly, the biggest obstacle to a bill may not be Democrats but Republicans who refuse to go along with their own president. And -- yes, there is an election coming -- Democrats will be wary of going forward unless a substantial number of Republicans join them.

Bailout deal wobbles amid partisan divide (James Oliphant, 9/26/08, The Swamp)
Deal or no deal?

A day that began on an optimistic note devolved into an evening of partisan bickering and finger-pointing, as Democratic supporters of a $700 billion Bush administration plan to bail out the financial sector accused Republicans of trying to scuttle the deal at the last moment.

And they also suggested that the man who had come into town to save the deal, John McCain, had, in fact, wrecked it by encouraging the fracas, after a White House summit billed as a chance for both parties to work together ended with no agreement and perhaps more division on the issue than ever.

Lawmakers Weigh Political Risks of Stance on Bailout Plan
With leaders in Congress working on a controversial financial-rescue plan, rank-and-file lawmakers face a crucial election-year question: If they back the proposal, will they pay at the polls?

Populist outrage has been spilling out across the country from people of all political stripes. Lawmakers say they have received hundreds of calls and emails in recent days, almost uniformly against the idea of giving the government the power to buy billions of dollars in distressed assets to keep the financial system afloat.

Things Fall Apart (Daniel Politi, Sept. 26, 2008, Slate)
A dizzying day of high-stakes Washington drama has left everyone confused and unsure about whether the $700 billion bailout to save the nation's financial system has any chance of making it through Congress. Whereas yesterday's papers were filled with optimism that a compromise would be reached, today no one knows whether the breakdown in negotiations means the plan is doomed or if it just represents a brief stumbling block.

McCain Ploy Ultimately Changes Little (Carl Leubsdorf, 9/26/08, Real Clear Politics)
Critics immediately accused the Arizona senator of political grandstanding in the face of faltering poll numbers, noting that congressional leaders and Bush administration officials already were resolving differences over the massive package.

Supporters argued that Mr. McCain's move meant he would be able to claim a large share of responsibility if a package ultimately passed because his support was needed to get enough House Republican votes to create the bipartisan support Democratic leaders demanded.

In fact, both critics and supporters may be right.

Mr. McCain's move was clearly political, since he was not directly involved in hammering out the complex legislation. But his role as the party's de facto leader may give him leverage over GOP congressmen who would otherwise not fall in line.

Indeed, the Republican standard-bearer seems to have acted less to rescue the talks than to ease the potential damage to himself and his party for opposing, or even killing, a bipartisan bailout proposal.

Circumstances leading to his announcement Wednesday strongly suggest that.

Paulson and Obama (American Spectator, September 26, 2008)
When Sen. Barack Obama was given the floor to speak during White House negotiations, according to White House aides, he did so raising concerns about a House Republican alternative to the Paulson/Bernanke $700 billion bailout. But those concerns weren't necessarily his, as he was not aware of the GOP plan before reviewing notes provided him by Paulson loyalists in Treasury prior to entering the meeting. [...]

"Paulson and his team have not acted in good faith for this President or the administration for which they serve," says a House Republican leader who was not present at the White House meeting, but who instead is part of the team hammering out the House GOP alternative. "We keep hearing about how Secretary Paulson is working with Democrats on this or that, yet he never seems to consider working with the party that essentially hired him.

He works for the American people, not the House GOP caucus.

Posted by Orrin Judd at September 26, 2008 6:08 AM
blog comments powered by Disqus