John McCain's ploy to cast himself as an above-party leader in the financial crisis -- and incidentally to wriggle out of having to debate Barack Obama tonight -- has backfired in all key respects. He is widely seen as having parachuted clumsily into delicate negotiations, perhaps helping House Republicans to derail them. The White House meeting was hastily contrived to help McCain, but all it did was help blow up the deal.
Far from demonstrating his claim of putting country above politics, the caper reeked of transparent opportunism. By ducking the question of what kind of package he'd support, McCain demonstrated the opposite of leadership. And far from "suspending his campaign," he continued to run the negative ads and his surrogates continued to trash Obama. Heckuva job, John.
You can just imagine the genius in the McCain campaign who thought up this gambit. Hey, let's send the candidate to Washington to be the hero who helps consummate the bailout deal. That way, we can look really presidential, and have an excuse to reschedule Friday's debate to October 2, and do a nifty carom shot by bumping the Palin-Biden debate as well. Wow, brilliant! Probably the same strategist who came up with putting Sarah Palin on the ticket.
At the level of presidential politics, this signals severe disarray both in the McCain camp and in the Republican Party. The House Republicans are deserting both their president and their senate colleagues. McCain is all over the map. Bush's feeble attempt at leadership failed. He couldn't even hold the Republicans. At the White House meeting, Obama was engaged, asking plenty of respectful and substantive questions, while McCain sat like a stump.
But what about the substance of the legislation and the fate of the country? The Republicans have abdicated. The question now is whether the Democrats have the wit, the nerve, and the unity to do this right. As the politics stand today, the eventual plan may well pass Congress mostly with Democratic votes, with most Republicans voting no, but signed by a Republican president. If the plan works, the Democrats are heroes. If it fails, they are goats. It had damned well better work.
The emerging House Republican plan for a "private sector solution" (backed by more government insurance and tax benefits) is pathetic. It's not really private at all, and it won't solve the problem. But what will solve the problem?
Several of us have proposed slightly different variations on an idea with two core elements: First, most of the government money goes to refinance mortgages rather than buy up bad paper. Once the mortgage market stabilizes, some value returns to the bonds backed by mortgages. That way, homeowners are the primary beneficiaries, not the incidental ones. Second, government takes a majority stake in the major failing institutions, takes a good look at their books, and only then pumps in equity capital as necessary. When the crisis passes, government closes the ones that are beyond salvage, and sells off the good bits.
Since the House Republicans are now damning the Paulson-Wall Street sweetheart deal as socialism (ha!), the Democrats might as well step up to the plate and do it right. If it takes another week or two, that's okay. This is not about rescuing the stock market day to day. It's about fashioning a program that will work.
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