President Bush came out of hiding last night to warn the nation that the economy is in crisis and the situation will get much worse unless Congress acts quickly to pass the $700 billion bailout of troubled financial institutions. “Our entire economy is in danger,” Bush said. The president took pains to emphasize that the bailout wasn’t designed to help Wall Street millionaires but rather to preserve “America’s overall economy.” As USA Today summarizes, Bush warned that “inaction could cause millions of layoffs, bank failures, business closures, lost retirement savings, more foreclosures, a further drying up of credit and ‘a long and painful recession.’ ” The Los Angeles Times points out that the “wholehearted endorsement of massive government intervention represents a startling about-face for a president who has insisted throughout his career that such meddling creates problems instead of fixing them.”
In an effort to display the urgency of the situation, Bush invited congressional leaders, along with the two parties’ presidential nominees, to what the New York Times, the Wall Street Journal, and USAT all call an “extraordinary” meeting today at the White House. The Washington Postpoints out that it was Bush’s first prime-time speech in more than a year, and the NYT notes that it was the first time in his presidency that one was devoted entirely to the economy.
Bush’s prime-time address came after many Democrats on Capitol Hill had been criticizing his silence as Republican opposition to the bailout plan, particularly in the House, appeared to grow in the last few days. Democrats “have argued that they should not have to take the political risk of passing the wildly unpopular measure without Republicans joining in,” notes the LAT. Key Democrats breathed a sigh of relief and predicted that the speech would help gather support for the massive bailout. The WSJ says that Democratic leaders hope to iron out some of the major details of the plan this morning so they can take a general outline to the White House meeting in the afternoon when a final compromise might be cobbled together.
While all the papers warn that everything is still very much up in the air, details of the compromises in the plan appear to be taking shape, and the WSJ does the best job in clearly outlining where things stand. In an unsurprising development, Treasury Secretary Henry Paulson appeared to drop his resistance to limiting the pay of executives at companies that would participate in the bailout. Now it seems almost certain that such a measure would be included in the bailout package. In addition, beefed-up oversight through the Government Accountability Office also appears to be a shoo-in. And in another unsurprising move, it seems Democrats are ready to stop pushing for a measure that would allow bankruptcy judges to modify the terms of mortgages.
Whether the government would have the right to acquire shares in the companies it bails out appears to be less clear. The NYT cites Democrats saying that the White House has agreed to such a measure that would theoretically allow taxpayers to profit from the bailout if the companies recover. For its part, the WSJ cryptically says that “in certain cases” the government could get the right to an equity stake but doesn’t spell out what these cases would be. Of course, it’s more than likely that the lawmakers themselves don’t know yet.
Most interesting of all is an idea that was barely talked about a few days ago but seems to have gathered steam in Democratic circles yesterday as more lawmakers wondered whether they couldn’t effectively set up an installment plan. Under this scenario, the Democrats would authorize the entire $700 billion but disburse only a smaller amount—$150 billion, according to the NYT—to get the program started. The WSJ reports that some Democrats want to “establish benchmarks” to periodically assess whether to give out the next batch of billions. The White House isn’t too keen on the idea but appears to be open to it as long as getting each installment won’t require congressional approval.
Despite all the wheeling and dealing, the WSJ warns that “it’s impossible to handicap the bill’s actual prospects.” This is particularly true due to the continued opposition from many House Republicans, who the Post says “have emerged as the most difficult bloc of votes.” But don’t fear, John McCain is coming to the rescue.
All the papers give big front-page play to what the LAT calls “a dizzying day of political one-upmanship” that culminated with both candidates agreeing to go back to Washington to participate in the bailout negotiations. It all began when Barack Obama placed a call to McCain yesterday morning to discuss issuing a joint statement of principles on the bailout plan. Instead of giving into the ploy, McCain decided to “up the ante” and announced that he was throwing his campaign schedule aside to return to Washington. Obama at first hesitated when McCain called for him to return to Capitol Hill, saying that it would merely bring “presidential politics” into vital negotiations. But after Bush “did exactly as McCain had requested” (WP) in calling for the White House meeting, Obama had no choice but to give in.
McCain called on Obama to postpone the Friday-night debate and join him in pulling down ads and stop all fundraising until a deal is reached. Obama quickly rejected the idea of postponing the debate as Democrats trampled over one another trying to be the first to call McCain’s move a transparent political maneuver. “Statesmanship or gamesmanship?” asks USATin a question that is echoed throughout all the papers. Whatever the case may be, it’s clear that McCain has, yet again, managed to shake up the presidential race at a time when several polls have been showing Obama gaining ground.
The LAT fronts a new poll that illustrates how registered voters prefer Obama’s ideas on the economy to McCain’s by a wide margin. But unlike yesterday’s WP poll, the LAT says the race remains neck-and-neck nationally as Obama only has a four-percentage-point lead over McCain among likely voters and a two-percentage-point lead among all registered voters.
The WSJ notes that like so many decisions he has taken in the past, McCain’s move “was both high risk and high reward.” Slate’s John Dickerson calls it McCain’s “second Hail Mary pass in a month.” The WP’s Dan Balz says the latest McCain gamble “may be among the biggest of his political life.” At a time when Democrats have the most to gain from troubles in the economy, McCain has successfully put the focus back on himself as he seeks to display strong leadership in a time of crisis. As a bonus, he also essentially tried to make it seem as if Obama was merely following his lead on the biggest issues of the day. But the move could easily backfire if voters see it as an attempt to exploit a very real crisis for political gain.
As for the debate, no one knows whether it’ll actually take place now. The Commission on Presidential Debates said it is moving forward with Friday night’s encounter in Oxford, Miss., but McCain said he would attend only if lawmakers reach an agreement on the bailout package before then. Obama says he plans to be there, and the NYT hears word that the commission wants to try to pressure McCain to reconsider by releasing a statement insisting that the debate go on as scheduled. Even some Republicans questioned the wisdom of McCain’s move, particularly since the debate was to focus on foreign policy, which many see as McCain’s strength.
Whatever the ultimate verdict from voters may be, McCain’s move has also added “an unpredictable new element into the negotiations for the bailout,” says the NYT. Democratic lawmakers were quick to criticize the move, saying that the involvement of presidential candidates would complicate the negotiations. “We need leadership, not a campaign photo op,” Senate Majority Leader Harry Reid said. For their part, Republican lawmakers welcomed McCain and touted his actions as a bold move from a strong leader. Still, as the LAT notes, McCain “faces an uncertain reception from Capitol Hill Republicans” since many rank-and-file lawmakers have spoken up against the plan. It could potentially be embarrassing for McCain if for some reason he doesn’t manage to bring Republicans in line to support the bailout.
The WP highlights that the back-and-forth on the campaign trail once again gave voters a front-seat view into the differences in the candidates’ styles of leadership. While McCain showed a willingness to “act boldly, if impulsively, to inject himself into the middle of delicate negotiations to force a solution” Obama adopted “a cooler approach designed to show calm in the midst of crisis,” notes the WP.
“This election is turning into a Goldilocks story,” writes the NYT’s Gail Collins. “One candidate’s too hot, and one’s too cool.”