First, the bailout. It's really starting to look like the Paulson plan will not pass in its current form. No congressman facing re-election wants to go along with a massive $700 billion transfer of wealth from the taxpayers to Wall Street. Nor does John McCain. There is a bipartisan consensus forming that Paulson is largely full of shit, and that this is not the only option.
It isn't. There are a variety of other ways to go about fixing the financial sector, but they all involve Wall Street taking some losses. Imagine that! Free enterprises reaping the gains and incurring the losses that result from free market operations! What a radical concept.
Anyway, back to the fun stuff. John McCain decided to "suspend his campaign" today, and asked to postpone the first debate, so he could get to work on fixing the economic crisis. "Country first", right? Not that he has the slightest idea how to fix this mess (he probably thinks we just have to "defeat it" ), but I guess presidential candidates need to at least appear as though they have some idea of what they're talking about.
Personally, I think McCain, knowing that this is not his strongest issue, was hoping that the Dems would sign on to the $700 billion Paulson plan, including Obama, and then he could campaign on a platform of opposing it. But now that it looks like neither party will be on board, he won't be able to demagogue the bailout. So, he's throwing another Hail Mary, trying to appear Presidential while potraying Obama as putting politics above country.
To his credit, Obama has said no to any debate postponement, calling McCain's bluff. Whatever McCain's stated reasons for doing this, the real motive is transparently clear. He knows how badly things are going for him, and he desperately needs to establish some credibility on the economy. For that matter, what McCain plans to do back in the Senate is a rather puzzling question. He brings no extra expertise to the table, so it's not clear to me how his presence will do anything to achieve a speedy resolution.
If anything, it might be the opposite; McCain's reactions to this entire crisis have been laughably incoherent and often in opposition :
When the crisis on Wall Street began, and the markets began tanking nine days ago, the very first message from John McCain was, "The fundamentals of our economy are strong." That didn't work, and McCain dropped the line.
His second message was that he wanted to see a commission investigate how and why the crisis happened. That made McCain appear confused, so he dropped that line, too.
His third message was in opposition to the AIG bailout. That didn't last, and McCain took the opposite position 24 hours later.
His fourth message was to fire Christopher Cox from the Securities and Exchange Commission. That turned out to be ridiculous, and McCain dropped the line, too.
His fifth message was to blame lobbyists, influence peddlers, and the collapse of Fannie Mae and Freddie Mac. That became problematic given the lobbyists and former Fannie/Freddie officials on McCain's payroll.
McCain has simply gone from one ridiculous notion to another, flailing around, looking desperately for something coherent to say. Now McCain has come up with yet another stunt: suspend the campaign, delay the debate, and head back to his day job for the first time since April.
So to recap, McCain has no idea how to respond to this, and with this latest stunt, all he's going to do is inject more politics into the ultimate decision that Congress will make, one that is already being made under the worst possible conditions: fear and intimidation.
To summarize: the Paulson plan buys all the banks' sludge at inflated prices, allowing them to stay in business instead of filing for Chapter 11 bankruptcy. In short, Wall Street doesn't lose a thing, and, in fact, gets a lot more than they deserve, and the taxpayers are short $700 billion. This kind of perverse robbing from the poor to save the rich from well-deserved losses is pretty much unprecedented.
No one disputes that major action is necessary to preserve the financial sector, and by extension, the entire economy. But handing out $700 billion with no strings attached and giving the Treasury Secretary such wide-ranging power to do as he pleases with the money is certainly not the only option, and it's dishonest to suggest otherwise.
The Bush administration is trying to push this false dichotomy: "you have to go along with this specific plan or else the economy crashes", just as they did with Iraq("we have to invade Iraq or Saddam will give WMDs to terrorists and they'll kill us"), just as they did with terrorism and expanded government surveillance powers ("we need to spy without warrants, otherwise the terrorists will kill us"). But I don't think Congress will be bamboozled into doing what he wants quite so easily this time.