Right now, about all we know about the federal government’s response to the Wall Street meltdown is that the Bush administration wants to spend at least $700 billion to buy up spoiled assets from financial institutions ravaged by the burst of the housing market bubble – and that the administration wants this bailout to be “clean,” as in free of whatever strings Congress might be tempted to attach.
The rest is up in the air. Criticism is flying from all directions. Such a massive federal intervention in the private sector is anathema to much of the right. And to the left, the notion of a strings-free bailout smells like a giveaway to the Wall Street fat cats whose recklessness led directly to this crisis. And yet there is a broad consensus that some action must be taken to protect the overall economy. Rival plans have sprung up, and some kind of compromise seems inevitable if Congress is to pass anything before its election season adjournment, now just days away.
Not surprisingly, the two presidential candidates are sending mixed and hesitant signals on the bailout, unsure where public opinion – to say nothing of opinion within their own parties – will ultimately fall. It’s not even clear whether John McCain and Barack Obama will even bother to show up in the Senate if and when bailout legislation comes up for a vote.
There could, however, be enormous political opportunity for both men in the bailout debate – if they are willing to assume the risks that would come from taking a leading role in it.
For now, only Mr. McCain, the slight underdog in the race, seems to be flirting with playing this game. On Monday, he pronounced himself “deeply uncomfortable” with the bailout plan that Treasury Secretary Henry Paulson had just spent the weekend touting. Mr. McCain called for specific revisions, all of them populist in nature – like more federal oversight and a cap on executive compensation for the firms being bailed out – but stopped well short of declaring himself irreconcilably opposed to the administration’s plan, or to alternatives with similar price tags.
The opportunity for Mr. McCain lies in taking his reservations a few steps further by junking his conflicted posture and making himself the face of opposition to the Bush plan and to any even remotely similar to it. All of the arguments that Mr. McCain would make to support this position would dovetail very neatly with the image he has been frantically trying to project – of a fearless and principled leader on a mission to protect the American taxpayer from pork-barrel spending, obscene earmarks, and, yes, corporate welfare. Greedy corporate titans and their arrogant protectors in Washington are conspiring to rip you off, he could warn Americans, but don’t worry – I’m here to stand up for you.
This could be more than just campaign-trail rhetoric. With a bailout plan likely to reach the Senate soon, Mr. McCain could excuse himself from the stump and dramatically return to Washington in an effort to kill it. His position would have tremendous superficial appeal; it’s inherently easy to rally opposition to a massive, publicly funded bailout. Plus, it would place him in direct opposition to George W. Bush, exactly the message that he wants and needs to send to swing voters.
So what is holding Mr. McCain back? For one, the administration’s plan figures to be revised before it comes up for a vote. Already, some of his demands – for more oversight, for example – seem likely to be added. Negotiations in the next few days could result in a compromise that makes all of the major players in both parties happy (enough). Then what would Mr. McCain be left to rail against? With his colleagues on both sides lining up behind one plan and insisting its passage was vital to the well-being of the American economy, Mr. McCain might look nakedly opportunistic in trying to gin up opposition. So he’s taking a wait-and-see approach.
Then there’s Mr. Obama, who for now seems content to echo his party’s Congressional leaders, who are demanding protection for homeowners, more oversight and executive pay caps as part of any bailout. Mr. Obama is playing it safe, voicing popular criticisms while creating the impression that he will ultimately go along with a compromise (while holding his nose, of course) in the interest of economic stability.
But isn’t this a chance for Mr. Obama, once and for all, to shake free of the McCain campaign’s oft-repeated claim that he’s never taken a difficult political stand and never stood up to his own party – that, in short, he’s never put “country first?”
Democrats in Congress, for the most part, are voicing reasonable concerns about the proposed bailout. But if their objections stall progress toward a deal, Mr. Obama could score political points by standing up to them and arguing that the bailout, as imperfect as it is, is critical to the economy. Even if public opinion were against him on the specifics, he’d be demonstrating the kind of leadership – embracing the unpopular because it is right – that Republicans insist he’s incapable of providing.
The most likely outcome, of course, is that a compromise will ultimately sail through the Senate without a fight from either presidential candidate. But that would be a missed opportunity for both of them.