Friday, September 26, 2008

Mr. McCain goes to Washington, and destroys the congressional bailout talks

This is from The Huffington Post:

Inside an intense White House meeting over the financial crisis on Thursday, where nearly every key player came to an agreement on the outlines of the bailout package, Sen. John McCain stuck out. The Republican candidate, according to sources with direct knowledge, sat quiet through most of the meeting, never offered specifics, and spoke only at the end to raise doubts about the rough compromise that the White House and congressional leaders were nearing.

McCain's reluctance to jump on board the bailout agreement could throw the entire week-long negotiation into a tailspin. Sen. Chris Dodd, after leaving the White House, suggested on CNN that the tenuous process could be derailed by what he viewed as McCain's political motives.

"What happened here, basically, if you want an honest appraisal of the thing, we have been spending a lot of time and I am tired. I have spent almost seven straight days at this in trying to come out with a workout plan for our economy a rescue plan," said Dodd. "What this looked like to me was a rescue plan for John McCain for two hours and took us away from the work we are trying to do today. Serious people trying to do serious work to come up with an answer."

According to the source with knowledge of the White House gathering -- which featured both presidential candidates, congressional leaders and the President -- virtually ever key figure in the room, save McCain and GOP Sen. Richard Shelby, were in agreement over a revised version of Treasury Secretary Hank Paulson's plan.

Towards the end, McCain finally spoke up, mentioning a counter-proposal that had been offered by some conservative House Republicans, which would suspend the capital gains tax for two years and provide tax incentives to encourage firms that buy up bad debt. McCain did not discuss specifics of the plan, though, and was non-committal about supporting it.

I am trying to analyze John McCain's behavior during the Bush photo-op meeting with congressional leaders and Barack Obama. And the only thing I can think of is what the frickin' hell was McCain doing there? Everyone was in agreement with the outline for the bailout--President Bush, Barack Obama, the House and Senate congressional leaders. Everyone except John McCain and GOP Sen. Richard Shelby. McCain sits silently through the entire meeting, never offers any specifics, only to say, at the end of the meeting, that he pretty much opposes the bailout package. McCain then made a counter-proposal:

Towards the end, McCain finally spoke up, mentioning a counter-proposal that had been offered by some conservative House Republicans, which would suspend the capital gains tax for two years and provide tax incentives to encourage firms that buy up bad debt. McCain did not discuss specifics of the plan, though, and was non-committal about supporting it.

Paulson, however, argued directly against the conservative proposal. "He said that he did not think it would work," according to the source. At another point in the meeting, President Bush chimed in, "If money isn't loosened, this sucker could go down" -- and by sucker he meant economy.

CBS News reports that the McCain counter-proposal included more corporate tax breaks and more government deregulation:

So what happened? I think presidential politics went to McCain's head. First I think that McCain opposed the $700 billion Bush/Paulson bailout plan because Barack Obama initially supported the plan. I don't believe McCain could ever support anything with Barack Obama. Second, any Bush bailout plan to be passed by the Democratic-controlled Congress would require some serious concessions. And there were some concessions made on the plan regarding the limiting of CEO compensation, doling out smaller chunks of $200 billion to the Treasury to buy up the bad debt, and then have Congress oversee the success or failure of the program. Also, any such bailout plan would have some regulatory oversight. President Bush and the Congressional Democrats agreed on an outline to such a bailout plan. The Conservative Republicans were balking on such a plan. When John McCain came to Washington, he would not accept any such government regulation, and threw his (non-committal) support for the conservative Republicans in proposing the alternative plan. By opposing the bailout package, McCain had embolden the conservative Republicans into walking out of the negotiations. According to the Washington Post:

As Friday began it was unclear the state of the negotiations on the rescue plan. After a day of apparent negotiating progress a renegade bloc of Republicans moved to reshape the a massive bailout plan, 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.


Rep. Spencer Bachus (R-Ala.), who had attended the meeting on behalf of House Republicans, denied that an agreement had been reached. While progress was made on peripheral issues, Bachus said, House Republicans remained adamantly opposed to the central point of the plan: purchasing bad assets from struggling firms.

"There's not a deal. There's not a deal made. There was progress on the issues," Bachus told reporters. He said House Republicans "would prefer a loan where we fix an interest rate or we would prefer insurance" rather than having the government buy up bad assets.

Bachus said many of those ideas were supported by McCain, who returned to Washington yesterday to participate in the negotiations. Bachus said he spoke to McCain on Wednesday, had breakfast yesterday with two McCain advisers and spoke to McCain again immediately after the morning meeting.

But, Bachus said, "John's not trying to call the shots for the House caucus, I can tell you that. He's just opposed to the plan in its present form."

[Representative Barney] Frank (D-Mass.) reacted angrily to Bachus's remarks, saying lawmakers had been well on their way toward a bill they could put to a vote and accusing McCain of engineering a breakdown. "This is the presidential campaign of John McCain undermining what Hank Paulson tells us is essential for the country," he said.

Despite expectations that a deal was near, Boehner took off in a different direction during the meeting, saying the bailout plan was not gaining traction among rank-and-file House Republicans.

As Obama and Frank peppered Boehner with questions about the new proposal, Bush rejected the idea as a too-broad rewrite of his administration's plan, according to the handwritten notes of one Democrat present.

"Don't start over," Bush said. "Don't start over."

It seems that the House Republicans were following John McCain's "leadership." By refusing to accept the bailout, McCain gave an opening to the House Republicans to offer their own alternative plan--one that was opposed by both President Bush and the Democrats (talk about an alliance here). Had John McCain agreed to the Bush bailout plan, any opposition by the House Republicans would have been stifled, and President Bush may have signed such an agreement by Saturday. So Mr. McCain went to Washington, and completely screwed up the Wall Street bailout negotiations for his presidential ambitions first, country second.

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