McCain/GOP on the High Wire

It doesn't take a weatherman to know that there are so many political cross-currents right now that nobody knows much of anything. Nobody in the media knows where the negotiations on Paulson's Big $700 Billion Bailout stand. But I'm not sure the negotiators know either. The main unknowable is whether John McCain or the House Republicans actually want a settlement. One of the reasons House Republicans rejected the understanding between the Dems and the Bush administration was that they didn't want an agreement until after John McCain got back to Washington. An aide to House Republican leader John Boehner "said Republicans revolted, in part, because they were chafing at what they saw as an attempt by Democrats to jam through an agreement on the bailout early Thursday and deny Mr. McCain an opportunity to participate in the agreement." Now McCain is returning the favor to the House GOP by indicating that he might not like the settlement either. But nobody knows what either McCain or the House Republicans want because they're both focused more on presidential politics than on solving the problem. The House Republicans didn't even show up for an evening meeting at the White House.

A secondary matter is that no one realy knows whether there will be a presidential debate Friday night or not. And I haven't even seen any guesses on what all the political manuevering means for the presidential election.

Finally, there's the big question about whether the credit markets are going to completely ground to a halt if there's no big bailout deal by Monday. House Republicans might not care (". . . some House Republicans are saying privately that they’d rather “let the markets crash” than sign on to a massive bailout.) but Sept. 29 might be remembered as the Black Monday of the next big depression.

To paraphrase Karen Carpenter, "Rainy Days and Black Mondays always get me down."

But the fact that nobody knows anything doesn't mean that there aren't important things to say.

The Dems Should Roll the House Republicans. The current hold-up for Paulson's Big Bailout is the House Republicans. The House Republicans are proposing some of the dumbest ideas in the history of American government and they're willing to hold their breath and withhold their votes until everyone else agrees with them. They want to provide insurance guarantees for the private parties buying up the bad financial debt. The House Republicans didn't come up with this idea until Thursday and there's reason to believe that they're mostly engaged in political posturing so that John McCain can look like the guy who's brokering a "compromise." But Secretary of Treasury Paulson declared it unworkable as soon as he heard of it.

I don't see how this proposal would work either. If private parties purchased the debt and it started losing value again, the Republicans want them to be insured for their losses. Perhaps I'm mistaken but my understanding is that investors in capitalist economies are interested in earning profits rather than breaking even by having investments insured. But why would this mechanism give investors confidence in relation to the extremely bad debt they already hold.

Even worse, the Republican plan incorporates more tax breaks for private investors than they already have and deregulates financial markets even further.

Yeah, that's the ticket--more tax breaks and even less structure and coherence for the financial markets than they have now.

Without House Republican support, the Democrats aren't going to go along with any bailout either. The Democratic leadership insists that any bailout legislation gets 100 House Republican votes. I can see the point. The bailout looks unpopular on Main Street and the Democratic leaders want political insurance against GOP attack ads.

But here Nancy Pelosi is mistaken. The Democrats should have more faith in the rightness of their own position and they be running their own ads about how the Republicans are responding to the national crisis with even more tax cuts for the wealthy and even more deregulation to reinforce reckless behavior on Wall Street. Nobody likes bailing out the irresponsible pseudo-geniuses of the financial sector, but Republican proposals are just as irresponsible as the original sub-prime loans. Ultimately, the Democratic leadership should be prepared to pass the bailout legislation with Democratic votes alone. They should also be using their financial advantage to start attacking the conservative Republicans who are rejecting bipartisan compromise in favor of ideological nonsense.

The Debate Tomorrow. The Obama/McCain debate looked like it was on when the Democratic negotiators were declaring that an agreement had been reached. However McCain has pledged to only do the debate if an agreement has been reached and it doesn't look like McCain is particularly interested in reaching agreement unless he gets to broker that agreement himself. Something tells me the Democrats aren't going to buy into that. So it's doubtful that McCain will do the debate.

But what's it all mean for the election. Nobody knows. McCain has gotten a lot of attention for "suspending his campaign," flying into Washington, and doing interviews with CBS, ABC, and NBC. That will probably keep him from slipping further, but I don't see public opinion as coalescing in relation to McCain's latest manuevers. As a result, the meaning of McCain's campaign suspension stunt will be determined more by future events than what's happening in the short term.

But we're seeing what a McCain presidency would look like. McCain talks a bi-partisan game, but what that means is that he would play the Democrats and conservative Republicans against each other in order to make himself look good. As a result, a McCain presidency would involve a constant helping of high-wire political posturing where a President McCain would try to focus maximum attention on himself. That's McCain's character. He a "me, me, me" kind of guy who likes to take big risks without being organized or thinking things through. It's also McCain's political position. McCain doesn't have a big constitutency in the Republican Party and would be facing Democratic majorities in both the House and Senate. Given that he's essentially a politicqal loner, McCain would alway have to be working out new ways to focus attention on himself. That makes for a daily high wire act.

John McCain not only likes to be irresponsible, it's his only option.