John McCain roared into Washington yesterday and reportedly broke up an agreement on the bailout deal. In doing so, he went against not only Democrats but the Republican president, the panicked Republican Treasury Secretary and Fed Chairman, and Republican Congressional leaders. Instead, he sided with a small band of outraged Republicans grousing about violation of free-market principles.
So was this idiotic McCain self-destruction, as most people are suggesting? Or was it a brilliant populist move?
We think the latter.
Americans hate the Hanke-Panke plan, which they accurately view as a bailout of the financial-services companies and executives that helped get us into this mess. The plan is now a lot better than it was originally–mainly because the government will now take equity in the banks it saves–but this message hasn’t gotten out there yet.
Some Americans are so angry, in fact, that for now they’d rather see “this sucker go down”–as Bush put it yesterday, referring to the U.S. economy–than support a financial-services bailout. By aligning himself with a small band of Republicans who are refusing to go along with the Hanke-Panke plan, McCain not only appears to be standing up for this outrage but is reinforcing his desired image as a maverick.
Given the ongoing crisis in the credit markets, a bailout plan will likely be struck today or Monday–whether McCain plays ball or not. Assuming this happens, McCain will:
- Take credit for brokering a compromise (assuming the final deal is palatable to Americans)
- Crow that he was the candidate who tried to stand up against the bailout of Wall Street fat-cats
- Note every five minutes in the next six weeks that the enormous sop to Wall Street hasn’t saved anything (if the bailout works, it won’t work until long after the election is over)
- Blast President Bush, who everyone hates anyway, thus reinforcing his “change” message
- Say he’s the only guy with the balls and experience necessary to deal with this crisis.
And on the off chance that a deal doesn’t go through in the next couple of days, McCain can just rail about the outrage of the Democrats’ desire to bail out Wall Street at the expense of Main Street and say he’s the only one standing up for the little guy.
In our opinion, this was a brilliant political play (and we’re voting for Obama). If only it were likely to lead to a better bailout plan.
(What’s a better bailout plan? One that injected equity into the banks–or, better yet, converted debt to equity–thus penalising banks for their stupidity, not taxpayers, and actually accomplishing the desired recapitalization. The agreement on principles the Congress announced yesterday was closer to this, so McCain’s bet is indeed a risky one).
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