Analysis: A bailout plan too big to fail

President Bush and the two men running to succeed him raised the political stakes dramatically Wednesday in the great bailout debate of 2008, effectively stamping a "too big to fail" sign on congressional efforts to pass a pre-election economic rescue plan.

With the outcome all but assured, details and a timetable for passage of an unprecedented federal intervention in the capital markets remain to be settled. And both John McCain and Barack Obama will be able to claim credit for winning changes in the administration's original plan — some of which the White House has already accepted.

"The whole world is watching to see if we can act quickly," President Bush said early in the week, before his proposal ran into criticism from Democrats and Republicans alike.

So, too, the American electorate, six weeks before choosing between two presidential candidates, now staging side-by-side auditions for the job of national crisis manager-in-chief.

Bush arranged a prime-time address Wednesday night to warn Americans that the nation faces the possibility of "a long and painful recession" if Congress doesn't act.

Building on dire warnings daily from Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, the president's remarks were designed to revive the rescue plan that he sent to lawmakers less than a week ago.

With less than four months remaining in office and approval ratings in the 30 percent range, Bush's persuasive powers are as uncertain in Congress as they are with the public.

It was a point some Republicans were willing to make, uncharitably at times.

"It's a tough sell to most of our members," said Rep. Tom Davis, R-Va., after a closed-door meeting with Paulson and Bernanke. "It's a terrible plan, but I haven't heard anything better."

"They sold the war, they sold the stimulus package and some other things. It's the 'wolf at the door'" argument, said Davis, who is retiring at the end of the year.

If Republicans weren't exactly clamoring for Bush to show them the way, Democrats insisted the president step up, for reasons of their own.

"It is time for him to explain why his administration sat on its hands for months and only now has come to realize the need for immediate and unprecedented government action," said Senate Majority Leader Harry Reid of Nevada.

"It is time for him to explain how he could tell our country for months that our economy was fine, yet overnight declare that if American taxpayers don't accept his bailout bill, our country will face an economic disaster."

Translation: Neither Reid nor House Speaker Nancy Pelosi intended to put their rank and file in the position of voting for legislation that Republicans could oppose and then use as a campaign issue against them. But if many Republicans were planning to vote for the measure eventually, they were quiet about it on Wednesday.

While Bush was exercising his presidential powers, would-be successors McCain, the Republican, and Obama, the Democrat, were trying out for his job.

McCain, trailing once more in the race for the White House, announced he would return to Washington to help work on legislation. He suggested he and Obama hold around-the-clock meetings with congressional leaders and administration officials until they had reached an agreement, and he said this Friday's presidential debate should be rescheduled in deference to the crisis.

"All we must do to achieve this is temporarily set politics aside, and I'm committed to doing so," McCain said in New York.

It was an echo of the acceptance speech he delivered in St. Paul, Minn., less than a month ago: "After we've won, we're going to reach out our hand to any willing patriot, make this government start working for you again," he said then.

But there was more to it.

McCain's statement marked the second time in a matter of weeks that he used a dramatic gesture to shake up the race for the White House.

The first was his selection of Alaska Gov. Sarah Palin as vice presidential running mate, a pick that energized conservatives and helped fuel a post-convention surge in public support.

But the gains in public opinion surveys have now dissipated, and most polls show Obama with the same relatively modest lead he held before the summer. One, the Washington Post-ABC survey, gave the Democrat a nine-point advantage, with a commanding lead among voters who said the economy was the top issue.

And while McCain has insisted Palin is ready to take over as president, he made no mention of including her in the crisis meetings he wants in Washington. One aide said he did not intend for her to be present.

Obama was next to step before the cameras, telling reporters that he had initially called McCain to suggest a joint statement that would make clear both presidential hopefuls supported legislation to stem the economic slide.

Where McCain talked about bipartisanship, Obama provided specifics across party lines.

"I also need to give credit to Republican Sen. Tom Coburn, who had called me suggesting that a joint statement might be useful," he said.

He also said he had urged Democratic congressional leaders not to pursue efforts to add an economic stimulus package to the bailout. Similarly, he said the attempt to give bankruptcy judges the power to rewrite mortgage terms, another Democratic priority, "is probably something that we shouldn't try to do in this piece of legislation."

Then came the jab at his rival.

"My hope is, is that Sen. McCain is going to be talking to Republicans and sending them the same message, that there are some issues that they may be concerned about or things that are priorities for them, but what we shouldn't do is try to get everything done in this package."

Nor was Obama taken with McCain's call to defer the debate until agreement had been reached on legislation.

"You know, presidents are going to have to deal with more than one thing at a time," he said. "It's not necessary for us to think that we can only do one thing and suspend everything else."

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EDITOR'S NOTE — David Espo covers presidential politics for The Associated Press.

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