Bailout Failure Puts McCain on the Spot
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The surprise defeat of the $700 billion bailout plan before the House of Representatives will soon show what downside, if any, Senator McCain faces for his bold gambit last week declaring his campaign suspended as he briefly jumped into the thick of negotiations over the proposal.
Lawmakers said yesterday it was uncertain whether the House would try for a second vote on the proposal in the coming days or return to the drawing board and come up with something new. The bailout plan was voted down, 228-205. House Republicans rejected by a margin of 2-to-1 the measure that had been advanced by a Republican administration to intervene in the financial markets.
The Dow Jones Industrial Average fell 778 points yesterday, the largest ever drop in points for a day.
In calling last week for a postponement of the first presidential debate as he tried to rally House Republicans to the proposal, Mr. McCain sought to show that he was a bipartisan leader willing to put his political ambitions in check to confront an economic crisis. In doing so, he may also have assumed a degree of stewardship over a bailout proposal that was unpopular with both his party and large swaths of the public, who may have been inclined to see it as a check from taxpayers to Wall Street.
Mr. McCain “staked some of his prestige on suspending his campaign to fly to Washington to prove that he could make this thing happen,” the director of the Center for Politics at the University of Virginia, Larry Sabato, said. “Well, it didn’t.”
Mr. Sabato did not expect Mr. McCain to reinsert himself so deeply into the next round of negotiations. He said: “He pirouetted into Washington to resolve matters and he pirouetted right back out to resume his campaign. It would be ludicrous and it would look desperate to resuspend his campaign.”
Yesterday, there were no signals from the McCain campaign as to what role the senator from Arizona intended to play as lawmakers and the White House tried anew for a bailout plan.
Asked whether Mr. McCain intended to suspend his campaign a second time to work toward a bailout, an economic adviser to Mr. McCain, Douglas Holtz-Eakin, said the candidate was “assessing the situation.”
The fourth-ranking Republican in the House, Rep. Tom Cole, said that he did not expect the vote’s failure to “make much difference, one way or another” for Mr. McCain’s presidential run. Mr. Cole, who voted for the bill, said that senator’s support had, in fact, succeeded in “bringing some House Republicans along.”
“Who knows, he may still have a role to play,” Mr. Cole, of Oklahoma, said. “It’s a little early to know. Right now, there’s not a plan to sell.”
The bailout bill sought to confront the credit crisis and shore up teetering financial firms by authorizing Treasury Secretary Paulson to buy hundreds of billions of dollars worth of troubled assets from banks, pension funds, credit unions, and other financial institutions. President Bush said the bailout plan was needed to avert a recession.
The bill drew the support of every representative from New York City except Rep. José Serrano, a Democrat of the Bronx.
House Republicans were firmly against the bill, with 65 voting for it, and 133 voting against.
Among Democrats, 140 representatives voted in favor of the bill, while 95 opposed it.
The Republican minority leader, Rep. John Boehner, speaking from the floor of the House, urged his party to back the bill.
“If I didn’t think we were on the brink of an economic disaster it would be the easiest thing in the world for me to say ‘no’ on this,” Mr. Boehner said. Moments later he said: “I believe Congress has to act.”
Mr. Holtz-Eakin, the McCain aide, echoed several Republican lawmakers yesterday in saying that the bill’s failure may be because of several remarks delivered by the speaker of the House, Nancy Pelosi, a Democrat, right before the vote.
Mrs. Pelosi used the opportunity of the vote to blame the current economic woes on the “failed economic policies” of the Bush administration, a statement a number of Democratic lawmakers have made countless times in the last two weeks and before. Speaking with reporters, Rep. Barney Frank, the lead negotiator on the bill for Democrats, ridiculed the idea that there were “Republicans who are putting feelings over country, holding out because someone said something they didn’t agree with.”
“Just before the vote, when the outcome was still in doubt, Speaker Pelosi gave a strongly worded partisan speech and poisoned the outcome,” Mr. Holtz-Eakin said. “This bill failed because Barack Obama and the Democrats put politics ahead of country.”
The Obama campaign shot back, with a statement saying that the bill’s failure as well as “the angry and hyper-partisan statement released by the McCain campaign are exactly why the American people are disgusted with Washington.”
Mr. Obama, too, had returned to Washington last week to join negotiations over the bailout proposal. He has, in guarded terms, endorsed the bill.
“Democrats, Republicans, step up to the plate, get it done,” Mr. Obama said, from Colorado yesterday, referring to the bill.
Secretary Paulson told reporters after the bill’s defeat that the fight for bailout legislation was not over.
“This is much too important to simply fail,” he said.