NEWTON, Mass. — On the most important issue of 2008, the $700 billion bailout plan for Wall Street, the leaders of the Democratic Party and President Bush are holding essentially the same position.
After months of railing against John McCain, representing the election of Mr. McCain as a third term for President Bush, House Speaker Pelosi, Senate Majority Leader Reid, and the Democratic chairman of the House Financial Services Committee, Rep. Barney Frank of Massachusetts, all find themselves in the unlikely position of standing shoulder-to-shoulder with the president right now. Even Senator Obama himself, who has the most to gain by linking Mr. McCain to Mr. Bush, will likely vote for the plan. Even more extraordinarily, Mr. Bush is looking to the House Democrats to rescue the plan, which was voted down yesterday.
Unsurprisingly, none of the Democrats are praising Mr. Bush. Nonetheless, they find themselves linked to him on a proposal many small town Americans are bound to hate. For this reason, they are finding ways to separate Mr. Bush from the very proposal his Treasury secretary offered.
For example, speaking in Providence on Saturday night, the junior senator of Rhode Island, Sheldon Whitehouse, said, "We do think the rescue bill will pass," before conceding, "$700 billion is a lot of money." He tried to put that amount in perspective for his audience, members of the Rhode Island Medical Society, saying that the difference in the budget surplus in the last of President Clinton's years in office and the budget deficit this year under Mr. Bush was $7.7 trillion, a number, he said, was 11 times the bailout amount. "Think of it as the last egg in the dozen," Mr. Whitehouse said.
Mr. Obama has tried to shift the focus away from what will undoubtedly be his support of the current plan to a lack of oversight under Mr. Bush. " Two years ago, I warned that, because of the subprime lending mess, because of the lax regulation, that we were potentially going to have a problem and tried to stop some of the abuses in mortgages that were taking place at the time," Mr. Obama said at Friday's debate. But despite his rhetoric, he acknowledged that he will back the plan: "Yes, we've got to solve this problem short term. And we are going to have to intervene; there's no doubt about that."
The position that Mr. Obama and the other Democrats are taking could threaten the one undeniable advantage that they have in the national race, superiority on the economy. The director of the Political Research Center at Suffolk University, David Paleologos, is in the midst of conducting surveys in battleground states, such as Nevada and New Hampshire. Before news of the proposed Wall Street bailout, Mr. Paleologos found that Mr. Obama was pulling ahead of Mr. McCain on the issue of the economy. Undecided voters in New Hampshire blamed the Republican Party for economic troubles by a margin of 5 to 1.
"It's so ironic that you're going to see Obama and Bush embracing on this issue," Mr. Paleologos said. "At the least, it inoculates the Republicans from the sting of blame. The net effect is a wash on the bailout bill."
But a senior fellow at the Hudson Institute, Diana Furchtgott-Roth, cautioned that the Democrats' position on the bailout came only from self-interest. "They're afraid to be against the bailout because they're afraid it will bring Wall Street crashing down," she said, noting that the market was already down several hundred points at the time of the interview. "They're not doing it because of principal, they're doing it because of CYA." Ms. Furchtgott-Roth urged that Congress increase the $100,000 limit on FDIC insurance and blamed the Democratic leadership for failing to adequately scrutinize Fannie Mae and Freddie Mac.
There's been much talk during the last week of differences between Wall Street and Main Street. The closest thing to a Main Street in the home district of Mr. Frank is Newton Center. Disagreement exists even here on the bill. One man coming out of a bakery with challah for Jewish New Year gave his opinion of the financial rescue plan. "It's good for the people who have plenty of money but the average person is going to get hurt," he said.
At a bakery down the road in nearby Brookline, a customer, Ronald Berman, endorsed the plan and one of its authors, Mr. Frank. "It needs to be done," Mr. Berman said. "If it's not done I think you'll see a significant downturn."
Beyond recriminations over whom to blame for the current financial crisis, certain realities exist. When Wall Street booms, benefit typically is concentrated in a relatively small number of hands — although until recently even Joe Six Pack profited by being able to procure a cheap mortgage. It may not necessarily be fair, but when Wall Street crashes, everyone gets hurt. It is worry over that exact scenario that is bringing Democrats together with the man they revile to back the bailout bill.
Mr. Gitell (gitell.com) is a contributing editor of The New York Sun.