A round-up of this morning's must-read stories.
IN BAILOUT VOTE, A LEADERSHIP BREAKDOWN
(Jackie Calmes, New York Times)
The collapse of the proposed rescue plan for the teetering financial system was the product of a larger failure — of political leadership in Washington — at a moment when the world was looking to the United States to contain the cascading economic crisis. From the White House to Congress to the presidential campaign trail, the principal players did not rally the votes they needed in the House. They appeared not to comprehend or address in a convincing way an intense strain of opposition to the deal among voters. They allowed partisan politics to flare at sensitive moments... While there were lawmakers who opposed the package on the merits, with Election Day just five weeks away, substantial numbers decided that to favor the bill would be to imperil their own political futures. And once the vote was under way and so few Republicans were voting aye, Democrats were disinclined to force more of their members to help pass the unpopular plan.
AN APPEAL AND A BLAME GAME
(Michael D. Shear and Dan Balz)
Reacting to the House's defeat of a $700 billion economic rescue proposal Monday, Sens. Barack Obama and John McCain called on Congress to pass a new bill and then sought to blame each other for the deadlock on Capitol Hill. McCain found himself in a particularly awkward position after bragging about his role in building a coalition behind the rescue package yesterday morning -- hours before it was defeated... The repercussions for the presidential campaign are uncertain and potentially dramatic as both candidates search for the right way to navigate the most severe economic crisis in decades just five weeks before Election Day. Aides in both camps said the candidates immediately called Treasury Secretary Henry M. Paulson Jr. and others, but neither McCain nor Obama announced plans to return to Washington... Ross Baker, a political scientist at Rutgers University, said McCain would feel the fallout over the House's rejection of the measure far more than Obama. "There's nothing worse than prematurely claiming victory and then finding you've been handed a defeat," Baker said. "It's a sign of the impulsiveness that he's often been accused of." McCain's political situation is complicated by disarray in the Republican Party. The split between Senate Republicans and President Bush, both of whom supported the plan, and House Republicans, who largely opposed it, make McCain's effort at trying to show leadership over his party all the more difficult.
REVOLT OF THE NIHILISTS
(David Brooks, New York Times)
The 228 who voted no... did the momentarily popular thing, and if the country slides into a deep recession, they will have the time and leisure to watch public opinion shift against them. House Republicans led the way and will get most of the blame. It has been interesting to watch them on their single-minded mission to destroy the Republican Party. Not long ago, they led an anti-immigration crusade that drove away Hispanic support. Then, too, they listened to the loudest and angriest voices in their party, oblivious to the complicated anxieties that lurk in most American minds. Now they have once again confused talk radio with reality. If this economy slides, they will go down in history as the Smoot-Hawleys of the 21st century. With this vote, they’ve taken responsibility for this economy, and they will be held accountable. The short-term blows will fall on John McCain, the long-term stress on the existence of the G.O.P. as we know it. I’ve spoken with several House Republicans over the past few days and most admirably believe in free-market principles. What’s sad is that they still think it’s 1984. They still think the biggest threat comes from socialism and Walter Mondale liberalism. They seem not to have noticed how global capital flows have transformed our political economy.
A FAILURE TO COMMUNICATE (WHAT WE HAVE HERE)
(Marc Ambinder, The Atlantic)
This was and wasn't a partisan failure. Majority Leader Hoyer and Finance Committee chairman Frank, and Minority Leader Boehner were statesmanlike before the vote. Speaker Pelosi gave a partisan speech at the wrong time; it's indeed possible that it cost her 15 votes. Still, if those Republicans had been of stronger backbones and more nimble minds -- and more mature than Pelosi, who, let's call it, gave a relatively tame, generic partisan speech -- the bill would have passed. Those Republicans were looking for an excuse, and Pelosi gave it to them. It shouldn't matter what Pelosi says; the future of the Republican was at stake... Neither presidential candidate took a firm position, although one of the candidates riskily suspended his campaign and intervened, without intervening. That intervention failed; he is now blaming his opponent and Nancy Pelosi via a spokesman and bemoaning the gridlock in Washington with his own lips. Neither candidate really explained the trade-offs to the American people. There was something pernicious, in a way, in both candidates' failure to answer Jim Lehrer's simple question: what will the trade-offs be in January? What, of all the things you've promised, will you not be able to accomplish? As president, both candidates will rely on the power of the bully pulplit to rally the country, and yet neither candidate has distinguished themselves during the worst financial crisis in the country's recent history.
TO SAVE CAPITALISM
(Rich Lowry, National Review)
What now? If nothing passes and a crash comes, Republicans risk getting tagged for the blame for a long time to come. The vote is a blow to John McCain, who had so dramatically “suspended” his campaign to return to DC and broker a deal. His campaign had explained his role as bringing to the table and coaxing along House Republicans, whose revolt now makes him look ineffectual. Yet the bill will likely be revived — and deserves to be. The phrase the “real” economy has become a hallmark of this debate, implicitly contrasted with the “fake” economy of the financial world. McCain talks of the honest laboring man as the strength of America. No doubt he is, but he wants to buy a house (which requires a mortgage), not pay for everything with cash (which requires credit cards), have a job (which requires a business that is very likely dependent on loans) and buy big-ticket consumer items he can’t pay for upfront (which requires car loans, etc.). Freeze up all those sources of credit, and economic life as we know it ends... Conservatives who make so much of their knowledge of the markets would ordinarily be the ones to point this out, but they have a blind spot for the market’s failures. The financial system is subject to periodic panics that, if left to work their course, will wreak economic havoc out of all proportion to reason. They take down good institutions along with the bad.
CELEBRATING THE BAILOUT BILL'S FAILURE--AND LOOKING AHEAD
(David Cay Johnston, New Republic)
Whether you favor the $700 billion bailout or not, the House vote today should make you cheer--loudly. Why? Because the majority vote against it shows that Washington is not entirely in the service of the political donor class, by which I mean Wall Street and the corporations who rely on it for their financing. These campaign donors, a narrow slice of America, have lobbied and donated their way into a system that stacks the economic rules in their favor. But faced with as many as 200 telephone calls against the bailout for every one in favor, a lot of House members decided to listen to their constituents today instead of their campaign donors. The GOP members voted overwhelmingly against the bill, while two-thirds of the Democrats favored it. Right now you can be sure that cajoling and arm twisting is underway in an effort to persuade 16 GOP members (or perhaps a dozen Republicans and a few Democrats) to vote the public largesse for Wall Street. None of this is to say that we need, or do not need, some government intervention in the markets. Rather it is to say that the administration has failed to make its case, instead assuming that just as with the war in Iraq and the Patriot Act, it could stampede Congress into thoughtless action and terrify the public into going along.
HOW VOTER FURY STOPPED THE BAILOUT
(Stephen Power and Gary Fields, Wall Street Journal)
The defeat in Congress of a proposed $700 billion economic-rescue package followed an intense outpouring of voter anger, fanned by politicians, interest groups and media on the left and right, that overwhelmed calls from the president and top lawmakers to pass the deal. Voters opposed to the deal deluged Capitol Hill with letters, emails, phone calls and faxes over the past week. Some 23,000 signatures were collected over two days by Sen. Bernie Sanders, a Vermont Independent, calling for a five-year, 10% surtax on the wealthiest Americans to help fund the bailout. Some prominent conservatives and bloggers criticized the deal as an unwarranted intervention in the free market.
CHALLENGERS SAY NO TO PLANNED BAILOUT--VULNERABLE INCUMBENTS FOLLOW SUIT
(Aaron Blake, The Hill)
Congressional candidates across the country lashed out at Congress’s $700 billion bailout package even before the House rejected it Monday, highlighting the political pressure faced by many of the members who ultimately sent the package to its defeat. Challengers and open-seat candidates were the quickest to denounce the package as inadequate, and some are already up with ads on the topic. While House Republicans were the most averse to the package, candidates of both parties were saying no to the bailout before the vote. Democrats who came out against the bill were casting it as President Bush’s proposal, even as congressional Democrats spearheaded the final measure. In the end, the vast majority of vulnerable incumbents voted against the bill, including a slew of freshman Democrats, three of the four House members running for Senate, and almost all vulnerable Republicans.
CONCERNS ABOUT PALIN'S READINESS AS BIG TEST NEARS
(Adam Nagourney, New York Times)
A month after Gov. Sarah Palin joined Senator John McCain’s ticket to a burst of excitement and anticipation among Republicans, she heads into a critical debate facing challenges from conservatives about her credentials, signs that her popularity is slipping and evidence that Republicans are worried about how much help she will be for Mr. McCain in November. Ms. Palin, the Republican vice-presidential nominee, flew to Mr. McCain’s ranch in Sedona, Ariz., on Monday for three days of preparation with a team of his aides — a sharp contrast to the less structured preparation that led up to the senator’s first debate. The amount of time and staff power being devoted to this was evidence of concern among Mr. McCain’s associates that Ms. Palin’s early triumphs — a well-received convention speech, her drawing of big crowds — has been overtaken by a series of setbacks, creating higher stakes for her in the debate Thursday with the Democratic nominee for vice president, Senator Joseph R. Biden Jr. of Delaware.
BIDEN'S STRATEGY: GO EASY ON PALIN
(Roger Simon, Politico)
If Sarah Palin goofs, flounders, stumbles or blunders during her debate against Joe Biden on Thursday night, Biden is going to let it slide. “If she makes a gaffe, he underplays it,” one of the people prepping Biden for his vice presidential debate told me. “At most, he says, ‘I am not sure what Gov. Palin meant there.’” There are three reasons for this. First, Biden does not want to look condescending. For the same reason, he plans on referring to Palin as “Gov. Palin” during the debate and never as “Sarah.” (He will sometimes refer to John McCain as “John,” however, because they have been senators together for many years.) Second, Biden knows the press is going to pounce on any mistakes, and so he does not need to. Third, and most important, Sarah Palin is not Biden’s true target. “Joe Biden’s No. 1 job during the vice presidential debate is to keep the focus on the top of the ticket,” the Biden debate prepper told me. “He is going to keep the focus on John McCain.” This is an arguable strategy. After all, McCain is the experienced one on the Republican ticket, the one whose credentials to be commander in chief from Day One are not in much question. So why attack him instead of Palin, whose lack of readiness has been the subject of endless discussion as well as late-night comedy? Because, at least in the past, Americans have not concentrated on the bottom of the ticket when it comes time to vote. They care about who the president is going to be, not who the vice president is going to be.