McCain vs. Obama: The bailout

Posted: Monday, September 22, 2008 9:31 AM by Domenico Montanaro

It's a good, old-fashioned lobby campaign on the Hill this week. "Congressional Democrats began to set their own terms on Sunday for a plan to rescue the nation’s financial institutions, including greater legislative oversight of the Treasury Department, more direct assistance for homeowners and limits on the pay of top executives whose firms seek help. The Democrats’ demands came as Treasury Secretary Henry M. Paulson Jr. blanketed the Sunday talk shows to promote the Bush administration’s $700 billion bailout package, emphasizing that it was needed not just for Wall Street, but for all Americans. He urged Congress to move swiftly to approve a “clean” rescue plan without tacking on extra programs."

And: "Congressional Republicans, too, put the Bush administration on notice that they would not rubber-stamp the bailout proposal but would insist on a number of changes, including specific protections for taxpayers. Those would include a requirement that any profits from the program be returned to the Treasury.

So will both Obama and McCain come back to DC to vote on the bailout? In interviews with John Harwood of CNBC and the New York Times, "Senators John McCain and Barack Obama warned Sunday that there should be more oversight built into the government’s $700 billion plan to stabilize the financial markets but said the potentially enormous expenditure would not force them to scale back their ambitious governing agendas."

Both McCain and Obama "agreed in separate interviews that steps should be taken to ensure taxpayer dollars are not used to enrich the executives of troubled financial firms bailed out by the government. They echoed each other in assessing the threat from the financial crisis as severe enough to warrant government intervention. But Mr. McCain said in an interview here with CNBC and The New York Times that he would press on with his plan to extend the Bush tax cuts and to cut others. Contrary to the warnings of fiscal analysts, he said he believed he could do so and balance the federal budget, which was falling deeper into deficit even before the financial crisis, by the end of his first term.”

”… In a separate interview earlier in the day, Mr. Obama said that despite the huge new government obligation, he would press ahead with his plans to overhaul the health care system to insure more people, make college tuition more affordable, give a tax cut to the middle class and raise taxes on those making over $250,000 a year. "

Treasury Secretary Hank Paulson's power is about to be enhanced like no Treasury secretary ever. And he's only going to be in office another four months. Is that smart? Doesn't that mean Paulson's going to be hard for either McCain or Obama to get rid of when they come into office?
 
Because of this, speculation is already starting about whom either would appoint. "All of this has ignited speculation about whom Senator Barack Obama or Mr. McCain might name as Treasury secretary if elected president. The consensus in both parties is now that the next secretary must -- like Mr. Paulson, formerly chief executive of Goldman Sachs, one of only two surviving investment banks -- be well versed in financial markets." 
 
Obama, the Democratic nominee, does not rule out retaining Mr. Paulson, a Republican. The two have spoken almost daily since Treasury put the mortgage giants Fannie Mae and Freddie Mac into government conservatorships two weeks ago, and Mr. Obama speaks highly of Mr. Paulson. ‘Getting a new person to start juggling those balls is going to be tricky,’ Mr. Obama said in an interview aboard his campaign plane Saturday. ‘Regardless of who wins the election, the issue of transition to the next administration is going to be very important. And it’s going to have to be executed with a spirit of bipartisanship and cooperation.’”

”But Obama advisers say it is more likely that he would pick someone new. The names bandied about before the financial crisis remain among the main prospects now, they say, though the turmoil has altered the calculations about each person. They include Timothy F. Geithner, 47 and a protégé of one of President Bill Clinton’s Treasury secretaries, Robert E. Rubin. As president of the New York Federal Reserve, Mr. Geithner has had a supporting role in managing the crisis. Also mentioned are two Clinton cabinet veterans: Laura Tyson, 61, former chairwoman of both the White House National Economic Council and the Council of Economic Advisers, and Lawrence H. Summers, 53, Treasury secretary for Mr. Clinton’s final year and a half. Both are economists and have been part of the core of advisers Mr. Obama has been consulting lately, along with Mr. Rubin and Paul A. Volcker, a former Federal Reserve chairman.” 
 
Here's a lead the McCain campaign wants in some battleground state newspapers today. From the New York Daily News:  "With Wall Street's binge likely to become Main Street's hangover, John McCain launched his sharpest shots to date Sunday night at fellow Republican George W. Bush. ‘I say the Bush administration has failed,’ McCain said on ‘60 Minutes’ after agreeing that he placed ‘a great deal’ of responsibility on the President for the financial meltdown. Then, perhaps trying to broaden his salvo, McCain added, ‘I say the Congress has failed, Democrats and Republicans. I remind you the Democrats have had the majority in Congress for the last two years. So everybody's failed.’” 
 
So who knew McCain was such a fan of Andrew Cuomo?
 
Bloomberg's Al Hunt sees Obama handling last week better than McCain.

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