Obama Opens Up a 9-Point Lead

[Aeson]

It seems there's going to be a "compromise". Basically we'll give bailoutees the choice of how they screw the US Gov. Either they can have Paulson throw money directly at them, or they can have the US Gov insure their crap.

Insuring MBS really worked out well for AIG...

[Darius871]

Why would anyone choose insurance over a gift? How is that even a choice?

[Aeson]

If the insured value is the same as the sale value, then probably so. But if they can insure it for full (imaginary) value, but can only sell it for market value... might be better for them to insure it and not have to mark it down. Also if there's a hard limit on the amount that can be bought but the insurance has a different limit, or no limit, you could see a lot of assets that miss out on the buying opting for the insurance. It may also depend on what types of securities that are acceptable to one or the other or both. As well as the effects of whatever other strings/loopholes end up in the bill.

In any case, I'm sure we can agree that what Congress intends to do, and claims they are doing, is likely not going to be the same as the effects of what they actually end up passing.

[Darius871]

Sure, without a doubt. It'll be interesting to see what the House Republicans end up finding acceptable though. I never thought the Dems would be the first ones on board with Bush...

[Ramo]

What about the fact that only FOUR Republican House members were for the bailout? You keep ignoring that (because it sinks your point). It, of course, changes everything.

The piece conveniently neglects to mention exactly how many were against it. Many didn't take a position. They were waiting for McCain. The fact that McCain failed to provide cover was key here:

How McCain Stirred a Simmering Pot

By Jonathan Weisman
Washington Post Staff Writer
Saturday, September 27, 2008; A01

When Sen. John McCain made his way to the Capitol office of House Minority Leader John A. Boehner (R-Ohio) just past noon on Thursday, he intended to "just touch gloves" with House Republican leaders, according to one congressional aide, and get ready for the afternoon bailout summit at the White House.

Instead, Rep. Paul D. Ryan (Wis.), the ranking Republican on the House Budget Committee, was waiting to give him an earful. The $700 billion Wall Street rescue, as laid out by Treasury Secretary Henry M. Paulson Jr., was never going to fly with House Republicans, Ryan said. The plan had to be fundamentally reworked, relying instead on a new program of mortgage insurance paid not by the taxpayers but by the banking industry.

McCain listened, then, with Sen. Lindsey O. Graham (S.C.), he burst into the Senate Republican policy luncheon. Over a Tex-Mex buffet, Sens. Robert F. Bennett (Utah) and Judd Gregg (N.H.) had been explaining the contours of a deal just reached. House Republicans were not buying it. Then McCain spoke.

"I appreciate what you've done here, but I'm not going to sign on to a deal just to sign the deal," McCain told the gathering, according to Graham and confirmed by multiple Senate GOP aides. "Just like Iraq, I'm not afraid to go it alone if I need to."

For a moment, as Graham described it, "you could hear a pin drop. It was just unbelievable." Then pandemonium. By the time the meeting broke up, the agreement touted just hours before -- one that Sen. Lamar Alexander (Tenn.), the No. 3 GOP leader, estimated would be supported by more than 40 Senate Republicans -- was in shambles.

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/26/AR2008092603957_pf.html

For those counting that's at least 81% of the Senate GOP caucus behind the legislation. You really think that a large number of House R's wouldn't rally to the legislation after their nominee endorses it? Please.

In fact, what happened over Saturday is that everyone did their Kabuki: the House GOP got a nominal concession (I doubt the insurance provision survives that far past the election), McCain endorses the legislation, and the deal looks golden because of that.

[Ramo]

I'm still waiting to see evidence for any House R support for this so-called deal from any House (not Senate!) leader at any point in the day.

As the Schieffer piece points out, the House GOP was waiting for cover from McCain.

[Darius871]

I loved the paragraph right after your cutoff:

McCain's presence was only one of the complicating factors. Sen. Barack Obama played his part, with a hectoring performance behind closed doors at the White House. And a brewing House Republican leadership fight helped scramble allegiances in the GOP.

http://www.washingtonpost.com/wp-dyn...603957_pf.html

In any event, I still fail to see how there was any "deal' that included House Republicans, the Senate aside.

If your point is that the House would have been on board had McCain only given them some cover, then wouldn't conceding that he's such an indispensible linchpin (which I don't buy) defeat any argument that going there was all a political stunt? You can't have your cake and eat it too. If your premise about failing to provide cover is correct, then not making a scene by going to Washington would have "ruined" the "deal" just as handily.

[Ramo]

1. My position all along is that his vote is indispensible. Everything else was badly executed Kabuki.
2. I also said that McCain was only part of the reason for the delay. You've clearly got other influences here.
3. As Schieffer was saying, the House GOP was just looking for cover. It didn't come until after the theater.

[Darius871]

Ah. Well, here's hoping he spoils the deal anyway. It's interesting that even in the debate and on Saturday he kept tight-lipped about his stance. Maybe he'll pull a rope-a-dope against this plan and thereby get to cast Obama as "Bush's man" taking taxpayer dollars to save Wall Street fatcats from their ridiculous gambles, and at the same time distinguishing himself from Bush and boosting his own maverick cred, ending the "Bush's third term" crap once and for all. What an entertaining little twist that would be.

[Ramo]

No way a deal is passed that McCain doesn't endorse.

[Darius871]

My point exactly. If he refuses to endorse it, any supposedly bipartisan "deal" would be scuttled, and the Democrats (even though they have enough votes for it) would be too terrified to pass an unpopular giveaway without heavy Republican support this close to an election, so he'd be in a position to propose a new, more voter-friendly loan/insurance package, the Democrats would begrudgingly pass it because they have to pass something, and he'd get all the credit. If he actually has the balls to make that maneuver it'd clinch the election, but I don't see it happening.

[Ramo]

If the deal falls through, the Dems will push a more populist proposal, guaranteed. And that would help them. Arguably, they have more to gain from a deal falling through. Since, you know, there's the whole party affiliation of the incumbent thing. It hurts their long term interests (economy going to **** doesn't exactly help in governing), so that's why they want a deal.

Remember that McCain's constrained by his party. He can't really propose something to the left. The resistance in the GOP is for a far right insurance (aka guaranteed taxpayer loss)/capital gains tax cut "alternative." Not exactly the biggest vote getter ever. The most populist plan McCain can propose might actually be the one on the table right now.

[Darius871]

Originally posted by Ramo
Remember that McCain's constrained by his party. He can't really propose something to the left. The resistance in the GOP is for a far right insurance (aka guaranteed taxpayer loss)/capital gains tax cut "alternative." Not exactly the biggest vote getter ever. The most populist plan McCain can propose might actually be the one on the table right now.

...assuming they're not cynical enough to give up some of the less populist elements of their plan if it could help prevent their opposing party's looming monopoly on two branches of government instead of one. They probably know deep down that a capital gains tax cut is a pipe dream they'd have to sacrifice in exchange for a deal.

And I totally fail to see how using a combination of binding collateralized loans and insurance agreements with mitigating subrogation are oh-so "right wing" and toxic to voters when compared to the even less populist immediate buyout of securities at several times actual value. To the 55-60% of average schmuck Main-Street voters who oppose the existing plan because in their minds it's been characterized as simplistic "giveaway" of billions to irresponsible Wall Street fatcats to light their cigars with, a loan/insurance combination would sound like a polar opposite looking out for them by making the markets feel secure and thereby saving their jobs on the one hand, while protecting their tax dollars as much as humanly possible on the other. In their minds - and in the minds of independents in particular - it would seem like the more populist of two options, regardless of which party proposes it.

[Ramo]

Collateralized loans (with a sufficiently high interest rate) are fine. Insurance and CGT cuts are the ludicrous parts. With insurance, you've basically got the valuation issues that come with the initial Paulson plan, without the equity provisions that Dodd and Frank inserted.

As I was saying, the Dems can easily go to the left here and win tons of votes. Punitive nationalizations, for example, would probably be fairly popular.

[Ramo]

I'm really interested in seeing how the roll call goes down. If the Republicans are smart, they can deliver a bunch of safe votes, and then allow the folks who are threatened this year to vote against it. And I wonder how large the progressive rebellion will be...