Wanted: someone who will claim credit for saving the U.S. economy. With little fanfare and all the enthusiasm of a hangover, congressional leaders from both parties on Sunday unveiled a detailed agreement on legislation to bail out Wall Street. But no presidential candidates were in sight, and few in Congress were doing much bragging about their handiwork.
Last week, jockeying for the title "savior of the economy" seemed intense, with both the Democratic and Republican candidates flying into Washington and overeager negotiators emerging with a premature victory announcement. But after dramatically suspending his campaign and asking to postpone last Friday's debate in order to deal with the financial crisis, John McCain kept a decidedly low profile in the final days of negotiations. His staff said McCain kept track of events by phone, keeping in touch with Treasury Secretary Henry Paulson and House minority leader John Boehner, and calling members on both sides of the aisle, urging them to support the deal. "I'm proud that we were able to get this done, and I'll give the credit to everybody else," McCain insisted on ABC's This Week on Sunday morning.
Yet on Sunday it was hard to find anyone willing to take credit for the agreement. "This is the Administration's problem," House Speaker Nancy Pelosi told reporters. "They sent us their bill. We did the best we can to improve it."
"The American people are angry about the situation they find themselves in," said Representative Boehner, the conservative Republican whose objections sent negotiators back to the drawing board on Thursday, but who endorsed the agreement announced on Sunday. "I've got to tell you, my colleagues are angry about the situation they find themselves in. Nobody wants to have to support this bill."
Barack Obama seemed at least a little more upbeat. In a statement, he noted that all four principles he laid out last week increased oversight, taxpayer protections, a provision limiting golden parachutes and measures to help homeowners were included in the bill. But he added, "When taxpayers are asked to take such an extraordinary step because of the irresponsibility of a relative few, it is not a cause for celebration."
The 106-page bill gives Paulson the $700 billion he requested in a three-page proposal 10 days ago but divvies the money up: $250 billion immediately, with another $100 billion upon request of the President. The rest, if and when it is needed, will require the approval of Congress. And the money comes with strings. Paulson must report back to Congress more often and transactions must be posted online within two days. The House is expected to take up the bill on Monday and the Senate aims to pass it by Wednesday.
Once the bill is signed into law, Paulson will have many options open to him on how to unclog the credit markets, which Senator Judd Gregg, the top negotiator on the bill for Senate Republicans, described as a massive car accident in the middle of the highway. The government must clear the accident away by buying the toxic debt so that normal traffic can flow freely. One avenue will be to do a reverse auction, where banks compete to sell the Treasury their bad paper, with the Treasury choosing the lowest offers. The Treasury may also directly negotiate with companies, though no one knows exactly how that will work.
After their McCain-backed White House rebellion last week, House Republicans won a few concessions in the compromise: they had funding for a controversial housing program taken out and a bankruptcy provision that they argued was a giveaway to trial lawyers removed. They also got the Treasury Department to establish a federally backed insurance program for the debt an alternative solution that is easier on the taxpayers but more expensive for the already cash-strapped banks though the Treasury would not be required to actually use the program, and Paulson has expressed opposition to such a route.
The issue of executive compensation nearly blew up the bill in the final talks, which for some staff went well past 3:30 a.m. Sunday morning. But a compromise was reached that places a tax on executive salaries and bonuses of $500,000 or more at companies in which the Treasury has bought more than $300 million in assets at auction. For companies in which the Treasury intervenes directly, a 20% surcharge on golden parachutes is instituted.
Ultimately, negotiators said, everyone left the table unhappy. "This is a classic 'orphan bill,' " said Larry J. Sabato, director of the University of Virginia's Center for Politics. "A week after the vote, no one will claim parentage, and fingers will be pointed every which way. 'I held my nose and voted for it, lacking a good alternative,' will be the best anybody offers."
Certainly, the timing couldn't be much worse, with just 36 days to go before the elections. House Republicans are particularly exposed, with 29 retiring members, many of them in swing districts. House Republicans are also $50 million behind the Democrats in fund-raising, and the Dems are already running commercials criticizing GOP deregulation of the markets and efforts to privatize Social Security in six vulnerable districts, with many more coming.
But the candidate with the most riding on Monday's vote is McCain, who backed the concerns of conservatives in the House over the initial agreement. "John McCain stood up for House Republicans," said Representative Spencer Bachus, an Alabama Republican who was involved in early negotiations. "He stood up to the Administration. John McCain vastly improved this bill."
But if a majority of the House Republicans don't vote for the measure, McCain could lose political face. "If McCain cannot persuade them, it is hard to portray him as a leader," said Clyde Wilcox, a political science professor at Georgetown University.
When asked if McCain would be hurt if the bill did not win a majority, Boehner on Sunday night snapped, "That's irrelevant." Since McCain "suspended" his campaign, the polls have been swinging Obama's way. McCain tied Obama in the Gallup and Rasmussen Daily tracking polls early last week, but Obama has since opened up his widest leads of the race in both surveys, ahead by 8 and 6 percentage points, respectively. But even if most House Republicans wind up supporting the bill, the legislation is beginning to feel like the White Elephant every one is looking to give away.