Bill Manzi.com

John McCain and Barack Obama traded shots over who is the big spender in this race, with McCain unleashing this ad attacking Obama for his plan to spend “recklessly” and add to the deficit. Obama responded by citing McCain’s “reckless spending plans”, including the massive transition costs associated with privatizing social security. It is my firm belief that neither campaign has truly acknowledged the need for fiscal discipline, but at least Obama has talked of the obvious possibility that some spending may need to be put off, or spread over longer periods of time. McCain has said he would balance the budget by the end of his first term, without saying how he would do it. At this point both campaigns are full of it on spending, but it has been eight years of “reckless spending and tax policies” by George Bush and the Republican controlled Congress that drove us from the Clinton surplus to doubling the national debt in eight years. The day of reckoning for that mismanagement is at hand, but many still fail to see the underlying problems of trade and fiscal deficits. Both parties continue to cling to the idea that these deficits can continue forever without eroding our standard of living in the U.S. The fallacy of that position is only begining to become apparent.

Another trick question from Katie Couric brings us to Sarah Palin announcing that she reads “all the newspapers”, with a non sequitur about news in Alaska thrown in. I wonder if the question about what newspapers you read could have been handled by Joe Biden. Seems like a natural for next week’s SNL. They once again can use the exact transcript from Governor Palin to tremendous effect.

The United States Senate, feeling heat from constituents who are now demanding action, will tackle a bailout bill today. The Senate bill will add provisions not in the House bill, including a one year increase in the FDIC cap for bank and credit card accounts, (from $100,000 to $250,000), the renewal of a host of business tax breaks that had expired, and a fix to the problems of the Alternative Minimum Tax. The Senate bill will likely peel off some Republican House votes since it offers no tax increase to pay for the decreased tax revenue from the AMT fix and restoration of business tax breaks, but may be a tough pill to swallow for some centrist and conservative Democrats, who are concerned about violating so called pay-go provisions.

Both Barack Obama and John McCain have expressed support for the Senate plan, and both will reportedly be in Washington for the vote today. President Bush has expressed support, as well as criticism of the inaction of the House. From the Washington Post:

“I am disappointed by the outcome” of the House vote, Bush said. Appearing drawn and frustrated, he noted that Monday’s stock market dive cost more in market capitalization — more than $1 trillion — than his $700 billion rescue proposal. “The reality is that we are in an urgent situation, and the consequences will grow worse each day if we do not act,” Bush said. “Our economy is depending on decisive action from the government. . . . This is what elected leaders owe the American people,” he added.

With public opinion now appearing to swing in favor of some sort of package it appears that political momentum is once more building for passage. But the political cross currents in the House make predicting that outcome a tricky business.

John McCain and Sarah Palin back with Katie Couric, trying to explain the contradiction between the McCain criticism of Obama for publicly stating he would launch cross border attacks on terrorists into Pakistan, and Governor Palin’s expressed support for that position in a conversation with voters. Apparently they can blame “gotcha journalism’ even when journalists are not the ones asking the questions. Is there such a thing as “gotcha voters”?

http://www.cbs.com/thunder/swf/rcpHolderCbs-prod.swf

Conservative Republican Rep. Darrell Issa, a no vote on the Bush bailout package, appeared on Hardball with Chris Matthews today and said, amongst other things, that the “mismanagement of the Fed and the Treasury had gone on for “months and years”. He also urged Treasury Secretary Paulson to stop acting like a “day trader” at Goldman Sachs and begin acting like a traditional banker. If the Republican House leadership had indeed made a deal to contribute “half of their caucus” to this package they must have forgot to tell members like Issa. And Issa did not sound like a man who had been influenced by some harsh partisan rhetoric by Speaker Pelosi into voting against the package. Sounded to me like he was going to vote against it even if the Speaker blew kisses to the Republican side of the aisle.

It is a strange event unfolding, with the Republican President and the Republican nominee for President supporting this package, and the House Republicans repudiating both. Issa avoided direct criticism of McCain, instead praising McCain for saying that SEC Chairman Chris Cox should be fired. Cox is a former Republican member of the House of Representatives.

http://www.msnbc.msn.com/id/22425001/vp/26947567#26947567

The defeat of the Bush bailout plan brought charge and counter-charge between the Republican and Democratic leaders of the House. 133 Republicans and 95 Democrats rejected the bill, with Republicans charging that a “partisan” speech by Speaker Pelosi before the vote pushed enough Republicans into a no vote to derail the bill. From the Washington Post:

After a week of intense debate in both party caucuses, 95 Democrats and 133 Republicans opposed the bill just five weeks before they face voters in an election that is shaping up as a referendum on the economy; 140 Democrats and 65 Republicans supported the controversial measure.

Republican and Democratic House leaders later blamed the defeat of the bill on each other but vowed to continue working to produce legislation that could pass Congress. They did not say when this could happen.

The Republican leadership, which had signed onto the bill, laid the defeat right on the doorstep of Speaker Pelosi.

“Americans are angry, and so are my colleagues,” House Minority Leader John A. Boehner (R-Ohio) told reporters after the vote. “They don’t want to have to vote for a bill like this.” Now, he said, “we need to renew our efforts to find a solution that Congress can support.”

Rep. Roy Blunt (R-Mo.), the minority whip, said, “We’d like to find a way to deliver enough Republican votes to make this happen.”

Boehner charged that the bill could have passed today “had it not been for the partisan speech that the speaker gave on the floor of the House.” Other Republican leaders also berated Pelosi.

“We thought we had a dozen more votes,” Blunt said. However, “it didn’t take much to turn them off,” he said. “A bipartisan solution is only as good as the last person that throws a bomb into the room.”

And what was it that sent the Republicans into a tailspin? The Speaker lambasted the policies of the Bush Administration forcefully.

At the beginning of a floor speech urging support for the bill, Pelosi denounced the $700 billion price tag as “the costs of the Bush administration’s failed economic policies — policies built on budgetary recklessness, on an anything-goes mentality, with no regulation, no supervision, and no discipline in the system.”

If in fact this bill is the right prescription for the financial system then both sides should hang their heads in shame. We could have done without partisan rhetoric from the Speaker, despite the fact that I truly believe not one Republican vote was swayed by her talk. And the Republican leadership and the President were humiliated by their inability to deliver Republican votes for this package. Rep. Issa of California, a leader of the Republican rank and file that voted no, went on Hardball and condemned the President and the Treasury Secretary in unusually harsh terms.

It looks like we need some adults in the room. With the stock market tanking today and the Fed forced to inject massive amounts of liquidity into the system where do we end up tommorow? The focus on the stock market took attention away from that Fed action. And that Fed intervention was large.

The Federal Reserve more than doubled, to $620 billion, the dollars available to nine other central banks — in Europe, Australia, Canada and Japan — to make short-term loans to banks and other financial institutions. It also tripled, to $225 billion, the amount available for short-term loans to U.S. financial firms.

The new Fed action came as a collection of European governments scrambled to bolster three troubled mortgage companies. This weekend, British financial authorities took over mortgage giant Bradford & Bingley, and European governments in Belgium, Luxembourg and the Netherlands pumped $11.2 billion into Fortis, a major Belgian financial services conglomerate.

Can we move beyond raw partisanship to right the ship of state? I hope so, but I have my doubts.

http://www.washingtonpost.com/wp-srv/mmedia/player/wpniplayer_viral.swf?thisObj=fo139755&vid=092908-8v_title

http://www.washingtonpost.com/wp-srv/mmedia/player/wpniplayer_viral.swf?thisObj=fo71981&vid=092908-7v_title

In a stunning rebuke to the Congressional leadership and the President the House of Representatives today voted down the bailout bill by a 228-205 margin. Where we go from here is anybody’s guess, but this is a huge development. I will post the vote by legislator as soon as it becomes available.

The John McCain debate ad, criticizing Obama for agreeing with him so much.