Talks Falter on Bailout Deal.

The $700 billion bailout plan was at risk last night and Democrats are laying the blame for this squarely at the door of John McCain.

A renegade bloc of Republicans moved to reshape a massive bailout of the U.S. financial system yesterday, surprising and angering Bush administration and congressional leaders who hours earlier announced agreement on the "fundamentals" of a deal.

At a meeting at the White House that included President Bush, top lawmakers and both presidential candidates, House Minority Leader John A. Boehner (R-Ohio) floated a new plan for addressing the crisis that has hobbled global markets.

Democrats accused Boehner of acting on behalf of GOP presidential candidate Sen. John McCain (Ariz.) in trying to disrupt a developing consensus.

There was much optimism at the start of the process with even Bush saying, "We are in a serious economic crisis in the country if we don't pass a piece of legislation ... My hope is that we can reach an agreement very shortly."

But by the end of the day when Bush held his summit, most of that good will had dissipated, with Democrats laying the blame at the door of McCain.

Democrats accused Boehner of acting on behalf of GOP presidential candidate Sen. John McCain (Ariz.) in trying to disrupt a developing consensus. The new proposal also displeased White House officials, including Treasury Secretary Henry M. Paulson Jr., who chased after Democrats leaving the meeting and -- half-jokingly -- dropped to one knee and pleaded with them not to "blow up" the $700 billion deal, according to people present at the meeting.

It's hard to believe that the Republicans came up with this as part of the solution, but believe it or not, they did.

* Have Private Capital Injection to the Financial Markets, Not Tax Dollars. Instead of injecting taxpayer capital into the market to produce liquidity, private capital can be drawn into the market by removing regulatory and tax barriers that are currently blocking private capital formation. Too much private capital is sitting on the sidelines during this crisis.

Yeah, less regulation, that's what's needed at this point. 'Cos it's too much regulation which led to the current crisis isn't it?

But then much of the Republican plan makes no sense given all that has recently happened and, in fact, appears to be an attempt to rewrite what has happened to fit a Republican script.

Justin Fox:

What I can offer a halfway informed opinion on is whether the two Republican counterproposals floating around make any sense.

One, that of the House Republican Study Committee, seems to be a joke. It calls for a two-year suspension of the capital gains tax to "encourag[e] corporations to sell unwanted assets." But the toxic mortgage securities clogging up bank balance sheets are worth less now than when they were acquired. Meaning that no capital gains tax would be owed on them anyway. If you repealed the tax, banks would have even less incentive to sell them because they wouldn't be able use the losses to offset capital gains elsewhere. Seriously, where do these people come up with this stuff?

Are they setting up a script were McCain rides in at the last moment and rescues the day? Or are they trying to get the Democrats to vote for Bush's bill and allow themselves political leeway to distance themselves from it later on?

Their behaviour is simply bloody bizarre.

Democrats say they would not approve the legislation without a significant number of Republican votes to share in any political fallout from the controversial proposal, which comes just weeks before the November election. "We are working to try to get this bill ready, but if House Republicans continue to reject the president's approach, then there's no bill," said Rep. Barney Frank (D-Mass.), an architect of the bailout legislation. "We told Paulson the whole thing is at risk if the president can't get his own party to participate."

One gets the feeling that the Republicans, sensing how unpopular this bailout is across the country, are seeking to distance themselves from Bush's plan and make the Democrats responsible for what is a mess which was created whilst their party was in power.

It's a further example of McCain running against the Republican party whilst running on their ticket.

What's astonishing here is that the Bush administration have been telling us that we face the utter collapse of the entire American financial system unless a deal can be cut here and yet it is the Republicans who are undermining the deal.

And I agree with the Barney Franks. I think this whole thing is being manufactured so that McCain can distance himself from it later and blame Obama for what we are told is a necessary but deeply unpopular piece of legislation.

Country first? My arse. The cynicism of these creeps is breathtaking.

UPDATE:

Young Turks give us their take on this.



UPDATE II:

Barney Frank:



UPDATE III:

The cynicism of the political theatre the "Maverick" is playing. Putting his campaign before his country.

Tags: financial crisis, Paulson, McCain, Obama, Democrats, Republicans, US election 2008