McCain and the Paulson Plan

As a former card-carrying member of the Libertarian Party, the idea of a massive government bail-out makes me ill. However, the sad state of the US (and, by extension, the global) financial system requires some sort of action. To disappoint investors' expectations for some kind of a bail-out plan would be to risk a serious panic. This is especially true of foreign investors, who are more accustomed to government intervention in the capital markets. Further panic-induced shocks to the financial system could turn the current economic sniffles & headache into a life-threatening case of pneumonia. Principles must, on occasion, give way to the unhappy reality in which we live.

That said, the Paulson plan is deeply unsatisfying for several reasons. First, it commits too much money to buying-out questionable debt, as opposed to only the most distressed assets. The bail-out should be a back-stop for financial institutions, not a gift. To the taxpayers, it looks too much like a former investment banker (Paulson) bailing-out his buddies still on Wall Street. Second, the plan gives too much unfettered power to the Treasury Department. Washington does not need another unaccountable, bureaucratic monstrosity. Finally, the Paulson plan, especially when viewed in light of the proposed Democratic amendments, looks like a massive power-grab by the same Washington politicians who did so much to create this mess. Government should encourage free markets to work their magic, not supplant them.

In light of all of this, McCain's recent maneuvers, ably-seconded by the GOP Congress (it lives!), were both bold and brilliant. The dominatrix, Mistress Nancy, and her gimp, Harry Reid, thought that they had the Bush administration over a barrel. Suddenly, they find themselves outmaneuvered by McCain and (suddenly) a no longer spineless GOP Congressional leadership. The Democrats are as desperate for a bail-out as the Bush administration, and will quickly give in to many GOP demands so as to prevent McCain from getting all the credit for a much improved, and more taxpayer friendly, bail-out plan. Of course, they'll fight a tough rear-guard action in the media, and we do not know yet what the final package will look like. However, I suspect that we'll have deal in place when the markets open on Monday.


Both presidential candidates sent clear, unmistakable messages to the voters this week. McCain underscored that he is a man of action, willing to swim against the tide in order to serve the public interest (this is not to say that he isn't also trying to score some political points here). Barack Obama announced that nothing is more important than him becoming president, and that we should call him and leave a message during times of crisis, or whenever leadership is called for. I just hope that he has some good tunes playing while the nation is on hold waiting for him to respond during future crises.


What about the debate tonight? I think that McCain should still do it. The subject is foreign policy, and Urkel is a tepid and uninspiring debater, so McCain doesn't need much preparation. He should show up at the last minute, with some good footage of him walking briskly across the tarmac after just flying in from Washington. Then, let the voters decide which candidate they would trust when the sh*t hits the fan.