Washington diary: Campaign in flux
|
http://news.bbc.co.uk/go/rss/-/1/hi/programmes/world_news_america/7634704.stm Version 0 of 1. By Matt Frei BBC News, Washington It is hard to keep up with anything in America's year of living dangerously.The Paulson-Bernanke bail-out plan has met resistance in Congress On Wednesday, the latest opinion polls suggested the public was selling Palins and McCains and buying Obamas and Bidens. It was not a rally. But gambles are out and caution is in. The numbers were looking terrible for the Republican candidate and the public's love affair with Sarah Barracuda had begun to fizzle. In these nervous days, America is looking for reassurance, experience and sobriety. Novelty and shrillness almost induce an allergic reaction. The most reassuring thing that has happened all week is that Warren Buffet, the sage of Omaha, has decided to sink a cool $5bn into a revamped Goldman Sachs. I bet you many Americans are wondering if we cannot just outsource government to him until the storm is over. The campaign has been transformed. MATT FREI'S DIARY <a class="" href="/1/hi/in_depth/americas/2008/vote_usa_2008/7620124.stm">Troubled times</a><a class="" href="/1/hi/in_depth/americas/2008/vote_usa_2008/7609440.stm">Pigs and lipstick</a><a class="" href="/1/hi/in_depth/americas/2008/vote_usa_2008/7595145.stm">McCain's gamble</a><a class="" href="http://news.bbc.co.uk/2/hi/in_depth/americas/2008/vote_usa_2008/default.stm">Special report: US elections 2008</a> John McCain has gone on the offensive, in classic high-wire style, by calling for the first debate to be scrapped. He also announced that he would return to Washington to hammer out the details of the bail-out plan. Its survival may well come down to his ability to rally recalcitrant Republicans behind it. It was a bold but risky move. Mr McCain is claiming part-ownership of a financial package that will largely determine what the next president can or cannot afford to do in office - he might as well help draft it. A senator stepping up to the plate and getting stuck into the business of government. It looks almost presidential. This election campaign is a wild and merry dance and Barack Obama popped up a few hours later rejecting his opponent's call to delay the debate, effectively accusing him of stealing the limelight. If there was a genuine desire to put politics aside and act in a bipartisan spirit, it was lost in a hailstorm of accusations. Politics these days is far too serious to be left to the politicians. Economic 9/11 The terror attacks on 9/11 changed America's relationship with the world and the world's view of America. And then there was 9/17, 2008 - the day the AIG bailout failed to calm plunging markets and panic ruled. Ben Bernanke, the chairman of the Federal Reserve, woke up that dawn to find that the overnight lending activity between banks had virtually dried up. Mr McCain called for a suspension of the campaign It was the financial equivalent of a massive stroke. The administration spent several hours in the dark, lawmakers were groping around blind. Fear was on the rampage. Had the Fed and the Treasury not acted, our ATM machines would probably be drying up round about now. The huge bail-out package which was announced last Friday, and which is still being haggled over on Capitol Hill was like the battlefield first aid performed on a wounded soldier in Iraq. It kept him alive. But we still have no idea whether he will fully recover, let alone, how he will walk, talk, think or slot back into a normal life. Let's make no mistake: 9/17 was the world's economic 9/11. It will change the way America does business at home and with the world. We just don't know how. So, what next? The administration was hoping that the bail-out package would get a swift bipartisan response in Congress. It has. But the response has been anger as much as acquiescence. Greedy bankers Broadly speaking, Democrats dislike it because it gives a handful of unelected officials a vast amount of money and power. As Hank Paulson has essentially argued, with throbbing temples: whatever you think of those greedy bankers, if you cannot stabilise Wall Street, you cannot help Main Street. The Democrats, including Barack Obama, do not buy this argument as it stands and after eight years of an administration that tried to eke out more and more executive power, they smell a rat. It probably did not help that a glum Dick Cheney, the prime proponent of greater executive power, ha been stalking the corridors of Capitol Hill, imploring lawmakers "to do something." If we cannot save Lehman Brothers, why should the taxpayer save Ramadi? Many Republicans do not like the plan for broadly similar reasons. Fiscal conservatives, who are already reduced to skin rashes by the mammoth growth of government under a Republican President, see this as government on steroids. As Senator Jim Bunning (Republican of Kentucky) put it: "It is financial socialism and very un-American." They also fear that whatever anyone promises these days, it will shred future hopes for tax cuts. And what both Republicans and Democrats are afraid of most is that they will get blamed for the plan if it fails and lose their seats in the upcoming election. No one really likes the bailout package. But if it does not get passed, the markets are probably betting on a return of blind panic. The original sin of this crisis - the bottomless pit of debts financing millions of piles of bricks losing money by the week - will not have been solved. Financial armageddon will become a possibility. Finger-pointing If the package passes, it will increase the budget deficit to $1.5 trillion. It could cost the average American household as much as $10,000. Think of the consequences. The Iraq war has cost more than $500bn so far. Will Mr Obama be forced to follow Mr McCain's lead? That is $250bn less than the bail-out package. But if we cannot save Lehman Brothers, why should the taxpayer save Ramadi? The Iraqis will have to do much more of their own heavy lifting, in financial and military terms. Who's to say that President Bush's generous and ambitious plan for HIV/Aids prevention in Africa or mosquito nets used against malaria - worth $15bn dollars - will survive the inevitable cuts? Or Medicare subsidies on prescription drugs for the elderly? Every government mounts the domestic and foreign policy it can afford and after a $700bn to $1 trillion hole in the economy, an already heavily-indebted America can afford a whole lot less. Whoever gets the keys to the White House will have his hands tied. It is like saying to a friend: "Go to the Caribbean, have a great vacation. Here's a dollar!" Then there is America's image abroad. To many watching with open jaws in Shanghai, Berlin or Johannesburg, the Bush era has been defined by a mixture of ideology and incompetence: the (initially) bungled occupation of Iraq, the risible response to Hurricane Katrina and now the excesses of Wall Street. There will be a rash of finger-pointing, much of it grossly unfair, some of it perfectly justified. But the only fingers that really count are the ones rolled in yen and renmenbi notes. If the Chinese and Japanese stop buying US debt, Uncle Sam's banker will have turned his back on his neediest client. Finally there is self-esteem at home. A poll in this week's Washington Post indicated that only 9% of those polled believed the economy was sound. Who are these die-hard optimists? Just 14% of Americans think that the country is heading in the right direction, the lowest since the dog days of Vietnam and oil shocks in 1973. It had taken America three decades to rediscover its legendary optimism. It has taken a week to lose it. Confidence had been shrinking for months but it has now crashed. <i>Matt Frei is the presenter of </i><a href="http://news.bbc.co.uk/2/hi/programmes/world_news_america">BBC World News America</a><i>which airs every weekday at 0030 BST on BBC News and at 0000 BST (1900 ET / 1600 PT) on BBC World News and BBC America (for viewers outside the UK only).</i> <hr /> Send us your comments in reaction to Matt Frei's Washington diary using the link below: <a class="bodl" href="http://newsforums.bbc.co.uk/nol/thread.jspa?forumID=5393&edition=1">Send your comments</a> |